Looking to expand your business to a new country or to a new city?
We made some research for you and prepared a list of 7 key considerations for entering a global market.
Entering a new market is always challenging. Whether you are expanding to a new country or a new city, it will bring opportunities along with unexpected obstacles. But if you can plan your strategy the right way, then you can expect amazing results.
Studies show that companies that expand are 11 percent more likely to survive, and an impressive 34 percent more productive in their first year.
After expanding you will find advantages like-
- Access to local talents
- Increased business growth
- Establishing regional centers
- Reduce spending by achieving economies of scale
- Less influenced by crises in certain countries.
That is why big brands like Coca-Cola, Starbucks, KFC, etc have expanded their business worldwide and have become quite popular.
So if you are thinking or made up your mind to expand your business globally, you need to consider a few things to learn how to do business internationally-
1. Conduct Market Research & Define Your Target Audience
One of the first key considerations of entering a global market is doing thorough market research and defining your target audience.
Of course, you cannot go and enter any market you want and expect to get results right away. First, you need to understand the various regional markets and how they work. Market research isn't just checking out your competition, understanding local trends, or your target customers in the region. You need to consider how your product fits into the market strongly.
In other words, you need to perform,
- SWOT Analysis
- Segmentation Analysis
- Market Gap Analysis.
Then you need to come to the decision if your product is market ready or not. If it doesn't fit today, then you can't think about adding features or adjusting your product to make more sense within a given market. You just need to know its current level of readiness.
Also, determining your targeted audience is not quite as simple as guessing how old your customers are or hoping to find a certain demographic. Instead, you need to know about your products and determine who is this product for.
Here are the steps you need to identify your target market:
- Identify the problem you solve and the people who benefit the most
- Evaluate your past data and create a target audience template
- Compare your template against real people
- Create your target market personas.
This is how you can identify the target audience for the global market.
2. Identify Your Business Goal
if you are thinking about expanding to the global market then you should have a concrete goal. After doing your market research and choosing your target audience next you should decide your goal.
You should work toward planning your long-term goal and also short-term goals. Setting goals for each stage will help you to measure successes and understand costs at every stage.
Sit down with your team and come up with realistic goals for your expansion. What will be your business model structure, will it be the same as your current business model, these are the questions you need to find answers for.
In order to set goals you need to-
- Identify your short, medium, and long-term strategy
- Define attainable and specific goals and objectives. You have to set metrics that will measure your progress, as well as the cost/benefits.
- Complete the business model and structure. For example, do you want to build a separate company, a branch, or a sales office?
- Create a top-down annual budget.
- Develop a tactical project plan that contains commit dates.
Your goals need to be specific, measurable, attainable, relevant, and timely. Use numbers. Set dates. Give yourself something very clear to work toward.
3. Be Financially Prepared & Create a Sound Infrastructure
One of the major things you need to consider when entering a global market is, whether are you financially ready or not.
What will happen if you couldn’t pay your new supply chain provider in their local currency? How will you verify payments for imports or exports? What about your overall expansion budget? How will that pan out?
Also, different countries have different tax policies. So you need to take into account those considerations as well. Start-up costs for foreign ventures are often higher than expected. And revenues might be lower in the first months. To avoid these, don't use your everyday cash to finance your international venture. Go for a business loan instead.
After you are financially ready, then you need to create a proper infrastructure. For example, if you are used to shipping within the United States, you will need to get familiar with the problems that come with other countries. Risk management planning, cash repatriation, and sales reporting are all major components of your financial readiness.
Internet problems, roads, and air traffic may be more limited. Getting your products to the customers may be more difficult than you think. You need to know what areas of your new market are accessible and important for customer satisfaction.
If you’re unable to deliver a product after an order is placed, or experience significant delays, you may damage your company’s reputation.
4. Learn About International and Local Business Laws & Culture
Learning about international and local laws is an important part of business expansion. However, learning the laws and regulations of local countries can be complicated. You will find that some countries have banned the import of certain fruits, vegetables, or plants due to agricultural or environmental concerns.
Other than that alcohol, weapons, or even books and toys are illegal in some countries. You have to know about them as well.
Apart from commodities, countries have different laws about business operations. Some information you will find online, but it is better to get help from local lawyers to get the right picture.
Also, you have to be very careful about the country's culture as well. Every culture has a different approach to doing business. You can easily offend customers if you use the wrong phrases, photos, or even marketing techniques.
Other than reading books on business etiquette, getting suggestions from local marketing agencies is also a smart approach. Moreover, you need to keep a detailed track of your marketing campaigns to see which campaigns are working. You will also be able to optimize your marketing efforts to increase conversions at the lowest rate.
5. Define Your Timescale
You can't rush expanding your business. You need to define your timescale. A timescale will provide structure, scalability, and the opportunity to iterate where you are and if you are facing any obstacles or not.
You will need to add key dates to map the entire expansion process. The dates need to be feasible, consistent, and motivating. Moreover, the timescale needs to sync with your business process and justify your objectives. You can't put an imaginary deadline that will ultimately not be met.
Go through the process and come up with realistic timelines for your expansion.
