Over 51% of businesses cite growth as a top priority, making it the most common answer in a recent Gartner survey. But for a business working in one geographic market, you’re limited in how much growth is possible. For a growth-minded business, one smart strategy to broaden your customer base is global business expansion.
What is global business expansion?
Global business expansion is the practice of taking your business beyond the borders of the country you started in. Expanding globally could mean starting to sell your products in one or two neighboring countries or it could involve opening new offices and facilities in multiple locations around the world. Regardless of the scale and complexity, you want to be thoughtful and strategic in how you approach global business expansion.
The purpose of global expansion: Opening new opportunities in a worldwide market
If your business has already reached market penetration in your home country, there may be few new customers you can gain there. Bringing your products to new countries gives you access to new markets, which can quickly expand your customer base.
Reaching a new population of potential customers is the most obvious way global expansion can increase revenue, but expanding globally has other benefits as well. Growing your business can help create economies of scale.
As you add customers and ramp up production, you can negotiate better deals on supplies you purchase. In some countries, you may also gain access to financial incentives that save money, such as tax breaks. Plus, adding new markets diversifies your business, which means that a disruption to business in one country may not impact business in other countries you sell in.
4 types of global expansion strategies
None of the potential benefits of global expansion are a given. For your expansion strategy to yield higher revenue you have to take the right approach. Global expansion strategies fall into four main categories. These strategies aren’t all mutually exclusive. You may want to start with one and shift into others over time.
An international strategy is often the easiest place for businesses to start the global expansion process. It involves keeping most of your business operations centered in one country, while starting to sell products in additional markets.
To start selling your products in new markets, you can connect with local businesses or localization partners that can help you sell effectively to the new customer base. For physical products, that can mean developing relationships with local resellers you export goods to. While for technological products, it can mean partnering with experts in the local language and culture who help with translating your products and content to be relevant to your new audience.
With an international strategy, by keeping most of the strategic decisions and operations work still based in your home country, you can keep costs relatively low.
A multidomestic strategy is one that emphasizes localization. This strategy requires devoting more resources to understanding each new market you consider. By adapting your products and marketing to local preferences, you increase your odds of success.
A multidomestic strategy typically involves hiring staff or partners located in each new country. Another option is pursuing mergers or acquisitions to quickly bring local talent into the fold.
This approach is decentralized and allows for more flexibility to respond to local trends. It’s also more expensive and resource intensive than the other options. That tends to make it a harder sell for businesses just dipping their toes into global expansion. But it can be a smart choice for businesses willing to invest more upfront for the chance at a bigger reward.
A key difference in these four strategies is where they fall on the spectrum of standardization versus localization. Standardization is keeping your products and marketing as consistent as possible across all markets, while localization involves tailoring your products and approach to each local market.
A global strategy falls on the opposite end of the spectrum from multidomestic. With a global strategy, you keep your products essentially the same in every market you sell them in. That can make a global strategy more affordable, but it only works in limited contexts. Namely, your original product(s) must have universal appeal.
A company like Apple can pursue a global strategy, as their products are designed to only require minimal changes to perform well worldwide. An iPhone in Japan isn’t all that different from one you’d get in Brazil. With this strategy, the investment required for expansion is typically smaller than for a multidomestic strategy, while keeping factors like internationalization and translation in mind to ensure your products and marketing are designed to sell in each market.
With a translational strategy, you keep many of the main branding and product decisions centralized in your home country, but also manage local subsidiaries in other markets. This allows businesses to balance the benefits of local customization, with the efficiency and cost savings of a more centralized model. In practice, this often achieves what we call “glocalization,” a synergy between global strategy and localization.
For companies that use a transnational strategy, products in different countries will be similar, with some minor adjustments to better meet local preferences. That could mean making changes to the user interface (UI) design to better match local expectations, or tweaking features to accommodate cultural differences.
A transnational strategy is a fairly sophisticated approach to global expansion. Businesses are more likely to pursue this option after gaining some initial international experience.
