With international borders becoming less of a barrier to entry, companies are increasingly looking beyond familiar local markets for growth opportunities. Recent research shows that 28% of U.K. domestic businesses plan to expand globally within the next three years. Meanwhile, businesses in the U.S., Spain, and Poland are also teeing up for international growth.
These moves are at the highest level observed in the past two years, and this surge in global ambition reflects a broader shift in how organizations approach market expansion. Take Just Eat, for example. The Danish food delivery platform found unexpected success when it relocated to the U.K. in 2006, transforming from a local startup into a global household name operating across 23 countries.
Despite the risks of international expansion, companies that venture into nontraditional regions leverage unique competitive advantages. Access to diverse talent pools and untapped markets can accelerate business expansion far beyond domestic limitations. Additionally, spreading operations across different geopolitical and economic environments helps shield businesses from region-specific challenges such as political instability or market saturation.
Argentina presents a compelling example of untapped potential, with its e-commerce market growing at an unprecedented rate of 29% in 2024. Savvy business leaders recognize that unconventional market expansion creates opportunities for innovation and adaptation. But how are businesses expanding into global markets? Here, we look at best practices and examples of companies tapping into unlikely international markets.
Best practices for expanding into unexpected markets
Expanding into unexpected markets requires a strategic blend of thorough preparation, cultural sensitivity, and operational flexibility. Below are several best practices that globally expanding businesses follow.
1. Market research and feasibility analysis
A comprehensive market analysis forms the foundation of strategic global expansion. Market feasibility studies should evaluate not just surface-level metrics but also deeper cultural and economic indicators. Research shows that over 40% of startups fail because they misunderstand their target markets.
Companies must conduct thorough demand analyses, competitive landscape evaluations, and supply chain viability assessments. This process should include studying regional consumer behavior patterns and analyzing the economic stability of the target market.
2. Cultural and consumer adaptation
Successful adaptation requires more than simple translation—it demands a fundamental understanding of local customs and preferences. For example, KFC’s success in South Africa resulted from creating limited-edition buckets featuring local art that resonated with the community.
Businesses can benefit by investing in cross-cultural training programs and working with local experts to navigate cultural nuances effectively. The goal is to cultivate authentic connections with the local market while maintaining brand integrity.
3. Regulatory and legal compliance
Navigating global compliance requires meticulous attention to local regulations and legal frameworks. Non-compliance can result in significant penalties. For instance, GDPR violations can lead to fines of up to €20 million or 4% of global turnover.
International businesses must establish compliance frameworks that address everything from labor laws to tax regulations. This includes developing clear policies for employee management, financial reporting, and data protection that align with local requirements.
4. Business model adaptation
Flexibility in business model design is crucial for success in unexpected markets. Companies must be willing to adjust their operational structures and revenue models to match local market conditions. Netflix exemplifies this approach by customizing its content library and pricing strategies for different regions.
The key is to maintain core business values while adapting delivery methods and customer engagement strategies to local preferences and infrastructure capabilities.
5. Leveraging technology for expansion
Technology is a crucial enabler of international expansion. Companies leveraging cloud computing have seen a 19% growth increase in international markets over the past five years. Additionally, AI-driven localization tools can significantly enhance market adaptation efforts, from content analysis to customer engagement.
In fact, cross-border e-commerce transactions are projected to grow by 107% globally over the next three years, while domestic e-commerce will only increase by 48%. Implementing digital solutions can help overcome traditional barriers to entry and accelerate market penetration.
Examples of businesses expanding into unlikely markets
Examining real-world examples provides valuable insights into successful market expansion strategies. These cases demonstrate how companies have turned unconventional opportunities into high-return business investments.
Zoona’s financial innovation in Africa
Zoona transformed financial services in Zambia by introducing basic banking through distinctive lime-green booths across African cities. Despite operating in a country where over 60% of the population lives in poverty, the company successfully built a trusted money transfer business serving more than one million customers.
