International Expansion Strategy: 4 Examples

Management
Adedamola Ojedokun
27 Jul 2023

5 min. read

Contents

Expanding your business internationally can be a game changer that opens up a world of possibilities. However, you need meticulous planning and a well-executed strategy to enter new markets.

To avoid common pitfalls and enhance your decision-making, follow our international expansion strategy examples that can be adapted to your circumstances.

Pro tip: Tailor your user experience to meet the expectations and preferences of customers in different regions using an efficient localization platform like Centus. Learn more.

4 International expansion strategy examples

The international business expansion strategy examples provided below have proven to be successful. By examining them closely, you can understand what works and why to make strategic decisions that are well-aligned with your international expansion goals.

1. Exporting

intermodal containers Source: Pexels

Exporting is a market entry strategy that involves selling domestically produced goods or services to buyers in foreign markets. The following are three key types of export strategies:

Direct exporting

Direct export involves selling products directly to customers in foreign markets. Typically, this strategy requires developing distribution channels, establishing local sales teams, and managing logistics to deliver products to international markets.

Indirect exporting

Indirect exporting involves using intermediaries, such as export agents or distributors, to facilitate product sales in international markets. This strategy allows businesses to contact customers in other countries without establishing a physical presence by leveraging the experience and network of local partners.

Cooperative exporting

Cooperative exporting is an international expansion strategy that involves collaborating with other businesses to gain access to foreign markets collectively. This strategy allows companies to pool their resources, share costs, and jointly enter new markets.

How to implement

Company A might pursue direct exporting as its initial expansion strategy by performing market research and identifying possible target markets in Europe. It can build relationships with local distributors in European countries and create logistics infrastructure to ensure efficient product delivery.

Company A can reach new clients and create revenue without creating a physical presence in international countries by directly exporting its software solutions.

2. Licensing and franchising

a franchise cafe Source: Unsplash

Licensing and franchising allow businesses to expand their influence while reducing their direct involvement in international markets.

Licensing

Licensing is an international expansion strategy that involves granting another company the right to manufacture or sell products bearing the licensor's trademark or intellectual property. The licensee pays royalties or licensing fees to the licensor in exchange for the rights and support provided.

Franchising

Franchising is the process of allowing an independent party to operate a business using the franchisor's existing brand, systems, and processes. The franchisee pays the franchisor an initial franchise fee as well as monthly royalties.

How to implement

After successfully establishing a presence in Europe via direct exporting, Company A can explore the licensing approach to further expand its international reach. It can collaborate with another software development firm in a market that it wants to enter but lacks the requisite local knowledge (for example, the Japanese market).

Company A can license its software solutions to a Japanese company, allowing them to localize and distribute their products in Japan. This approach allows Company A to quickly enter the Japanese market while leveraging the partner's knowledge of local business practices.

3. Joint ventures and strategic alliances

office building Source: Unsplash

Joint ventures and strategic alliances involve collaboration between two or more companies to gain access to local expertise, distribution networks, and pooled resources.

Joint ventures

A joint venture is an international expansion example whereby two or more companies form a separate legal entity to pursue a specific business venture. Each partner contributes resources and expertise and also shares risks and profits.

Strategic alliances

These are cooperative agreements between businesses that do not lead to the formation of a separate legal entity. Partners work together while maintaining their separate identities and enterprises. Strategic alliances can involve shared marketing efforts, joint research and development, or technology transfer.

How to implement

Company A might potentially form a joint venture with a local technology company in Brazil to expand its influence in emerging markets. This will allow the company to establish a physical presence and have access to the partner's established customer base and distribution network.

By pooling resources and expertise, the joint venture will develop customized software solutions exclusively for the Brazilian market. This approach will provide localized products and services to satisfy the unique demands of local businesses.

4. Foreign direct investment (FDI)

a person holding cash Source: Pexels

FDI is an international expansion process that is used to develop a physical presence in a foreign market. It involves a company directly investing capital, resources, and expertise from one country into another.

Foreign direct investment offers businesses increased market access and a physical presence in the target market, thereby allowing them to build relationships with local suppliers, distributors, and customers.

Greenfield investment

In greenfield investment, a company establishes its operations in a foreign market from scratch. This includes building new facilities, recruiting a local workforce, and establishing distribution networks.

Greenfield investments allow businesses to adjust their operations to the specific needs of their target market. It also allows them to retain full ownership and management of their company.

Acquisition or merger

It entails buying or partnering with an established company in a foreign market. This strategy for international expansion allows companies to enter a market rapidly and use the acquired or merged company's established infrastructure, customer base, and brand recognition.

Companies that buy or merge with a local organization can benefit from rapid market access as well as the acquired company's local knowledge and skills.

How to implement

Company A may decide to pursue a foreign direct investment strategy as its international expansion efforts continue to grow. They can establish a greenfield venture in India, which is a fast-rising market for software solutions.

Company A can establish a cutting-edge software development hub in India, employing local workers and leveraging the skilled labor of the target country. This investment will give Company A complete control over its operations, allowing it to effectively service the Indian market.

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