Planning, crafting, and executing a global expansion strategy is rarely—if ever—a straight forward endeavor. With seemingly innumerable moving pieces, putting ideas into action can be an arduous task—particularly for small and emerging businesses; an expansion could be disruptive to current business activities. But, with the right research, planning, and vision, international development planning can lead to lucid understanding of your target market prior to implementation and can only bolster your international expansion efforts. Below we highlight the three phases of game-planning your international development.
Phase One: Why Expand?
Organizations have many different reasons for expanding globally. For some, it’s to improve service models or to reduce operating costs. But for many, it’s a chance to increase and diversify revenue streams. Understanding and articulating why your organization is expanding not only sets a shared vision of expansion efforts among all team members involved, but it also outlines parameters by which decisions will likely be made.
No international expansion is a single move from one location to another. As there are multiple reasons for enacting an expansion, there are also various modes of entry into a new market(s). However, each mode of entry will be highly dependent upon an organization’s reason(s) for expanding.
Phase Two: Market Analysis
This portion of the planning phase begins to reveal where and how your organization should expand. Companies that are looking to break into new markets should conduct extensive research into where market opportunity exists for selling a product. With a target market in mind, a company should perform a market segmentation analysis to better understand and determine if the product will be well-received by the target market. Preparing a product gap analysis against a local product may reveal a demand that remains to be filled by a local provider. Performing a SWOT analysis against competition will allow a business to glean a better understanding of whether or not its product may fare well in the local market. Ideally, the market will reveal a strong economy, equally strong infrastructure, and a promising customer base.
Considering the target market’s local talent pool is an integral factor in developing and enacting your expansion plan. Developing nations, such as Kenya and Nigeria, are emerging hotbeds for technology talent. In fact, many African nations are beginning to emerge as technology hubs, with over 400 tech hubs that provide a range of products and services from software to mobile money, and engineering to blockchain tech.
But beyond gaining an understanding of the talent pool, businesses would be wise to gain a clear understanding of their target country’s geopolitical landscape. Key considerations should include:
- Stability and economic policy
- Trade war participation
- Tax implications
- Is creating a tax-effective hub important?
- Operational impact of existing in the desired market
- What should take place in target market vs. what should remain at domestic HQ?
- Currency exposure
Phase Three: Execution
Once a business has completed all due diligence prior to expanding, it should then identify all resources required, including a sound budget, timeline, and expertise. Meeting with and evaluating multiple legal personnel, accountants, and consultants will provide a business with new perspectives on the local market, as well as provide an organization with a better understanding of local laws, tax information, and business norms.
Finding the right partner for your global expansion is crucial for ensuring your strategy’s execution meets your vision, understanding of the local market, and is agile so as to confront any unforeseen challenges that may present themselves at any leg of expansion. Reach out to Velocity Global today to learn more about how we can assist you with your global expansion.