how can a company expand internationally

^{Select a Method for Expansion}

• Exporting: Many corporations starting to expand globally choose to export their products. Exporting works well for ecommerce, and allows a company to reach international customers without a physical presence. ...
• Licensing: Licensing works similarly to exporting. In this case, a company grants a license to a international business, allowing it to represent the company’s brand in their home market. ...
• Strategic partnerships: Also called an international joint venture, this strategy allows a corporation to partner with an existing global company. ...
• Subsidiaries: For a company looking for complete control over their international locations, establishing a subsidiary may be the answer. ...
• Multinational expansion: Multinational corporations build locations all over the globe. These companies may have production facilities, regional headquarters, sales outlets, and training facilities in many countries. ...

Why should companies export to other countries?

• The reason for your company to consider exporting is quite compelling; the following are few of the major advantages of exporting:
• Increased Sales and Profits. Selling goods and services to a market the company never had before boost sales and increases revenues. ...
• Enhance Domestic Competitiveness. ...

Why would a company want to expand abroad?

The first and most foremost reason for taking your business to another country is the opportunity for increased sales volume. There are literally billions of consumers abroad and surely not everyone who wants or needs your product/service has access to it.

Why expand your business globally?

In This Article

1. New markets. According to the U.S. ...
2. Diversification. Many businesses expand internationally to diversify their assets, an action that can protect a company’s bottom line against unforeseen events.
3. Access to talent. Another top benefit of going global is the opportunity to access to new talent pools. ...
4. Competitive advantage. ...
5. Foreign investment opportunities

What are the challenges of doing business globally?

• Cultural Features
• Supply Chain
• Talent Retaining
• Tax and Compliance
• Trending Regions to Expand
• Competition between Organizations in New Region
• How to Overcome the Challenges of Business Globalization with Global PEO What Challenges Companies Face When Going Global?

What are the five ways companies expand internationally?

There are numerous ways for companies to enter foreign markets, including exporting, importing, joint ventures, licensing and off-shore production.

What are the 3 strategies for international expansion?

3 Types of International Expansion Strategies to ConsiderLicensing Arrangements.Mergers and Acquisitions.Entity Set-up, PEO and EOR.

What are the four international business strategies?

Multinational corporations choose from among four basic international strategies: (1) international (2) multi-domestic, (3) global, and (4) transnational. These strategies vary depending on two pressures; 1) on emphasizing low cost and efficiency and 2) responding to the local culture and needs.

What are expansion strategies?

What is an Expansion Strategy? An expansion strategy is synonymous with a growth strategy. A firm seeks to achieve faster growth, compete, achieve higher profits, grow a brand, capitalize on economies of scale, have greater impact, or occupy a larger market share.

What are market expansion strategies?

A Market Expansion strategy is an approach that helps companies grow when they have already expanded as far as possible in their existing channels. This strategy's primary focus is to ensure that all of your current markets are already fulfilled and satisfied with your products and services as presented.

What are the steps in developing international strategies?

Set Goals for Your International Strategy. ... Identify Your Product/ Service. ... Research New Markets. ... Understand Your Competition. ... Plan Your Marketing Strategy. ... Plan Your International Organizational Structure. ... Determine Your Distribution Strategy. ... Assemble a Strategy Document.

What is an international strategy when is this type of strategy appropriate?

An international strategy is usually the first approach most businesses take with global expansion: exporting or importing goods and services while maintaining a head office or offices in their home country. Global expansion as a business doesn't have a one-size-fits-all approach.

What is the biggest shock for many when they’re expanding their companies overseas?

One of the biggest shocks for many when they’re expanding their companies overseas is the difference in how business is done. The pace of business across the globe varies significantly depending on where you are. If you’re currently based in the United States, you’re likely used to a very fast-paced business environment where employees are working long, hard hours. You may not ever talk to a business contact outside of the office or a business meeting.

Do you need to keep your branding consistent?

You already have branding, and if you’re planning to expand internationally, that branding is likely well-known in your industry. You need to keep your branding consistent even in your new market. While there is definitely room for flexibility depending on the cultural needs and norms, you should ensure that any branding you use is still recognizable as yours.

Why do governments want entrepreneurs to export goods?

Most governments want entrepreneurs to export goods, as it is good for trade deficits and the GDP. Do not be afraid to research opportunities within your own borders to expand outside of them.

How to minimize corporate risks?

Some countries have a reputation for frequent business litigation. Make sure you understand the legal market and gather a legal team which will minimize corporate risks. Be sure you follow the government rules in place for operating your industry within the country. Create localized commercial agreements and hire local counsel who is familiar with industry-specific regulations within your target market.

