Developing an International Expansion Strategy
When your company is ready to expand its business activities overseas, having the right frameworks and resources for a solid establishment is essential. Just as it’s important for soldiers on a battlefield to have military strategies, so also, it’s important for businesses launching into the international market to have a firm strategy.
You need to settle down and carefully prepare a detailed strategy and framework for global expansion. This is because an international expansion strategy gives your business bragging rights, quick growth, firm structure, profitability, sustainability, business efficiency, increased revenue, innovative and diversified talents, etc when marketing internationally. In this guide, you’ll find what you need to consider if you are thinking about going global.
International Expansion Strategy
Global expansion strategies simply refer to the strategic ways by which businesses are expanded abroad. They are corporate, detailed, and multifaceted plans and strategies used in launching a business in global markets, recruiting foreign employees, and setting up thriving business activity. As you’re expanding internationally, these are key factors and areas that will guide you to structure your business like other successful international companies:
- Organizational structuring and models: detailed internal auditing, action plan localization, roadmap development, partnership, administrative operations, and pattern of services, etc.
- Financial analysis: marketing strategies, budgeting analysis, market and business analysis, competitive study, etc.
- Sustainability: business duration, feasibility study, growth rate, customer behavior, price analysis, KPIs, etc.
- Mode of Operation: remote activities, established physical structures, compliance workers; recruitment, etc.
Global expansion strategies involve the complete outlining of foreign operational plans and strategies which includes growth strategies, value offering, branding, marketing analysis, etc. Having this in mind, companies that should go global must understand the best practices that are beneficial for international expansion.
Best practices of International Expansion and Tips
When you are confident that your company is ready to expand globally, you must equip yourself with the right knowledge. You need strategic roadmaps to achieve success in foreign nations. We’ve outlined several tips and advice for you from businesses around the world with global expansion experiences. These are some of the tips we’ve collated:
Find the right talent
When expanding internationally, getting talents that are suitable for your business is an essential activity. Overseas expansion does not require you to necessarily relocate talents from your home country to your new branches abroad. You might indeed need some of the workers in your home country to supervise progress, and conduct training in your international entities, but then real growth and expansion need the contribution of local talents from your new market. Thus, you must source and recruit talents that well-versed and deeply engaged in the knowledge, culture, and environment of your targeted countries. The right talents for your company must be people that believe in your business overview and have developed deep interest and passion in your activities. They give you strong knowledge, credibility, and trust among natives in the market. If you’re also searching for expertise for your business, locating the right talent is important.
When entering a foreign market for the first time, avoid making assumptions and dwelling on substantial experiences, employ talents that solid experiences in carrying out businesses in the new market. For instance, let’s assume your company is marketing hamburgers in the U.S and you want to move to West Africa, you need to recruit local talents from that region that will help you to understand the culture, believe in the perks and goal of your businesses, and help you identify the right locations where your business can thrive. Nevertheless, there are different reasons why international businesses need to employ the right talents. These include:
- Introducing products to a foreign market
- Establishing a local branch
- Seeking innovation and diversity
- Corporate reorganization, etc.
Interestingly, there are several ways in which companies going global can source the right talents for their business. However, employing the services of an Employer of Record like WeHireGlobally is the best choice due to the 100% efficiency and compliance they provide.
Remember to Audit
When solving the puzzle of how to start an international business, internal auditing is one of the important strategies you must pay attention to. An internal business audit simply refers to an objective examination of a company’s business to increase the worth, and efficiency of its operations. To expand business overseas, you’re expected to implement internal auditing to your business strategies in examining and enhancing the significance of corporate administration, risk mitigation, and control. This process provides you with the right interpretation and analysis to perfectly understand your business operations, and how they can be used in other countries. Internal auditing avails your business with the opportunity of developing action plans, visualizing every detail from your corporate administration and governance to market output just before launching into starting a business in a new market.
Just as it’s almost impossible to use the same methodology for making coffee to make ice cream, so also, it’s difficult replicating the business process that is working in your home country in another country. Thus, all operational units, business activities, and personnel needed to be examined, analyzed, and localized to make them effective and relevant in foreign markets. You can carry out the following internal auditing expand business abroad:
- Identification and classification of targeted customers through market segmentation
- Examination of your products and services, and their acceptance through gap analysis
- Aligning the value of your products and services to create good perceptions among foreign customers
- Study the financial outlook of your targeted market using SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis.
