Dangers and Pitfalls of International Expansion

Taking your business abroad has numerous benefits, but as many benefits there are, there are equally numerous pitfalls.  The road to expansion begins and ends with research.  You or your business will go nowhere without a proper amount of foresight that comes out of due diligence and a thorough accounting of where you are and where you are going.  As discussed before, just because you have the capabilities of expanding internationally, does not mean that you should be going abroad.  Going abroad takes a tremendous amount of resources, so it is very much worth it go through the research and determine if the further investment is worth it.  


When preparing for an international expansion, it’s a good idea to try to think up as many potential pitfalls as possible.  You probably know your company’s weaknesses better than anybody else does.  After understanding these weaknesses, the next step would be to put them into the context of where you are expanding.  You  can start by researching your target market as thoroughly as possible.  The more information you have, the better you will be placed to succeed.  This would be a good time to do a SWOT, gap and market segmentation analysis.  Gather as much information as possible before moving forward.  Some things to consider are how big the market is, what is your timeline for success, is the target market compatible with your own market? After you have much of this information, you can proceed to develop your strategy for the target market.    


One of the next things to consider is whether or not your organizational structure is indusive to a positive international expansion.  If you are expanding into a new culture with different languages and customs, it’s important to have a workforce that is flexible enough to adjust to the situation.  It is important that you have a set of guidelines in place that makes that integration into a new country as smoothe as possible.  Its also important to think about how to integrate technology and your workforce.  If you are looking to hire new employees in the new region, it’s important to know what kind of compensation and what you can offer that is customary.  If you go in expecting their customs to be the same as yours, you will fail to build the trust that is necessary for further expansion.      


Similarly, if you have a product, that product should be ready for expansion.  That entails that your product meets certain industry and government regulations.  It is not worth to go through with all the work only to be halted before distributions because you didn’t read the fine print.   It is also important to do some cultural research.  You don’t want to launch a product that doesn’t translate well into the local language or a product that is offensive to locals.  It wouldn’t hurt to do some serious product testing and make sure that the demographics are consistent with what you would expect.  Another area of research is to make sure that your product is protected sufficiently.  Certain countries are known for harboring individuals that specialize in  copying or stealing ideas and repackaging for themselves.  You should have more than a rudimentary understanding to sufficiently protect yourself.


Once you have entered a foreign market, it is also important to your investment that you remain in that market.  Having a solid foundation at home is crucial for the initial expansion, but in order to have continued success it’s important to build that same foundation in your target market.  The faster you find stability, the easier it will be to transact business.  THis means that both you and your business will have to adapt and be malleable to your new environment.  Being too rigid can lead to loss of business and erode the relationships you have previously built.  It is equally important to gauge new ideas more carefully.  Remember, your thought process might not fit in with the local culture seamlessly.  As you continue to expand and diversify both your organization as well as your offerings, it’s key to hold your company message as consistent as possible.  THis is especially important for a new environment because it is the easiest way to characterize your business and keep everybody on the same page.  Consistency is also key to building a base of loyal consumers.  




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