In the age of globalization, companies must expand overseas and take advantage of dynamic developing markets. It’s one of the best ways to achieve sustainable growth.
Unfortunately, we’ve seen far too many businesses fail outside their home markets. Even big names have struggled, like Best Buy’s massive failure in Europe.
As a leader in energy and sustainable building construction, I understand that building a global company is a process that must be executed delicately and intelligently. It can be tough to expand into a truly worldwide operation without risking over-extending yourself.
Here are 4 tips to overcoming obstacles and creating a successful global operation:
1. Identify the best potential target markets
Knowing which markets offer the most potential depends largely on your product or service. This requires research on your part initially.
Ting Shih, the founder and CEO of ClickMedix, a company that connects patients in developing countries with healthcare professionals around the world, recommends asking yourself certain questions:
- What markets have a need for your product/service?
- What is the willingness to pay for your product/service in this market?
- Can your business compete with competition in this market?
- Can your company achieve growth in this market?
It’s easy to get initial ideas of which consumers may be interested in your company. For instance, if you’re a gold retailer in Canada, you certainly must know that India is the world’s largest consumer of gold.
To figure out which markets are worth the investment, you need to perform thorough in-country research. That necessitates partnering with agencies who know the market and can accurately test it.
2. Have a flexible business plan
You won’t be ready to scale properly and reach the growth you desire if you don’t have a detailed plan established. This plan should be very flexible, as you’re going to have to make adjustments along the way. You must plan for mistakes and have a strategy in place to consistently recognize and fix problem points.
Rhett Power, the co-founder of Wild Creations, has some good advice for entering a new market. As he says, you’re best off starting small. This enables you to learn the nuances and grow from there.” Rhett states that “once you’ve gotten your feet wet and learn the game, there will be nothing stopping you from substantial profits.”
When crafting a business plan, a great lesson is to be patient. You’re probably not going to be wildly successful right away. Accept that. It’s going to take time for you to build the proper relationships and your strategy to work its magic.
3. Be thorough in your execution
When you make plans to expand overseas, you must account for local rules and regulations, especially those concerning taxation and banking. You also need to obtain proper licensing to do business in that country. Don’t neglect these legal tasks.
Another thing to consider is your distribution channel. Most likely, you’ll need a suitable partner that’s dominant in the local market. For instance, if you’re an auto parts supplier based in Mexico that’s looking to expand sales to the Middle East, you may want to partner with Emirates SkyCargo to deliver auto parts at scale to your customers there.
Additionally, you must make note of how to spread brand awareness in that country. For the U.S. market, social media campaigns on Facebook may work. But if you’re expanding to China, social media platforms like WeChat and Sina Weibo are much more effective for brand marketing purposes.
4. Avoid common pitfalls
There are many ways you can fail in a foreign market. This is why, once you’ve identified a suitable new market and made a plan, I don’t recommend jumping right into the game. Step back and get a good picture of your task at hand.
As you plan your strategy, you must take into account various issues that may arise when going global. For example, these problems are all too familiar:
- A lack of trust with local partners and employees: This can be solved through effective communication and compromise so that everyone can benefit from growth in the new market.
- Not localizing marketing tactics: Consumers in different markets have different needs. The language you use must speak to those needs.
- Not learning about the culture: Before you go into a market, get familiar with the customs, etiquette, and history of the country. This will make navigating the market easier and ensure you don’t make a cultural faux pas.
- Not tailoring the product/service: Did you know that KFC serves lean pork congee in China? The brand’s attention to local preferences is a big reason why it’s been incredibly successful in the country. The lesson here is that, while a product may work one way in your home market, it won’t work the same in another.
With proper research and planning, you can avoid these pitfalls. Then, you can focus more on making the operation succeed.
Win at turning your company into a global brand
There’s no magic formula for success in the global business landscape. But if you properly prepare for the challenges, it will make success overseas more attainable.
In addition to following these four tips, make sure that your product or service actually delivers. After all, it’s a stellar product that’s going to turn new customers into loyal supporters and brand ambassadors.