11 Things to Consider when Expanding your Business Internationally
By: Ricky vela
The world is a global village now. Every entrepreneur starts dreaming about going global after the launch of his setup. The concept of globalization implies a worldwide activity of financial, trade, and communication integration and relativity. People often assume the concept of globalization as new, however, it is as old as the Roman Empire.
This concept went popular with Thomas L.’s book ‘The World is Flat’. Its author argues about the practices of globalization, outsourcing, and supply chain management. He further talked about how the process is speeding up and the effect that the business ventures and other enterprises are going to witness in the coming centuries.
The Globalization For the SMEs
It is also important to take a note here that for the small and medium emerging businesses, globalization and going global is a big deed. It requires a significant undertaking that tells how it could interrupt the existing business and practices.
Hence, the CEO has to take the decision after considering everything and taking care of all factors, and analyzing its strengths and weaknesses. All the stakeholders should also agree on this, as their cooperation is always required to carry out the day-to-day activities as a result of global initiatives.
A list of eleven important factors that are significant to consider prior to the execution of the business internationally with in-detailed analysis has been shared for the convenience of entrepreneurs.
Before taking the initiative of globalization, it is crucial to take into account the pros and cons of going global and the after-effects on the business, such as,
- Making the data and analyzing the market segmentation to determine if the potential product is market-friendly and easily acceptable for the local customers.
- Working on the product and its gap analysis with the comparison of local products. Also addressing the demand for local products and requirements that lack among local products.
- Carrying out the SWOT analysis by going through all the details and preferences of the target audiences. The price of the product may go higher as compared to the local products. Considering if it’ll be accepted by the locals.
- Considering market opportunity, and capturing and targeting the market is going to be a good decision, and how long it is going to take to capture audiences.
Working on an Effective Business Plan
Expansion of a business overseas is not an easy task. It requires proper research and a business plan to follow. Random things don’t work in globalization. Developing a strategy and business plan is of foremost importance. Market norms vary with the regions.
There are different nuances in different markets due to relevant economic, cultural, and governmental conditions.
A localized strategy is integral for effective overseas expansion. A business plan should be developed, and it should not only adhere to international corporate sectors but should also address the needs and objectives of the local market.
Important Points to Work on Before Developing a Plan
It is important to work on the short, long, and medium strategies to carry out the process accordingly. Also, setting practical and reasonable goals is important according to the budget and measurement of the progress.
- A business plan should also include the goals and objectives of the global initiative, along with success metrics.
- Completion of business model and structure. Before that, it is important to be clear about the business structure, either if it is going to be a separate company, a sales office, or a branch.
- Working on the annual budget is also mandatory to know the expenses.
- Developing a project plan that meets the committed deadlines and does not delay it unnecessarily.
Building a Beachhead Resource
A common practice among companies while working in globalization is the parent company’s use of executive resources. Besides that, many of them go for rebuilding a team from scratch. This practice is time taking and also risky.
It slows down the process and time. Experts always advise using senior executives with proven experience.
It further enables the company to stimulate the work progress and the expected goals and results are achieved when the right team with relevant experience is hired. Moreover, other important points include
- Selection of interim executives with strong expertise, and the company can also outsource the interim leaders from the external market for the project.
- Working on a sound financial infrastructure and considering outsourcing to the regional local service provider.
- Starting a recruiting process with an advanced leadership team.
Availability of Products in Advance
The product has to be made ready in advance as per the market’s requirement. The company should spend due time on the products to accomplish the best results. They can also analyze and review the government and go for certifications if needed.
- Determining the localization of the product is important, and deciding the right and accurate translation of the product name can also not be ignored.
- Initiating patent and trademark review and feedback should also be considered.
- Quality assurance test is another important factor. That requires adherence to the local standards.
Cultural differences and factors are the most important things to consider before going global. The culture of the home country can not be applied to every region and country. Whether, it is about language, customers, or other regulations, the company has to be flexible enough to implement the policies and procedures that are according to the choices and preferences of the target audiences.
A usual approach of companies is “one size fits all” which is not a practical approach, and it could be beneficial only on short-term bases and has negative effects in the long run. It also includes an evaluation of organizational structure so that the strategy can be executed successfully.
