January 22, 2022
In accordance with microeconomic theory, the main goal of the company is to maximize profits, which is achieved by its growth and development. This goal can be accomplished in various ways. One of the possible options for a company is a global expansion.
The decision to go global is influenced by several factors. We will take a look at each factor in this article and will provide tips for entering new markets.
Sustained success, continuous expansion of the range of services, and readiness for progressive changes are powerful incentives for a business to transcend borders and enter foreign markets where there is an opportunity to access new clients. In this way, you can increase the company’s market share and sales of services while maintaining the overall brand strategy.
Profit growth is perhaps the most attractive reason for entering new foreign markets. It is influenced by various factors. First, an increase in sales directly leads to an increase in profits. Additionally, companies may set prices for their services in international markets higher than in local ones.
The economic situation in the domestic market may lead to a decrease in the solvency of consumers of the company’s services, and consequently to a reduction in sales. The inability to achieve growth goals in their market forces companies to look for new opportunities. The greater the number of international markets, the less the company depends on changes in one of them. Reducing the demand for services due to the economic downturn, political instability, and the volatility of consumer tastes will not be able to significantly affect the success of the company as a whole, because losses are easily compensated by international representations in other countries. This allows you to distribute risks between individual branches, thereby significantly reducing them.
Increasing brand awareness
If a company applies a standardized marketing strategy for all its international markets, using the same identity, advertising, and document design, this can help increase overall brand awareness. It is quite logical that increasing consumer loyalty to the company will affect the growth of sales of services and, accordingly, the increase in profits.
Assessing a company’s readiness for scaling
Winning and maintaining positions in foreign markets is much more difficult than simply announcing the globalization of business and waiting for revenues from sales of in-demand services abroad. The organization of marketing and sales in the territory of any other country requires careful preparation and study of some of the most important aspects of working in this market. To find out if a company is ready to expand, it is necessary to answer a few questions.
The presence of the target audience
First, it is necessary to find out whether there really is an appropriate target audience in the countries where business development is planned. After all, the high demand for the company’s services in its native country does not mean that it will be as high in other countries. Before investing time and money in conquering new territories, it is necessary to conduct research to know that your company’s target audience is there, needs your services, and is ready for you to enter the market.
One of the main arguments for choosing foreign markets is their similarity to the domestic market. The more intersection points there are, the easier the adaptation process will be. After all, the algorithm for achieving success to a certain extent can be repeated in the foreign market. In this case, it is worth familiarizing yourself in detail with the peculiarities of the market situation and identifying the main differences to effectively negotiate and conclude agreements on mutually beneficial terms. It is necessary to consider the presence of trade restrictions, geographical location, currency system, the culture of the chosen country, etc.
Successfully taking a business to the international level is possible only when the financial and structural stability of the company allows you to attract new employees who will be able to cope with large volumes of work. Therefore, before entering global markets, it is necessary to make sure that the company has enough resources and personnel to begin expansion into new markets.
It is important to form a strong team that will be responsible for the expansion of the company and effectively overcome new challenges. Without steps to expand the workforce, it will be difficult to build a business abroad while supporting the sustainable development of the brand. In addition, your team members must be fluent in a foreign language. Today, customers prefer to communicate directly with local experts.
Hiring personnel in foreign countries is not an easy process to manage. Acvian with the help of its Employer of Record solution will help you to run the processes of international hiring and payroll smoothly, cost-effectively, and safely. Check out our recent blog, outlining the reasons not to establish foreign legal entities for international hiring.
Creation of a roadmap for cooperation with potential partners
To scale the business and expand its presence not only in the domestic market but also in the world, it is necessary to create a reliable system, provide strong management to cope with new challenges that will certainly arise. International competition and integration into another culture is a powerful incentive for this. Given the different business models, this may seem daunting. However, all that is required is preparation.
To enter a new market, pre-project preparation is necessary – from the formation of a brand concept to accompanying the path to a potential buyer, as well as conducting market research, updating, and adjusting the company’s marketing strategy, etc.
