International business expansion 101: A primer for businesses


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Meer informatie 
  1. Inleiding
  2. Benefits of international business expansion
  3. How to expand into international markets
    1. Market dynamics
    2. Local partners
    3. Cultural differences
    4. Hiring a team
    5. Local languages
    6. Time zones
    7. Product value
    8. Payment culture
    9. Legal and regulatory compliance

Expanding your business into international markets presents exciting growth opportunities while introducing a new level of complexity. In a 2023 Outleap survey of chief commercial officers (CCOs), chief marketing officers (CMOs), and chief executive officers (CEOs), 44% said their businesses are looking to expand in 2024.

Below, we’ll outline the benefits of international expansion and what you need to know about expanding into foreign markets—including dealing with cultural differences and legal and regulatory compliance.

What’s in this article?

  • Benefits of international business expansion
  • How to expand into international markets

Benefits of international business expansion

Expanding your business internationally is a major undertaking—one that can yield important rewards. Here are some key benefits that can come from international expansion:

  • Diversified revenue streams: For businesses, operating in multiple markets can mitigate the risks of economic downturns or market saturation in their home country. This diversification provides a more stable cash flow and reduces the business’s vulnerability to local economic cycles. For instance, a recession in one market might be offset by robust performance in another.

  • New customer bases: International expansion opens up access to new demographics and customer segments, which offers the chance to increase your market size. Taking advantage of these new customer bases requires in-depth market research on local customer behavior, preferences, and purchasing power. Possible strategies include localized marketing campaigns, adapting products and services to meet local tastes, and using digital platforms to reach remote customers.

  • Economies of scale: By operating in multiple markets, businesses can achieve economies of scale in procurement, distribution, and marketing. Strategies might involve optimizing supply chains to source cheaper materials or negotiating better rates with suppliers because of higher volumes.

  • Enhanced competitive advantage: Businesses with international operations can gain a competitive advantage by selling unique products or services not available in local markets, relying on superior technology and using more sophisticated business models. Having a reputation as a global player can also benefit a business by enhancing brand prestige. Implementing advanced analytics and customer relationship management (CRM) systems can create tailored offerings and outmaneuver local competitors.

  • Access to talent and innovation: Expanding globally lets businesses tap into new talent pools and opportunities for innovation. This can be particularly advantageous in industries in which certain regions are known for specific expertise such as technology, manufacturing, or creative industries (e.g., being able to hire tech experts in the United States or Japan). Establishing partnerships with local universities, participating in local innovation hubs, and hiring local talent can accelerate product innovation and adapt business models to local markets.

  • Operational efficiency: International businesses can fine-tune their operations by using the comparative advantages of different regions. For example, manufacturing might be more cost-effective in one country because of lower labor costs, while another country might have advanced technological infrastructure for research and development (R&D). Businesses must conduct thorough cost-benefit analyses and consider logistical challenges, such as transportation and tariffs, to maximize operational efficiencies.

  • Regulatory and tax advantages: Operating in multiple jurisdictions can create advantages with taxation and regulatory compliance. Businesses can structure their operations to benefit from lower tax rates, tax treaties, and government incentives to attract foreign businesses. Working through the complexities of international tax law and maintaining compliance with regulations in all applicable jurisdictions requires careful planning.

  • Risk management and resilience building: International diversification can also help with risk management. By spreading operations across different geopolitical and economic environments, businesses can shield themselves from region-specific shocks such as political instability, trade disputes, and natural disasters. Building a resilient supply chain means creating redundancy, diversifying suppliers, and developing contingency plans to protect business continuity.

How to expand into international markets

Here are some of the areas you’ll want to consider when creating your strategy for international expansion.

Market dynamics

To educate yourself about the dynamics in different markets, look at factors including economic indicators, customer behavior, market trends, competitive landscape, and regulatory environment. These elements can differ significantly from one country to another, influencing how a product or service should be positioned and sold. Here are the areas you’ll want to investigate and research when breaking into new markets:

  • Economic indicators: Start by assessing the target country’s macroeconomic environment. Examine gross domestic product (GDP) growth rates, inflation rates, employment levels, and purchasing power parity for a sense of the market’s overall economic health and potential customer spending power.

  • Customer behavior: Research local customer behavior patterns, including cultural nuances, purchasing habits, price sensitivity, brand loyalty, and preferred channels of communication. You can gather customer behavior insights through surveys, with focus groups, and by analyzing customer data via social media and other online platforms.

