How to grow and expand your business internationally [In-depth guide]
“It is about stepping into the new land and achieve the next level of growth.”
Multinational companies are one of the most influential factors in the global space. Once a firm reaches a multinational level, they have already had a lot of power, and every step they take affects the lives of countless people. These firms can influence, sometimes even manipulate the policies of states and nations to their advantage. When a company expands beyond the borders, they are also amassing greater wealth and power.
However, in this day and age, it is so easy to reach foreign customers. Businesses can reach customers from all around the world without having to grow to a massive level. Thanks to the connectivity we have today, global expansion is much easier with a more transparent process.
Small companies, with only a decent budget and revenue can sell to customers from the other side of the globe if there is demand there. One of the biggest examples of this is the e-commerce industry. It is no longer difficult to ship internationally, and we have been able to buy international products within a few clicks. Wherever there is demand, there will be supply. If there is unsatisfied demand in a market somewhere, there are business opportunities there. If succeeded, the result will be increased brand awareness and a growing customer base, which translates into higher profitability.
In this in-depth guide, we will provide a framework for you to develop that thorough plan. This is not a one-fits-all guide, because everything varies with the different countries you chose to expand to. However, with proper analysis of the market, planning, and allocation of revenue, you should be able to gradually grow and scale your business. A small business with proper management can target and sell to customers all around the world like a big business.
1. Analyze your own business with SWOT
Before reaching the international space, it is necessary to step back and take a deep evaluation of your own business. Many frameworks have been developed to do that, but SWOT analysis is still the most popular one.
SWOT analysis simply consists of four dimensions:
- Strength (S)
- Weakness (W)
- Opportunity (O)
- Threat (T)
Those are the four major aspects you should consider. The main goal of SWOT is to provide you with a basic foundation to build your strategy.
For example, when you look at the “Strength” aspect, you want to understand the things that your business is doing well. What are the main competitive advantages of it? What do other businesses see as your strength? Similarly, when you look at the “Weakness” aspect, you want to understand the things that you are not doing particularly well. You want to know the outstanding problems that your business model is facing or the areas where your company is lacking resources.
Sometimes the “Strength” and “Weakness” are not easy to find out. There are a lot of overlapping factors in a business that we might find a hard time seeing through. With the help of a good analysis where we use metrics to calculate the development of a business, these factors can be understood much easier. Keeping detailed records of your business activities comes in handy here. By analyzing those raw data, you will be able to understand how well or badly you are doing, and exactly in which areas.
The Opportunity and Threat dimensions are the same. It is about identifying the major positive and negative factors in the areas you are stepping into. If your Strengths align with the Opportunities strongly, it is a good idea to take the risk and expand.
You can have a look at this information to learn more about SWOT analysis. However, keep in mind that the SWOT analysis is only qualitative, which means that it is not clear-cut. You are describing everything with vague terms such as “good”, “bad”, “normal”. We have differing ideas of what is good and bad. If you want to have deeper insights, you need to use data and statistics. Numbers tell a much clearer story than words.
If you want to be clear and accurate, you have to dive deeper into the analysis of the market you are stepping into.
2. Conducting market research
Market research is a complex process. However, we can break down the process of market research into these 4 major steps.
- Key demographic research
- Consumer behavior
- Market trends
- Competitors analysis
2.1. Key demographic research
Key demographic research involves finding out the personal details of your buyers. If you are just starting out, you may have little information to analyze. However, if you have already had a decent volume of sales, you should have collected enough data to know who your customers are.
With raw data, you can categorize them into different groups, including age, gender, location, jobs, positions, relationship status, income, lifestyle, interests, as most importantly, their demands. Essentially you are trying to understand who they are, to the finest details. You can use the existing data on your local customers for the international customers as a reference, and make adjustments once you have gathered enough information in the foreign markets.
A team of market researchers, however, can help you do the information gathering through various methods, such as surveys, interviews, or data collection from various sources on the Internet.
2.2 Consumer behavior research
Once you have found out who your customers are, you can continue to study WHAT they DO. People are not the same everywhere. Things that you find to be normal in your local area can turn out to be strange to foreigners. By identifying their behaviors, we can create suitable strategies and marketing campaigns to make our products known in the market.
One of the factors to consider is the cultural values that they hold. Western countries value individualism, while Eastern countries tend to value collectivism and community activities more. In order to find out, we have to conduct surveys and interviews of our targeted demographic.
You will want to find out what they think about a product like yours, what they want in the quality, and what value they want it to bring to them. In a way, consumer behavior research is about going deeper into the mind of your targeted demographic. If they hold different values from the customers in your local area, it is best to make adjustments to your strategy to fit with their behavior. Be flexible in your marketing strategy.
A few other factors to consider are the technology in the country, the available marketing channels, and their preferred way of doing business. Modify your model in a way that suits them. For example, if your foreign customers prefer using TVs to mobiles and desktops, why not go on TV — the highest potential channel — to advertise?
2.3. Market trends research
Market trends tell you to adapt to any changes happening in the area.
A trend can happen within a few days, a few months, or even for decades. An example of a short-term market trend is Black Friday or Amazon’s Prime Day, when market activity is high, but not for long.
Long-term trends, on the other hand, are created by major societal changes. The introduction of the Apple iPhone has changed the phone industry due to its ground-breaking technology. Ever since the iPhone, everything technology-related has also changed so much, and that is exactly what a long-term market trend is. Nokia, which didn’t follow that major trend, slowly dies out and disappears from the market.
