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8 min read

Global Expansion: A Strategic Guide To Expanding Your Business Internationally

Global Expansion
8 min read

Global Expansion: A Strategic Guide To Expanding Your Business Internationally

Global expansion is the process of taking your key business or product offerings or services and launching them in a new market — often within a foreign country where you have identified a key market demographic that would find what you offer valuable.

Key points

  • Global expansion is an exciting opportunity that, when done well, can lead to many benefits for businesses regardless of the industry they operate in.
  • Expansion needs to be well considered and managed — reports indicate that it can take several years to see a positive return from growing internationally. 
  • Having a robust global expansion strategy can help you identify, meditate, and manage some of the biggest challenges businesses face when expanding.
  • There are many strategy models you could utilize; it pays to do your research and find the right one for you.
  • Global expansion strategies provide you and your teams with the blueprint for success — don’t dismiss the value they bring.

The decision to take your business global is an exciting and bold move — but it can also be a significant challenge, especially if you don’t apply some sound strategy.

Global expansion is a fantastic way to tap into new markets at an international level, grow your client and audience base, as well as learn from new and best practices in other countries. A global presence provides you with nuanced knowledge and expertise that can help you develop a reputation for being a global leader in your respective industry.

It’s not something that should be left without some careful planning. Below we cover some of the best global expansion strategy guidance to take heed of when considering your next global move.

What is a Global Expansion Strategy?

Many companies begin global expansion in a near-similar market to their own and grow from there. For example, if you are doing business in the US, expansion into a similar Westernised country will often be easier as there are fewer cultural needs to consider, low chance of language barriers, and customers/clients generally have fairly similar needs.

A global expansion strategy is a formal business plan that allows you to expand your operations in this way while:

  • Identifying, mitigating, and managing any business risks
  • Enhancing revenue growth
  • Leveraging international networks to develop your talent pool.

Any strategy you develop should clearly outline the timeline for the expansion, budgets, market and competitor research, and targeted KPIs to achieve success.

Think of a global expansion strategy as the blueprint that allows the team taking responsibility for the expansion to make informed decisions and ensure this new development runs as smoothly and effectively as possible.

Why Do You Need a Global Expansion Strategy?

With so many big players who’ve managed to develop globally with huge success, you’d be mistaken for thinking this business move is easy — it isn’t. Having a clear strategy in place will help you better understand whether now is the right time to move into global expansion and a clear picture of the challenges you might come up against.

Christian Stadler, a professor of strategic management at the University of Warwick Business School and a co-author of Open Strategy, advises in an article for Harvard Business Review that companies who had expanded globally had an average Return on Assets (ROA) of minus 1% for up to five years. On average, it took businesses up to 10 years to reach +1%, with around 40% achieving at least 3% ROA.

But there are some incredible success stories to draw inspiration from. Netflix’s global growth continues to be a significant factor in its ongoing success. In 2015, the company was available in 50 countries. By 2017, they were the leading streaming platform in over 190 countries. Its international streaming revenues exceeded domestic revenue for the first time in 2018, a trend that continues for them. And a huge part of that success? A sound strategy.

A sound global expansion strategy will help you to:

  • Know when the time is right for global expansion and into which markets
  • Create efficient budgets and financial planning
  • Understand, manage, and mitigate risks
  • Understand local laws, legalities, and regulations in the countries you’re expanding into, such as the rules of international trade compliance
  • Find a competent and effective team
  • Learn from challenges and mistakes for continued expansion
  • Provide you with the key blueprint to start, allowing you to adapt as needed.

Global expansion is not something to be taken lightly, and having a sound strategy is a must if you want to overcome these challenges.

How can you succeed with global expansion?

How to Succeed With Your Global Expansion Strategy

A successful global expansion strategy will be unique to your business needs and your organization’s industry. That said, some core themes need to exist within the strategy and be carefully considered as you put this together.

Below we’ve broken down the key areas your strategy should include in achieving success.

Global Expansion Strategy
6 variables to consider when analyzing potential markets in which you can expand

1. Market Research

Regardless of the industry you operate in, market research is a crucial component of any organization’s continued growth — and global expansion is no different.

Thorough market research can help you understand the markets you want to enter in other countries, identify opportunities and untapped niches, and gain a better idea of where you should place your efforts and budgets as a priority.

Market research is essential to ensure you maximize the success of your strategy. It’s a key way to identify your biggest competitors and risks, but it’s also instrumental for demonstrating to key stakeholders and board members that you’ve done the work and that global expansion is a viable step forward.

When getting started with market research, you might look into hiring a third-party company that specializes in this area to get the best and most reliable information. Look for an organization with expertise in global expansion that has worked with organizations similar to yours.

Questions you want to gain answers to through market research include:

  • Who are your main competitors?
  • What are the gaps in the market that you can fill?
  • What is the demand for the products/services you offer?
  • What is the Total Addressable Market (TAM)?
  • What local laws, legalities, and regulations do you need to be aware of?
  • Does the country have the local talent available that meets your business needs?