  • Market trends: Identify and analyze current market trends, including emerging technologies, shifts in customer preferences, and societal changes. Understanding these trends is important for anticipating market needs and staying ahead of competitors.

  • Competitive landscape: Conduct a thorough analysis of the competitive environment. Identify direct and indirect competitors and their market share, strengths and weaknesses, pricing strategies, and product offerings. This will help you position your product or service effectively while identifying any gaps in the market that you can exploit.

  • Regulatory environment: Familiarize yourself with the legal and regulatory framework of the target country, including trade policies, tariffs, import restrictions, and any industry-specific regulations. Compliance with local laws is a must to avoid fines and lawsuits and to ensure you can continue to do business in the country.

  • Barriers to entry: Assess the barriers to entry in the target market, such as high competition, stringent regulations, or high capital requirements. Understanding these barriers will help you formulate strategies to overcome them, whether through innovation, with key partnerships, or by relying on unique selling propositions.

  • Market size and segmentation: Gauge the size of the market, and segment it based on demographics, psychographics, geography, and behavior. Segmentation allows for more targeted and effective marketing strategies, product development, and distribution plans.

  • Distribution channels: Investigate the most effective distribution channels for the market, such as online platforms, retail partnerships, direct sales, and third-party distributors. Each market might have a unique distribution scene, influenced by customer preferences and local infrastructure.

  • Pricing strategy: Develop a pricing strategy that reflects the target market’s economic conditions, competitive landscape, and customer expectations.

  • Feedback loops: Finally, set up mechanisms to gather and analyze feedback from the market on an ongoing basis. This could involve customer satisfaction surveys, social media monitoring, and sales data analysis. Feedback loops help with making adjustments to strategies based on real-world performance and insights.

Local partners

Identifying and securing the right local partner is a key step for international expansion. A local partner can provide invaluable insights into the market, facilitate smoother entry processes, and provide established networks that might take years to build independently. Here are some considerations when seeking a potential local partner:

  • Alignment of vision and values: Make sure potential partners share your business’s vision, values, and objectives. This alignment helps prevent conflicts and is key for long-term collaboration. Conduct thorough due diligence on their business practices, reputation, and corporate culture.

  • Market knowledge and network: A suitable partner should have deep knowledge of the local market and a robust network of contacts including potential customers, suppliers, and regulatory bodies. This network can accelerate market entry and expansion efforts, reducing the time and cost associated with establishing new relationships.

  • Complementary strengths and capabilities: Look for partners who offer complementary strengths and capabilities. This might include specific industry expertise, distribution networks, marketing capabilities, or technological know-how.

  • Financial stability and resources: Assess the financial stability and resources of potential partners. A partner with sufficient resources can contribute to funding the expansion efforts and sustain the operation through initial growth phases.

  • Legal and regulatory compliance: Confirm your local partner has a clean track record of legal and regulatory compliance. Noncompliance issues can disrupt business operations and damage your brand’s reputation. Hire legal experts to conduct a comprehensive review of the partner’s compliance history.

Once you have identified a potential partner, begin crafting an agreement and negotiating terms. This process should cover all aspects of the partnership, including roles and responsibilities, financial contributions, profit-sharing, intellectual property rights, dispute resolution mechanisms, and exit strategies. Before finalizing a partnership, you might also consider engaging in pilot projects to test the working relationship and evaluate the partner’s effectiveness in real-world conditions. These projects can provide valuable insights into the partner’s operations, commitment levels, and ability to deliver results.

Cultural differences

In every new market, consider the cultural differences that could affect areas such as product value, marketing strategies, and hiring decisions. These include:

  • Cultural research: Educate yourself about the target culture’s norms, values, communication styles, and business etiquette. This research can help you build stronger relationships with local stakeholders and prevent misunderstandings.

  • Local expertise: Engage with local experts or consultants who can provide insights into cultural nuances and how they affect business operations. Their expertise can help you adapt your business model to suit local preferences.

  • Customization of products and marketing: Adapt your products, services, and marketing messages to resonate with the local audience. This might involve changing product features, packaging, or promotional strategies to align with cultural preferences and sensitivities.

  • Communication style adaptation: Be mindful of differences in communication styles, which can vary widely across cultures. Understanding whether a culture values direct or indirect communication can influence how you negotiate, sell, and build relationships.

  • Training and sensitization: Provide training for your team around cultural awareness and sensitivity to guarantee they can interact effectively and respectfully with local partners, customers, and colleagues.

