International Expansion Things you need to consider when expanding internationally

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At some point, as your brand grows, a time will come when the leadership team is sitting around the table and “going global” is the topic of discussion. It can be an exciting venture, and at the same time brings an entire new set of factors to consider. Where do we start? Do we have to adapt? How much do we have to adapt? Does our partner profile need to change? Does our franchise model need to change? What about our menu? The list goes on…

You have achieved success in your local market and are thinking of bringing your business into international territories. But just because a company has reached brand equity and massive revenue in its current location doesn’t mean that the same level of accomplishment is guaranteed in markets abroad. Are you ready for a global expansion?

Research shows that entering a foreign market costs between $20,000 (USD) to $250,000 (USD) depending on your company’s offering and the new market’s complexity.

Regardless of the size of your company, an international expansion takes a lot of time, money, and manpower. It’s extremely crucial how these resources are spent during this process.

If you need some guidance for this big move, here are some things that need to be considered when expanding internationally!

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1. Have a Global Branding and Expansion Strategy

Never rush an international expansion. Use your time to create business and marketing strategies in your new market.  Besides, it will be easier to finance your move if you have a plan.

You can use lessons from other company’s international ventures and you can also look at your own data and experiences to check if it is the right time for an expansion. Conduct a thorough cost analysis and study the country you want to enter.

When planning, you will notice differences between your local market and the new location, which can pose as a challenge. For example, business rules and regulations vary per country. Furthermore, taxation is another legal compliance to be mindful of.

The planning also includes defining your new markets. For a successful entry, take note that a foreign culture may have different needs and motivations for purchasing your products and services and cultural differences may mean a different acceptance of your capabilities as a brand.

Other things to consider as you enter your new market are language, formalities, market size, and local competitions. A market study will help you identify these nuances.

When entering a foreign market, calculate all risks and prepare for unfortunate events. A lack of preparation can result in the complete downfall of your global expansion.

2. Design your international organisational structure

How will you manage international or remote operations? Will you have physical offices or a hybrid work model?

Now, a hybrid work model will enable you to have a distributed team, which means some of your teams can work remotely while others can work on-site. This is why it is crucial that you decide on an organisational structure and ensure that standard operating procedures are in place in order to make sure that back-office processes and reporting requirements are still met.

Besides identifying the right work setup, you must also align your new business model to the local laws and cultural expectations set on the targeted country. This is because your current operational structure might not apply in a different work environment.

To address these issues, an adapted international organisational structure must be included in your global expansion strategy to ensure that you can achieve operational stability and growth.

3. Recruit the Right People

In business, there is no one-size-fits-all and so, some strategies might not work well in another country. Therefore, you need the expertise of top local talents to tailor your strategies to the local market.

Ideally, when recruiting internationally, your hires must be able to speak the language, embody the culture, and identify commercial and marketing opportunities. A proficient candidate may also have a better understanding of the management style that can work in the office. Treasure the perspective of your employees as they are the key to building new relations in your new market.

Consequently, when screening international talent, it is crucial that you involve your managers in the hiring process. Doing so will ensure that you only target top talent that fits the right combination of attributes—good educational background, relevant job experience, knowledge and skills, and culture fit.

Besides skills, experiences, and cultural awareness, your employees must also be aligned with your company values. It’s something that you must uphold to keep your company’s core intact. After all, your management has to stay on top to sustain your company culture. You’ll experience less stress in managing remote operations when you know you can trust the people you hire to understand and accomplish their assignments. In short, hiring the right people will highly contribute to the success of your global venture!

Are you ready? Keep these tips in mind for a successful international expansion for your business!

The extent of the answers to many of these questions, on many occasions, will be determined by the answer to the very first question. Where you start will be an important determinant in how your road to international expansion unfolds. Here are five key factors to consider when choosing where to launch your global expansion initiative.

