Once a company has maximized its domestic market share, one strategy traditionally has been to venture outside local borders and to expand into the international sphere.
As communication networks and business technology continue to advance, there are more opportunities to expand without the extensive travel and legwork that used to be necessary. However, the logistics and differences in cultures can make it challenging to operate in foreign territories. Is it worth the efforts to go global? In today’s market do the rewards outweigh the risks?
In addition to gaining market share, there are many advantages to international expansion, such as diversification and gaining access to a wider pool of investors and international talent. Each company must do its own cost/benefit analysis to determine if a global move is right for them.
Understand Your Position
As the old saying goes “You won’t really know where you’re going until you understand where you are.” It is important to have a clear and current picture of where your company stands before you expand.
Just as if you were planning the merger, sale, or acquisition of your company, it is sometimes beneficial to bring a strategic consulting firm, such as Teneo in at an early stage. For example, an advisory firm such as Teneo’s firm can help you achieve an unbiased view of where you stand and help you to determine options for moving forward.
Does your company have what it takes to go global? One article published by Harvard Business School goes in-depth on the keys to being prepared for global success. A few of the qualities that were highlighted as key qualities of a successful business candidate for international expansion included flexibility, fortitude, and a clear vision.
Plan Your Strategy
Once you have determined that your business is ready to go global, it is still important to do further research, especially regarding your target markets. You can learn from case studies of large companies, such as Home Depot in China, and Walmart in Japan, that misunderstood their target markets resulting in unforeseen results.
Be Prepared to Play the Long Game
As mentioned above, fortitude is one of the key factors in deciding whether to expand locally. It can take numerous years to become successful, and taking a long-range view may be necessary. Readjustments may be necessary and a slow and steady approach that allows you to build relationships with local partners, as well as learning to understand local legislation and business processes is a safer way to proceed.