International expansionpromises multiple business benefits. Diversification of revenue streams, larger market share, and access to global resources are just a few. International expansion requires significant investments in financial resources, human capital, and time. In addition, it can be difficult to navigate different cultural and legal frameworks.
Fortunately, you can minimize risks and maximize benefits by developing the right strategy. In this post, we detail two key steps for entering an international market.
1. Check your company’s internal readiness for international expansion
The first step in any business endeavor is determining the state of your organization and its resources—and entering foreign markets is no exception. It requires a thorough assessment of available resources, such as financial capital, human resources, and technology. The goal is to ensure that a company is prepared to tackle international growth risks and challenges.
The following four questions will help you determine whether your organization is ready to expand internationally.
Are key company leaders on board?
You need executive buy-in to expand internationally. Without it, you won’t have access to resources and funding. Even with senior leadership support, you may need outside expertise to ensure the process runs smoothly. External advisors can help you navigate complex regulations, cultural norms, and language barriers.
A dedicated executive can also help you manage international business. For instance, if a company has operations in more than one country, the CEO might appoint a Chief International Officer. Otherwise, the CEO may be overburdened with managing operations domestically and abroad.
Does your workforce need upskilling or additional training to enter another market?
Conduct an audit of your current workforce to evaluate their existing skills and identify training areas you need to address. From there, you can develop a training plan to teach the skills that can help your workforce prepare the company to enter the target market. Your sales team may benefit from training on sales best practices in that locale and your engineers may need training on local industry standards.
Do you have adequate international marketing, sales, and other human resources?
International expansion requires significant investment in marketing, sales, and other human resources such as customer service, accounting, and legal teams. As you evaluate your current team, look for any staffing gaps that may arise. Then you can create a plan to hire qualified personnel or outsource certain tasks.
Consider hiring employees with experience in the target market or recruiting local partners to help you navigate cultural nuances. For instance, you may want to hire a Human Resources Outsourcing (HRO) firm to ensure local workplace compliance.
Are your products or services well-suited to the market you want to enter?
There’s no one-size-fits-all product or service for every market. Before entering another locale, consider the following questions:
Will your products or services appeal to local buyers? Your success or failure depends on how well you understand the target market’s needs and preferences. eBay, for example, failed in China because Chinese consumers preferred fixed-price sales to online auctions. The company’s business model simply didn’t fit the market. To avoid the same fate, you need to do extensive market research beforehand.
Can you stand out from the competition in your target market? You need a unique selling point (USP) to attract local customers, especially if your competitors have already gained a foothold. For example, Spotify grew in popularity in the U.S. due to its personalized Discovery Weekly and Release Radar playlists. This sets it apart from Apple Music and Amazon Music.
Will you need to adjust price points? Different markets have different purchasing power. What may be affordable in one market may be too expensive in another. When setting prices, keep your target customers and competitors in mind. This will ensure your competitiveness.
Will you need to localize your offering? Some degree of localization is necessary—even if you take astandardized approach to an international product launch. As you conduct research, consider how to adapt your offering to ensure market fit. Aglocalization strategy may work if your product or service can be standardized. Otherwise, you’ll likely need to localize multiple elements such as the design and messaging to give it a local look and feel.
2. Develop a market entry strategy
Global expansion requires careful planning and forethought. Here are four key steps to follow when developing a market entry strategy.
Set clear goals
This will help you define the objectives of the market entry and ensure resource efficiency. As you create a plan, include:
Sales, revenue, and budgetary goals
Products or services to provide
Major action items and timelines
Conduct extensive market research to gain insights into the new locale
You want to choose a market where your product or service is most likely to succeed. To do so, you need to research the following:
Total market size
Direct and indirect competitors
Your unique value proposition in the market
Barriers such as local regulations and legal requirements
This information will help you evaluate how your offering fits into the existing business landscape. You can also use it todevelop a localization strategy to tailor the product or service to meet local needs and cultural preferences.
Determine the most effective mode of entry
There are several ways to enter a new market. The most common include:
The right method(s) for you depend on your budget, client base and the type of products you sell. You may find that a blend of channels is your best bet to succeed internationally. For example, a SaaS company that requires significant pre-sales support might combine online marketing, local partnerships, and direct sales.
Factor in financing and insurance costs
To avoid exhausting your working capital, consider financing the venture or seeking investments. This will allow you to spread the cost over a period of time and limit your debt burden. You’ll also be able to make larger investments, such as purchasing equipment or hiring staff, which will help you scale quickly.
Don’t forget about insurance to protect against contract cancellations, shipping losses, non-paying customers, and other potential risks. This will increase your financial security and keep your working capital ratio in check.
Key takeaways: Cover your bases when entering international markets
As you can see, international expansion requires thorough research and planning. To sum up, you should:
Ensure leadership buy-in and accountability for expansion activities
Secure financial resources, business infrastructure, and personnel to support expansion
Research target markets in depth
Develop a market entry plan with well-defined goals and KPIs
Measure results and adjust your plan to meet goals
Following these steps will help you ensure your plan is on track and achieving its goals.
Enter the global market with confidence
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