Match your business model with your mode of entry
Your business model is exactly the blueprint on which your business is established and operated in a particular market. These models are flexible and can easily be changed over time whenever there is a call for improvement and innovation. Also, business models are functionally based on time, business and location.
Therefore, a successful international business expansion strategy requires a suitable business model that corresponds to the projected value of the foreign market and your resources for expanding there. Furthermore, when expanding internationally, you must design your business model to suit the structure and culture of the foreign market. For instance, the advertisement strategies for steaks in the U.S might not work in vegetarian Australia. You will need an advertising strategy that suits Australia’s market structure and its vegetable cultures. Thus, having a good strategy that will match your business model with your mode of entry will successfully help you in expanding internationally.
Consider the right infrastructure
While providing answers to the question “how to start an international business”, it’s important that you have, acquire, and consider the right infrastructures and systems. Having the appropriate systems and resources on the ground will help you to successfully execute international expansion.
To effectively determine and design the right infrastructure for your company, you must consider and provide answers to the following questions to position your international businesses within the right standards:
- Does your company have the needed structural and financial resources?
- Are you capable of setting up the technological and technical infrastructures and frameworks?
- Do you have the required resources to handle compliance alone?
- Can your staff coordinate and carry out your strategic plans remotely?
- Can you observe all the required obligations and liabilities?
- Can your team handle and manage the pool of your existing and new customers?
Get the impact of any new ideas
Moving to foreign countries to expand your business will require you to be collaborative, flexible opened to new ideas and solutions. Adopting the “openness to new ideas” strategy will give your business a new outlook, improve products and services, enhance efficiency, etc. You must be ready to accept and induct the solutions suggested to you by your foreign staff and partners. The ideas, solutions, and innovations that are applicable in America might not be applicable in Africa. Considering the impact of the new ideas and being receptive to them is an important strategy you must inculcate while expanding internationally.
Diversify market presence
Most of the successful international companies have something common, and that’s “diversification”. Diversification simply entails exploring other markets (products and services) locally or internationally. It gives businesses the power to operate in different markets at the same time. Businesses don’t have to depend on one market to operate, diversification has made way for multiple market expansions in an easy manner. Diversification will avail your business an easy flow to your identity market in the new market. Efficient strategizing of diversification will thus allow companies to effectively explore foreign markets.
Alter your customer support
One of the deciding factors for the success of a business is the credibility and responsiveness of its customer service. Just having good products and services alongside a good marketing strategy is not enough to sustain your customers. The efficiency of customer service always has a great impact on the sustainability and growth of your customers.
Developing strategies that will support your customers in the new market is an important step you must consider during global expansion strategizing. The support and strategies initiated on your existing pool of customers might not work on your new customers. The existing and new customer base have different identities, languages cultures, geographical location, time zone, etc. Thus, you must alter and restructure your customer service to suit your new market. You must ensure that your customer service support is strong, easily accessible, and quick in response. They must understand the business environment, business model, products and services, targeted customers, culture, etc.
Cultural difference is a very essential factor, every company going global must pay attention to. No matter the proximity of where you’re expanding to, you will always be faced with significant differences in culture and tradition. These are some of the options you can explore in managing the cultural differences that might showcase while expanding internationally:
- Localization of your products and services to fit in with foreign culture and language.
- Branding and packaging your products relative to the foreign culture
- Labeling your products and services according to the market’s local language
- Employ the services of talents that are versed with the foreign culture
- Rollout translation and marketing roles to external organizations and/or individuals
Why does Business expand overseas?
The rise in globalization, technological advancement, and diversification have made overseas expansion is a necessity for most companies. The increase in international business opportunities has seriously opened numerous channels for companies to go global. However, it’s important to know, understand and review the reasons for your company’s international expansion to avoid market pitfalls and ensure successful growth. These are some of the popular reasons why companies expand globally:
- Hire skilled and innovative team
- Explore specialized experts’ community
- Source right talents
- Increase in market demand
- Products’ lifecycle and sales extension
- Market Diversification
- Business Growth
- International Interest in your business
- Expanded customer base
Overseas expansion challenges to avoid
As amazing as global expansion is, there are several challenges companies face in entering global markets. Challenges of international business expansion can come in different ways but then, the implementation of solid strategies will help in overcoming the associated impediments. Some of the impediments affecting global expansion include regulatory and legal compliance, testing and quality assurance, functional infrastructure, and lack of data-backed decision-making.
