Expanding a Business Internationally: 9 Essential Factors

Netflix has expanded its international footprint from 0 to 190 countries in only 7 years.

Unfortunately, not all businesses are so successful at international expansion. The list of failed international expansions is as long as it’s worrisome.

To raise your chances of overseas success, find out what to consider when expanding a business internationally.

We’ve done the legwork for you and covered critical factors affecting international business expansion like pricing, marketing, hiring, registration, and more. All factors are accompanied by case studies to give you a solid head start for your international growth strategy.

Let’s dive in.

9 Factors to consider when expanding a business internationally

International expansion presents endless possibilities for a business. To make it a success, you need in-depth research, awareness of local cultures, and a desire to adapt.

Let’s give you a detailed rundown on what to consider for international business expansion.

Pricing and taxes

Your pricing strategy directly affects your market positioning and ultimately sales.

If you fail to customize your prices according to the local consumer purchasing power, you’ll likely become either an overly expensive, high-end brand or a cheap, low-quality one.

Try these pricing strategies to find the sweet spot in new markets:

• Value-based pricing: your pricing matches customers’ expectations for the perceived value of your product/service
• Demand-based pricing: you change prices based on the overall demand for your product/service in the market
• Premium pricing: your pricing is correlated to the quality of your product/service and remains higher than competitors’ because of the premium quality
• Penetration pricing: you undercut the existing competitors in the market to build a monopoly for your brand and gradually increase prices later

Besides pricing, consider your business tax requirements when operating internationally. Study closely the local and international tax regulations and develop a plan to ensure compliance and avoid legal complications later.

Even if you have a subsidiary company abroad without any office space, you need to abide by the tax regulations to minimize risk.

Example

Nike is a great example of a premium pricing strategy for international expansion. When Nike entered the European markets, it positioned itself as a high-end brand for consumers who prioritized performance, value, and quality. Through the launch of Tech Pack and other innovative design collections, Nike became a popular choice among premium buyers. Source: Behance

Brand recognition

One of the trickiest parts of international business expansion is building your brand from scratch. Your brand might be a household name domestically while being unknown internationally.

Get ready to channel a large portion of your marketing budget into building brand awareness and credibility. You'll also need to localize your brand identity to cut through the cultural barriers. This will help potential customers resonate with your brand.

Follow these actionable tips to create your international branding strategy:

• Perform thorough market research: Understand your buyers and competitors to develop a suitable marketing strategy.
• Revamp your brand identity: Create a timeless and culturally appealing identity that evokes a desirable emotional response in the target audience.
• Identify your differentiators: Find the core value propositions that set you apart from the local brands and spotlight these features to win over the new market.
• Monitor public response: Take a pulse of your customers to understand your brand perception and adjust your strategy.

Pro tip: Bring your brand identity in line with the local flavor to appeal to the local audience.*

Example

Netflix presents the perfect example of revamping brand identity when expanding internationally. The streaming service has dedicated social media profiles for different countries and publishes translated, locally relevant content from every account. This gives the brand a more engaging image and a sizable following in every home country. Source: Instagram

Custom market offer

Defining a customized pricing strategy for a new market is the ideal starting point. The next step is creating an enticing offer based on local buyers' expectations.

To create an irresistible offer that sends your sales through the roof, study target buyers' purchasing habits, analyze their aspirations and pain points, and identify market gaps. Use this research to refine your messaging and fine-tune your pricing.

Walmart’s failure to expand in countries like Japan and Germany highlights the importance of customizing market offer. The retail giant failed to account for locals' dietary habits and cultural differences, leading to empty shelves, uncooperative workers, and unsatisfied customers. This misplanning eventually resulted in Walmart's exit from these countries. Source: Nikkei Asia

The lesson? Invest enough time and effort to understand your target audience meticulously and make critical business decisions based on this understanding.

Sourcing talent locally

Your international expansion strategy is incomplete without an efficient and well-functioning workforce. But hiring locally can be challenging because every country has a different talent pool and market standards. Therefore, you need an airtight talent acquisition strategy to find skilled professionals for your workforce.

Here are a few best practices to hire locally in a new country:

• Choose a local staffing agency as a talent acquisition partner and let them do the heavy lifting of finding the best candidates
• Clearly outline your requirements, job descriptions, compensation, agreements, and other necessary details to speed up the hiring process
• To position yourself as an ideal workplace, use employee testimonials and unique aspects of your business culture
• Establish strong social media presence and leverage it to attract local talent
• Create a referral program for your employees and encourage them to network

Hiring local employees is arguably one of the most complicated pieces of the international expansion puzzle. Make sure to dedicate a sizeable portion of your resources to developing and executing a solid talent acquisition strategy.

