Expanding internationally is something many companies want to do but do not know how. There are many options for international expansion and what works for one company may not necessarily work for another. In addition, just because your company is successful in its current market and country does not mean that it will be a success another country. So, when looking to take your business abroad, it is important to make sure that you conduct market research and learn about that country’s laws and regulations.
To get a better understanding of this, lets take the example of a successful chocolate company looking to expand into the United States. In the US, there are four main actors in this market (Hershey, Mars, Lindt and Nestle) that account for 89% of the total market value. You analyze these companies but still think that you offer something they don’t. Through your market research you also learn that the chocolate market experienced a 2.1% in volume and totals $19 Billion. Now you definitely want to enter this market. However, upon further research, you realize that the US FDA has high food safety regulations which means your company will be tied up trying to get FDA approved. Then, perhaps you realize that this market is very concentrated and it might not be that easy to just open a store and be a success.
So, how do you successfully expand into the United States?
If the market is concentrated by big corporations, like the four mentioned that are also global brands, you need to get creative. Look to see what the market is missing but people want and need- be innovative. Another option is partnership. Partner with an already established, large, successful brand. Offer your product to be paired with theirs; so, when people buy their product, they get something of yours as well. This builds brand awareness through a strong partnership with major brands. Or, for example, in your market research you find out that the global chocolate industry has rising demand but, by 2020, it’s expected to run out of cocoa… Perhaps your company grows its own cocoa beans, leverage that and help improve the cocoa supply. Maybe this is not exactly how you wanted to expand but, it is a way to get your company known and enter the US market.
It is important to remember that markets vary, especially when you’re expanding internationally. What works in your current market or country will not necessarily work in another. You may have to change your business model to be successful or change your product offerings. When expanding, make sure you do a thorough market analysis to learn the best mode of entry and minimize the risk of failure.