When we talk about international expansion, it is not just an ambitious dream reserved for large groups, but a real growth strategy.
Indeed, in today's economic world, expanding beyond borders should not be the prerogative of multinationals alone. Small and medium-sized enterprises (SMEs) can also embark on an international adventure, provided they do so with mastery.
It's an exciting but challenging journey, where success depends on careful preparation and a constant ability to adapt.
So, how can you transform international operations into a “playing field” for your business?
We invite you to explore behind the scenes of international expansion , with proven strategies and practical advice.
Understand the target market
The crucial first step in international expansion is total immersion in the target market.
It's not just about understanding demographics, but grasping the cultural intricacies unique to each country.
Buying behaviors, social values, local trends and linguistic nuances can have a profound impact on the reception of your products or services.
What works well in your home country may be completely unsuitable elsewhere.
Additionally, local regulations should be carefully studied.
Tariff barriers, safety standards, environmental rules and labor laws vary widely from country to country and can greatly influence your ability to enter and operate in a new market. Surrounding yourself with local experts or consultants in international law is essential to navigate these sometimes troubled waters.
Finally, understanding the needs and desires of local consumers is fundamental.
You have to carry out market studies, surveys, whatever is necessary to understand what the current offer is and how your company could bring something new. The objective is to clearly define the positioning of your offer on the target market and to identify opportunities for differentiation.
It is with a thorough understanding of the market that you can develop a solid entry and growth strategy.
Choosing the Right Entry Mode
There are several ways to enter an international market, and choosing the right method will depend on many factors, including the size of your business, your resources, your risk appetite and the nature of your offering.
Direct export is often the simplest and least risky method, but it can limit your control and your ability to adapt to local specificities. It remains, however, a first step rich in lessons on the real positioning of your offer on the target market.
Conversely, creating subsidiaries provides maximum control but involves considerable investment and higher risks. That said, this approach would be part of a logic of long-term regional influence when investing in markets outside the European Union. Indeed, it makes it possible to improve knowledge of the local market and to benefit from commercial agreements, if any, linked to this area.
In this case, the country of establishment is absolutely crucial in the development strategy: it must be taken into account whether or not it belongs to a free trade zone, which opens up privileged and competitive access in the countries which are part. [1]
Joint ventures and franchises are middle ground options that combine local knowledge and resources with those of your business. Indeed, a joint venture gives you access to partners who already know the field, while a franchise can capitalize on an already established brand while benefiting from local entrepreneurship.
Each mode of entry has its own implications in terms of costs, potential revenue, brand control and regulatory compliance. You should therefore evaluate these options carefully to determine which model is best aligned with your long-term goals.
Some markets may require specific entry modes due to legal restrictions or trade barriers. It is essential to stay informed about free trade agreements, economic sanctions and protectionist policies that could influence your entry strategy.
A detailed cost-benefit analysis will help you make an informed decision on how to proceed.
Adapt your offer and your marketing strategy
Adaptability is the key to international expansion.
This often involves customizing your product or service offering to meet local expectations and tastes while maintaining the essence of your brand.
Sometimes minor adjustments are enough, such as changing sizes or specifications.
Other times, more substantial changes are necessary to meet cultural preferences or legal requirements.
The marketing strategy should not be neglected in this adaptation process either.
Successful campaigns in your home market may not have the same impact abroad. It is therefore essential to develop a communication strategy that speaks directly to the target audience, using elements of appropriate language commonly used in the country of establishment.
This may involve working with local agencies to design culturally relevant advertising messages and choosing distribution and promotion channels tailored to local consumption habits.
In some cases, a global brand strategy (glocalization) may be the best approach, combining globally consistent branding with personalized messaging and offerings for each market.
Respecting and valuing local particularities while maintaining a uniform brand presence can greatly contribute to the international acceptance and success of your business.
Take for example the establishment of Starbucks in Europe. If it managed to be done without too much difficulty in other European countries, in Italy it proved more difficult.
The internationalization of Starbucks in Italy clearly illustrates the challenges of cultural adaptation in a new market. Italy, known for its rich coffee culture and traditional cafes, has put up significant resistance to Starbucks' standardized approach.
Upon setting up shop in 2018, Starbucks attempted to introduce its American model of large-format coffees and sugary drinks, which did not fit with local preferences for simple espressos and coffees served in authentic, family-run establishments [2 ] [3] .
Despite some initial successes, notably with the opening of the Starbucks Reserve Roastery in Milan, the company faced fierce competition from local Italian cafes and a lack of acceptance of its products by Italian consumers .
Ultimately, Starbucks' experience in Italy highlights the importance of strategic and cultural adaptation when entering foreign markets, particularly those with a strong cultural identity such as Italy [4] .
Focus on local partnerships
Establishing strategic partnerships with local businesses can be a great way to facilitate your entry into a new market. These partnerships can take different forms, such as distribution alliances, manufacturing agreements or joint ventures. Local partners bring invaluable market knowledge, including consumer preferences, best business practices and contact networks. They can also help you navigate local bureaucracy, access essential resources, and overcome language or cultural barriers.
It is crucial to choose partners who share your values and long-term vision. Before committing, take the time to evaluate them carefully and build a relationship of trust. Clear and detailed agreements are essential to define the expectations and responsibilities of each party.
Think about intellectual property protection, financial arrangements, individual contributions and dispute resolution mechanisms.
Partnerships must be mutually beneficial.
Your company can bring advanced technology, expertise or a renowned brand, while your local partner can offer market knowledge and an established presence.
This synergy creates fertile ground for shared growth and success, reduces risks and increases the chances of success of your international expansion.
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More and more SMEs are betting on export.
The observation is clear, SMEs which have attempted to develop their sales outside the European Union:
Successful international expansion relies on a thorough understanding of the target market, a wise choice of entry mode, a suitable offering and marketing strategy, and the formation of strategic local partnerships.
These steps are essential to any business development strategy aiming for a sustainable presence on a global scale.
Immersion in cultural subtleties, compliance with local regulations, adaptation of the offer and the establishment of solid relationships with local partners constitute the foundation on which the company's success beyond its borders rests. .
Although more and more SMEs are betting on international development, they represented only 5% of all French companies in 2021. [7] Fear of the unknown remains a significant obstacle while numerous systems exist to ensure the success of internationalization projects. [8]
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At Imoran.fr , we support companies wondering how to expand internationally.
Our consulting experts help our clients navigate the complexities of the global market, choose the right entry modes and tailor their offerings to maximize their impact.
By sharing our expertise, we hope to inspire and guide you on your own international expansion journey.
Share your experiences and thoughts:
Have you already undertaken international expansion or are you considering doing so? What have been your biggest challenges and your most notable successes? What are the blocking points? What would be your reservations about such a strategy?
Your feedback is valuable and we would be delighted to discuss with you!
[2] “Italian coffee culture continues to inspire us” — Starbucks Italy GM Vincenzo Catrambone - World Coffee Portal