Example

Starbucks is one of the best examples of how hiring local talent can benefit your international expansion strategy. Local marketers helped to position Starbucks as a vital destination between home and work, which was in line with China’s ethos. They were also instrumental in establishing the brand’s premium status, allowing the company to command higher prices in China than the rest of the world.

To gain the loyalty of its local workforce, Starbucks created a health insurance program for their elderly parents. Additionally, the company hosted the Partner Family forum to honor partners’ families. Source: Starbucks

Translation management

A translation management system (TMS) allows you to localize your content for other countries effortlessly. You can deliver consistent messaging to buyers across multiple international markets by localizing all your communication with a TMS.

Find more about business translation here.

Example

To expand its business overseas over a decade ago, Zendesk localized its solution to French, Portuguese, German, Spanish, and Chinese. The move proved to be successful and now Zendesk is available in over 40 languages. Source: Zendesk NL

A professional localization suite like Centus can streamline your business expansion efforts by automating your translation process.

Centus is a one-stop solution to bring your team of designers, developers, and translators on a single dashboard and localize your content for any market. Its intuitive interface, built-in quality assurance framework, and user-friendly functionality will be instrumental in aligning your product with the local market’s needs. Learn more.

Marketing framework

Once you’ve established robust foundations for your business, it’s time to design a powerful marketing strategy to win over your potential customers.

Remember that your marketing techniques will vary for different markets. What works in some countries might flop in others. So, circle back to the insights from your original target market research and shape your marketing strategy piece by piece.

Here are some crucial points to keep in mind for an effective marketing strategy:

• Use marketing intelligence tools to get a deeper understanding of your ideal customers
• Customize your messaging to match your target audience’s intent
• Work with key opinion leaders and influencers in the local market to get more eyes on your brand
• Partner with a local marketing firm to figure out the best-performing marketing channels and campaign ideas

Example

Gartner’s global presence spans over 85 countries. The company’s international expansion strategy is buttressed by its markting strategy framework shown below.

Gartner’s marketing strategy framework allows linking marketing objectives with operational plans, which is crucial during international expansion. The framework’s emphasis on midterm execution, situation review, and marketing manager accountability allows rectifying costly mistakes early.

Make sure to study Gartner’s marketing strategy framework closely before expanding your business internationally. Source: Gartner

Registration and due diligence

Registering your business in a new country is often complicated and riddled with uncertainties. To steer clear of bureaucratic restrictions and repeated delays, work with a local legal counsel to estimate the costs, legal requirements, and timelines for completing the registration process.

You also have to perform due diligence with the help of local experts. In layman’s terms, this is the process of understanding the risks and challenges involved in expanding your business internationally.

A local legal firm can offer hands-on information on the domestic market and culture to help you complete the registration process seamlessly. Whatever you do, don’t skimp on legal counsel when launching your business in the international market.

Example

When a US-based business enters the UK market, it needs to register with the country’s official registrar, Companies House. This is necessary to protect the brand, which will operate as a separate legal entity in the UK. Registration is also required for opening a bank account, filing taxes, and managing the company’s finances.

Economic and political landscape

Your target region's economic conditions and political stability play a pivotal role in your international expansion plans. If you venture into a country with the right consumer and business culture but a failing economic infrastructure and fragile political system, you're setting yourself up for failure.

Studying the economic landscape is crucial to recognizing whether a market can fulfill your potential revenue goals. Evaluating the political setup will help you determine the viability of opening a business in a country.

Example

Let’s consider the example of a US-based company looking to expand internationally in a politically and economically unstable country like Venezuela. The high inflation rate in Venezuela would make it difficult for the US company to price its products competitively. Political instability can undermine the safety of the company’s employees and operations.

Cultural and language considerations

Embracing the local language and cultural nuances of a new market is another prerequisite for success when expanding internationally.

Being closely familiar with the target country’s culture, you can recreate your brand identity to match it. Thus, you can operate as an insider rather than an intruder. This automatically translates into healthier customer relationships and a more relatable brand image.

Example

IKEA is a classic example of how a business can meet the cultural and language requirements of a new market.

The home furniture brand follows a standard ambiance across all markets but adapts to the local cultures to blend in. For instance, all IKEA stores in India offer on-site assembly service instead of the DIY function everywhere else. The company also changed the sizes of its fitted sheets and bedding to match American sizes when launching in the US.

Conquer the international market with a fail-proof international expansion strategy

Expanding internationally is a massive step for any company. A strong strategy covering all bases can set you up for long-term success and protect you from the common pitfalls of expanding internationally. Use our nine factors for international expansion as the starting point in your research and strategizing process.

Pro tip: Need a localization tool to localize your content for international markets? Try Centus for free to revamp your content in no time. Learn more.