Competition in the global market is much tougher than in domestic markets. Therefore, to scale a business, first, services must be truly unique, professional, comply with international standards, and be performed in compliance with the rules of professional ethics. In addition, it is important not to cross the line between being customer-centric and remaining impartial and independent of opinion.
Pooling resources for sustainable growth
If the market has noticed a new company, the business starts to grow by leaps and bounds. Clients appear and with them new challenges – how to provide services in the required volume. And if the company cannot meet the growing needs, customers begin to forget about it and go to competitors.
The answer to the challenge of growing customer needs can be the creation of a learning ecosystem within the company that supports business growth and the constant need for employees to master new competencies. With its help, you can implement models, processes, and systems that guarantee a financial result and meet the needs of customers at peak loads.
Choosing the optimal presence formula
Before developing new markets for your services, you should carefully study all aspects of doing business, weigh all the risks, consider the national and mental characteristics of consumers, and study competitors. To do this, you need to hold several meetings with your potential employees, suppliers, and partners in new markets. This will provide a large amount of information about the work in the country, about its specifics. This tactic is used by all international companies that enter foreign markets. Why not borrow a proven algorithm of actions that will not harm the business?
Creation of an innovative corporate model
Organizational design is how your company is perceived by customers in foreign markets. You need to be prepared that partners and clients will carefully analyze your operational and management processes. Therefore, a certain organizational update with a reorientation to the client will only benefit the business. For example, managers who were previously responsible for managing internal processes can take on responsibility for external focus and stakeholder engagement. Such a reorientation is conditional because any changes are generated from within. But in the eyes of customers, management is perceived as partners interested in satisfying the interests of consumers.
If you believe that your services are of competitive quality and you plan to enter a new market, you need to fully plan it at all stages. An effective analysis will make it possible to level the risks of lack of demand, unforeseen expenses and consider all the local features of doing business. In addition, it will help to optimize terms, find reliable partners, and get analytical support at all stages of entering the market.
Global expansion is always a risk. Failure to make the right moves at an early stage can lead to a much faster collapse in international markets than in local markets. The requirements of global markets for new players can and will change, so you should be well prepared and calculate all possible scenarios for the development of events. Preparing for every negative scenario will help you deal with problems with confidence. To do this, you need to conduct a deep and comprehensive analysis of the market you are going to enter. This will provide insight into key aspects such as:
– potential market size.
– features of the provision of services in the selected country.
– detailed analysis of competitors.
– price monitoring, etc.
The result of the analytical study of the foreign market is a multi-factor model for selecting the target market, which considers all exit risks and contributes to the correct choice of strategy.
It’s best to start preparing for business scaling with a clear plan to highlight short-term and long-term growth goals. Companies can seize the best opportunities when top management fully understands potential opportunities for expansion. An internal strategy and knowledge of the strengths and weaknesses of your business are also important for effective competitor analysis. Keep in mind that strategy and evaluation should not be static. They need to be reviewed as often as market conditions change.
Having received information about the market, consumers, and competitors, you can proceed to the approval of the current strategy for entering foreign markets.
The strategy includes:
– current additions to the services provided.
– competitive pricing policy.
– effective sales channels for services in the market.
– tools for promoting services, etc.
Embodiment of global thinking in company culture
For successful integration into foreign markets, it is not enough to fulfill legal formalities. Although this should be thought out to the smallest detail. Entering the international level is a great success for any company, but not everyone succeeds. To go beyond the local market and hold positions, you will have to organize work in accordance with many new factors that you have not had to deal with within your own country. Therefore, it is important to adhere to a certain algorithm of actions necessary to start working in foreign markets.
It is necessary to set a high bar, difficult to achieve goals – this will lead the business to the desired result. Any management decision, any operational process should be analyzed from the point of view of how it will work in a business scaling environment.
Also, be prepared for the fact that in the global market there is no instant success. You need to be patient, calculate your resources for a long distance if you plan to root your business in the chosen country. But this is an investment in the future. Therefore, any management decisions must be consistent with the global strategy and provide for several steps forward.