How to get people to buy your business?

You should be focused on building relationships rather than finding out how much someone will buy your business. Make an effort to get to know the people you speak to. If they speak another language, try to learn some phrases, and bring an interpreter if necessary. Understand local body language as well. Firm handshakes or a kiss on the cheek as a greeting might be standard in your country, but could be unusual or even offensive to another. Try to research professional demeanor in different countries before setting up meetings.

How to start a localized business?

Define short-, medium- and long-term goals. Establish metrics to measure your success over time. Analyze which business structure you want to utilize and develop a comprehensive and detailed budget. Prepare a proposed timeline and set deadlines for when you want goals to be met.

How to hire a local team?

It can be tempting to hire a wholly local team in your target location from scratch, or rely simply on the executives in place from your parent company – but both approaches can be a mistake. The best method is to use the best of both worlds. Use senior interim executives who are motivated, have specialized knowledge and understand the business as it is to create your management team. Once the interim leadership team is selected, focus on outsourcing leaders from the local business, who will help you establish a permanent leadership team.

What countries will have the Internet by 2020?

There are predictions that by 2020, emerging international markets will be the new global leaders, particularly Brazil, Russia, India, and China. The opportunity to communicate and trade with people around the world has never been so palpable.

How can fluctuations in the local market be offset?

Fluctuations in the local market can be offset by targeting international markets with different or opposite fluctuations, particularly if the locations are located in different hemispheres and thus experience different seasons.

How do multinational companies influence the world?

Multinational companies are one of the most influential factors in the global space. Once a firm reaches a multinational level, they have already had a lot of power, and every step they take affects the lives of countless people. These firms can influence, sometimes even manipulate the policies of states and nations to their advantage. When a company expands beyond the borders, they are also amassing greater wealth and power.

What is the final step of international expansion?

The final step of international expansion happens when it feels like you are doing business in your own country. By that time, you have essentially finished your global expansion process. It will take some time to grow and scale your business, but it will be worth the challenge and effort. Expanding your business overseas is also a great way to learn more about the cultures of the people there, and helps you understand how your business and products affect them. The more you grow, the more you will learn.

What is the main goal of SWOT?

Those are the four major aspects you should consider. The main goal of SWOT is to provide you with a basic foundation to build your strategy.

How do market researchers help?

A team of market researchers, however, can help you do the information gathering through various methods, such as surveys, interviews, or data collection from various sources on the Internet.

How many steps are there in market research?

Market research is a complex process. However, we can break down the process of market research into these 4 major steps.

When is it time to enter the market?

Once you have gathered enough information about the prospects of the market and understood your business thoroughly, it is time to enter the market. When developing an entry tactic, it is necessary to find a common point between the market’s needs and your company’s competitive advantage.

Is it easy to reach foreign customers?

However, in this day and age, it is so easy to reach foreign customers . Businesses can reach customers from all around the world without having to grow to a massive level. Thanks to the connectivity we have today, global expansion is much easier with a more transparent process.

Why do business owners want to expand internationally?

Not only does it open up the door to international travel and new experiences, but it also increases your number of potential customers — and, therefore, your potential revenue. Current events underscore how truly connected our world is.

How does international expansion affect business?

However, there are several ways that international expansion can compromise your core business model. For example: 1 Stretched resources: The biggest problem is typically stretched resources. It costs money and takes time to expand a business, and if you’re not careful, you could tap your resources before you’re able to get a foothold in a new country. This is especially true of ambitious young startups, which often collapse due to aggressive expansion. Spending too much money prematurely or funneling all your efforts into expansion can leave you with too little to work with. 2 Cultural changes: Operating in a new country may offer you substantial cultural challenges. You may not be able to sell the same products and services, or you may struggle to find the right fit for your team. If you make too many compromises here, it can completely change the landscape of your corporate operations. 3 Brand consistency: Similarly, your brand consistency becomes more difficult to maintain with greater space between bases of operations. Expanding internationally, that physical distance is enormous. You’ll have different leaders and segregated teams all vying for the same goals under the same umbrella, and this can make things incredibly complicated.

How to get around a gap analysis?

The way to get around this is through exhaustive due diligence. You’ll want to prepare a gap analysis for your target local market, as well as a SWOT analysis (evaluating the strengths, weaknesses, opportunities, and threats) for the new location. You’ll also want to look at the local competition. Is there truly an opportunity in expanding here, or would you be trying to fit a square peg into a round hole?

Why are stretched resources bad?

