Global expansion is undoubtedly one of the best ways to tap into international markets, acquire world-class experts, and set your company up for long-term success. But without a solid strategy, global expansion is near-impossible and can result in delays, extra costs, and wasted resources.
This guide will give you a clear understanding of what a global expansion strategy is and how your business can formulate its own plan successfully. You’ll learn the best practices for planning market expansion step by step, from the consideration phase to launch.
Why You Need a Global Expansion Strategy
Having a considered business expansion strategy in place will help you to:
- Expand into the right markets at the right time
- Use time and money efficiently
- Mitigate risk and stay compliant with local regulations
- Build a competition-crushing team
- Scale your business faster
- Increase profitability
What Is a Global Expansion Strategy?
A global expansion strategy is a formal business plan that outlines how a company intends to expand its operations into foreign countries and markets, while mitigating risks and enhancing revenue growth. To be successful, it should include clear timelines and budgets, thorough research, realistic goals, and dedicated talent.
Your strategies for international expansion should give clear structure and guidance to those in charge of executing it, thus making it a crucial part of your overall global expansion process.
How to Create a Successful Global Expansion Strategy
Creating a robust global expansion strategy is a big task; it requires enough time, dedication, and resources. But it’s not an impossible feat, and when done right, your global expansion plan will make scaling your business far easier and more successful in the long run.
To help you hit the ground running, we’ve broken down the global expansion strategy process into six simple steps.
1. Set Company Goals to Guide Your International Expansion Strategies
Before you jump into a global business expansion, you first need to set clear company goals. This will give you and your teams direction and purpose for the short, mid, and long term, driving the business forward sustainably.
Setting company-wide goals will help you to understand where global expansion fits into your company vision and which goals it can help you achieve. It’ll also help you prioritize certain aspects of global expansion, set aside an appropriate budget, and give you a clearer timeframe for when you need to achieve each step in the expansion process.
When setting goals, consider what the main aim(s) of your global expansion should be. For example, your global expansion plans may be led by factors such as:
- Widening your talent pool to build a diverse team and source niche skills
- Expanding your business into lucrative new markets
- Proving economic stability for your business by diversifying markets
- Saving money by moving operations abroad
- Building a globally recognized brand or improving your existing reputation
Each of these potential drivers for global expansion will result in very different goals that you would need to set and plan.
To help you set achievable company goals, there are many frameworks you can use, such as OKRs (Objectives & Key Results) or WIGs (Widely Important Goals). But whichever framework you use, your goals should be S.M.A.R.T.:
2. Do Thorough Market Research
Once you’ve set company goals and understand where global expansion fits into them, you need to carry out thorough research into the markets you wish to enter. This will help you identify opportunities and obstacles before you start spending money to execute your expansion strategy.
When done well, market research can help you maximize profitability, decrease risk, and reassure stakeholders and investors that your global expansion plans are substantiated.
Here are just some of the questions you should answer before entering a new market:
- Is there a demand for your product or service?
- What is the total addressable market (TAM)?
- What’s the socio-political and cultural landscape like? Is it ready for a product like yours?
- Who are your competitors and can your product or service offer something new?
- How will the local laws and regulations affect your expansion plans? Can you overcome these barriers?
- Will you need to invest in localization to make your product or service successful in the new market?
- What kinds of talent are readily available in the target country? For example, does the country produce high-quality academics, leaders in a specific industry, or an abundance of tech talent?
There are many tools you can use to help make researching target markets easier, such as country-specific databases like the OECD. Once completed, you should have a better idea of which markets to prioritize in your global expansion strategy.
While the end goal may be to expand into dozens of countries across all continents, it’s best to stick with a select few high-priority, low-risk markets to begin with. You could start by expanding into Europe or another strategic area, for example.
This expansion method will allow you to test out your international expansion strategy and make any necessary adjustments before investing more money and resources.
3. Evaluate the Different Types of Global Expansion Strategies Available & Choose Wisely
There are many methods to expanding business globally, but what works for one company may not work for yours. Use your market research, company goals, and budget to determine which international expansion strategy is right for your company. The main types of expansion strategies are:
- Exporting goods or services
- Licensing & franchising
- Forming strategic partnerships
- Acquiring or merging with foreign businesses
- Setting up wholly owned subsidiaries abroad (also known as Greenfield Venture)
Each market expansion strategy has pros and cons. For example, licensing is fairly inexpensive and allows your business to expand rapidly, but it can lead to a loss of control over quality, messaging, and reputation.
