Like Simba, do you feel ready to conquer the world? Do you have big dreams of adventure for your business? Do you see yourself thriving in an international market? You're on the right article… and at the right time!
Indeed, thanks to globalization, it's easier to cross national borders, export your activity abroad, expand your audience and increase your revenue.
But before you plant your paws on a new continent, you need to define an internationalization strategy. Ideally, a strategy that fits your needs and helps you thrive…
Let's go! We'll tell you everything about growing your business internationally and the techniques to reach your goals.
What is an internationalization strategy?
By definition, an internationalization strategy refers to the techniques and methods by which a company sells its goods or services outside its local market. It signals an organization's desire to expand.
You're setting out to conquer new targets with consumption habits often different from your local customer base. This can push a company to adapt its objectives.
This strategy is an ongoing process and requires:
- An analysis of the international market (or markets, if you plan to expand into several different countries).
- An assessment of resources.
- Setting SMART goals (Specific, Measurable, Achievable, Realistic, Time-bound).
- A solid understanding of the target market dynamics to develop effective offerings.
Why implement an internationalization strategy?
International markets offer many development opportunities for your business. One of the main advantages remains increased sales and revenue. But that's not all. Opening up to foreign markets allows you to:
1. Take advantage of new markets
The primary advantage of an internationalization strategy is access to new markets. You build a new customer base and reach an untapped audience.
It also exposes you to foreign investment. You can therefore attract other capital and accelerate your company's growth.
2. Secure your business
You know the expression "don't put all your eggs in one basket", right? If your company only sells its services or products in one or two regions, it's exposed to risks following a natural disaster, a change in socio-economic conditions or other unforeseen circumstances.
With an internationalization strategy, you minimize these risks and stabilize your revenue.
3. Achieve economies of scale
Internationalizing your activities involves significant investments, it's true, but these allow you to achieve economies of scale.
For example, you don't need to double your workforce to operate in a new market. Your current employees can help adapt existing protocols to those new territories.
If you expand your activity into regions similar to your current location, you can duplicate marketing campaigns and thus achieve a higher return on investment.
International development also enables large-scale production, which lowers the unit cost of the product and increases your margin.
4. Stay ahead of the competition
Internationalizing your activities gives you access to new customers. If your competitors haven't yet conquered these new markets, you'll gain an advantage over them!
Expanding your company beyond its region will increase the visibility and therefore the value of your name, your logo and your brand image.
You also have an opportunity to extend the reach of your intellectual property, your trademarks and your copyrights.
5. Improve your offerings
To carve out a place in a new market, you must meet and convince a different audience. This includes knowing the needs, consumption habits and expectations of the consumers there.
This exercise will help you identify opportunities to improve your products or services. You may develop new features or even discover an unusual use for your offerings.
These improvements may resonate with your local customer base, offering another opportunity for growth.
8 internationalization strategies to know
Global expansion as a company does not follow a single approach. Depending on your business and objectives, you will have a choice of eight internationalization strategies.
1. Exporting
Recognized as the most commonly used, this strategy focuses on exporting products and services to foreign markets. You keep production headquarters in the country or region of origin. This means you don't need to invest in staff and facilities abroad.
However, this internationalization strategy requires finding reliable local distributors who are consistent with your brand image. You must also manage global logistics and comply with foreign trade regulations in different countries.
The export strategy is often followed by small local businesses looking to export resources to foreign markets. Wine is a good example!
This can also be a starting strategy that lets you test the reception of your goods or services in new markets. If successful, you can move on to a more lucrative method.
2. Multinationals
The multinational strategy aims to establish a presence in a foreign market and adapt products to local needs. You keep your headquarters in the home country and create branches in the regions to be conquered, with dedicated management.
You reposition your marketing strategy to address this new audience, taking into account the customs, traditions and cultural traits of that market.
These adjustments are often costly and can involve financial risk. However, they also have a higher chance of succeeding.
This internationalization strategy is widely used by companies in the food and beverage sector. For example, Nestlé adopts a different marketing and commercial approach in each of its markets and adapts its products (and even its brand names) to local tastes.
3. Overseas operations
With a global value-chain strategy, you treat the world as a single market. It’s the optimal method for achieving economies of scale, increasing brand awareness and generating more revenue.
You have a central office in the home country while establishing operations centers in foreign markets.
Even if products and services are standardized, small changes may be necessary. For example, McDonald’s or Burger King may change, add or remove certain burgers to meet local market needs.
The export strategy and the value-chain strategy may seem similar, but there is a difference: with the former you maintain a national policy and adapt it to international markets, while the latter involves treating each foreign market differently by (sometimes slightly) adapting products or services.
4. Transnational strategy
The transnational strategy is a combination of multinational and value-chain strategies. Transnational companies operate with a central office (in the home country) that coordinates local subsidiaries in international markets.
This organizational structure means there is a single brand and operations center. It determines overall decision-making and supply chain management, allowing economies of scale.
You sell the same product or service (without any modification) in multiple countries, with differences only in how it is marketed by region. A brand that uses this transnational strategy is the soft drink Coca-Cola!
The brand is the same worldwide. The logo, marketing approach, taste and formula are similar. Only the language on the packaging changes.
5. Acquiring a company abroad
Another internationalization strategy is the partial or complete acquisition of a company that already operates abroad. Despite high costs, this option can help you reduce the risks of entering a new country.
You rely on the skills and expertise of the existing company. Moreover, if its activity is profitable, you immediately reap the benefits of the acquisition, giving you time to understand the new market and develop a growth strategy there.
6. Licensing
The license is an international agreement between two or more parties. They agree that the licensee, in return for payment of royalties, may use the owner's resource for a specified period.
In this strategy, internationalization is carried out with the help of a foreign company. You leverage their reputation to establish yourself in the new market.
The main drawback is that the foreign company is not part of the parent company. There is therefore a risk that it may become a competitor if the license agreement expires.
7. Franchising
In franchising (or commercial affiliation), you find an affiliate (franchisee) who must pay you a fee. The franchisee is authorized to sell your products or services and to use your business system.
Companies that choose franchising as an internationalization strategy must ensure that the affiliate complies with their quality, pricing, and advertising standards.
8. Joint venture
A joint venture is an association between two or more companies for a given period, with a common objective. The partners share capital, management, profits or losses, and know-how.
This internationalization strategy proves relevant if you have the support of a partner who already knows the foreign market.
Our tip
Do you want to conquer foreign markets? Use this list to find an internalization strategy that meets your needs.
And don't hesitate to post an ad on Codeur.com to find a freelancer who will support you in this new adventure!