Regulatory and Legal Compliance
Just as the saying, “behave like the Romans in Rome”, so also is compliance in foreign nations. When you’re moving your businesses across the globe, staying compliant is one of the potential obstacles you will encounter. You must ensure that your expansion strategies and business operations do not violate the local laws. You need to learn, understand, master, and observe all regulations and obligations. Compliance is needed in aspects like; managing taxes and payroll, hiring local talents, establishing a local presence, business and market standards, registration and licensing, etc.
As you can see, regulatory and legal compliance can impede overseas expansion due to its lengthy and expensive process. However, it’s needless to heap all these impediments on your company when you can simply explore the services of an Employer of Record like WeHireGlobally. EOR will lessen the establishment and expansion time, reduce the resources in managing payroll & taxes, ensure the observance of all regulatory and legal obligations, etc. EOR is not expensive, they are fast and 100% compliant. Partner with an EOR such as WeHireGlobally while expanding your business overseas to mitigate risks and eliminate compliance penalties.
Testing and Quality Assurance
During your international expansion planning, the feasibility study of your targeted customers and the acceptance of your products and services are compulsory during internal auditing. This study, however, gives your business a safe landing and smooth introduction to the new market. It will allow you to easily test your products and services among your target audience.
However, the process of testing your products in a new market is very stressful, risky, expensive, time-consuming, etc. For Instance, your product labeling might have another interpretation, or the features on your services might not be accepted. Instead of trying to patch the problems as a result of testing, you should consider localizing your products and services. Ensure that you structure your products and services for localization rather than testing when expanding internationally. Localization will make your products and services fit into the new market directly, and will be readily accepted. This gives your products and services quality assurance relative to the foreign market standards.
Establishing a local subsidiary in the new market is a great way of stabilizing your presence internationally. An onsite presence had fluidity and a smooth ride to your business processing overseas. It avails you the opportunity to easily perform administrative and management tasks in a structured environment. However, developing functional infrastructures abroad has some potential risks. Undergoing the process of business registration, licensing, and statutory compliances, etc is expensive and time-consuming, as it could take 6-24 months in completing the whole process. Overcoming this impediment is possible with the solutions of an Employer of Record (EOR). EOR has already established themselves as registered entities and they have the right infrastructures for establishment. Working with an EOR/International PEO like WeHireGlobally will help your company to mitigate all risks and infrastructural challenges that are associated with the whole process.
Lack of Data-Backed Decision-Making
Data is one of the strongholds of any business today. It is considered the next “oil” in the global market. Data help businesses in making decisions, strategizing, forecasting, check and balance, performance improvement, etc. During global expansion, the proper and efficient use of data in making plans and setting goals is essential. Oftentimes, companies fail to follow the available data analysis to the latter. Companies set goals and targets with data but they fall out of the data’s significance in the long-run due to a lack of data-driven models.
Companies going global must adopt a data-driven model in creating metric-workflow for all units and activities. Data-driven models will enhance the efficiency of target setting, progress and performance measurement, conducting regular analysis, etc. it reduces processing cost and helps in increasing the interpretation of data. Decision-making on market improvement and growth will be made easy with a data-driven metric-workflow.
Are you ready for an international expansion?
This is an important question every company expanding internationally or making plans to expand internationally must provide answers to. The outlined points below will serve as a guide in evaluating your decision and providing answers to the question:
- Outline your driving force
- Define your “why”
- Define your administrative and financial roadmap
- Do you have the products and services that will thrive internationally?
- Can you handle the time and monetary input?
- How long are you planning to stay global, short-term, or long-term?
- Can you manage the potential increase in the customer?
Developing an International Expansion Strategy
International expansion strategies are corporate, detailed, and multifaceted plans and strategies used in launching a business in global markets, recruiting foreign employees, and setting up thriving business activity.
Expansion strategies for companies going global include internal auditing, product and services localization, recruiting local talents, managing cultural differences, staying compliant with an Employer of Record, localize and efficient customer service, partnership, etc.
Developing an International business expansion strategy involves evaluating your readiness, knowing your motive, conducting market and customer analysis, innovation, partnerships, understanding competitors, getting a team of experts, consolidating resources, effective documentation, etc.