International expansion

International Expansion: 5 steps to build a winning global strategy

International expansion is essential for companies looking to scale up. It is one of the five key ‘growth stars’ for any global business out there. 

Software businesses grow like any business – by moving into new markets.Ed Fry, Head of Growth, Paddle

When we think about the global economies, the U.S. market might pop into our minds first as the leading force. But the reality is much different and there are notable movements in terms of market sizes and values.

International expansion in an ever-evolving world

Let’s pause for a second to look at the data and revise what we think we know about the global economy. In 2018, a book called “Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think” was published as a joint effort by Swedish statistician Hans Rosling and his son, Ola Rosling, and daughter-in-law, Anna Rosling Rönnlund.

Every single claim in this book is backed by official data. The book helps you realize just how much the global media shapes your perception of the world, along with all the “common facts” – which are not really facts at all.

Hans Rosling explains four different levels of income and how the world is gradually improving in terms of standards of living. He also exposed how we’re probably wrong about the economic forces in the world:

Yes, I think the Western domination of the world economy will soon be over. People in North America and Europe need to understand that most of the world’s population lives in Asia. In terms of economic muscles “we” are becoming the 20 percent, not the 80 percent. But many of “us” can’t fit these numbers into our nostalgic minds.

In addition, the book explains how by 2040, 60% of Level 4 consumers will live outside the Western world, meaning that markets once considered somewhat underdeveloped will take the lead.

So, what’s the current state of affairs? Right now, more than 50% of the revenue in the U.S. S&P 500 Index comes from sources outside the United States. Top global tech companies like Apple, Amazon, Netflix, and Paypal are present in markets around the world. That adds up to a considerable amount of money:

Rank Brand Brand Value Value Change (2019-2020) Brand Revenue Industry
1 Apple $241.2 B 17% $260.2 B Technology
2 Google $207.5 B 24% $145.6 B Technology
3 Microsoft $162.9 B 30% $125.8 B Technology
4 Amazon $135.4 B 40% $260.5 B Technology
5 Facebook $70.3 B -21% $49.7 B Technology

Source: www.forbes.com

However, global expansion can be tricky. Take Parker Pens, for example. They launched their advertising campaign in Mexico by mistranslating “embarrassed” as “embarazada” — telling their prospective customers that the pen wouldn’t get them pregnant (good to know). Of course, this is just one single example of a chuckle-worthy fail in the domain of localization.

The truth is, that international expansion is a venture with many different obstacles.

Are you interested in expanding internationally, but aren’t sure where to start? Read this guide to international expansion to learn more.

    What is international expansion?

    International expansion (or global expansion) is the process of entering a foreign market, or multiple foreign markets, to capture a greater share of the global market.

    Many brands jump straight to wanting to enter a foreign market without spending a sufficient amount of time developing a strategy. While international expansion is an exciting opportunity, there are many challenges to consider. Move too quickly, and you risk entering a market without a strong product-market fit. Move too slowly, and you risk losing out on key opportunities in favor of your competitors.

    The benefits of global expansion

    International expansion can provide opportunities for significant growth and scalability beyond what may be achievable within a single market only, no matter how large that market is. Boosting potential sales, revenue, and profit–are the main objectives for any business seeking to grow. Besides that, expanding to different markets allows companies to diversify their business risks making them also resistant to single market shocks.

    Access to resources is another important advantage to consider. Operating in multiple countries provides access to unique resources that may not be available in the home country. This includes access to a larger international talent pool, technological advancements, or raw materials for certain industries.

    Insights from different markets help generate new ideas and innovate, improving products and services faster and more efficiently as well.

    Companies that successfully operate globally often gain a competitive advantage. Global businesses are often seen as industry leaders, enhancing their brand recognition and increasing their credibility not only internationally but also in the domestic market.

    4 modes of international business expansion

    1. Exporting–this is often the first mode in global expansion for companies producing goods and services. Simply put, as part of their expansion strategy, companies from one country would sell their goods and services to companies or consumers in a different country.
    2. Licensing and Franchising: as part of international growth, companies use this method to allow other businesses the right to use their brand or technology or sell their product in another location, often in exchange for agreed fees.
    3. Joint Partnerships: these are formed with foreign companies for mutual benefit –you share your resources on the product and services while also benefiting from the local partner’s knowledge of the region.
    4. Strategic Acquisition: acquiring or merging a local company in the same field, allows businesses to gain immediate access to the new market.

    Selecting the approach that works for your business depends on various factors. Financial resources, industry, competition, and other market research initiatives would help you understand which way to go.

    Challenges involved in international expansion

    International expansion isn’t as easy as snapping your fingers and magically making your products available in other markets. To determine if you’re truly ready to become an international business (or expand your global reach into a new market), here’s what you need to bear in mind:

    international-expansion-infographic

    5 steps to building an international expansion strategy

    Expanding into international markets takes deliberate planning. As you’re revving up for global expansion, follow these steps to create an international expansion roadmap:

    1. Recognize the challenges, time, and commitment necessary

    Most companies struggle with international expansion, taking five years or more to see a return on their global investment. HBR determined that it takes 10 years to reach a modest +1% ROI, and only 40% of companies create more than 3%. The reason it’s so challenging? Many companies believe it’s the only growth strategy available to them, leading them to enter too many foreign markets too quickly.

