Many business owners consider international expansion the next step after they have established a strong domestic presence. This is a great way to explore your brand’s full potential and gain a stronger foothold in the market. However, any kind of retail global expansion comes with its unique challenges and hurdles.
It is important to approach this process with caution and develop a solid strategy to increase your chances of success. This article offers a brief introduction into the international expansion so you can have an idea of what to expect.
- Why Consider International Expansion?
The modern business world is smaller than ever and international expansion isn’t as challenging as it used to be. Here are some reasons why you should consider it:
- Expanding into international markets diversifies risk.
- You can venture into bigger economies and target audiences with higher purchasing power.
- Expansion presents a new challenge and planning a new store expansion strategy can help you flex your entrepreneurial muscle.
- You can explore new opportunities, talent, and ideas.
If you have a solid store expansion strategy, it will be easier to set up a strong foothold in countries that are vastly different from your own.
- Understand the Risks
Retail international expansion is a risky venture and it is important to understand the risks involved before you start planning. Here’s a look at some of them:
- The country’s culture and history may affect the sale of some products or services.
- Currency value and foreign exchange rates can affect your revenue. Your pricing should compensate for the changes in exchange rates.
- Governance structure, tax laws, regulations, and licensing requirements can restrict your business.
You need to conduct in-depth research into the country and understand their business environment before establishing a business there.
- Factors to Consider
There are several factors to consider while expanding into international markets. Every country has different rules and regulations, culture, and business environment. You can use tools like location mapping software to understand these influences. Several factors require specific attention, including:
- The country’s GDP and growth.
- The target demographic’s purchasing power and shopping habits.
- Level of local competition.
- Business ethics and standard practices.
- Language, culture, and religious influence.
- Ease of establishing and doing business.
- Access to technology, internet, and other communications mediums.
- Political stability and government policies.
All of these factors will influence your business’ success in international markets. You will need to investigate every country carefully before launch because no two countries are the same.
- Market Entry
There are many ways to enter a market and you need to determine which method of entry is most suitable for your business.
- You can export and trade products directly without collaborating with any local merchants and vendors.
- You can establish strong and permanent local presence by building your stores and offices at the location.
- You can buy local businesses that offer similar products and services.
- You can partner will established local brands and utilize their market influence.
Location analysis software can help you collect vital information for expanding into international markets. Thorough research will help you create the best plan and increase your chances of success.