Hiring a team

When you expand into a new market, you’ll need to hire an international team to oversee the region’s operations. The following best practices will help you hire the right talent:

  • Local talent acquisition: Hiring local talent has several benefits. Local employees understand the market’s cultural and business nuances: they’re familiar with local customer behavior, legal regulations, and business etiquette, which can accelerate your market penetration efforts.

  • Diversity and inclusion: Emphasize diversity in your hiring strategy. A diverse team brings a range of perspectives, ideas, and solutions to the table, which helps with complex problem-solving and innovation. Take care that your hiring practices are inclusive and nondiscriminatory to attract the best candidates from all backgrounds.

  • Tailored recruitment: Identify the specific skill sets and experience levels your international operations team needs, then tailor your recruitment efforts to find candidates who match that criteria. Your priorities might include language skills, international business experience, or specific industry expertise. Beyond professional qualifications, you’ll want to consider candidates’ cultural fit and how adaptable they are. Employees who are flexible, creative, resilient, and adaptable—and can deal with cultural differences—will be more successful in international roles.

  • Listing remote and hybrid positions: Listing remote and flexible work arrangements lets you tap into a broader talent pool and accommodate different time zones, improving collaboration and productivity.

  • Legal compliance: Maintain compliance with local employment laws and regulations, which can vary widely by country. This includes contracts, work hours, benefits, taxes, and termination policies. Consulting with local legal experts can help you work through these complexities and avoid potential legal issues.

Once the hiring stage is complete, invest in training and development programs to equip your team with the necessary skills for international expansion. This can include language lessons, cultural sensitivity training, and seminars on international business practices. Ongoing learning opportunities can help you retain top talent by showing your commitment to their personal and professional growth.

Local languages

Understanding the languages used in your target market is important for effective communication and localization strategies. Here are key areas to research:

  • Official and business languages: Identify the official language(s) of the country and any regional variations, including which languages are used in business contexts such as legal documents, negotiations, and corporate communications.

  • Customer language preferences: Investigate the language preferences of your target customer demographic. Preferences can vary greatly within a country, especially in regions with multiple dialects or languages, and tailoring your communications to these preferences can enhance customer engagement and brand loyalty.

  • Language proficiency levels: Assess the general level of language proficiency in the country, especially with English or other languages in which your business operates. This helps you tailor communication, product information, marketing materials, and customer support to meet local needs.

Once you’ve assessed the languages in your new market, you can decide what kind of language localization efforts you need to undertake. This might include translating and localizing websites, mobile apps, marketing materials, and user interfaces to resonate with local users, if the primary language used in business or preferred by customers is different from the language in which you typically do business.

Language services providers and multilingual staff can be assets when translating your business communications to a new language. Language services providers can assist with translation, interpretation, and localization services and are a great tool for maintaining accuracy and cultural appropriateness in translation, which is key for legal documents and customer-facing content. Staff with multilingual capabilities can make a major difference in customer service and local market analysis by bridging language gaps, facilitating smoother operations, and providing insights into cultural nuances.

Time zones

International businesses must maintain availability across different time zones to provide timely support to customers, partners, and employees around the globe. The following business practices can help you build a team capable of operating in multiple time zones:

  • Building out customer support coverage: Implement customer support systems that can cater to global customers in their time zones. This might involve setting up 24/7 support lines, using chatbots for off-hours queries, and hiring support staff in different time zones.

  • Allowing flexible work hours: Adopt flexible work hours for your team to accommodate international meetings and work requirements.

  • Adopting scheduling and remote collaboration tools: Use scheduling tools that can automatically adjust for time zone differences, such as World Time Buddy or Google Calendar’s world clock, to schedule meetings without the confusion of time zone conversions. To support asynchronous work, use remote collaboration tools such as Slack, Trello, or Asana, which let team members contribute according to their schedules while moving projects forward.

  • Implementing rotational shifts: For operations that require constant attention, such as information technology (IT) support or customer service, consider implementing rotational shifts to cover all time zones. This ensures someone is always available to respond to key issues or inquiries.

  • Setting clear communication protocols: Establish clear communication protocols that specify when and how to communicate across time zones, including preferred hours for scheduling meetings and expected response times for emails.

  • Honoring cultural differences: When planning meetings and deadlines, be mindful of cultural differences in work-life balance and public holidays across regions.

Product value

Though translating your product and marketing materials might seem like a logical first step of international expansion, it’s important that you first assess the true value proposition for your product in each international market. What resonates in your home market might not translate directly to another, and cultural nuances, economic realities, and competitor landscapes can substantially affect your product’s perceived value.

