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What is an internationalization strategy?
An international strategy is a strategy through which the firm sells its goods or services outside its domestic market. International markets yield plenty of new opportunities for your business to grow. With an internationalization strategy your business could increase in market size and emergence of new markets, end up with a greater return of investment, acquire global brand recognition and customer satisfaction.
Why do you need to build an internationalization strategy before expanding your business?
Business internationalization can have huge benefits, but that does not mean it is risk-free. You will have to consider some risks when adopting an internationalization strategy. Fortunately, building a strategy can help you achieve both your short-term and long-term goals. Strategy focuses on principles, which help you think, instead of tactics, which help you execute, so it allows you to concentrate on why your business does certain activities, not just how you do them or what you do.
Why do businesses expand to other countries?
Different businesses would have different interests, expanding will be good for those who have exhausted growth opportunities at home, they turn to global expansion to help grow their business. For many companies, international expansion offers a chance to explore new markets and gain access to millions of customers, thus increasing sales. Expanding abroad allows them to get out of a saturated market where their competitors do not operate.
By expanding abroad, businesses find the opportunity to not only sell their current product or service to a new customer base but also to invest and introduce new products/services. With a much broader customer base, they can generate more business and increase sales. Also, they will be able to lower their operational costs and save money. Many companies have found it advantageous to move some of their manufacturing operations to other markets due to cheaper labor costs and more affordable and greater talent.
Expansion as diversification of the market
Keeping your business in the home market can limit potential for profit. One of the downsides companies face when they operate in only one country is the exposure to market changes. Taking your business international allows you the opportunity to diversify your markets, so your revenue is more stable. If your domestic market is slowing down, having the advantage of a global market will help cushion the company during slower economic times.
Tips to consider in an Internationalization Strategy.
Evaluate if you have the funds and customer base you will need.
First, make sure your customers exist. A product that sells well in your home country may not have the same appeal and popularity in international target markets. Scaling across borders is complicated and expensive regardless of a company’s size, and the process can take time and resources away from other opportunities. Look at finances and honestly ask yourself if you have the funds to support the initial investment and sustain the growth.
Find the right partners and team members.
It is crucial to establish a local office and team that understand the market and language to comply with local regulations.
Having a local country manager, like SERVIAP, can go a long way in not only ensuring that the company is compliant in each new market, but that it is handling its expenses efficiently as well. Working with a local partner can also help communicate your company’s unique selling point in a way that is meaningful to the local market.
Structure your infrastructure properly.
Having the right infrastructure in place will ensure a smooth launch. A management team that can deliver your strategy from a satellite office is the smart way of doing it. But you will need to decide first which business decisions can be made on a local level and which need to be made centrally.
Either if you have the capabilities to set up IT and telephone systems or not, is important to have that under control. The way that your future employees share data must be securely, and the data you are capturing needs to follow the law and best practices to avoid future legal problems.
Consider new ideas and rely on the experts.
Time zones, language and cultural appropriateness all need to be considered when you branch out internationally. It is imperative to study the culture and the way people communicate daily, and to also ensure you have people on the team who know the culture you are marketing to inside and out to ensure your message will be interpreted in a way that resonates rather than upsets.
In a globalized economy such as today’s internationalization, it has become almost an obligation rather than an option. With so many ups and downs in the growth rates of the different countries of the world, market diversification is a highly recommended strategy to guarantee the survival of a company in the medium and long term.
When considering expanding internationally, many businesses think that the only way to achieve their global goal is by setting up their own entity in a foreign country. However, setting up an entity can take time and if a company is looking for a more cost-effective and faster way to expand their business and hire workers globally, then SERVIAP could be considered. With our help, you do not need to set up an entity, and your workers will be employed legally and compliantly in a new country within a matter of days.