Stretched resources: The biggest problem is typically stretched resources. It costs money and takes time to expand a business, and if you’re not careful, you could tap your resources before you’re able to get a foothold in a new country. This is especially true of ambitious young startups, which often collapse due to aggressive expansion. Spending too much money prematurely or funneling all your efforts into expansion can leave you with too little to work with.

What happens if you spend too much money?

Spending too much money prematurely or funneling all your efforts into expansion can leave you with too little to work with. Cultural changes: Operating in a new country may offer you substantial cultural challenges.

How to overcome cultural barriers?

No matter what, you’re going to encounter cultural barriers, like language differences or strong value differences with the population in the new country, including your employees. To counteract this, you’ll need to come up with a cultural readiness plan. Research to anticipate the big cultural hurdles that could stand in the way of your company’s expansion, and hire people (like translators and cultural ambassadors) who can help you ease the transition.

How to create a team in a new country?

There are two common approaches when creating a team in a new country. In the first, executives try to build a new team entirely from scratch in the new country. In the second, executives try to bring a handful of existing people over permanently. Neither is efficient; in the first, you’ll struggle to communicate the values and expectations of your brand, and in the second, you won’t give team members in the new country a chance to develop on their own.

How to expand a company internationally?

A plan that outlines how to expand your corporation globally will take months of careful research and preparation to design. A clear strategy can assist you in communicating goals across teams and gather support from all departments. Your strategy should be lean and adaptive, able to prepare your company for the long-term future and plan for a variety of scenarios. Follow these 10 steps to create a data-backed, detail-oriented expansion strategy.

What are the challenges of expanding into international markets?

Differences in culture may change the way you market a product or the way you structure your corporate presence in a region. Also, each country you establish a presence in will have particular labor, tax, and licensing regulations you’ll need to meet. As with any new venture your company undertakes, you’ll also need to find an effective way to set goals and measure success.

What is global PEO?

A global PEO, or a professional employer organization, works as a co-employer when you operate in another country. A PEO allows an organization to expand without setting up a subsidiary. A true global PEO will have a physical presence in many countries, and so acts as your expert in doing business locally. PEOs have extensive legal, HR, tax, and accounting experience. They understand and follow country-specific regulations to help you mitigate risk.

How to align a product with a new market?

Aligning a product with a new market will take careful market research. You can combine government demographic data with independent research to learn about the consumers in a given country. You can study consumers’ perceptions of your competitors and cultural values. From there, create new market segments that reflect the local landscape. Differences in gender norms, religious preferences, and more can influence what is culturally-appropriate marketing. Understanding these beliefs can help you fine-tune your marketing strategy.

How does rewrapping products work?

Through localization, you can bypass barriers to product testing and domestic manufacturing. You get ultimate control over your products when you manufacture them using your existing supply chain. With culturally-appropriate packaging, you can target local consumers. Take the time to translate labels accurately and design impactful packaging for the environment. Since packaging can be redesigned and reprinted, you can make adjustments as you learn more about your market.

How to test and start in a new market?

Testing and starting in a new market requires agility and adaptability. Data-driven goals keep everyone on the same page about what defines success. Tracking these numbers let you find out immediately if efforts are not working as expected so you can change course. By keeping goals short-term, you can maintain a lean, adaptive strategy. You can revisit and establish new goals often to keep your company growing in a new market. It’s critical to set these goals and start tracking metrics right away.

How does culture affect products?

Every country has unique cultural values that may influence your products’ success in that market. You may target a different demographic than you do in your home country. Or, you might adopt new marketing strategies to appeal to consumers. Many companies seek to do a soft launch to test out products and see how the market responds. A test-run can be time and resource consuming. For many companies, selling products in another country may require a new manufacturing process and supply chain. Varying quality of raw materials can lead to product inconsistency.

Why do companies venture into global markets?

First and foremost, the main reason most companies develop their business to cover global markets is to expand their sales. As much you may want to remain loyal to your original base of operations, venturing into other markets can prove to be highly profitable.

What is the by-product of expanding your business into a new market or even globally?

A by-product of expanding your business into a new market or even globally is learning how to compete with other global companies, which in turn will help your business to grow and evolve.

How do cultures affect global markets?

Global markets are not similar. Different cultures greatly affect how markets will treat the businesses that transact within it. The only way to penetrate a new market is to learn about the local culture, use this knowledge to tailer your business to that culture and most importantly, remain consistent. Cultural understanding can be the difference between succeeding and failing in business.

Why is globalization important?

As much as expanding your business globally is important, you have to make sure you conquer the local market first. Globalization has really transformed how we view our world. Globalization, whether you believe it to be good or bad, has turned the entire world into a single market that people can transact in easily, quickly and cheaply.

