Whether your company is just starting to go global or looking to expand into additional markets, success doesn’t happen by accident. You need the right plan to make sure your organization meets its business goals. That’s why developing a globalization strategy is crucial to your efforts.
What is a globalization strategy?
A globalization strategy is the blueprint to expand into new international markets. The right strategy will help you navigate the challenges of doing business in locales with different languages, cultures, customs, employment practices, laws, and regulations.
It will position your company to reap the significant benefits of global expansion, including a larger customer base and talent pool, access to new technologies and suppliers, lower manufacturing costs, and greater revenues and profits.
What are the different types of globalization strategies?
As you develop your plans for global expansion, consider these different approaches:
Companies pursuing an international strategy sell their products or services in global markets without making substantial changes to their offerings, pricing, or operations. They maintain key offices in their home country and standardize how they do business across their markets.
An international strategy is an extension of the company’s domestic strategy and is often chosen:
- As the first approach to globalization when a company is just beginning to expand into international markets
- If the appeal of the brand comes from the company’s home country, such as the quintessentially American motorcycle brand Harley Davidson
With a global strategy, companies offer the same products and services across all of their markets with minimal changes. They are focused on creating efficiencies that will lower costs and allow them to compete on pricing rather than tailoring their offerings to meet local requirements.
These businesses are highly centralized and are sometimes known as following the hub-and-spoke model. Corporate headquarters make most decisions, which subsidiaries then implement. Tech giant Microsoft and pharma companies such as Pfizer are examples of companies that employ a global strategy.
A multidomestic strategy is the opposite of a global strategy. Multidomestic companies focus on meeting the specific needs and preferences of local customers with highly tailored products or services, marketing materials, strategy, and customer service.
These businesses have a decentralized structure, with headquarters taking a hands-off approach, leaving subsidiaries to operate with a great deal of autonomy. A good example of a multidomestic company is Nestlé, which operates in 188 countries and owns more than 2,000 brands.
A transnational strategy blends elements of global and multidomestic strategies. Transnational companies aim to be highly responsive to the needs and preferences of local markets while also reaping the benefits of global integration.
They strike a balance by creating efficiencies upstream in the value chain—in supply sourcing and manufacturing, for instance—and adapting downstream activities like distribution, sales, marketing, and customer service for each individual market.
Transnational organizations typically have a headquarters that coordinates operations and works collaboratively with its foreign subsidiaries. McDonald’s is an example of a transnational company—its core menu is the same everywhere in the world, but there are also offerings tailored for the tastes of each individual market.
How to build your globalization strategy
Doing your due diligence up front is key for developing a winning globalization strategy. Here are some tips to keep in mind as you get started:
Analyze your company, brand, and target markets
Before you begin formulating your globalization strategy, it’s important to take stock of where your business is now.
Use tools to gain more insight
SWOT analysis—SWOT stands for strengths, weaknesses, opportunities, and threats. It examines both internal and external factors to help you understand what your business does best and also what weaknesses exist that your competitors may exploit
PESTLE analysis—This tool evaluates key external factors: political, economic, sociological, technological, legal, and environmental. It gives you a big-picture view of the business landscape and conditions that may affect your company. PESTLE analysis can also help you identify strengths and weaknesses for your SWOT analysis
Conduct market research
Market research helps provide a thorough understanding of new markets. You need insights into customer preferences and purchasing decisions, as well as the ways cultural practices, customs, and norms may differ from your domestic market. Carefully researching your target markets can help you avoid costly mistakes that may set back your globalization efforts.
Choose the right type of global strategy for your business
Once you’ve assessed your company’s target markets, you’ll have a clear understanding of how you can compete and succeed, whether it’s on price or market fit or a combination of the two. This will point you toward the globalization strategy that’s right for your organization.
Put your globalization strategy into action
Now that your strategy has been formulated, you’re ready to start making plans for how you’ll execute it across the different departments and operations involved in your global expansion. This could include everything from human resources to marketing to product development.
4 best practices for a winning globalization strategy
Here are some tips that can help you successfully execute your strategy:
Get your entire organization involved
To meet your expansion goals, you need everyone in your company at every level, from the C-suite on down, to embrace your globalization strategy and take an active role in implementing it. Your company may find it helpful to identify an individual, team, or department to head up the effort, but everyone who works for your company should consider it their responsibility to help your global expansion succeed.
Focus on localization
In order for your company’s offerings and marketing to truly resonate with customers in your new global markets, you need to speak their language and understand their culture. A survey conducted in 29 countries found that 76% of consumers prefer to buy products with information in their own language.
Similarly, nearly two-thirds of business buyers would pay more for a localized product and purchasing experience. So, make localization a priority and start early in the process, during product development, for instance. For your localization strategy to deliver real business benefits, it can’t be an afterthought.
Collaborate with partners in your target markets
No one understands a market better than the people who live there, so make sure you’re tapping into local customers, suppliers, employees, and other partners. They can offer valuable insights to help you finetune your globalization strategy.
Keep evolving your strategy
Doing business in a market gives you valuable data. As new information becomes available and as market conditions shift, make sure you continually adapt your strategy to keep up with all the latest developments.
Create your globalization strategy with help from an experienced partner
As you can see, developing the right globalization strategy for your business is absolutely critical for meeting your expansion goals. To do it successfully, you need a strategic localization partner that can give you deep insights into your target markets and help you create lasting customer relationships.
At Acclaro, we partner with you throughout the entire process to develop and implement your strategy. We’ve helped some of the world’s top brands create a blueprint for global success. Contact us today to learn how we can help your company build a winning globalization strategy.