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Expanding a business overseas is a great way to gain access to new customers and can lead to tremendous growth for a company. However, it is important to weigh the potential risks and rewards to determine the viability of expanding a business internationally. In order to be successful in foreign markets, businesses must develop a market strategy, operating model, and product that are specific to the market or markets that are being targeted. The following paragraphs identify four tips that business owners can use to determine if expansion overseas is a good strategy, and if so, which markets to target.
First, a business must set clear objectives for expansion and employ strategies to achieve these goals. Setting clear goals will allow for an accurate assessment of risk and help to determine if expansion overseas is a good idea or not. In addition, management should identify measurable performance indicators that can be used to objectively evaluate progress and growth.
A second suggestion for businesses looking to enter new markets is to conduct in-depth research on the nations it is targeting. Research should identify things such as exchange rates, government stability, ease of doing business, treaties, and trade regulations. Reputable resources such as the CIA World Factbook, the World Bank, and Export.gov are a good starting point for research.
When looking to expand into new markets, business owners must anticipate big changes. To succeed internationally, a business will likely have to change how it is organized and managed. In order to identify which areas of the business will need to be adjusted, it is necessary to isolate every aspect of the domestic model and determine if it will be effective in a foreign market. One piece of the domestic business model that will undoubtedly change is the supply chain model, as goods need to travel longer distances and may run into red-tape and other impediments to trade.
Lastly, it is important for businesses to start with calculated risks. This involves conducting market tests to identify how to better cater to the foreign market. Expanding into new markets is challenging and requires continual adjustments to be made. It is imperative to listen to customer feedback and continue to adapt the business model to better align with the new market and consumers.
Evaluating the aforementioned issues will help a business determine if making a strategic move overseas makes sense and also help determine the most viable target markets.
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