International Expansion Strategy

Global expansion is among the best ways to acquire new markets, explore new talent pools, and grow your business’s success. However, expanding your business internationally requires time, effort, patience, and a well-thought expansion strategy that resonates with your business values and long-term goals.

In this article, we cover the most successful international expansion strategies, methods and models for international expansion, and tips on how to create a custom strategy that aligns with your business goals. Keep reading.

What is international market expansion?

The international expansion involves taking your business operations, products, and services from your domestic market to target markets across the globe. In order to perform this successfully, businesses need a thorough operations plan on how to enter the market, establish the brand, and achieve sustainability and growth. 

Reasons for international expansion 

Expanding your operations abroad is an ambitious goal that can lead your business to success. Here are four of the reasons why international expansion is profitable.

1. Revenue increase

Businesses typically consider international expansion when they reach the peak or experience limitations on the domestic market. International markets bring more opportunities for acquiring new customers, advancing your offerings, and hence, increasing your business growth and revenue.

2. Access to international talent pools

Hiring internationally can open a lot of opportunities for your business. A global team with diverse backgrounds can bring new and fresh ideas and perspectives, unique skills and knowledge, and help navigate through cultural differences and communication barriers with new target markets.

3. Profitable target markets 

The global expansion comes with the advantage of discovering new profitable markets. Operating internationally will help you broaden your current customer base, discover new target markets, advance your current offer, and even develop new products and services.

4. Lowered costs 

Global markets offer a lot more opportunities and potential than domestic markets. With the right approach and a well-thought strategy, global markets can help reduce costs for operations, including talent acquisition, legal compliance, procurement, manufacturing, and others. 

The most frequent methods for international expansion

Expanding your operations internationally requires making crucial decisions, with expansion methods being among them. When choosing an expansion method, organisations need to evaluate some factors such as current circumstances, the company’s goals, costs, and others. Therefore, here are some of the most common methods for international expansion.

1. EOR

In today’s dynamic business landscape, international expansion can impose a lot of challenges, such as opening a legal entity, compliance with laws and regulations, managing global payrolls, HR administration, and many others. To ease the process and ensure sustainability in the long run, many organisations decide to partner with EOR (employer of record) companies.

EOR platforms such as Native Teams are a convenient, cost-effective, and time-saving solution for executing your global expansion strategy. EOR platforms can be beneficial for organisations in multiple ways, such as:

• Providing legal entities in the targeted countries
• Handling employment and legal contracts 
• Managing HR administration and documentation 
• Managing global payrolls, including salaries, taxes, benefits, and other administrative expenses.

2. PEO

One of the most appealing aspects of international expansion is having access to a wide talent pool that can refresh your team’s expertise and innovation. However, hiring a global workforce is a long and daunting process that imposes a lot of administrative intricacies. 

Similar to EOR, many organisations use the help of PEO (professional employer organisation) to help with time-consuming tasks, such as:

• Providing employment contracts, written statements, and declarations
• Handling HR administration and documentation
• Navigating through global payrolls, including employees’ salaries, benefits, taxes, and administrative fees.

The main difference between EOR and PEO is that PEO doesn’t provide a local entity in the country of expansion. While EOR companies will ensure legal employment and full compliance with local labour laws, PEO is more suitable for organisations in need of HR, admin, and payroll management. 

Manage risk and compliance effectively when you hire and expand globally with Native Teams PEO Services.

3. Mergers and acquisitions

Similar to EOR and PEO, mergers and acquisitions require partnering with other organisations to expand globally. In this case, your business is either merging or acquiring an already established organisation in a foreign country. 

One of the greatest advantages of mergers and acquisitions is that they provide access to an international expert workforce, valuable resources, and other important assets. However, mergers and acquisitions are the most challenging expansion method, which imposes high investment costs and requires an advanced integration plan.

How to create an expansion strategy?

In order to expand your business globally, it’s essential to create a custom expansion strategy which is aligned with your business goals and objectives. In this section, we cover the most important considerations to create an international expansion strategy and achieve success:

Target specific countries for expansion

The target location is the most crucial factor that will determine your expansion strategy. Some country markets feature a higher demand for certain products and services than others, which will determine your revenue and success. Aside from that, it’s also important to research local laws and regulations, business environment, as well as expansion costs before targeting specific markets.

Research your target country’s business and cultural norms

Each country has its own business landscape and cultural norms, which will significantly impact how you operate in the specific market. At this point, it’s important to do thorough research and understand how to customise your products and services to meet local customers’ needs and preferences. 

Having a good understanding of the business conditions and cultural norms will help you build and maintain long-term relationships with target customers, and therefore, lead your business to successful expansion.

Develop a marketing strategy that resonates with local users/customers

Aligning your marketing strategy to the target country’s business landscape and cultural norms is the key to a successful market expansion. Adjusting your offering to specific customer behaviours, buying habits, the local language, and culture will help you establish better communication with local customers and your brand on the market. 

Consider partnering with local organizations

When expanding your business on foreign markets, it’s recommended to make partnerships with local organisations and experts. A local partner can help you gain a better understanding of the country’s business landscape, cultural norms, and legal requirements, as well as help you expand your network of stakeholders and customers. 

Not only can your local partners elevate your offerings on the specific market, but they can also positively impact your branding and reputation.

Choose the right strategic model

There are many types of strategic models for expansion, each coming with its own advantages, disadvantages, complexities, and challenges. Choosing the right model is crucial to achieve your international business goals and successfully penetrate foreign markets. In this section, we cover the most common strategic models for expanding your business across the border.

Multidomestic

Businesses that utilise multidomestic strategies customise their offers to match local markets’ cultural norms, needs, and preferences. If an organisation operates in multiple countries, its offering varies according to the local market, including the offer’s features, marketing strategies and channels, brand name, and other factors.

One of the greatest advantages of the multidomestic model is the local adaptation, allowing businesses to tailor offers and build brands that resonate with specific markets. However, this model can be very expensive, requiring custom research, strategies, and product development for each market. 

Global

Unlike the multidomestic model, the global approach to expansion focuses on minimising costs and offering the same products and services in different markets. Organisations that follow this approach are more focused on offering competitive pricing, rather than customising products to the local market’s cultural norms, and local preferences.

Even though lower costs for market penetration are the greatest advantage, the global expansion model also imposes some challenges, such as legal compliance, cultural barriers, and others.

Transnational

The transnational model for business expansion combines aspects of both multidomestic and global models. This method focuses on optimising offerings for local markets while managing costs in the most efficient ways. Therefore, the transnational model promotes minor market customisation and cuts costs for separate marketing strategies and product development. 

Transnational strategies focus on managing costs efficiently, but it still imposes some risks such as staying compliant with laws and regulations, and a lack of understanding of some local markets’ norms. 

To Wrap Up

International business expansion opens a vast variety of opportunities for growth and success. However, it’s crucial to understand the different international models and methods before crafting an expansion strategy. 

By creating a custom plan that follows specific approaches, methods, and models, businesses can optimise costs and nurture their brand’s values, while achieving growth and success in different countries’ markets.