1) Familiarity of offering

Are you entering a market where people are familiar with some version of your product/service? If your restaurant brand serves a specific type of cuisine, for example, is the market you’re entering already familiar with this cuisine, or will the consumers need to be educated? If the latter is the case, you will then take on the role (and investment) of pioneering the market to educate consumers on your offering and build the demand. Should you choose to go this route, educational marketing and other similar strategies will be important for getting the customer in the door. On the plus side, this investment has the potential to pay off well, giving you an advantage over any future incoming competition, should the offering be well accepted. At the same time, it will be important to manage financial expectations, particularly on ROI, as the consumer education process could slow the ramp-up period. Entering a market where there is familiarity with your product/service reduces the need for consumer education and risk of non-acceptance. In this scenario, it will be important to analyze the competitive landscape.

2) Brand recognition

Does your brand currently have any level of brand recognition in the market? Nowadays, travel is easier than ever, and more and more people are becoming familiar with brands and concepts outside their home market. Notwithstanding the first point above, if there is a high level of recognition for your brand in the market, you are already ahead of the game. We’ve all seen it happen where a brand opens in a new market and there is a line out the door on opening day. This is a prime example of the benefits of entering a market where brand recognition exists. Doing the research to understand where you stand in the new potential market will pay off in the end for both you and your franchisees.

3) Market landscape

What is the current market environment in your sector in the new market? Is the economy comparable to the one you are currently operating in, or is it better or worse? By assessing the economic climate in your sector, you can gauge the earning potential of your brand in the potential market. What about competition? What is the current competitive climate? Who are the big players, and what are their unique selling propositions and success rates? Competition is a good thing, as it signifies demand. When assessing the climate of competition, be sure that the level of competition is not too high or near saturation, leaving little room for the introduction of new players.

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4) Geographical distance

When expanding internationally for the first time, it can sometimes seem easiest to go to the first place where you receive interest from a franchise prospect. On one side, this could be a faster way to get the deal done. On the other, you could end up in a scenario with your first franchisee on the other side of the world, missing out on the benefits that come with expanding into a closer market. International travel and relocation are becoming more and more common, so it’s likely that the population of neighboring or nearby countries has a higher percentage of clientele who have experienced (and like) your brand. Starting your international expansion in one of these markets allows you to take advantage of this brand recognition (see point #2). Additionally, when it comes to supporting, training, and managing your franchise partners, expanding into a market farther from home can pose additional challenges in managing time zone differences, logistics barriers, and travel time. If this is your first time going outside your home country, the initiative will require a great deal of attention, and it will be important to have easy access to the new market to facilitate supporting your franchise partners.

5) Cultural understanding

Every country has its own culture, both socially and professionally. No matter which country you choose to start in, there will be a learning curve to adapt to the norms of doing business there. It will also be important to understand the consumer, as you work with your franchisee to build marketing strategies and materials. For most of us, this is one of the reasons we have chosen to enter an international market through franchising. At the same time, before we choose to enter a market, we owe it to our franchisees and to ourselves to do our research. Consider starting in a country where you and your team have a higher understanding of how business is conducted in that culture. Understanding the cultural differences between your market and the entry market will facilitate the relationship with your franchisees and help you minimize cultural faux pas. The same goes for the language. If this is the first time you are expanding into a new country, starting with a country that speaks the same language as you do, or that has a sizable population of people who speak your language will avoid the need for translating manuals, simplify employee training programs and the opening process, and minimize the transfer of knowledge getting “lost in translation.”

Conclusion

No matter where you decide to take that first leap, keep in mind that the more research you do beforehand, the better prepared you will be for this new and exciting venture. Going international is an important step for a growing brand and, if done responsibly, can produce remarkable results for both your brand and your franchisees.

The views, thoughts, and opinions expressed in this article belong solely to the author, based on his/her industry experience and expertise and are in no way a representation of Darden Restaurants, its employees, affiliates or other related group.

 

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Rebecca Viani, Director of Development for Darden International, is currently handling the expansion and development of the Darden brands for Europe, the Middle East, and Africa. Before joining Darden, she was Head of Franchising for restaurant concept developer and franchisor, AWJ Investments in Dubai. Her international franchising experience began in Latin America, where she led an initiative to acquire a master franchise license for a U.S. international snack brand. She next worked at United Franchise Group, where as Vice President of Operations she played a key role in the growth and international development of one of their brands as it expanded from 30 U.S. locations to 110 locations in 9 countries.

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