Determining the true value of your product in new contexts will let you create a compelling proposition that resonates with local audiences, ultimately driving success in your international expansion. As you adjust your value proposition to new markets, you’ll be responding to local customer preferences, market conditions, and local cultural norms and values—adjusting your communication to resonate effectively in the target market. During expansion efforts, be prepared to refine your value proposition based on new market insights.

The first step in assessing your product’s value in a new market is to conduct the following market research:

  • Determine needs and wants: Analyze local customer preferences, challenges, and buying habits, assessing what problems your product solves in this specific context.

  • Evaluate competitor landscape: Analyze competitor offerings, pricing, and value propositions, assessing how your product differentiates itself.

  • Assess local economic factors: Consider purchasing power, income levels, and affordability for your target audience.

Once you’ve assessed how your product fits into this new market, you’ll want to adapt your value proposition to reflect its new position.

  • Address market needs and preferences: Emphasize features that address specific needs and preferences identified in your research. Consider implementing different pricing options or subscription models to cater to a variety of budgets and preferences.

  • Tailor messaging to cultural norms: Make sure your messaging resonates with local cultural context and avoids misunderstandings.

  • Reflect any product adjustments: In some cases, it might be necessary to make minor product adaptations to align with local needs or regulations. Make sure these are reflected in your new value proposition.

  • Communicate comparative value: Demonstrate how your product outshines those of competitors. Instead of competing solely on price, showcase the unique value your product provides compared with its alternatives.

  • Highlight intangible benefits: Beyond functional benefits, emphasize emotional or social value that resonates with the target audience.

Payment culture

The key to succeeding in international markets is embracing their unique payment cultures. From the dominance of mobile payments in Asia to the prevailing role of bank transfers in Europe, determining each market’s payment preferences can help your business demonstrate respect for and understanding of your new customers’ habits while creating a convenient payment experience. Businesses should pay attention to the following considerations when adopting a payment strategy in new markets:

  • Payment processing: The payment processing experience can dramatically influence your market position. Work with local financial infrastructure to create a checkout experience that is as smooth and low cost as possible to keep customers coming back.

  • User experience: Providing a local currency option or integrating regional payment gateways demonstrates your brand’s commitment to its new audience.

  • Regulatory compliance: Every market has its own financial regulations. Cutting through this regulatory jungle demands a proactive approach to data protection and fraud prevention that reassures customers their transactions are secure.

  • Payment security: A robust cybersecurity framework protects against fraud and cyberthreats, which is a technical necessity and an important part of preserving customer trust.

  • Local partnerships: Forming alliances with local banks and financial entities gives your business logistical leverage and an insider’s perspective on the payment environment. These partnerships can provide insights into local customer behavior, regulatory hurdles, and potential market opportunities.

Businesses that operate internationally must comply with all local laws and regulations. This might require designing a unique strategy to comply with each market’s local tax regulations, data protection laws, employment standards, environmental obligations, and more. Adapting your business model to these requirements means diving deep into local laws and strategizing about how to maintain compliance without compromising operational efficiency or brand reputation. The following business practices are key when developing strategies for compliance in new markets:

  • Engage with local legal and tax experts: The complexity of global compliance and taxation is often beyond the scope of in-house expertise, particularly in markets with opaque regulatory environments. The global tax environment, for example, is a patchwork of regulations including value-added tax (VAT), goods and services tax (GST), corporate income taxes, and customs duties. Working with local experts clarifies your obligations and provides insights into best business practices within each jurisdiction. This collaboration can extend from initial market entry strategies to ongoing compliance and audit readiness.

  • Use tax structures to your advantage: Analyze tax obligations and opportunities across relevant regions to determine tax credits and incentives as well as strategies that mitigate double taxation. Tax planning can influence pricing strategies, supply chain design, and more, and it should include assessing the tax implications of different corporate structures, intellectual property management, and cross-border transactions. Effective tax planning supports sustainable growth by optimizing tax liabilities and enhancing operational effectiveness.

  • Rely on technology for compliance and tax management: Advanced technologies and platforms can automate the tracking of regulatory changes, calculate tax obligations in real time, and facilitate accurate reporting across jurisdictions. Investing in these technologies minimizes the risk of noncompliance and associated penalties while freeing up valuable resources to put toward core business growth.

  • Monitor regulatory changes: Businesses must stay up to date about tax and compliance changes. Create a structured process for monitoring legislative developments and industry trends, interpreting their impact on your business, and swiftly implementing any necessary adjustments.

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