Is Global Expansion Right for you?
Growing organizations often start thinking about going global—expanding internationally beyond their original market to new customers overseas or in other countries.
It’s an exciting time for your business, but global expansion is also a complex process and decision with many important considerations.
What are the Benefits of Global Expansion?
Elevates business growth
Access to an international talent pool
Creates new revenue streams
Expanding a business internationally provides companies with access to additional markets. Entering new markets helps businesses grow beyond the customers and prospective buyers in their original country.
A worldwide market means more potential buyers, markets with different needs and preferences, and markets operating within different regulatory requirements.
Creates new revenue streams
Access to an international talent pool
Creates new revenue streams
Entering new markets internationally gives organizations additional income, helping them become more resistant to market shocks and changes in domestic market conditions. Growing revenue by expanding internationally could be as straightforward as making products available online within additional countries, or as complex as building new f
Entering new markets internationally gives organizations additional income, helping them become more resistant to market shocks and changes in domestic market conditions. Growing revenue by expanding internationally could be as straightforward as making products available online within additional countries, or as complex as building new factories and fulfillment centers overseas.
Regardless of how your organization enters a global market, the potential for revenue growth is a realistic possibility. You can use this revenue to strengthen your profitability.
Boosts your global brand recognition
Access to an international talent pool
Access to an international talent pool
By reaching other markets, your organisation builds brand awareness and brand recognition with potential customers. Global expansion makes it possible for your company to become better known and establish a recognizable reputation. This creates new possibilities for product promotion and strengthens your brand.
Once you’ve gained recogniti
By reaching other markets, your organisation builds brand awareness and brand recognition with potential customers. Global expansion makes it possible for your company to become better known and establish a recognizable reputation. This creates new possibilities for product promotion and strengthens your brand.
Once you’ve gained recognition outside your home market, reaching additional markets often becomes easier—you already know how to communicate relevance to a new market with new customers. You may have success you can use to launch your reputation into nearby countries, the rest of the continent, or a new region. After taking your business into Canada, for example, you may more easily expand into the United States.
Access to an international talent pool
Access to an international talent pool
Access to an international talent pool
As your company grows across borders, hiring great talent from other countries generally becomes easier to accomplish.
Better name recognition for your brand and familiarity with other markets can be very helpful when you’re recruiting—and access to an international talent pool provides your company with the opportunity to hire the best people.
What are the Risks of Global Expansion?
Ignorance or lack of understanding of cultural differences
Incomplete insight into political, legal, and compliance environments
Incomplete insight into political, legal, and compliance environments
Cultural differences can be very significant and their impact on business shouldn’t be ignored or underestimated. Social, linguistic, religious, and other misunderstandings could harm otherwise strong business plans. Decisions that show ignorance of culture can backfire and pose a serious threat to any company expanding overseas. Well-pre
Cultural differences can be very significant and their impact on business shouldn’t be ignored or underestimated. Social, linguistic, religious, and other misunderstandings could harm otherwise strong business plans. Decisions that show ignorance of culture can backfire and pose a serious threat to any company expanding overseas. Well-prepared business leaders carefully consider cultural differences throughout the global expansion process.
For example, if product packaging includes a color that’s offensive or inappropriate artwork, customers may reject the brand. Clothing styles that are fashionable in one country may be considered immodest or unusual in another cultural context.
Incomplete insight into political, legal, and compliance environments
Incomplete insight into political, legal, and compliance environments
Incomplete insight into political, legal, and compliance environments
The wrong move on a compliance issue can be fairly costly for your business. Imagine being unaware of a tax you’re required to pay, regulations in place before you can advertise your product in another country, or other compliance conditions with significant risks.
Potentially higher initial investment and waiting for long-term gains
Incomplete insight into political, legal, and compliance environments
Potentially higher initial investment and waiting for long-term gains
Before you expand globally, it makes sense to count the costs and have a realistic assessment of when you’ll break even or generate a profit on the investment. International businesses may incur higher costs and unexpected expenses that eat away at profit margins. That’s why upfront research, profit projections, and estimates are always helpful.
Insufficient attention to marketing and advertising requirements
Incomplete insight into political, legal, and compliance environments
Potentially higher initial investment and waiting for long-term gains
Marketing and advertising can work quite differently from one culture to another. Even if you’re using the same platforms or channels for reaching potential customers, you may have to follow another process to get started in another country, and this could be much different from what you anticipated. Closely related, what is important to
Marketing and advertising can work quite differently from one culture to another. Even if you’re using the same platforms or channels for reaching potential customers, you may have to follow another process to get started in another country, and this could be much different from what you anticipated. Closely related, what is important to your market today may not fit with what other markets value.
For example, different countries often use different social media channels: While Facebook tops the US market, VK (Vkontakte) is the preferred social media platform in Russia. Similarly, planning around the popularity of Google Search isn’t as helpful for businesses planning to launch a website in China, where Baidu is a more popular search engine. This makes it obvious that you should adapt your product to the habits of your target audience if you want to be seen. Expanding a business internationally provides companies with access to additional markets. Entering new markets helps businesses grow beyond the customers and prospective buyers in their original country.
A worldwide market means more potential buyers, markets with different needs and preferences, and markets operating within different regulatory requirements.
Case Study - Dominos Failure in the Italian Market
Domino’s Pizza, the famous American multinational pizza restaurant chain, embarked on an ambitious journey in 2015 by entering the Italian market, the birthplace of pizza. This move was bold and somewhat controversial, given Italy’s rich culinary tradition and the strong presence of local pizzerias that have perfected their craft over centuries.
Domino’s entered the Italian market with a strategy tailored to differentiate itself from traditional Italian pizzerias. They focused on convenience and technology, offering online ordering, home delivery, and American-style pizza variations, which local establishments did not commonly provide. Domino’s aimed to cater to a niche market segment that valued these services, particularly among younger consumers and urban dwellers looking for quick and convenient meal options.
Did Italians need Domino’s Pizza? No, they didn’t. In fact, despite its global brand recognition and successful business model in other countries, Domino’s faced several significant challenges in Italy:
- Cultural Resistance: Domino’s underestimated the strong cultural attachment we Italians have to our culinary traditions. Pizza in Italy is not just food; it’s a cultural heritage. Many Italians remained loyal to their local pizzerias, which offer superior quality and authenticity compared to the American chain’s offerings.
- Competition with Local Pizzerias: Italy is home to thousands of pizzerias that offer a traditional dining experience, with pizzas deeply rooted in local traditions and flavors. These establishments have a loyal customer base and deep ties to the community, making it difficult for a foreign chain like Domino’s to compete.
- Economic Factors: The economic landscape in Italy, particularly the challenges posed by the COVID-19 pandemic, played a role in Domino’s struggles. While the pandemic initially led to increased demand for delivery services, the competitive landscape and operational costs remained significant hurdles.
All of this happened because of bad market research and very little knowledge of the market. In 2021, Domino’s announced the closure of its operations in Italy, citing difficulties in sustaining its business in the face of stiff competition from local pizzerias and the inability to capture a significant market share.
Domino’s Pizza’s exit from Italy is a perfect example of the challenges of global brand expansion into markets with strong local traditions and preferences. While Domino’s continues to thrive globally, its Italian venture reminds us that success in one market does not guarantee success in another.