When entering a new market, it is necessary to find out the trends in that market. Do you find that customers there are choosing a product like yours? Do you find that they are rejecting it? Will the trend be short-term or long-term? What exactly can you do to take advantage of that trend? By asking yourselves those questions, you should be able to form a general idea of what to do. After that, you can use quantitative tools to confirm them and formulate business plans.
2.4. Competitor analysis
There will always be competitors in the market unless you enter a completely new and untapped niche. No matter what market you enter, you still need to know if there is a lot of competition there, and exactly how competitive are they compared to your model.
This step, like all of the three steps above, involves a lot of research. You will need to gather information about a sizeable set of competitors in the market, and then select about 4 to 5 major brands. They don’t need to be the biggest ones in the market, but the ones that are most similar to you.
Find out everything about these companies using the SWOT analysis that we presented above. It is a good framework to analyze a business. You can also use the Business Model Canvas as a guide to analyzing all aspects of your competitors. The main goal of competitor analysis is to find out what they are doing better than you, and what you’re doing better than them.
It’s also important to test the loyalty of their customers. Loyalty test is a part of consumer behavior research, but we can also put it here. You may want to find out if the customers are interested and loyal to the products of the main players in the market. If you can further develop your competitive advantage in the environment, and they can’t copy yours, then it’s a good opportunity.
3. Develop and execute entry tactics
Once you have gathered enough information about the prospects of the market and understood your business thoroughly, it is time to enter the market. When developing an entry tactic, it is necessary to find a common point between the market’s needs and your company’s competitive advantage.
If you want to sell online, for example, choose a strategy that aligns with the current eCommerce environment there. You should have plenty of information available after the market research. Similarly, you can consider using the services of an in-country distributor or agent. These companies can help you distribute your products without you having to be there physically. If you do want to set up a physical presence, consider other legal and environmental regulations there and plan accordingly.
4. Overcome the language barriers
Once you enter a foreign market where people don’t speak the same language, it is going to be your main concern to overcome the language barrier. It is a tricky one because language is not something that you can learn in a night.
You will need to speak to your customers in a way that resonates with them. More importantly, they won’t even bother to glance at your products if they have no idea what it is. The language barriers prevent you from a lot of opportunities. Even if you have translated everything your company has, the customers might not even understand what you truly mean. Language is really nuanced, and there can be some subtlety lost in the process.
For example, we all know the “finger-licking good” slogan of KFC has many layers of meaning. If you are from an English-speaking country or know English, you will know that it is a word-play. However, translating that word-play into another completely different language, like Chinese, is challenging. The vast difference between the two languages makes it hard to truly retain the word-play, which is the essence of the slogan.
There is more to translation than this example, but it’s enough to show how important translation is in the process of global expansion. Besides interacting with customers, we also need to deliver our values and messages to business partners. When expanding internationally, you will need help from local businesses. They will give you insights and help you navigate through the unknown waters.
However, if you don’t have an interpreter with you, it can be challenging to exchange ideas and thoughts. Different languages might have different ways to express the same idea, and it can cause a lot of confusion. Confusion, if left unresolved, can cost a lot, and nobody wants that. Moreover, communicating with foreign business partners requires a deep understanding of their culture and etiquette, too.
No matter how big or small your business is, once you expand overseas, you are certain to face those barriers. You can have a look at this post here for some tips and tricks to overcome language barriers in a global environment.
Read more at pTranslate: How to overcome the language barriers in the global workplace?
5. Calculate financing needs and find a suitable payment method
Every single penny wisely spent will bring in thousands of other pennies. It is necessary to determine carefully the financing needs in all aspects, including shipping, hiring, and other operational costs. Bringing your products across the borders alone costs some fees, and it will add up until it reaches the end-user. Therefore, you should consider if your pricing strategy is competitive enough with the local competitors, and if not, try to partner up with a local supplier that offers cheaper alternatives. If you can’t lower your pricing, try approaching your customers from a different angle, and tell them why buying your products at that price is worth it.
Countries don’t use the same financial system. However, money knows no boundaries, and there will be a need to pay in local currency. A quick research can give you information on the payment methods that those countries use. In some industries, such as in tech or IT, payment with cryptocurrency is also accepted.
There will be some delay when you transfer money internationally. It is necessary to establish a payment policy that suits the payment method of your choice to ensure a positive cash flow. The delay caused by some payment methods may slow your business, sometimes even harm its reputation. It is advisable to compare different payment gateways and choose ones that are fast, efficient, and low in fees. Paypal currently is one of the most widely used and accepted payment methods in international businesses, besides credit cards and debit cards. Whatever methods you chose, always research carefully its policies and how it works.
6. Establish your local presence
Once the major challenges of expanding your business have been overcome, it is now time to grow and scale your business. Once you reach this step, you should have understood the ins and outs of the new country and how your new customer base behaves. There will be a lot more to learn, especially if you decide to establish a physical location there. You might need to learn about the law, the regulations, and other related issues in the new country, which is usually different from your country. It is better to hire native lawyers to help you with the papers and avoid unnecessary legal risks in the future.
From then on, you can continue to develop your strategies based on what your customers do. The more you sell, the more data of your customers you will have, and you can make little tweaks to your strategies to make it more and more targeted.
The final step of international expansion happens when it feels like you are doing business in your own country. By that time, you have essentially finished your global expansion process. It will take some time to grow and scale your business, but it will be worth the challenge and effort. Expanding your business overseas is also a great way to learn more about the cultures of the people there, and helps you understand how your business and products affect them. The more you grow, the more you will learn.
Are you ready to take the dive?
