When your company starts to think about international market expansion, the first thing you’ll pull together is a strategy. This strategy shouldn’t be a rehashing of your current business plan for local operations. While it’s important to keep all locations tied to your headquarters, you should have a separate, tailored strategy for global growth.
Before you start pulling together your international market expansion strategy, ask yourself, why is my company going overseas? If you can’t craft a solid response to this question, then it’s time to go back to the drawing board. Discover the real reasons your company is ready to expand into an international market and let those reasons inspire your strategy.
Pulling together a ready-to-go plan is imperative for companies. Without one, what seemed like a great idea becomes a failed and expensive strikeout. As operations start to fall apart, the company will have to exit their selected market either before they’ve had a chance to see their opportunities come to fruition, or after they’ve wasted enormous amounts of money from lack of planning.
Don’t fall into this trap. We’ll provide a few tips for you to start crafting a strategy and get your business overseas in a much better position than if you tried to wing it.
1. Partner Up During International Market Expansion
High-performing international businesses thrive through strong partnerships. Developing relationships with team members that have the first-hand experience in your target market is one of the biggest factors to your future success. Your company can tap into new customer pools, develop relationships with suppliers, and network more efficiently to beat out competitors from the onset.
For example, Apple developed a strategic partnership with China Mobile, the largest wireless network in the world, which helped the tech giant become the leading smartphone developer in China. In fact, this partnership was so successful that just one year after the deal was announced, Apple surpassed five local competitors that once dominated the marketplace.
2. International Market Expansion Takes Time
Chase conducted a survey of nearly 1,100 executives of mid-sized companies and more than 2,000 small business leaders across the country and it discovered that 73% planned to expand into new markets. Global expansion is enticing for many companies and may seem like the answer to drive new business quickly, but it’s a long-term investment that takes time to see positive ROI.
As an example, Economist Intelligence Unit surveyed 480 small and medium enterprises from 12 countries and found that 40% earned absolutely no revenue from international operations in the first year of operations. Five years later, 72% of those businesses expected to earn up to 50% of their revenue internationally.
Essentially, understand that expanding into international markets does have a lot of potential to help your company grow, but it’s a commitment. Global growth takes time and dedication from business leaders in order to really see the rewards. And if you’re patient, the rewards will be great.
3. Going Global Won’t Solve Your Local Problems
If your company is not performing to the standards you desire in your current market, it’s probably not wise to expand overseas. Many business owners think that taking their business into a new country will allow them to take a stale product and sell it to a new and excited market. It’s wise not to pursue international market expansion as a remedy for slower business growth domestically. Fix your local issues first before expanding into new markets. It’s too risky.
4. Test Your Target Market
Before diving headfirst into your new country by setting up a subsidiary, which is a huge investment, you need to see the demand by testing the market. You can test the market by using an agile approach to international growth. These methods include services like Foreign Subsidiary as a Service (FSaaS), which allows businesses to get a legal establishment in-country without setting up a foreign subsidiary.
Once you have a legal presence, you can work with your local partner to sell your product or services to new customers, join professional networking groups, and learn more about your competition. This test will help you determine if your product or service will succeed before taking the next steps towards a larger commitment.
5. Tap Into a New Talent Pool
International market expansion allows your company to hire new talent that can take operations to the next level. These talent pools can also contribute to your business’ competitive advantage overseas by helping you gain access to new customers. For example, when selling your product or service in your new market, a local salesperson is an effective way of producing new leads, building rapport with the market, and increasing revenue streams. Working with local talent is faster and cheaper than spending your budget on advertising that may fall flat.