    Furthermore, the complexity that’s required to enter a new market is often neglected because companies simply don’t know any better. They treat l10n (localization) as an afterthought rather than an integral business process necessary for going global. This ends up costing a lot more in the long run.

    Successful international expansion requires time, patience, and commitment. Before embarking on an international expansion project, determine your goals and objectives and how you’ll balance the investments you need to make on a global level with the business you’re currently doing.

    2. Evaluate the pros and cons of market entry

    Beyond the broader pros and cons above, there are market-specific barriers to overcome. These include technical limitations (like outlet voltages or smartphone settings), cultural norms, and different languages. You’ll need to determine which markets to enter and, more importantly, why.

    Netflix grew its global value by 72% between 2019 and 2020, according to Forbes, and part of that is due to a careful international expansion. Rather than jumping straight into every market, they consciously evaluated each potential country for language, culture, and competitors — starting with Canada, the most similar market to their home country of the United States.

    Rather than trying to enter new markets from scratch, without any brand equity, they piggybacked on existing well-known brands in other relevant sectors, like broadband and Internet companies, to bring Netflix into every home.

    Besides local advertising and marketing partners, they’ve partnered with companies like Vodafone to have a Netflix button on their television remote, making it seamless for customers in other markets to engage with the platform. As they’ve accelerated their global expansion, they’ve worked directly with in-market mobile, broadband, and television partners to become culturally relevant worldwide.

    3. Conduct market research

    With international expansion, timing is everything. All the work you’ve done to launch your business in your home market — product-market fit, focus groups, social media, market research, testing your idea — you must be ready to do all over again with a new market in mind.

    Starbucks, for example, formulates every menu with local items to fit the taste preferences of each country. They conduct intensive market research to change their products so that they match what customers really want in a given market. By partnering with local coffee companies, they alter the formulas and packaging to those that make the most sense for the market — emphasizing local ingredients and innovative designs. By doing so, they can better capture customer loyalty in brand new markets.

    Consider the flagship Starbucks store in Milan. Starbucks updated a well-known building rather than introducing a new Starbucks-branded store. This not only complied with local regulations but also revitalized a historic area along with a building that had been neglected, thus creating a unique experience for locals and tourists alike.

    While you might have a completely different business, and be without the resources and research teams that Starbucks has, there are simple yet crucial steps you can take to make sure your launch in the new market isn’t a failure.

    4. Commit your organization to continuous localization

    Prepping for global expansion isn’t just about the new parts of your organization you’ll create and hire in other markets, like translators, local support teams or even local sales teams. It’s about preparing your existing team to adapt their processes and how they will collaborate with other localization stakeholders.

    Your product team, for instance, may have a sprint cycle that ships new software updates every week. With international expansion, you’ll need to create room in that process for localization. In fact, localization should be a part of your continuous delivery workflow so it doesn’t halt product releases. Plus, then your international users are not treated like second-class customers by not having access to the latest version of your product right away.

    Simply put, your products and content are likely to be continuously improved and updated, so that means you’ll continuously have new content to translate and localize. Because your international expansion isn’t a one-off thing, once you launch in a new market, you’ll need to constantly support your existence in that market.

    Thus, your marketing, sales, and support will become a part of localization because you’ll also need to create and ship new content in order to attract and retain customers in your new target market.

    5. Localize any digital content and assets that will support your expansion

    Your international customers will likely interact with your brand in multiple ways. For example, they may read your blog posts, visit your website, receive an email, read your tweets, see your ads, talk to your support, and so on. All of these digital assets support the process of entering a new market. Once you know your target market(s), you can start localizing the rest of your existing content — and therefore prepare for future expansion.

    The alternative is that your user experience for international customers can become awkward and disjointed because multiple touchpoints are out of sync. Imagine customers searching for your product on google, they land on your website, but it has been translated into their native language using negligent machine translations.

    Despite the fact that your product might be perfectly translated and localized, your website is an integral part of your customer journey and machine translation quality is going to raise some trust issues (especially if you are brand new to the market).

    This misalignment will reflect negatively on your whole brand and your customers won’t care which team was responsible for it.

    Keep a single source of truth for all your translation and localization files and assets

    For software companies in particular, your content likely is hosted on different platforms and using different technologies. For instance, your marketing content may be stored on WordPress, while your product (your software), is on Azure Repos, GitHub, Bitbucket,

    Furthermore, you’ll have different teams owning and managing the content and potentially working with many different translators. As you can imagine, keeping everything in sync is going to be quite a challenge and you risk creating misalignment among your teams. Just think of the endless back-and-forths between product managers, developers, marketers, and translators. Also, you’ll likely often get charged for the same translations twice, which ultimately results in much higher costs, missed deadlines and releases.

    To keep things from falling apart, you need a platform that allows you to seamlessly integrate and connect to all of your content platforms (all the content that needs to be translated and adapted), keep and organize all your translations, and get an overview of your projects and communication with all the stakeholders in one place.

    What you should do next

    Request a custom demo and see how to implement an interconnected continuous localization workflow at your company.

    Lokalise’s customers report an up to 37% shorter development release cycle and 8 times faster translation delivery times. 3000+ companies from 80+ countries, including Notion, Lemonade, Bayer, and KPMG – use Lokalise for continuous localization.

    Talk to one of our localization specialists

    Book a call with one of our localization specialists and get a tailored consultation that can guide you on your localization path.

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