Parameters to consider while developing strategies for international expansion by start up companies
The international business community is a cosmopolitan landscape with endless possibilities for growth. As technology becomes ‘core’ from an enabler, we have seen a proliferation of Indian firms in areas such as Consumer Tech, Fintech, Software/SaaS which have rapidly expanded across the globe. In the last few years, many Indian companies are walking on the path of pursuing global expansion. To name a few, Byju’s is hiring talent to develop and launch its international product this year. Ola, the country’s largest homegrown ride-hailing firm, set the ball rolling in January 2018 when it drove into Perth, Australia. Soon, hotel chain OYO followed in a big way.
Many companies invest and build capacity for creating economies of scale. Companies target expansion into new markets by efficiently using their potential and creating additional sustainable income opportunities. In light of this, there are various opportunities both in developed countries, where there is larger demand, and in developing countries where there is increasing demand. Companies need to target and plan their international growth strategy for success.
An international expansion strategy comprises market entry strategy including crucial choices in regard to primary markets of focus, determination of target customer and channel strategy, resource allocation, product and service value offerings, brand positioning, and creation of an operating model. A successful market penetration strategy ensures the most suitable and efficient use of corporate resources and helps companies increase their success.
International expansion strategies are formal, multi-level strategic plans that businesses use to enter an overseas market, establish a growing presence, and become quickly profitable. When strategizing international expansion, a company needs to consider the political, social, environmental, technological, legal and economical analysis of the targeted markets. A successful market penetration strategy ensures the most suitable and efficient use of corporate resources and helps companies increase their success.
5 most significant parameters to consider while developing the international expansion strategy
A thorough market analysis is of utmost importance to find out information regarding essential aspects of the market like market size and growth potential, state of the economy, and so on. This helps in obtaining an accurate picture of the demand prevailing in the targeted market. After this stage settle on the first international market that you would like to infiltrate. Often, tech startups start with a country that has a high enough market demand to justify the move.
Technical Barriers to Trade
Diversifying smoothly into another country without violating any laws or rules must be a priority when considering expansion.
In-depth study of the foreign policy, agreements signed by India and the target country and laws of India in terms of expansion are a prerequisite while considering expansion.
Local legal representation in the target country can help settle paperwork and lay the groundwork for a seamless launch. In addition to general representation, an experienced trademark attorney to guide through the process of protecting your brand names abroad can prove to be beneficial.
Analysing the market for any competition is crucial for expansion as it helps in developing a marketing strategy, including brand positioning, marketing channels, product or service delivery, marketing KPIs, marketing programs, and even pricing evaluations based on the new market’s economic environment. The research must cover the strengths and weaknesses of competitors within the region and make space for product modifications that must be made to accommodate international users.
Supply Chain Management
After heavy research sessions, the company must start visualizing a blueprint to transform the theoretical data into action. Start answering the question – What will your supply chain logistics look like?
A few factors to consider while executing the plan are:
Determining the operational and organizational model
Conducting feasibility analysis
Determining the road map and action plan
Harness the benefits of local knowledge and experience within your sector to ensure you build the optimal channel structure.
Investment plays a central role in international expansion by increasing the productive capacity of the technology disruption and generating increased employment. In developing countries like India, Foreign Direct Investment as well as financial support from institutional investors are pivotal during the course of implementation of such an international expansion.
The power of research cannot be stressed enough while discussing strategies for global expansion but it is also necessary to not be afraid to look outside of the box. At the end of the day, you want to prioritize countries that have high broadband and mobile penetration, stable political environments, accessible payment infrastructures and favourable regulatory and tax requirements. The international expansion won’t happen overnight because dominating on a global scale takes time and a real commitment and must be approached with a balance of enthusiasm and caution.
Source: Business World