On the other hand, Greenfield Venture allows your business to remain in full control of operations, but it’s an expensive and complex process from start to finish.
Which Option Should You Use to Expand Internationally?
Choosing the right business expansion strategy depends on your timescale, budget, and goals. Global expansion isn’t just for big corporations anymore, but the size of the company will likely determine the type of expansion strategy you use.
For enterprise companies with an expansive budget and plenty of resources, acquisition or Greenfield Venture may be the most attractive option, for example.
However, for start-ups and SMEs with a lower budget, partnerships, licensing, and exportation may be more cost-effective methods of global expansion that allow you to get your foot in the door.
At Omnipresent, for example, we use a mixture of owned entities and strategic partnerships to carry out our own global expansion strategy. Our two main reasons for expanding internationally are:
1. To hire the best talent available around the globe
2. To build a network of entities and local expertise to be able to offer the very best service to our clients.
To achieve these goals, we’ve adopted a thorough and multi-faceted approach to global expansion. Here’s a brief overview of what we do:
- Conduct research on local regulations all over the globe
- Analyze client demand and growth patterns
- Research the complexity of setting up and acquiring the proper licenses to be fully compliant
- Evaluate internal expertise to determine which markets we should prioritize and how aggressive we should be
- Set up local entities in viable markets
- Partner with trusted local service providers to harness their expertise and resources
- Build a world-class team by remote hiring from across the globe using our own product and EOR solution
4. Hire the Best Local Talent
Hiring local talent can make global expansion simpler and more cost-effective, especially if the target market is very different culturally and linguistically from your existing markets. Having staff on the ground helps you to:
- Tap into local expert talent
- Gain first-hand knowledge of the market and local culture
- Benefit from local language skills
- Save money by not having to travel as much or relocate existing staff
- Gain trust in the local market by building on existing relationships
- Leverage existing business contacts and networks
If you’re worried about the costs of hiring a lot of new talent, don’t! You don’t need to hire a fully fledged team in each new market to reap the rewards. Think strategically:
- Do you want customer support staff available in the local time zone?
- Do you need sales representatives who can speak the local lingo?
- Would you benefit from project managers who have strong existing relationships with local service providers?
Every business has different needs, so evaluate what local talent would benefit your global expansion strategy the most.
How to Hire Local Talent
Hiring remote employees abroad may seem daunting. After all, setting up a local entity in each new market can be time-consuming and requires a sound knowledge of local regulations for compliance. You may be tempted to hire independent contractors instead, but that can be risky, too.
The simplest solution is to partner with an Employer of Record (EOR) service, like Omnipresent, which employs staff on your behalf and handles all the associated administration for you. Using an EOR is faster and less risky than employing international talent directly, and it’ll make the global expansion process much smoother as a result.
5. Select Local Partners Carefully
Even with employees based in your target market, you’ll likely need to work with local partners in some capacity. For example, you may need third-party logistics partners, legal advisors, or marketing & PR agencies to execute your international expansion strategy successfully.
But before signing any contracts, be sure to do your due diligence. Here’s what to look for in a reliable global expansion company partner:
- An impressive portfolio of existing clients mirroring your own business
- Positive references from those clients
- A competitive quote for their services
- Timely and considerate customer support
You may even consider implementing a trial period with your chosen partners to assess how well they work with your business before committing to a long-term relationship.
6. Launch Your Product or Service in New Market & Continually Monitor
Now’s the time to launch your product in the new market and get your message out to your target audience! First impressions matter, so use a range of relevant marketing channels to create a stir, including localized advertising campaigns, dedicated social media accounts, local media coverage, and special events.
Once launched, you should continually monitor progress and adapt your strategy as appropriate. By seeking regular feedback from local customers, you’ll have a better understanding of the target market and what you need to improve to meet their specific needs.
Assessing the success of your initial global expansion strategies will help guide any subsequent market expansion plans you may have. That way, your business can continue to grow sustainably and you can enjoy the many benefits of globalization while mitigating risk as much as possible.