Ready to Expand to Global Markets?
Ready to Expand to Global Markets? Here are 10 Tips for Success
Increasingly, American businesses are seeking to expand their operations to foreign markets overseas.
Global expansion allows opportunities for increased sales and revenue, but is also accompanied by considerable risk if not well-researched. Entering unknown markets can be rife with challenges, especially for companies who have not previously made a foray outside of the country.
By following these ten simple tips, you will avoid the common pitfalls associated with global expansion and increase your chances of success in the international marketplace.
1. Research Your Market Carefully
Many pitfalls of global expansion can be avoided with simple research.
Knowing the particulars of the country or region in which you are attempting to penetrate the market can go a great distance to improving the likelihood of success. For example, a would-be exporter of construction equipment needs to be attuned to local construction practices, geography, and other competitors within this marketplace.
If your product may offend religious or cultural sensibilities, there is an additional layer of research that must be completed. Even products that seem innocuous in the United States may have cultural considerations in other regions of the globe. Most of all, there is one central question to be answered: Is there a local need for this product or service? Why does it not exist already? Who will be purchasing it? Understanding the local market and its intricacies is central to success.
2. Identify Barriers to Expansion
Identifying barriers to international expansion should come naturally from careful research of the intended market.
Barriers to expansion could include lack of local market need, difficulty in obtaining supplies or labor, or inadequate infrastructure. Perhaps the largest barrier is simply a lack of local demand for your product or service — a consideration that should be revealed early in the research process.
3. Meet Global Needs
The most important aspect of global expansion is ensuring an adequate need for your product or service in the area in which you are attempting to expand. Without this, your business is destined to fail.
The lack of apparent need for your product or service does not necessarily mean you will be unable to expand into a specific country, however. Instead, it may mean an increased need for information and marketing campaigns to increase awareness within the population. This can be carried out in different ways that must be tailored to the intended marketplace. For instance, in India, many foreign companies have succeeded in promoting their products through paid product placement in Bollywood films. This is an example of culturally-relevant marketing that has succeeded internationally.
4. Develop Local Expertise
The success or failure of your international expansion will be dependent on how well you know your market. There are various ways to do this.
A business might hire local marketing firms or conduct focus groups with local participants to adjust product flavors to local preferences.
Many businesses hire local individual employees who are experienced in their field to ensure the appropriateness and relevance of business decisions being made.
5. Learn from Others’ Successes
Are there businesses that have already expanded into your intended market and experienced measurable success? If so, they might be your key to success as well. Learning from others is an excellent way to avoid drawbacks and make gains quickly. If other businesses are public about the challenges they faced in entering the market, this is something you can learn from.
6. Know Your Competition
Of course, essential to expanding your business to any new market is understanding your competitors. Are there local businesses who do the same work that you do? If so, consider what value you can add that they do not, and how your product or service can stand out from those already on offer.
Are there other international competitors who have yet to expand into the region? If so, it may be worth investigating the rationale for not doing so.
7. Know the Rules
Regardless of the country or region, there will be regulations your company is required to meet. A thorough understanding of the rules and regulations that apply to your product or service and the structure of taxes, duties, and fees you are expected to pay will prevent unpleasant surprises later.
One example of this is language requirements for labeling. Many American companies initially expand their operations internationally by moving into the Canadian market and are surprised to discover that bilingual English and French labeling is a strict requirement for most products sold in the country.
Another common challenge in certain international markets is that of prohibited ingredients. Some countries — including Canada, Western Europe, and much of Scandinavia — have stricter regulations than the United States regarding food additives and industrial chemical exposures. If you are operating in an industry where these rules may apply, it is worth reviewing a list of banned or restricted ingredients and quantities to see how this may impact you.
8. Test the Market
Before a full-blown expansion of operations, it is a worthwhile endeavor to test your product or service on a small portion of the intended market.
A common way to do this is through focus groups or in-depth interviews. These strategies can help you understand what will work and what won’t in intended markets, and develop a nuanced understanding of how the local population will perceive your product or service.
Even without having end users try and review your product or service, surveys can help your business develop a thorough understanding of the needs, tastes, and preferences of your intended market, as well as how much they might be willing to pay for your product.
9. Adapt Your Product or Service
Many products exported internationally will need to be adjusted or changed for local tastes or the realities of sales in the region. Food products being sold in the Middle East, for instance, commonly avoid additives derived from pork as these are not accepted within the dominant religion of the region, and in some countries, they may be banned for import altogether.
As another example, products that need to be kept cool may need to be transported in Styrofoam boxes or coolers and have their prices adjusted accordingly for the international market.
10. Foster Employee Competency
To truly succeed in international markets, your employee base must have the skills and competencies required to operate in global business.
Some of these may include foreign language skills, cultural sensitivity, and tactful negotiation capabilities. Hiring employees who have these skills or developing them in the employees you already have is essential to driving the success of global expansion. By following these tips, your business will increase its likelihood of success in expanding in the global marketplace.
Guest post by Cory Levins
Cory Levins serves as the Director of Business Development for Air Sea Containers. Cory oversees the development and implementation of ASC’s internal and external marketing program, driving revenue and profits from the Miami FL headquarters