Is Your Business Ready To Become A Multinational?
Global expansion is at the forefront of most modern-day companies – small and large, as firms forever seek ways to boost sales and increase profits.
According to World Bank estimates, gross domestic product (GDP) will increase globally by 3.2 percent in 2014, which represents the first time in three years the body has forecast world growth. While this demonstrates how opportunities for expansion exist, a brand's presence is not going to explode overnight, so businesses with an eye on global domination need to put an in-depth plan in place before taking the leap.
Here are five essential steps every business should follow:
Do your research
The starting point of any successful expansion is research. Have you checked the viability of the market you are targeting? Will there be enough demand for your product or service? For years, a number of international beer manufacturers have been trying to compete in the Chinese beer market, quite unsuccessfully. Part of the problem they face is the large volume of domestic brewers already operating, and the fact the Chinese government supports local beverage manufacturers through tax benefits. This ultimately means global firms have struggled to compete resulting in very limited market share, something thorough research would have revealed.
Get your branding right and work with a reputable localization company
One of the big issues surrounding global expansion is making sure your branding connects with different cultures. In order to do this, companies should look to internationalize their slogans and literature. There are plenty of examples of brands being left red faced because they translated their brand message rather than localizing it – Take KFC’s ‘eat your fingers off', Pepsi’s ‘Pepsi will bring your ancestors back from the dead’, and HSBC’s ‘do nothing’ campaigns – this can cause untold embarrassment and in some cases irreparable damage. Fortunately these companies are strong enough to bounce back, but many aren't so fortunate. This is why companies should always employ expert localization services to make sure they are delivering consistent brand messaging that complements their brand, rather than running it into the ground.
Establish good working relationships
While your company will be used to doing business in local markets, it would be a massive error in judgment to assume custom and culture is the same all over the globe. While a handshake is the accepted greeting in the Western world, there are marked differences in how it is delivered. For example, a very firm handshake is the norm in Russia, whereas they go on for much longer in Latin American countries. Taking some time to find out about business practices in various countries is essential, as this will be key to developing good working relationship and useful contacts – the cornerstone to any successful expansion.
Embrace technology, it's your friend
Technology can make a huge difference to a company's operations. Used correctly, it simplifies the whole process of budgeting, planning and managing finances. Typically, foreign expansion will encounter major stumbling blocks such as language and currency issues, but technology and ‘Internationalization’ of your various platforms can smooth over these problems. Technology also helps you to scale your business and grow without having to invest heavily in other resources – which is very useful when trying to establish a base in a new region. Whether it is data collecting, implementing software or using unified communications, technology can make all the difference.
Get your head around the regulations
Complying with regulations typically puts a disproportionate burden on small and medium businesses in terms of cost, time and resources, while both under- or over-compliance can lead to hefty penalties and fines. This is why would-be global firms need to have an in-depth understanding of the legal and tax requirements of any country they are targeting. Bryan Jackowitz, marketing director at drugs and cosmetics firm Dickinson Brands, recently told the Wall Street Journal there are always going to be issues around trademarking, licensing, testing and packaging laws. "The whole process takes about a year to enter the country and start shipping the product," he said. "But it will vary based on how high the mountain of paperwork is and the speed with which the agencies work with you."