Zoona’s success stems from its focus on reliability and safety rather than competing solely on price—proving that even in low-income markets, customers will pay for trustworthy services.
Samsung’s cultural immersion strategy
Samsung transformed itself from a low-cost manufacturer into a global leader through an innovative regional specialist program. The company sent specialists to various countries where they became fluent in local languages and established deep connections with prominent figures.
In Thailand, one specialist’s immersion led to breakthrough partnerships, including recruiting a Hitachi vice president when Samsung was virtually unknown in the region. This approach helped Samsung introduce its electronics products to local elites and achieve rapid market penetration.
IKEA’s strategic entry into India
IKEA’s expansion into India represented a masterclass in market adaptation and regulatory navigation. The Swedish furniture giant spent nearly seven years studying the Indian market before opening its first store in Hyderabad in 2018. The company invested over $1.5 billion to comply with India’s strict FDI regulations, which required 30% local sourcing.
IKEA revolutionized its approach by creating smaller format stores in urban centers, partnering with local artisans, and developing India-specific products like masala boxes and pressure cookers. They even modified their iconic self-assembly model, offering assembly services to accommodate local preferences for ready-made furniture.
Shopify’s educational innovation
Ottawa-based Shopify addressed talent shortages by creating a unique “dev degree” program with Carlton University. The program combines traditional computer science education with practical work experience, covering student tuition while paying salaries.
Shopify’s innovative approach to talent development has achieved remarkable results, particularly in gender diversity, with 50% female participation compared to the industry average of under 20%.
Zola’s global solar solution
Zola took an unconventional approach to providing solar power in Africa by distributing its operations globally. The company developed products in Tanzania, conducted R&D in San Francisco, manufactured in Asia, managed operations from Amsterdam, and maintained distribution in Africa. This distributed model allowed them to access specialized expertise and resources from different regions while effectively serving off-grid communities.
Lessons from businesses that expanded in unfamiliar markets
The experiences of companies expanding into unexpected markets have yielded valuable insights for future business growth. Here are the key lessons learned from successful and failed international expansions:
- Cultural understanding is non-negotiable. Walmart’s exit from Germany after $1 billion in losses demonstrates how misreading cultural preferences can be costly. The company’s failure to recognize Germans’ preference for fresh meat over prepackaged options proved detrimental.
- Local talent integration is critical. Successful expansions often involve hiring local expertise. Innocent Drinks’ breakthrough in Austria came directly from employing local talent with market knowledge.
- Product adaptation is essential. Companies must balance global standardization with local preferences. Major global brands like McDonald’s, Coca-Cola, and Nike have successfully implemented transnational strategies by maintaining core products while adapting to local tastes.
- Long-term commitment matters. Netflix’s successful expansion to over 190 countries required significant investment in localization, including translation into more than 60 languages.
- Regulatory compliance planning. Before entering a market, companies need to fully understand local regulations. IKEA spent nearly seven years studying the Indian market before opening its first store, ensuring compliance with strict FDI regulations.
- Market research depth. CVS Health’s transformation from a pharmacy retailer to an integrated health solutions company succeeded through careful market analysis and strategic adjacency expansion, according to McKinsey.
- Digital strategy integration. Also highlighted by McKinsey is how Marcus by Goldman Sachs successfully entered the consumer banking space by launching a digital-first approach, attracting millions of customers and accumulating over $92 billion in deposits.
- Strategic partnerships. Successful companies often form local alliances rather than attempting solo market entry. This approach helps navigate cultural nuances and establish credibility faster.
Tap into new global markets with confidence
Velocity Global is a leading provider of global employment solutions that empower businesses to expand into unconventional markets with minimal risk and complexity. Its comprehensive Employer of Record (EOR) services spanning 185+ countries enable organizations to enter new markets up to 90% faster than local entity establishment while saving thousands in entity setup costs. Velocity Global serves as both a strategic partner and compliance expert, managing everything from local labor laws to tax regulations, allowing companies to focus on growth rather than administrative burdens. To learn more, get in touch today.
