International Market Expansion

The key to your international market expansion strategy should be to have a strategy in the first place. This may seem like a blindingly obvious statement but all too often companies’ approach to global growth is entirely opportunistic. A company receives an enquiry over the internet from one specific potential client in one specific country and this de facto becomes the strategy. In our experience, whilst this approach can sometimes (although not as often as you might think) bring some short-term success, it very rarely leads though to long-term benefit.

Lack of strategic planning is the most common reason for companies to fail in their international growth plans and, at the very least, the following issues need to be analysed by the senior management team (not just the International Development Director) prior to investing too much time or cash in any concrete actions:

Why are we looking to internationalise? You need to convince yourself that there is a viable, sustainable reason to embark on an internationalisation journey. The fact that the home market might be temporarily sluggish is probably not a sufficient reason in itself. Develop a convincing set or arguments to support your case. We always advise clients to look at the proposition as if they were external investors. If your arguments are not strong enough to convince an investor, then you would have to question your approach. International expansion costs money and it takes time and effort. It is not to be embarked upon lightly.

Do we have the management bandwidth? Your senior management team are probably very busy even before you start to look at the China market or doing business in India - so where will you all find the time to embark on a complex and time-draining round of international visits, product adaptation and potential fund raising to support the plan? If you just add ‘international’ onto the task list of already busy people it is unlikely they’ll do a great job.

Do we have the skill-sets? Just because you are great at developing successful business in your home market, doesn’t mean that those skills are instantly transferable to a new, unknown country – chances are they are not. Do you understand why your product might fly in the USA but bomb when you try to export to the China market? Have any of your key management team got significant levels of cultural fluency? Contractual issues that may seem straightforward at home could be tortuous in Indonesia due to culturally differing attitudes to contracts. You need to raise awareness of these issues, get real in-depth knowledge and then learn how to apply those learnings to your strategy.

Which markets are best for us? It’s a great big world out there and just because you get a b2b enquiry from South Korea doesn’t necessarily mean that South Korea is a market you should commit time and resource to. You need to do some quality research and analysis of which markets are best suited to your product and service, which markets are most likely to bring quicker returns (very important in the early stages of internationalization as people can quickly lose appetite if no returns accrue) and which markets are viable for the long-term. This process of long-listing to short-listing is not simple but needs to be done well in order to give you the best chance for success.

Which entry vehicle should we use?
We always recommend taking a step-by-step approach to any new market. Unless there are very compelling reasons, it is usually best not to open a permanent establishment in a new market until you have sufficient traction to justify the cost and commitment that such a process will entail. Why not start by working through well-researched and viable distribution or agency agreement to validate the potential of the market – you can always move onto your own platform at a later stage?

How can I trust the people in a new market? Do not ‘get into bed’ with the first vaguely credible person/company you meet at a trade show. Scan the market for potential partners and select from a short-list which has been validated and whom you are confident can do what they promise. Be very careful when entering into agreements around issues such as agreement duration and geography. Do you really want to give sole distribution rights to one distributor in a country the size of India or China?

These are just a few of the issues you need to factor into your strategic thinking. We run a very successful strategy workshop ‘From Local to Global’ which helps companies work their way through this minefield and come out the other side with a clearer vision of the future.

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