The next big thing for your business is global expansion. While the global expansion of your business is important, you should ensure that financial, communication and trade integration is done. The concept of globalization can be traced back to the roman empire. However, globalization in the 21st century is completely different. Anyone can start expanding business globally without any hassles. Global supply chains, customers, and outsourcing have made expanding business possible. For small and medium-sized businesses, going global is a significant step in their business process. If this is not done without much understanding, it could disrupt the already existing business. That is why it is important to understand the risks and benefits of global expansion.
You and your stakeholders can analyze if the benefits outweigh the risks of expanding business globally. Other high-level executives will be given more responsibilities when the expansion occurs. That is because the company’s founder will be busy with the details of global expansion. So, you need managers to run the company’s day-to-day operations while expanding globally.
Taking a small business on a global level is a huge step; you should not do this without any research. You should research the target market, competitors, market trends, and other requirements to launch the business globally successfully. Before diving deep into taking your business global, you should know the key steps that can help you in that task.
Perform due diligence
You should know the impact of starting a global expansion before taking any steps. For that, you need to perform research with due diligence.
- Prepare a market segmentation report to analyze whether your product will sell in the local market or not.
- Try to understand if your competitors are meeting all the needs of your customers. If there is a demand that is not being met, then it is easy to enter the local market. If you are able to address pain points that were previously unaddressed by any competitor, you will gain a lot of customers quickly.
- Create a SWOT analysis for your competitors. Your product will be more costly because it comes from a different country. If so, will the customers be willing to buy your product? Is there anything your company can do to ensure that customers buy your product? You cannot start the process of expanding your business without performing a solid SWOT analysis.
- Try to understand the opportunities that you will be getting in the country’s market. Many people think if I expand my business, it will gain more revenue.
While that is true, not every market provides the right amount of opportunities.
- Know the market size and the amount of time it will take you to achieve your targeted sales. What amount of market share do you expect to gain in the market?
Starting a global expansion process without having this data is risky for your business and may create problems for you in the domestic market.
Develop a business strategy and plan
Each market is restricted by many economic, cultural, and governmental conditions. It is important to win the hearts of the local people while still being integrated with the overall corporate objectives.
- Create a short-term, long-term, and medium business strategy. Set some goals to measure the progress of your business in the local market. Know what something will cost you and measure it against its benefits before making any business moves.
- Define business goals, objectives, and metrics with which you can measure success.
- Establish a business model, which basically means how you plan on operating. Decide if you want to conquer the local market by setting up a different branch, company, or sales office.
- Create an annual budget. This will give you an insight into how much money you can spend for expanding your business.
- Create a project plan and team with deadlines.
Many companies try to shift executives from the parent company to the other country’s domestic market. If they do not do that, then they make the mistake of hiring a local team from scratch. Both these processes are risky and time-consuming. Instead of that, what you can do is send high-level senior executives with tons of experience to start the business process smoothly. Once they have started the business process, you can take your time to hire senior management for the foreign branch. This is the most efficient method of establishing your business offshore.
- Bring senior executives with a lot of experience into the picture or outsource leadership temporarily to executive leadership organizations.
- Create a financial infrastructure, you can outsource this to third-party organizations.
- Then begin the recruiting process for the senior management positions. Do not make haste here, because these people will be responsible for running your business on your behalf.
Review the product gap analysis, and take the necessary steps to make your offerings market-ready. Try to achieve product differentiation, if you cannot then compete on the basis of pricing.
- Review the government and industry-based rules. Obtain the necessary licenses or certifications to do business without any obstacles.
- Try to understand if the product will do well in the local market or not. Many times companies ignore the local culture of the country which plays a huge role in consumer attitude. You have to ensure that the product is desirable culturally and if it is not, you have to localize your product. Try to ensure that all translation is done correctly. A marketing hook that worked for one market may not work for another. So, before you begin selling you need to know who you are selling to.
- If you think that your product is unique, you can send it for a patent review so that your competitors cannot copy it.
- Start product testing and set quality assurance standards based on local standards. If your target audience expects a different level of quality from your brand, you should ensure that the level is met.
- Perform logistics planning. Who will be selling your product and how will you get the product to the selling party? If there are any holes in your logistical planning, you will not be able to meet the customer’s demand which will give your brand a bad name.