6 strategy tips for expanding globally: How to find international success
Regardless of the global expansion strategy you choose, there are a few smart steps you can take to improve your results.
1. Analyze your TAM and SAM for the new market
One of the earliest and most important decisions to make when expanding into new markets is choosing the right countries. To make an informed decision, look into the market size for each country you consider.
Calculating the TAM and SAM is a good starting point. To clarify, that means:
TAM (total addressable market) – the total market demand for a particular type of product or service
SAM (serviceable addressable market) – the portion of the TAM that is likely to be a good fit for your particular product
TAM describes the entire population of the country that might need a product like yours.But realistically, no company can win the sales of every person included within the TAM. That’s where SAM comes in, this is the sub-market most likely to purchase your products.
Calculating these figures can help you work out reasonable projections for how much revenue potential exists in each market. That helps you decide if the cost of expansion is worth it.
2. Perform comprehensive market research
To succeed in a new country, you need to understand the local culture. Before you start making investments, you want to confirm your target audience has a need for your products to begin with. Market research also helps you determine any key changes to make to your product to appeal to customers in your new market.
Market research is also how you scope out the competitive landscape. How will your product fit into the market that exists there now? How can you differentiate from other available options? If your research reveals very little competition in the space, that’s great. But if the market is already saturated, consider why customers there would choose your product. If you can’t answer that question, you’ll struggle to succeed there.
3. Customize your offer to the market that you’re entering
Chances are, you’ll need to do some work to adapt your product and marketing for each new market. If you’re expanding into a market that has a different primary language than that of your home country, the need for translation will be obvious.
But regardless of what language is common in your new market, you’ll also need to invest in learning the local culture—or at least work with local experts that do. That will be crucial both for getting translation right, and to update your marketing strategy to focus on the priorities of your new audience.
You may also need to make changes to your products to meet the needs of your new customer base. For example, when the Polish software company Prowly PR attempted to expand into the U.S. they quickly realized their product wasn’t designed to accommodate how local PR professionals worked.
Their U.S. customer base expected any PR software they used to include a media database—a feature Prowly PR’s product lacked because of differences in how Polish PR professionals do their job. By adding a media database and emphasizing the feature in their U.S. marketing, they were successful enough to gain a solid customer base in the U.S., which led to their acquisition by a U.S.-based company.
4. Expand your customer service hours to relevant time zones
A common challenge of global expansion is dealing with time zone differences. The customers you gain in new markets deserve access to responsive customer service just as much as those in your home country. Not providing it could put your reputation at risk.
To make sure you can accommodate the needs of all your customers, expand your customer service hours to include those relevant to new markets. You may also need to seek out staff who fluently speak the languages common to new markets.
5. Develop standardized brand guidelines to share across international teams
While incorporating changes to accommodate the local language and culture are likely necessary, you still want to develop a positive, consistent brand reputation across all markets. To achieve that, define the brand attributes you want to stay the same across all markets.
Develop clear branding guidelines, and share them with all your employees and partners. That way, they understand the overarching visual style and voice to stick with. As you build international brand awareness, your business will stay recognizable across markets.
6. Find the right localization partner
Getting global business expansion right requires expert knowledge, research, and investment of time and money. There’s one main shortcut that can help you fast track your global expansion approach without sacrificing your goals: finding the right localization partner.
Regardless of the strategy and markets you prioritize, global expansion will require an investment in some degree of translation and localization. A successful localization partner will have in-market experts who understand the cultural nuances of each new market you pursue.
They will help you source skilled linguists to help you get your software product, global marketing campaigns and training assets ready for your new customer base. Investing in a reputable translation partner will set you up for global success.
Global business expansion done right
Expanding globally gives you access to many new potential customers, which can lead to new revenue streams. But for global expansion to pay off, you have to choose the best strategy and take the right steps to be successful in each new market.
You don’t have to do it alone. Acclaro’s localization experts have decades of experience guiding global brands toward successful global expansion. Growing globally is hard, but it’s a lot easier with the right partner. Get in touch to discuss the next steps to grow your business by going international.
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