6. Hire an Effective Team (If Needed)
We can't call it a key consideration for entering a global market because this part totally depends on you. If you already have a capable team that can handle the business expansion to other countries or cities with a little training, then you don't need to hire any local employees. It will also save your budget.
You can take suggestions from local agencies to be safe.
However, if you have the budget and capacity to hire local employees, then you should go for it. But you have to be very careful with the hiring process. The background screening is a must and makes sure you are hiring top talents.
The new “Work from Home” culture has opened many doors and people are hiring top talents from around the world. There are many sites that help you find top talent from around the world.
7. Integrate with Multiple Payment Options
Last but not least, make sure you offer multiple payment options. If you have an eCommerce business then having multiple payment gateways is a must.
And if you are expanding to a new country, then you have integrated with local payment gateways. PayPal is a popular payment gateway and is widely accepted globally. Also, Google, and Apple have their own payment gateway that helps user pay from their phone.
However, it is better to learn about the local payment gateways so that you can integrate them and increase customer experience.
Here is a recap of what to consider when expanding a business internationally:
- Conduct Market Research & Define Your Target Audience
- Identify Your Goal
- Be Financially Prepared & Create a Sound Infrastructure
- Learn About International and Local Business Laws & Culture
- Define Your Timescale
- Hire an Effective Team (If Needed)
- Integrate with Multiple Payment Options
Common Challenges You May Face While Entering Global Market
We have written 7 key considerations for entering a global market. But that doesn't mean it is easy to start a global expansion. Every country has its own government, rules, business policies, cultures, languages, currency, timezone, and inflation rate.
Any of these can pose a challenge for you while entering a new market for your business.
Here are the common challenges business owners may face while expanding their business-
- Language Barriers
- Cultural Differences
- Managing Global Teams
- Currency Exchange and Inflation
- Annoying Foreign Policies
Business owners often face the challenge of the language. You need to consider the languages spoken in the country you are looking to expand.
Here is a famous story of a popular brand that got the language game wrong. Mercedez-Benz, when they entered the Chinese market, they changed their name to “Benz”-> Bēnsǐ”. However, Bēnsǐ means “rush to death” in Mandarin Chinese.
Obviously, that is not a good name for a car company. Realizing their mistake, they changed their name to Bēnchí, which translates to “run quickly, speed, or gallop.”
It is a smart plan to invest in interpreters to make sure your business continues to operate smoothly.
Other than language, you have to keep an eye on cultural differences as well. Every country has its own culture. That includes how they talk, meet new people, or adapt to changes. It is very important to learn about the culture of the country or city you are expanding to.
If people see that you have taken the time to understand their culture and pour that into your business, then they will surely appreciate it.
One example that comes to mind is the work culture differences between the USA and Spain. The working hours in the USA are usually 9 am to 4/5 pm. However, in Spain, you will see something different. Their working hours are 9 a.m. to 1:30 p.m. and 4:30 to 8 p.m. They take a break in the middle for a siesta, which is a rest taken after lunch in many Mediterranean and European countries.
Managing Global Teams
We have already stated that you may need to hire a team when you are expanding. However, hiring and maintaining a team is a totally different thing. Especially if you are hiring globally.
Because when you are trying to function as a team, language barriers, cultural differences, and technological differences can make it difficult.
In order to maintain a strong team relationship, practice regular check-ins, and use video conferencing platforms so you can interact in real-time.
Studies show that employees who have regular check-ins with their managers are three times more likely to be engaged at work than employees who don’t.
However, the past few years have opened the door to working from anywhere culture. So, people now know how the arrangement works.
Currency Exchange and Inflation
The value of your currency won't be the same in other countries. Nor will the value of currency consistently be worth the same amount of goods and services.
You need to familiarize yourself with the foreign exchange rates. The exchange rates between two countries are very important. For example, the exchange rate from the Canadian dollar to the US dollar is 0.77, meaning one Canadian dollar is equal to 77 cents in US currency.
Also, learn about the inflation rate as well. These are the rates that general price levels in an economy that increase year over year, expressed as a percentage.
Annoying Foreign Policies
Business doesn't exist in vacuums. Businesses are influenced by politics, laws, policies, and relationships between countries. You can't expect to do business in North Korea if you are a US citizen as the relationship between both countries are not amicable at the moment.
Also, the decision made by political leaders can impact taxes, labor laws, raw material costs, transportation infrastructure, educational systems, and more.
FAQ(s) for Your Global Expansion Strategy
There are five stages in the evolution of global marketing that emphasize the management orientations at different stages: domestic, export, international, multinational and global marketing.
Four key factors in selecting global markets are (a) a market's size and growth rate, (b) a particular country or region's institutional contexts, (c) a region's competitive environment, and (d) a market's culture, administrative, geographic, and economic distance from other markets the company serves.
A marketing mix is the actions brands take to market their products and services by using a specific framework with the five biggest components of successful marketing: product, place, price, promotion, and people.
Get Ready to Expand Your Business Globally
Now, you know about the key considerations for entering a global market.
You have to prepare for a lot of research, hard work, and some unique experiences. But if you are feeling overwhelmed by all the procedures, just take a step back and remember that you can accomplish each component by designing multiple achievable goals and the plans that move you toward meeting them.
Do you still have some queries? Do use the comment section below.