Make your organization ready for change
The country where you will be expanding your business will be different. So your organization needs to be ready to adapt to their customs, language, regulations, policies, and procedures. Your employees should be able to execute the company’s plans. One size never fits everyone and that is why your organization needs to have a different attitude while expanding in a local market.
- Decide which organizational structure is needed to execute the selected business strategy.
- Develop policies, procedures, and guidelines that are in compliance with local requirements while maintaining balance with overall company policies. Your organization should be able to change according to the region, but holistically it should be one.
- Think of competitive benefits that you can offer to hire talented local employees. Your business can only expand successfully if your hiring process is done successfully. You will set the process to be followed, but your employees will be executing it.
- Develop competitive compensation packages based on local customs.
- Create a local information technology ecosystem that is compatible with your company’s overall IT infrastructure. Overseas employees should be able to communicate with your headquarters without any problems. In the modern age, all businesses depend on IT services. That is why you should choose a reliable IT partner.
- Think about how you will manage human resources operations like payroll, hiring, firing, training, etc. You can start by hiring an HR management team. This option will be more reliable in the long term, but it will take time and cost you. If you do not want to go with this option right now, you can always outsource these services. This will allow you to build teams that you crucially need instead of building an HR team from scratch.
Your company needs to be ready to change if you are moving into a foreign market on all levels. It is impossible to maintain a comfortable domestic attitude while hoping to conquer international markets. To meet your revenue targets, you need to ensure that your organization is ready for change.
Establish a reliable market strategy
If you are to effectively sell your product or services, you need a reliable marketing strategy. This marketing strategy includes your sales strategy, sales delivery, brand message, branding/ value, proposition, marketing strategy, pricing, and affordable marketing programs. All of this creates differentiators for your brand and if it is sufficient you will see expansion in the global market.
- Determine the sales model you wish to follow: direct, indirect, OEM, hybrid, or distributor.
- Establish your sales method: solution-based, feature-based, consultative, or price based?
- You should be clear about whether a new brand will be created to gain a customer base in the local market or will the attempt be made with the parent brand itself. Sometimes, by making a few changes in the parent brand you can grow in the local market. However, sometimes the local market that you wish to conquer is so different from the domestic one that you have no other option but to create a different brand.
- Create a marketing plan in detail and how you will start to gain footing in the market. Keep a close eye on the key performance indicators. You should have a plan for what you will do if the KPIs do not meet your expectations.
- Evaluate the pricing model. Consumers in less developed countries are extremely price-conscious and they may not be willing to pay for your product or service, even if it is rich in features. Examine the economic environment of the market where you plan the expansion and then set the price.
- As your business expands in different global markets. You should take a look at your business vision and see if it still fits. If not, you should change the business vision accordingly. The business vision is always holistic whereas products, brands, or prices may not be.
Setting a reliable marketing strategy is the most crucial step in expanding your business. A half-baked marketing strategy will lead to the tragic failure of the expansion. That is why you should take your time to create a bulletproof market strategy.
Equip yourself legally
Some countries are infamous for being difficult to do business in, but that should not stop you. All you need is to be equipped with an understanding of business laws locally before you get started. Before you start operating in a country, you should ensure that all the legal paperwork is completed. If doing business in a country is not as easy as you thought, think about how you can make it easier. Many companies outsource their legal formalities to another firm. This makes everything easy for you and you can start planning the expansion, while a professional firm takes care of the legalities.
- Always do business with localized commercial agreements
- Review regulations based on your industry. If there are any regulations, obtain the necessary certifications needed.
- Perform regular corporate services such as conflict resolution, customs, shipping, etc.
- Maintain corporate records and ensure that your company follows local law. Perform regular audits to ensure that everything is being done legally. Outsourcing this function will be a smarter thing to do.
It is possible that you hire the best talent, and come up with the best marketing plan, but get stuck with legal troubles. No business has been safe from trouble with the law. That is why you should ensure that once your global expansion is thriving it should remain so. You can do that by being legally equipped to handle any troubles.
Expanding your domestic business into a global corporation is no easy task. However, as your business grows it becomes inevitable as different markets offer different opportunities. By doing your research, coming up with a plan, assigning important tasks, and outsourcing crucial administrative functions, you can make this task of going global look easy.