Growing internationally represents one of the most important challenges a business can face. At the same time, however, it is also an indispensable goal it should aim for. The main reason behind it concerns the intensification of economic trade and investment on a global scale.
So, let’s see what it means for your company to grow internationally and how you can do so! We start by saying that a company grows internationally when it expands all or part of its operations beyond its national borders.
In order to do that, adequate planning and management skills are required. Otherwise, you can’t deal with the implications that such a choice carries with it. Let us analyze these implications together!
Expanding the company’s market
If your company implements an internationalization strategy, it inevitably achieves a new customer base in addition to the one acquired in its own territory. The advantage, however, is that the new one is on a global scale.
Adaptation of products and services
New customers almost certainly correspond to new needs and preferences. The reasons? There are different cultures and lifestyles that lead consumers to desire different products and services.
So, if you aim to grow internationally, you should adapt your offerings to these novelties. And, sometimes, this results in the development of completely innovative products and services.
Among various brands, this is what McDonald’s has done. In India, for example, it launched a special burger called the McAloo Tikki Burger. A combination of spiced potato and pea patty in place of meat, a food not commonly eaten due to religious customs.
By doing so, the company has tailored its menus to local tastes and traditions.
New localization
Growing internationally also means expanding your company’s physical presence in the new territory. This involves, for example, opening new headquarters, stores, or even entire production facilities in the chosen foreign country. Doing so makes it easier to manage the various operations directly on the ground.
Apple is a demonstration of this consequence. It started with the first store opened at Tysons Corner Center in McLean, Virginia, on May 19, 2001. Then the American company kept on growing internationally and now boasts more than 500 stores located in 27 countries around the world.
Strategic partnerships
In a competitive environment, it is increasingly difficult to grow and succeed internationally. To overcome this obstacle, the most cost-effective choice is to partner. Therefore, if you want to expand your company abroad, we do suggest you go in search of strategic partnerships. In fact, the more companies share resources and expertise to achieve common goals, the higher the likelihood of growing internationally.
This was the choice made by Starbucks a few years ago. In fact, in 2018, the American giant partnered with key companies that are part of the ecosystem of Alibaba. The latter is a Chinese multinational company specializing in e-commerce, retail, the Internet, and technology. The objective? To relaunch the brand in the Chinese market through home services and personalized experiences.
Let us now continue with the main steps you should follow to grow your business internationally. Keep on reading to find out what they are!
Market research and analysis
It is unthinkable to succeed in growing internationally without first gaining deep knowledge of the target market. Aspects such as market size, consumer behavior, competitors’ strategies, and growth trends in the market itself, should be thoroughly analyzed. Keep an eye on this last aspect! In fact, it helps you understand how worthwhile it is to pursue a certain direction or not.
Target market entry strategy
Once you select the market to attack, the next step is to plan and implement how to do so. In this regard, you can choose among a series of options. Below, we list the most popular ones for you:
- indirect mode
You sell your products or services through intermediaries, such as trading companies, that you rely on to penetrate the new market. This mode, on the one hand, gives you faster results and minor risk. On the other hand, it doesn’t allow you to exercise strong control over the new market.
For example, this option has been chosen by two Italian multinationals, Barilla and Ferrero. The former has established a partnership with Walmart, a large American-style supermarket chain. The latter, instead, collaborated with Walgreens, one of the most powerful U.S. pharmaceutical chains.
Despite the different collaborations, the intention of the two Italian companies was the same: to grow internationally by distributing their products in the US market.
- direct mode
In this case, you directly sell your products or services in the foreign market through company representatives or your own commercial outlets. In contrast to the previous one, this mode definitely allows you to implement and drive your brand and product strategy in the new market. However, it forces you to bear higher financial investments and risks.
As an example, think of IKEA. In the summer of 2018, the Swedish low-cost furniture giant opened its first store in Hyderabad, India, after a direct investment of more than $1.5 billion.
- cooperative mode
This mode results in collaborations, such as joint ventures or franchises, that you can establish with one or more local or international entities. The objective? To speed up the process of expansion and growth in the foreign market.
In this regard, let us take the Burger King case as an example. Actually, most of the restaurants of this other American giant are private franchises.
In any case, the choice of strategy depends on the company’s needs and resources. But be careful to choose the winning one for growing internationally.
Financial planning and management
Plan and manage your expenditure and income wisely. Otherwise, you expose your company to risks, such as insolvency, that can threaten both stability and future growth in the international market.
For this reason, it is important for your company to develop effective financial plans. So, you can monitor the continuous succession of investments and financing.
Logistics and operational infrastructure planning and management
In this regard, the key word once again seems to be collaboration. In fact, strategic partnerships with local suppliers or distributors can facilitate your company’s entry and expansion into the new market.
As an example, let us again return to Apple. This time, as regards its penetration into the Indian market. In fact, the American multinational has partnered with Foxconn, a Taiwanese giant company engaged in the production of electronic components. Despite its Chinese origins, Foxconn also operates in India. Reason why Apple has decided to cooperate in assembling its devices for the Indian market.
Human resources management
Despite digitalization and the increasing use of artificial intelligence, human resources still seem to be the most important business component. Reasons why you should invest in the search and acquisition of highly qualified profiles.
In particular, if you aspire to grow internationally, it would be wise to recruit local talents. In fact, they are most likely supposed to have a better understanding of the foreign market and its dynamics.
Scout out the appropriate advertising campaigns and marketing channels
There is no business success without effective brand sponsorship and related products or services. Especially when the company aims at growing internationally.
To succeed in this goal, tailor smartly your company’s marketing and communication strategies to the new target audience. For example, you can leverage cultural elements or prominent personalities in the country where you want to grow internationally.
Uber is a demonstration of how a careful marketing strategy can be the key to brand success internationally. For example, one tactic of the company has been to use targeted advertisements and content, even sponsored by celebrities, in order to acquire new users and increase brand awareness.
Growing internationally but do it legally
Do not underestimate the last and equally important step. It concerns the thorough understanding of the legal and regulatory framework of the new market. Each country, in fact, has its own requirements that every company must comply with. Should this not be the case, you risk leading your company toward more or less severe penalties. But not only that. In fact, there is also the risk of compromising corporate reputation and, consequently, not growing internationally. Reasons why it would be wise to have the right team of consultants to assist in navigating local regulations.
Let’s consider the case of Facebook. It has been fined several times by the European Union because of its frequent violations of the General Data Protection Regulation (GDPR), a document on privacy and personal data protection.
First, these sanctions have hurt the social network’s reputation in the eyes of users. Secondly, the platform has been forced to invest more resources to realign itself with current regulations. This, therefore, has been a brake on its expansion in markets that have adhered to such regulation. At least in the short term.
Conclusion
Growing internationally is a major undertaking, especially in an interconnected world such as the one we live in.
While the road to successful international growth is paved with pitfalls, it can also bear significant fruit. These include, for example, new customer bases, a greater competitive advantage, or access to talents and innovation.
For everything to work, however, you should follow one basic rule: teamwork. In fact, the more your team members are aligned and working on the same goal (growing internationally), the better chance you have of meeting the challenge!
Has this article convinced you to expand your business abroad?
Take a look at our international services, and feel free to contact us. Our team is more than happy to support you on this new journey!
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