Taking your business global is more than just selling your products or services in a new country; it’s about diving headfirst into the complex world of international trade. Imagine your business as a local hero, now gearing up to make a mark on the world stage. It’s thrilling but challenging at the same time.
Going global is about tapping into markets that you’ve only read about or seen in the news. Each new country is a different story. Also, each has its own set of rules, tastes, and expectations. It’s like being a traveler, learning to speak new business languages, and understanding what makes people tick in different parts of the world.
You’ve got to plan really well, think on your feet, and be ready to twist, turn, and adapt. It’s like knowing when to stick to your roots and when to try something new to win hearts in a place you’re just getting to know.
Going international tests your business in ways you might never have imagined. It’s about getting cozy with new cultures, navigating through mazes of regulations, and sometimes, reinventing parts of your business while keeping its soul intact.
When you decide to go global, you’re not just making a business move; you’re signing up for a full-blown learning experience. You’ll learn about new markets, but you’ll also learn about yourself and your team. It’s a journey that demands respect for diversity, a knack for understanding different viewpoints, and a whole lot of patience and resilience.
There have been numerous successful U.S. companies that failed to expand internationally. You don’t want to be one of them. This article will help you take the steps to succeed.
Determine Your Company’s Brand Power
Before you start building a strong brand, it’s essential to know how the public currently views your company, so you can compare it to the end goal. Once you determine this as a baseline, you can keep track of your successes and failures as you build your brand over time. This is especially important when expanding internationally. There have been many successful companies that failed to expand internationally. One of the reasons why it tends to happen is the company relies too much on its brand power and not on other things such as the customer needs.
Here are some tips for determining your company’s brand power:
- Review your company’s mission statement, values, and goals.
- Perform a SWOT (strength, weaknesses, opportunities, threats) analysis: What are you doing well? What areas need improvement? Build on your strengths and determine how to address the weaknesses.
- Review customer testimonials or feedback from surveys sent out to customers and use that information to improve your products or services.
- Determine whether customers trust and respect your company’s brand and/or products or services.
Identify What Sets You Apart From the Competition
If your company sells similar products as a competitor, you should focus on those things that make you stand out from the crowd. What differentiates your product or service from theirs? Is it special food packaging that separates yours from the rest of the grocery store products? If so, how do people perceive that difference, and why is it important to them? Think about these things, and then develop a message around your brand that is unique. Doing this takes some time and honesty about your current business.
For example, Domino’s Pizza was able to successfully expand internationally once they realized that their edge would be in their ingredients and the taste of their pizzas. Especially, their pizza sauce.
They worked on the formula after numerous customer complaints and developed a recipe that stood out. Now, the pizza maker now has over 20,000 locations worldwide and its worldwide revenue of $8.7 billion annually is nearly equal to the U.S revenue of $8.8 billion.
Write down a list of your company’s strengths. What are you known for? This should be a part of your SWOT analysis that we previously mentioned. Think about how to best market your products or services, so they’re more enticing and memorable.
Define your target market demographics. Once you know what makes you unique, think about who will be most interested in your brand’s unique quality or feature. Your target audience can be based on several factors, including:
- Geographic location (state, city, or neighborhood)
- Interests or hobbies
- Financial status
Financing Global Expansion
Expanding a business globally is a significant financial undertaking that requires careful planning and strategic investment. The initial step is to conduct a thorough financial analysis to estimate the total cost of global expansion. This analysis should include direct costs such as market research, legal fees, marketing and advertising expenses, staffing, infrastructure development, and technology upgrades. Additionally, indirect costs like travel, cultural training, and potential opportunity costs should also be factored in.
Once the costs are estimated, the next step is to look at financing options. Businesses often look towards internal funding sources first, such as reallocating profits or reserves. However, depending on the scale of the expansion, internal funding might not be enough to get the job done. If that’s the case, external financing options come into play. These can include bank loans, lines of credit, venture capital, private equity, or government grants designed to encourage international trade and expansion.
For many businesses, especially small and medium-sized enterprises (SMEs), government grants can help. Many countries offer financial support to businesses looking to expand internationally. And why not? It is in the best interest of a country to expand business operations because it can boost the economy and create jobs. These grants can cover a range of expenses, from market research to setting up overseas operations.
Another important thing is managing foreign exchange risk. As businesses operate in multiple currencies, they are exposed to the risk of currency fluctuations. This impacts profitability. Effective foreign exchange management strategies, such as forward contracts and options, can help mitigate these risks.
You also need a good financial management system. You’ll need this for tracking and managing the financial performance of global operations. This system should be capable of handling multi-currency transactions, international tax regulations, and different financial reporting standards.
