By Sanjay Sehgal
Expanding the business globally is an enticing proposition, although it requires a carefully crafted strategy with a focus on comprehensive planning, quick implementation, and solid control of important performance parameters.
Taking the business to the doorsteps of global audiences presumes strategic significance in this era of digitalization. Organizations are expanding to reach wider categories of prospective buyers, and by winning over more customers, they reap attractive benefits in sales, profitability, and market expansion. The decision to go global resides with the top echelons of the organization as C-suite people are the ones who weigh all global options before taking a final call to scale the operations internationally. If you too steer the organization in the capacity of C-level executives, then here’s the complete guide on how to scale your business and emerge victorious by conquering markets globally:
Why Go Global?
Building a strong brand reputation and achieving higher profitability by accessing a wider customer base internationally are among the top benefits of expanding the business globally. Further, the expansion will lessen the over-reliance on one particular market and open new avenues of opportunity for firms to achieve enhanced share, growth, and profitability while boosting their global presence. In addition, by competing in the fiercely contested global markets, firms can significantly enhance their competitiveness and achieve a sustainable advantage over rivals by offering class-leading products and services. In sum, expanding internationally brings a host of benefits to the table and ensures firms continue to remain profitable by boosting their bottom-line performance across critical indicators of significance.
How to Venture into Global Markets?
While going global has many advantages, successful expansion in international markets comes with its own set of challenges. A study conducted by Harvard Business Review found that the average return on assets (ROA) achieved by a majority of firms in the first five years of operation is -1%. Further, to realize an ROA return of +1%, firms need at least 10 years with only 40% of the global forays capable of taking this to +3%. Clearly, the path of global expansion is full of challenges and calls for the adoption of a strategic approach to make the international debut successful.
- Comprehensive Analysis: Analysing both micro and macro components of the business environment is a prerequisite and must be conducted comprehensively by the company in wider consultation with its suppliers and channel partners. Start the analysis with a macro environment, which consists of deliberations on the PESTEL, and then follow it up with evaluating gaps in the current market offerings. Once the gap analysis is done, proceed with the SWOT analysis before finally deciding on the marketing mix (7 Ps) to capture the market abroad.
- Conceptualize Business Plan and Strategy: A business plan is a blueprint that guides organisations through their global expansion plans. Understanding the local markets, their socioeconomic characteristics, and cultural linkages is important for reaching out to the target customers with the help of a carefully crafted local-market strategy. In addition, maintaining compliance with local laws and supporting the well-being of indigenous communities can also prove instrumental in making your Going Global strategy a resounding success.
- Interim Executives: While launching global operations, firms either take executives from the parent brand or build teams locally in the host country. While both of these methods have their own merits, the primary disadvantage is the long time involved in constituting teams within these frameworks. Working with interim executives, on the other hand, is the best method to hit the ground running and start delivering right from day one. Interim experts bring domain experience with them, and by quickly validating the market assumptions, these people can quickly set up and start operating businesses in foreign markets. However, keep in mind that this is a stopgap measure, and in the long term, you need to build a strong local team that is complemented by globally competitive top management.
- Be Product Ready: Keeping the product ready for a swift market launch after commencing operations is an important determinant of success. The unfortunate part is that most firms fail to deliver on this crucial aspect and struggle to align their product launch in quick succession to the launch of their business. To keep the product ready for the market launch, businesses must be ready to meet the compliance requirements of the host country, have obtained patents, trademarks, and copyrights related to their products and services, and have localized their offerings in accordance with local needs and requirements.
- Develop Marketing Strategy: Creating, communicating, and delivering superior value propositions are at the heart of a successful marketing strategy. A cohesive and well-directed marketing plan emphasizes developing an optimum sales strategy, establishing key performance indicators (KPIs), and pursuing pricing that aligns with the income and aspirations of the host countries. Deciding on the extent of the localization is also an important part of the marketing strategy that can impact the fortunes of the company while going global.
- Striking Relationships: Coordination and collaboration are effective themes to minimise financial risks while expanding operations on the global horizon. To effectively pursue global customers, companies can strike partnerships with local players and become part of ecosystems by offering complementary products and services. Developing and maintaining good relationships with local alliances and teams is also helpful to excel in the global expansion strategy.
Going global is among the most important strategic decisions of the organisation. It mandates a huge amount of investment, although the profit potential of the strategy outweighs the financial risks involved in expanding operations overseas. For launching operations globally, organisations require a strong heart and a cool head, and by sticking to the fundamentals mentioned above, firms can achieve new heights of success in their global expansions while winning over their customers from all over the world.