Market research can also help you learn which markets are most ripe for moving into. It’s better to pick the ones with a high return on investment potential first and foremost rather than expanding into multiple areas that might not be as successful.

2. Choose the Right Expansion Partners

It’s foolish to think you can manage a global expansion alone. Especially when expanding into regions with different socio-economic climates, cultural diversity, and community needs. It’s wise to pick a selection of on-the-ground partners with expertise in the market who can advise and guide you appropriately.

The types of partners you might need to explore include:

When choosing the right business expansion partners for your organization, think about:

  • The portfolio of the client, who they have worked with before, and what industries they specialize in
  • Obtaining competitive quotes and comparing a few before deciding who to go with
  • Communication and support needs
  • Contract management, terms, and agreements in case things don’t work out. A trial period of working together is an excellent idea before developing a more thorough, long-term contract.

3. Choose the Right Business Expansion Structure for Your Strategy

There are a few different strategy models you might choose to build yours off of. As mentioned, this will come down to your unique business needs, products, services, and organizational structure.

What works for one company likely won’t work the same for another, so keep in mind that any model or structure you choose will need some tweaking and adapting to match your own needs, the market research you’ve completed, and the goals you have in mind for your expansion.

Some of the structures to consider include:

  • Foreign business merging or acquisition
  • Franchising or licensing your brand
  • Exporting products and/or services
  • Strategic partnerships bring two successful businesses in the same area together to create a third business in the new region.

Each structure has its own set of pros and cons, so ensure you research to uncover which one might be right for you. Consider what is important for you in terms of the outcomes of the expansion, your brand reputation, and what you hope to gain from expansion overall.

4. Hire the Right Local Employees

You probably don’t need us to tell you how important having the right employees, management, and team leaders in place is for business success, productivity, and profitability – and it should come as no surprise that the same is true when expanding into a new market.

Hiring local talent comes with numerous benefits, including:

  • Creating jobs for the local economy (helps consumers develop a positive association with your business if you’re helping solve unemployment issues)
  • Providing your business with knowledgeable talent
  • Bridging any local language and communication barriers
  • Saving money on relocation costs
  • Helping you to leverage existing networks through a dedicated, local team
  • Ensuring teams are in the same local time zone as your client/customer base.

Hiring and managing remote teams is easier than ever, thanks to COVID-19 accelerating resources and tools within this area. Many organizations are now well-equipped to manage this challenge.

When going about hiring these teams, you might seek support from outsourced recruitment services to support you in finding the right people – this can also help with the time-consuming aspects of hiring and local compliance/employment laws.

We recommend that you focus on the most crucial team members you need first and foremost, and build gradually as you go and gain better insights into who your business needs and any adaptations in skill sets you might need to mediate. 

At the same time, think carefully about the expectations you have for employees in your workplace: For example, are you willing to onboard remote workers, and will you allow async work?

5. Monitor Compliance With Local Laws

Moving into a new region for business means being aware of the new compliance and legal obligations in that area. 

One of the easiest ways to monitor and manage this part of the expansion is to find a local expert legal team who is well-rehearsed in advising companies from your area to grow into their area. When seeking a legal team for this support, consider:

  • Who they have worked with before and the types of industry sectors they specialize in.
  • Previous client recommendations and testimonials.
  • Sourcing a few different teams to compare their offering, services, and fees.
  • Have your legal team cross-check any contractual arrangements.

Having the right legal team on board to help you with this area is the best way to manage any challenges and risks, so it pays to do due diligence to find the right experts for you and your business.

6. Keep Monitoring & Adapt As You Go

The best strategies aren’t static. They offer the right amount of flexibility and adaptability to be amended as you continue to grow and learn more about your expansion.

Be sure to include scope for adjustments where needed, and take on any advice and guidance you obtain to ensure the strategy you’re developing is the absolute best it can be.

Remember, there is no one-size-fits-all when it comes to global expansion strategies. If something doesn’t quite work for you and your business, you don’t have to stick to it. Make the changes you need to keep reaching the goals you’ve set.

Global Expansion— Find Your Strategy

Expanding into new countries is an exciting opportunity that many businesses are well placed to take advantage of.

Put the work into your strategy as you begin this process, and you’ll undoubtedly reap the benefits of expansion, including business profitability, business acumen, and leadership in your designated industry.

For support in implementing your global expansion, consider the support of a top EOR service provider

FAQ

A global expansion strategy is a plan a business puts in place to guide its international growth. 

Without global expansion, a company is limiting its growth artificially by only doing business in its local market. 

Elaine is RemotePad’s expert in employee health and well-being. She draws on her professional experience in careers consultancy, and training in psychology, to inform readers on better recruitment and employment practices. Originally from London, Elaine has a dual honours degree in psychology and criminology from Keele University, and contributes to a range of publications including PositivePsychology and Healthline.

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