Why is it important to diversify your customer base?

Strategically, diversifying your customer base builds resilience against a drop in sales from a particular demographic that you are focused on. A strategy that helps mitigate risk is always a good thing.

What happens if your business is dependent on a particular region?

If this is the case, then you are at risk of your business being undermined quickly and irreparably due to an over-reliance on one particular customer type.

Does Nike have sponsorships?

Nike have sponsorships all over the world, which have profited the company immensely. They have released brands that are based on the local markets they have ventured in, showing that adapting to the local culture can be really beneficial for a business.

How to go global?

1. Perform a “Deep Dive” Due Diligence. Before going global, it is critical to understand what the full impact on your business will be. Prepare a market segmentation analysis to determine if your product will sell in the local market. Prepare a product gap analysis against local products.

Why is it important to be flexible in the policies and procedures implemented in an international operation?

Cultural differences, whether it is language, regulations, or customs, requires a firm to be flexible in the policies and procedures implemented in an international operation to ensure employees are engaged and executing on the company’s plans. The “one size fits all” mindset can have short-term benefits but will have negative long-term effects.

What is globalization?

"Going global” is defined as the worldwide movement toward economic, financial, trade, and communications integration. The concept of globalization can be traced back as far as the Roman Empire. More recently, the concept was popularized by Thomas L. Friedman in his book The World Is Flat, in which he argued that the pace of globalized trade, outsourcing, and supply-chaining was speeding up and that its impact on business organizations and business practices would continue to grow in the 21st century.

Why do you need to set up a proper tax and finance infrastructure?

The proper tax and finance infrastructures need to be set up early on to ensure that you are receiving timely reporting and that your foreign entity is adhering to local corporate policies and procedures.

Why is it important to have strong legal processes?

Some countries are known for being highly litigious, so it is critical that strong legal processes are put in place to minimize unnecessary commercial risks. Also, government agencies have strict requirements that necessitates legal documentation be in place prior to operating within the country.

How to gain competitive advantage?

Gain a strong competitive advantage by creating a supporting ecosystem of complimentary products and services, which can come via third-party relationships. These relationships can support the scaling of the organization while minimizing the financial risk.

Why do companies use senior interim executives?

Using proven senior interim executives allows the company to hit the ground running, quickly validate assumptions, and drive key readiness initiatives while the company hires the right senior management team.

How has globalization made it easier for businesses to expand?

Globalization has made expanding into foreign markets significantly easier for not only huge corporations but small businesses and startups as well. There are still some roadblocks with laws and paperwork, cultures and languages, but technology has made it easier for people to connect, establish relationships and communicate frequently from all over the world. This means that once your business is up and running globally, it can be easy to maintain.

Why is it important to take your business global?

The advantages can be significant because you're not only expanding your market, but developing contacts, exchanging ideas and imagining new opportunities for both you and your partners.

What are the challenges of moving into foreign markets?

Moving into foreign markets does have its own challenges. You have to be prepared to relinquish a little bit of control. Their world is not your world, and you have to trust the contacts you make and the partnerships you form to represent you. But if you can find those companies who are invested in mutual growth, and connect with the people who you trust with your business, you'll uncover a whole world of possibilities.

Is it possible to go global as a small business?

Many small businesses think going global is a pipe dream, but it's just as attainable for you as it is for a big corporation. Getting started in foreign markets can be done in four basic steps.

How fast does international expansion happen?

If you’re in a small country, international expansion becomes very important very quickly. It’s especially true in Europe, where companies expand internationally 19x faster than their American counterparts, mostly out of necessity.

What does it mean to extend beyond borders?

The decision to extend beyond borders means a shift away from opinion-driven development to data-driven development. Rather than pushing into a new market, make sure customer demand is pulling you there. Do your homework, and make sure you have the numbers that back up the need to jump in.

Why do we need product market fit?

You need product-market fit to succeed in a new country or region. But, that’s not the only way to ensure success. In my experience, winning over a new market oftentimes hinges on your ability to localize your strategy to fit the business climate and culture of each country you enter. That’s where the European entrepreneurial mindset is helpful.

Is Forbes opinion their own?

Opinions expressed by Forbes Contributors are their own.

Is it easy to go global?

To be sure, going global from the get-go isn’t easy. It’s complicated and comes with hurdles —especially as you navigate them alongside the normal growing pains of scaling a startup. Building products for an international customer base and creating multicultural and multilingual brand awareness across borders adds a level of complexity to most facets of the business. But, on the flip side, those early pains can enable earlier gains—potentially providing an edge on competitors that aren’t optimized to deal with the complex fragmentation of a global market.