There usually comes a point at which a successful business has outgrown its domestic market but the next logical step of expanding into international markets can be fraught with difficulties unless it is done right.
The potential rewards of taking a business into international markets are plenty. The most obvious one is increased sales. Expanding overseas means opening a business up to potentially billions of customers, not all of whom will have access to the type of products or services in question. Another potential and related reward is centred on market diversity. Domestically, a business is reliant on a single market so any decline in market conditions can lead to a steep decline in sales. Expansion overseas means that a dip in any one market can be offset by continued strong sales in other markets. Track consumer demand and trends globally and a business will know where to concentrate its marketing efforts at particular points in time.
The pitfalls to expanding a business into international markets should not be overlooked. An obvious but very important pitfall is the language barrier. At an executive level communication in international business is largely done through English, but on the ground, especially when it comes to customers, the native language of a particular market dominates. Hiring local staff and managers is critical, as is using local marketing professionals to tailor a message for local audiences. In terms of marketing, a business should not assume that the same online marketing message that worked at home would work abroad. Digital marketing should take account of language and cultural differences, as well as any variances in social media usage and preferences.
Aside from the language barrier, using local staff and services can help a business from overseas overcome cultural differences also. Other areas that need to be taken into account is the legal and regulatory requirements of different overseas markets and whether access to raw materials, labour and transportation is in any way different to what a business has experienced domestically.
Of course, one of the biggest mistakes a business expanding overseas can make is assuming that there will be a ready market available for what it is selling. It is critical to have professional and in-depth market research done before expanding overseas and not to assume that domestic success can be replicated abroad.
It is also important that a business does not expand overseas before it is ready. Consolidating domestic success first before considering international expansion is not a sign of weakness, especially for start-ups.
Kuwait Real Estate Investment Consortium is an example of a business that has taken domestic success onto an international level and the Chairman, Fahad Alrajaan is a great example of an individual who has combined domestic with international success. His chairmanship of Ahli United Bank sees him responsible for a major commercial and investment banking group born out of the merger of the United Bank of Kuwait and the Ahli Commercial Bank of Bahrain. Kuwait Real Estate Investment Consortium has brought its experience in developing key real estate in Kuwait to similar projects in markets across the wider Middle East.
Expanding a business into international markets is a potentially rewarding and transformative step, but businesses must have their research done right before going global.