Way back in 2005, the trend was to go global. But today, things seemed to have changed. A lot of companies are focusing on going local rather than a global strategy. But is going global still a relevant strategy?
Sometimes, it’s possible to get saturated in a local market. People may have heard about you, but all the people who need to use your products/services are already using them. In this context, expanding to a new market can give you access to new customers who are yet to hear about you, and might even find you exotic.
With over 500,000 listings in 33,000 cities and 192 countries, Airbnb has surfaced as a global giant in the apartment and home rentals business. What are the practices they have adopted that lead to this phenomenal success in the international market?
That is the question that comes to the mind of aspiring entrepreneurs’ who want to expand globally. To answer this question,let’s look at some of the practices that companies should adopt to go global.
Global thinking from the beginning
Even in the early stages when you are far from global expansion, your strategyshould be to go global from the start.As they say, your intent is as important as your strategy. StarOfService, a French start-up set its goals to go global from the beginning. Right now, they have a presence in over 80 countries.
Once they were successful in their local market, their strategy was to replicate the same model in other countries.
Target countries
The best method to target countries is to identify markets that are similar to your local market. Some of the factors that can be decisive when choosing a target country is its population,market size, GDP, Government policies, and high disposable incomes.
The first country to expand into for most US companies is theUK because there is no language barrier, which makes it familiar.But that might not be the case with your company. You want maximum return on your expansion and every country has adifferent combination of risk and return.
A lot of effort goes into global expansion, and it involves a lot risk, so choose the country that offers the best return on risk.Make a list; keep the return on investment and synergy with your existing business as yourtop priority.
If you are an online business, going global is a lot easier. Airbnb is an online platform, and it is much easier for them to go global. Another company that is growing globally is StarOfService, they are in over 80 countries and growing fast.
Strategy for expansion
Whether you form partnerships with existing local companies or run the operations in-house are some choices you need to make.The choices can be dependent upon the nature of your business. If you are an online business, it is possible to keep your entire operations in your home country. However, it may not be possible if you are an offline business.
Companies like McDonald’s, KFC, and many others have expanded through international franchising, which is a fairly low-risk strategy for global expansion.
Conclusion
Going global can be one of the fastest ways to grow your business, especially if growth is slow in your local market. Understanding international markets, thinking global from the beginning and being strategic about your approach can mitigate some of the risks.