Development of Policies Organizational Rules
Development of policies, procedures, and handbooks that are according to the local rules and regulations and with the maintenance of balance inside the company policies.
Working on the competitive benefits programs that local employees find tempting and competitive compensation packages that are based on local standards and traditions. Moreover, managing payroll and human resource functions are also part of organizational readiness and its activities.
Establishing a go-to-Market Strategy
An effective strategy to market and brand the products is extremely important. Only an effective and seamless strategy can bring sales and generate profit. The implementation of an effective strategy requires a particular policy that addresses sales, its delivery, proper branding, marketing programs, strategy, and pricing. This all is important to stand out in the market and for revenue growth.
It can further deal with
- Evaluation of sales model, is it either direct indirect and distributor or hybrid?
- Determining the methods and strategies for sales with solutions and features.
- Working on Key performance indicators (KPIs) and evaluating the pricing model. The consumers of the countries that are not developed well are quite price conscious and have particular budgets for things.
Laws and regulations are different in different countries. There are countries that are quite popular for the strict rules, and legislative affairs and then there are nations that are not much concerned about these.
However, for a business that has come from overseas, it is important they strictly adhere to local laws and regulations, or else a little mistake or violation can land them in court trouble.
It is crucial for companies to have strong knowledge of the legal processes to minimize commercial risks. Proper legal documentation is also an integral part of localization.
Companies should work on the localization of commercial agreements and review the legal affairs and regulations that are limited to the industry they are going to deal with.
Sound Knowledge of Tax and Finance
A business cannot work without the proper working and knowledge of tax and finance. There is a long list of taxes that a company has to comply with and pay. Before going global analyzing the tax and finance is also imperative.
Besides that, the company and organization have to check if they are ready to proceed in a foreign market with the proper estimate of budget and familiarity with tax and laws. They should also check if their target audience and the market are adhering to the relevant local corporate policies and procedures.
The consideration of accounting, tax, and payroll is also part of tax finance along with establishing local banking relationships. There should be a proper and developed plan of risk management. In order to take care of finances from all angles, the transferring of pricing policy and reports of sales and taxes should also be managed well.
Preparing Final Budget
Considering the above steps that are important to consider before going internationally should help in the final budget and its preparation. All the stakeholders should also be informed about the final budget and sufficient data about the international expansion.
In this regard, at least a 3-year budget with a business plan of 12 months should be developed. Moreover, it should have detailed KPIs with a prime focus on the content about every six months.
The management should also further work on performing quarterly operating reviews and inducing their energies into the real-time budget and its actual reporting with further variants and analysis.
Building Effective Relations with Local Enterprises
Healthy competition and relationships are vital to excel in the global market and particularly in the target business environment. The companies should work on gaining a competitive advantage and should also come forward with a positive approach to complementary products and services.
Such practices can always support the organization and improve its reputation among competitors with a minimum margin of financial risks.
The companies should also negotiate with their allies and other distributors. They should further sit together to work on the development of an ecosystem and business model that is beneficial for all in the long run.
There should be a separate team that should comprise the resources that the company has allocated to manage and stimulate the relationships.
Choosing a Professional Localization Expert
The importance of a professional language service provider and localization can never be overlooked. A professional team of translators is inevitable to start the business expansion overseas. They are the ones who take care of your content and ensure a quality translation, paving a smooth way to an effective localization. Expansion of business overseas is not a simple task, rather, it is an extensive and challenging process.
Every step and every resource should be selected wisely. A professional translation company resolves half of the issues. Moreover, a certified and quality translation also stimulates the localizing process.
Besides that, localization experts can integrate things more accurately. So, make sure you are not compromising on the selection of a translation agency and the team of localization.
Globalization is one hectic task. It requires a lot of work and practice. Every process requires particular research and paperwork before execution. The ten most important factors that are integral for the execution of a business international include developing a proper business plan, arranging an experienced executive-level team, readiness of products, organization, and market strategy. The company should also be aware of the legal, tax, and financial laws and the mechanism these work in relevant foreign markets.