Expanding a Business Abroad is More Than Just Opening a New Site. Here’s Why.

Many enterprising individuals are familiar with the struggles of opening a business on their home turf. A smaller number may have tried expanding within the same country and succeeded. But very few people can say that they have gone through an international expansion of their business without a scratch.

Take the fast-food industry, for example. Companies like McDonald’s, Burger King, Wendy’s, and Subway all come from humble beginnings. These former humble eateries have now become full-on mega-brands in their industry. This status gave them a license to not only expand their reach all over the US but even into the international market.

You would think that their popularity in their homeland would guarantee them success the minute they announce their existence in a different country. Not exactly. Many businesses (and not just fast-food chains) find it more difficult to capture a sizeable market share in a different country.

Checking out the local competition

One of the reasons expanding a business abroad can be challenging is because of the existence of local competitors. Unless you are building a team in an untapped city, you may be met with fierce competition from local brands that have already developed a reputation among customers.

Back in the fast-food industry, McDonald’s and Burger King met success in many places but not in Vietnam. Both brands have yet to achieve full saturation in the Vietnamese market. This is because of the fact that they overlooked a key feature of the local competition: that street food vendors could match their ability to provide food to consumers in a fast manner. This fact left them without an edge since Vietnamese were more likely to go for food items that were both inexpensive and familiar.

Understanding the local culture

Another reason why international expansion can prove to be a challenge is culture. Culture is a complex concept that encompasses more than just geographical differences. And unless you have a full understanding of the idiosyncrasies of the local market, you may need to consider looking for local talent.

Hiring local talent allows you to understand the culture of the target country, and may even help provide you with reliable translation services. Case in point: Iranian razor company TIZ (a Farsi word meaning ‘sharp’) made plans to export their product to Qatar. Unfortunately, the term had an unfortunate meaning in Arabic, the primary language used in Qatar. This led to abysmal sales, and their campaign failed.

There are many other facets of expanding a business to a different country that entrepreneurs need to understand before leaping. But knowing what the country is like and how the market in that country is performing are two of the most important things that need to be examined.

Expanding internationally is a considerable risk and requires a huge investment. It’s essential to have a good grasp of the concepts mentioned above. That’s the best way to know that investment is worth your time.

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