In a recent blog post, we discussed the different factors to consider before taking the next step in your expansion efforts – increasing your territorial reach by spreading your wings overseas.
It’s interesting to note that as of 2017, around 83% of businesses in Singapore engaged in overseas activities. That being said, many businesses fail to realise the many nuances that come with cross-border expansion.
Here are five not-so-well-known yet invaluable factors that entrepreneurs should take note of before taking that plunge and crossing borders:
Does your current structure fit the overseas market?
This point flows out of the importance of knowing your overseas regulatory obligations. Organisational structures vary considerably across different territories, so how you set up your business will depend largely on the geography you are moving to.
Very often, companies need to change their organisational structure and re-evaluate how they balance global leadership with regional leadership models. Both you and your employees need to understand the different cultural values present in the country you are expanding to, such as customs, philosophies and religions. This will affect interaction and behaviour and will determine how people communicate (verbally and nonverbally), make decisions, complete their tasks, negotiate and deal with conflict. In the end, it’s all about adapting to an entirely new environment to cater to the needs of the locals.
Is your business in demand?
This cannot be emphasised enough. Best Buy closed 9 shops in China after attempting to scale the market there with lack of market knowledge. They offered products such as espresso makers and sound systems, while all that locals wanted were products of practicality such as washing machines. The same company also had similar results in Europe with commercials incorporating American accents, repelling the local audience considerably. You need to carry out research on whether you product feeds the local market. This is a pillar of merchandising basics that can have grave effects if ignored.
You will benefit largely from listening to your new hires in the country, as they know the local climate best. A business development professional is often as strong as his contact base; the right candidate in a foreign company will add considerably to your customer base.
As always, study local compliance laws when it comes to staffing issues – the United Kingdom requires written employment contracts provided to every employee, whereas in Japan, either a written or oral contract may be provided.
Have you established a go-to-market strategy?
After you evaluate your needs and set your goals, it’s time to sit down and plan your market entry strategy. Essentially a blueprint for delivering a product or service to the end customer, your strategy should factor in such details as pricing and distribution logistics. This will also include a detailed marketing plan and the appropriate KPIs that will measure your success.
Have you established the necessary partnerships?
At times, it’s highly valuable to enter the market with partners that know the landscape well, who are based there and are more familiar with the nuances of the country than you would be. McDonalds, for example, entered the Indian market with companies that had a strong presence in the country already. This helped with overall efficiency, saving both time and money while assisting the global giant to expand successfully.
Do you require external advisors to expedite the process?
Two groups of professionals that can help in this area are advisors such as lawyers and accountants. These advisors can use their experience to set up new networks rapidly and speed up the introduction to networks due to their large database of contacts already at hand.
And there we have it, five points to consider when expanding globally. If scaled correctly, and with the right guidance, the process should prove to be an exciting and rewarding journey that will assist your company to spread its wings and reach new heights.