Trading Thoughts Blog
Permanent link for Three Key Considerations for Successful International Expansion on May 18, 2023
It seems like all over the internet there are guides giving advice on specific locations or countries. Some of their advice can range from very specific to extremely broad, making it all the more confusing as to what advice might carry over into a different country. But what advice do all these guides have in common?
Here are some general rules to apply when expanding your business to any country:
1. Understand the Market
Market research is absolutely vital when trying to reach a certain segment. When expanding internationally, this step is crucial. Markets vary widely by country and region, market research for a specific area/region is highly recommended.
Some things to consider while putting together market research:
- Local currencies
- Potential client base in your market segment
- Number of local competitors currently in your target segment
- Foreign competitors in the desired market segment
If performing business from your home country and shipping to a foreign country, ask yourself: Do they take my currency? Could I take their local currency? What kind of people am I trying to sell my product to? What type of people need my product? Which companies in that market are already selling a product similar to what I am trying to sell? Is that market oversaturated?
Asking and answering these types of questions can help verify that your business can become successful in your next venture.
2. Know the Regional Politics
On the outside, a venture might seem extremely viable, but if the political climate is not advantageous then everything can stop in its tracks. If governmental entities are unwelcoming to foreigners or certain types of businesses, then adjustments should be made accordingly.
Things to look out for regarding regional politics include:
- Recently passed legislation regarding the business sector your company is attempting to enter
- Any tariffs or exceptional high duties
- Past and present tensions between the country of origin and the country your business is attempting to expand to
Has the country you’re operating from been at odds with the country you are trying to perform business with recently? Have the respective governments responded by putting tariffs and other restrictions on each other? Such actions would make trying to get your product within that country extremely expensive and could potentially ruin the competitive advantage you once held over your foreign competitors.
Additionally, if the country residents are highly involved in these politics, they might boycott your product anyway. It is important to consider this a highly relevant factor when attempting to expand internationally.
3. Study the Culture
The culture difference can be a make-or-break point when introducing a new business within a foreign culture. Certain topics might be considered more taboo, other countries may hold more conservative values, and different countries might have almost no boundaries at all.
Here are some techniques to get an accurate grasp of a country’s culture:
- Analyze Their Media - If a country’s media broadcasts highly controversial or offensive content, business in this country may not be good for business. Media analysis can also often give you an idea of what’s popular with your demographic and help you advertise abroad.
- Look at Their Laws - Some countries might ban certain demographics from certain activities by the letter of their law. In that case, it would not be wise to release a product that would make those demographics legally vulnerable or unsafe.
- Know Their History - Countries historically go through phases, yet many aspects of their culture remain constant over time. It’s important to understand major historical movements that have happened within your target country, how they affected or changed the culture, and whether are not some of those impacts are still lasting today. Additionally, it is vital to identify ongoing movements and build that into your brand identity for marketing within that country.
Also, understand that cultures within countries can also vary by region as well, so the more specific an analysis is to the target area the better. It is vital to know if your product or service would transition well within a country’s culture to gauge how successful it has the potential to be. For example, avoid selling products that go against a religious belief held by the majority or confront a cultural taboo in the country you are looking to do business in. It is vital to identify whether your product has a “fit” within the culture you are trying to sell to.
With all three of these major factors in mind, you are now ready to successfully expand your business abroad and find yourself a market with the perfect fit for your product or service and the Van Andel Global Trade Center (VAGTC) can help! Whether you are a company just starting to consider global expansion or have been at it for a few years, VAGTC can help you go global or expand into new markets. With funding opportunities available for small and medium-sized businesses from the Michigan Economic Development Corporation (MEDC) through the Michigan State Trade Expansion Program (STEP), there is no better time than now to start or expand your export operations!
For more specialized information on expanding your business internationally and getting connected to the MEDC and STEP, schedule a consultation with the Van Andel Global Trade Center to answer any questions and get connected.
ABOUT THE CONTRIBUTOR
Natalie Bremmer is a Student Assistant at GVSU’s Van Andel Global Trade Center . She is a Senior currently pursuing an undergraduate degree in Finance, Human Resource Management, and General Management at Grand Valley State University. She enjoys lifting weights, getting lost in a good video game, spending time with friends, and going on long hikes.
Edited by Parker Mackey, a student assistant at the Van Andel Global Trade Center.
Posted on Permanent link for Three Key Considerations for Successful International Expansion on May 18, 2023.