Given that the needs of humans are approximately homogeneous across countries, and almost across cultures. When a business succeeds in providing a solution to a problem, either with a product or a service, the next rational thing to do is ensure that the product gets to all the possible markets at which it will be needed or will help meet similar needs.
The existence of possible potential markets in other countries is one of the fundamental reasons for which a business (company) would decide to go global or extended to neighboring countries. Other reasons for which a company would consider entering foreign markets the include ; 1) the desire to take advantage of cheap labor or capital resources in other countries (as many US companies are doing in China), 2) to seek foreign investors, and funding among others.
It is the dream of almost every entrepreneur to be able to extend their tentacles to international markets. The caveat according to research however is that expanding to foreign markets should only be considered after a business has gained significant grounding in the home country.
Extending service and product delivery to foreign markets is not easy and comes with its own sets of challenges, however, it is not impossible.
There are copious examples, of successful global business from which budding startups can learn from like Shoprite, Ecobank, Barclay’s bank.
There are three main channels through which a business can be able to enter a foreign market 1). Direct investment of the mother company, 2) Partnership with foreign country nationals, and lastly 3) franchising.
Below are some steps to follow in order to expand your business to neighboring countries.
The first two steps may seem trivial, but they are the determining factors of whether your business would succeed in a foreign market or not.
1. Answer Why You want to Expand to Neighboring Markets: Before you consider expanding to foreign markets, the first and most important question you have to answer is why do I want to expand to these markets. Being able to answer your why gives you a lot of perspectives and helps you tailor-make executable strategies. Do you want to expand because there is a ready market for your product, or to take advantage of cheap labor, infrastructure, and logistic resources? You must have clarity on you why.
2. Where (which market) yo you want to Expand to : After figuring out why you want to expand, you now have to decide which market you want to expand to. You may have a couple of alternative markets in mind, but it is important you expand one international market at a time. Conduct a market research where you can find out who your competitors are, the approximate size of the customer base for the product, and how the product is priced in this new market.
3. Study the Culture of the Foreign Market: To succeed in any international or neighboring markets it is expedient that you study their culture. The needs may be homogeneous, but our cultures are very diverse.
For example, a South African insurance company trying to expand to Ghana has to study how the insurance market in Ghana works. Are insurance sold face to face, do the clients come to the office or are sales made through phone calls. Do they really like insurance at all?
Or Is it a shoe or clothing business? You must understand the fashion sense of the population and any superstitious belief they have about fashion. You have to understand and have an idea of how this new market would respond to your product. Studying the country’s culture would help you work on the product or service delivery to suit the specific demands of the culture.
For example, strategies that work sales wonders in one country’s market may terribly fail in another. The way in which customers want to be approached varies across countries. So you cannot have a one size fit all strategy, instead, you can standardize the core product and service while you customize the superficial aspects of the product to the taste of the local consumer. For example, KFC and other fast-food companies have been able to succeed in doing this. The taste of the KFC burger you eat in China is slightly different from the one you eat in Ghana, however, the underlying ingredients remain the same.
4. Study the Government Regulations and the Legalities: To expand into a neighboring market or any foreign market it is important to understand the rules and regulations governing your specific industry of interest and the entire business industry in that country. How is a business registration done, how long does the process take, what is the tax system like? And lastly if possible you must build some networks with some public officials if you can. However, you should be careful not to fall in the wrong hands.
5. Breakthrough the Language Barrier: The are still a number of countries that English is not their first language. Like French, Spanish Swahili, or German-speaking countries. To be able to successfully expand your service and products to some of these neighboring markets you have to be able to communicate with the indigenous. You either learn the language or get local ambassadors to help out. Thus if you offer either tangible or intangible products, your product labeling and packaging should capture the spoken language of the people.
6. Visit the Country and Build One on One Relationship: It is necessary to network with one or two people who are already playing in the industry you seek to enter. Social media is a good place to get to meet, interact, and nurture these business relationships. You can also make use of resources like skype calls, zoom calls, and webinars to set up meetings. However, eventually, you must visit the country, is it the US, Kenya, Japan, etc.
7. Study and Understand Market Trends: Before you expand into any foreign market you must study the prevailing market trends of that country and understand how developed or rudimentary it is. What advertisement techniques are working in traditional media, print media, or social media? What age group of customers is most active, spending habits of the population, are people generally auster, or on average are heavy spenders.
8. Master the Currency Exchange Rate: Currency conversion, billing, and invoicing should be easy to do. Set pretty competitive rates not to rib off your customers but a leveraged rate that will result in a win-win for all.
9. Move Ambassadors and Influencers: Here, there are a number of mixed strategies you can adopt. You can move already grounded brand ambassadors from your mother company (headquarters) to this foreign country to work with some indigenous ambassadors. The ambassadors you move would help inculcate and transfer the company culture into this new environment. You can also use celebrity and social media influencers endorsement to market your product.
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