Global offices should not be led by a team of leaders, individual stars that pull each in their own direction, but by a leadership team that can work together to achieve a single goal in its highest manifestation. These may be people who have worked in different companies, in different countries, in different markets. And they understand how the culture of the chosen country differs from the domestic one.
When preparing to scale your business, you should prepare a list of companies that can become your partners in the target market. The support of specialized organizations, international experts, and companies from related industries will provide a reliable platform for a newcomer company to start confidently.
The main steps of the company to enter international markets:
- Analysis of statistical indicators of market conditions.
- Assessment of the company’s potential.
- Market selection.
- Checking for compliance of the quality of services with the standards of target markets and certification requirements.
- A thorough study of clients.
- Assessment of the company’s readiness.
- Analysis of resource provision (human and financial).
- Work on reputation.
- Search for partners.
Useful Tips for Success
Learn from experience
If all the pros and cons are weighed, and the management has confirmed the company’s readiness to start moving to the international market, first, one should study the useful experience of companies that have already gone this way. Perhaps one of them will become your reliable partner in this matter and help you overcome difficulties.
Don’t Forget the Power of Networking
It is not advisable to start such a serious project alone. Enlist the support of a mentor, an influencer, or a company that can support you in the process of establishing business contacts abroad. The chances of success increase if such a partner understands the specifics of your business and the industry as a whole and is well versed in the target market. Do not be afraid to meet new people and look for opportunities for fruitful interaction.
Set clear milestones
Determine the goals you are striving to achieve by establishing business contacts, and steadily follow them. This will save you from unsuccessful steps when investing funds or concluding additional contracts. To achieve success in the foreign market as quickly as possible, one should beware of immediately making big concessions to foreign partners, changing one’s own course.
Assemble a professional team
The team is a powerful asset of the company. It must include competent specialists who know the language and have the necessary connections in local business circles. Therefore, each employee must be as dedicated as possible, professional, and ready to achieve results over a long period of time.
The issue of hiring employees who will be responsible for the negotiation process and work with clients in another country deserves special attention. Local life and culture should be close to them, but the interests of your business remain a priority.
Be consistent in brand protection
New markets for the company’s services may require minor changes to suit consumers with a different culture. These may be certain visual and organizational updates, but they should not change the core principles of the company. The core values of the brand should be maintained in all markets because this is what makes the company different from others, and this is what makes it recognizable among consumers. Therefore, consistency in brand protection is important for business.
Adapt to change
If a company is looking for new markets, its top management must be willing to listen and adapt to local tastes. This is part of running a company. By acquiring new qualities within a global business, the company increases its chances of achieving the expected results and profits from expansion.
Stay vigilant with innovation
Business cannot stand still, so it is quite natural that the company will expand the range of services in accordance with new market needs and develop new marketing programs. When entering international markets, it will be necessary to consider the needs of customers not only in the domestic market but also in foreign ones. However, when coming up with new ideas and technologies, one should consider how they can be applied to foreign markets.
Making any important decision requires a slow, responsible approach, especially when it comes to doing business abroad. Think through possible scenarios, considering the strengths and weaknesses of the business. You must clearly understand all aspects of your market expansion strategy, a study in detail the markets your company is targeting, and consistently implement all planned steps.
Entering the international level opens endless opportunities for companies and their owners. Players planning to enter the international market must choose a specific market, strategies, and methods of entry, as well as consider many legal subtleties and tax aspects.
Being your professional employment provider Acvian will take care of your workforce overseas and all HR related questions:
- Employee onboardings
- Local agreement drafting and approval
- Payroll setup and calculation
- Wages payment and payslips providing
- Benefits compensation and expenses reimbursement
- Tax filing
- Legal consultancy
Contact the Acvian team today and learn what it will take to hire your talents. With our reach in 118 countries and a strong network system, we can make your global expansion happen much sooner and at a lower overall cost.