Establish Clear Communications
Since your brand will be part of numerous marketing pitches, you’ll want to ensure that it’s consistent at all times. Review your current branding materials (such as its logo or slogan) and identify any opportunities for improvement or inconsistencies in the design. Is the logo too small or faded? Are you using different fonts or colors in different marketing materials? Make sure all of your materials look professional and be consistent with how you use them throughout all communications.
Keep your logo or branding consistent depending on the type of material (business cards, website, letterhead). That means using the same verbiage in all communications. This will help establish how you want to be referred to before being used at all times. For example, “Red Lobster” can be written as “Red lobster” or “RedLobster”. For your brand, it’s vital to decide which one you want it to be!
Compliance and Legal Considerations
When expanding a business globally, navigating the maze of legal and regulatory compliance is one of the most critical challenges. Each country has its own set of laws and regulations, which can significantly vary from what a business may be accustomed to in its home country.
You first need to understand the legal landscape in the target country. This includes corporate laws that govern how foreign businesses can operate, such as restrictions on foreign ownership, required local partnerships, or specific business licensing requirements. Tax laws are also crucial. Businesses must understand both direct taxes, like corporate income tax, and indirect taxes, such as value-added tax (VAT) or sales tax.
Here are some other compliance and legal considerations you need to be aware of:
- Navigating Employment Laws: These laws include minimum wage regulations, working hours, termination rules, and benefits entitlement. It’s also important to be aware of labor union environments and collective bargaining agreements prevalent in the region.
- Compliance with Trade Regulations: Trade regulations, including import-export restrictions, tariffs, and customs procedures, are also vital. Non-compliance with these regulations can lead to hefty fines, legal action, and a damaged reputation. Businesses need to ensure they have the correct documentation and understand the legalities of cross-border trade.
- Intellectual Property Protection: Protecting intellectual property (IP) is another significant concern. IP laws can vary widely, and what is protected in one country may not be in another. Businesses must ensure their patents, trademarks, and copyrights are registered and enforceable in the target countries.
- Data Protection and Privacy: Data protection in other countries is different than in the U.S. Regulations like the European Union’s General Data Protection Regulation (GDPR) set strict standards for data handling and privacy.
- Seeking Legal Expertise: Given the complexity and variation in laws across different countries, seeking legal counsel is advisable. They can assist with contract negotiations, setting up business entities, and navigating the local legal system.
Legal and regulatory environments are not static; they evolve. Businesses must continuously monitor these changes and adapt their practices accordingly.
Cultural Adaptation and Localization
Succeeding globally for a company means understanding and adapting to the region’s culture. Expanding a business globally necessitates a deep understanding and respect for cultural diversity. Successful cultural adaptation and localization go beyond mere translation of language; they require a nuanced approach to business practices, marketing, product design, and customer service that resonates with the local culture and consumer preferences.
The first step in cultural adaptation is gaining an in-depth understanding of the local culture and consumer behavior. This involves researching and acknowledging the social norms, values, traditions, and taboos of the target market. Every culture has its unique aspects, which can significantly influence consumer behavior and preferences. For instance, color symbolism varies greatly between cultures and can impact the perception of branding and products.
Adapting products and services to meet the needs and expectations of local customers is vital. This may involve modifying product features, adjusting service offerings, or even developing new products specifically for the local market. For example, global fast-food chains often include regional specialties in their menu when entering new markets.
Marketing and communication strategies should be localized to ensure relevance and effectiveness. This includes not only translating content but also adapting messaging and imagery to align with local cultural nuances. Marketing campaigns should reflect an understanding of local customs, holidays, and consumer attitudes. It’s also important to choose the right channels for communication, as preferred media platforms can vary significantly between regions.
Establishing strong relationships with locals such as suppliers, distributors, and community leaders, is crucial. These relationships can provide valuable insights into the local market and help in navigating the cultural landscape. Engaging with the local community and showing respect for its culture can enhance a company’s reputation and facilitate smoother business operations.
Once you’ve established a consistent and accurate brand image, monitor its performance over time to ensure that you’re still meeting the expectations of your customers. Drifting away your core principles can potentially cost your client, so make sure that all branding efforts support the company’s mission and vision.
How to monitor results:
- Make sure your logo or slogan is consistently applied across all materials and platforms (i.e., website, business cards, etc.)
- Track how many people are visiting your website based on different modes of communication. If a particular advertising method resulted in an increase in traffic, then use that for future promotions!
- Analyze how your customers are reacting to new website changes or sales promotions. Are these methods yielding the desired results?
- Make sure that all branding materials are consistent with the company’s mission and vision. If they aren’t, you may be sending inconsistent messages that could hurt your image over time!
To create a strong global brand, you need to understand what makes your organization unique and then communicate those strengths in a clear, consistent way. Expanding internationally is something that should not be done in haste. Take the time to really evaluate and determine if global expansion is the next step for your business.
This article was first published in 2021 but has been updated and expanded