Expanding into a new market requires a deep understanding of the new terrain. This venture becomes challenging because of the complexities of the foreign land which requires an understanding of the target market, local legislations and requirements, competitions and market trends.
Multinational businesses like McDonald’s, Starbucks, Microsoft, Coca-Cola that have launched their businesses across various continents have faced several challenges in their expansion projects but were able to succeed because of their huge investment and commitment in understanding the dynamics of the new market before launch.
Global businesses ensure that they seek the help of experienced local partners that have a better knowledge of the terrain to support in crafting strategies to meet market demands. The success and growth of a business expanding into a new market is largely dependent on its ability to test and research the needs of the market and the adaptation of its offerings to the local environment.
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To successfully achieve its ambitious expansion into new markets, a business needs to consider some important factors that can impact its success. Some of the major highlights are:
Factors to Consider When Expanding To a New Market
Compliance with local laws
A foreign business can expand into new markets and achieve its objectives if it understands the peculiarity of the new market and abides with the local laws and regulations. Businesses are advised to partner with experienced local legal counsels that have a deep understanding of the laws to help with identifying potential hazards to the business operation in the new market.
Since some businesses require certain local permits, accreditations, and approvals, the need for a local legal guide is important to ensure that businesses do not face lawsuits, potential financial losses or eroding goodwill due to non-compliance with the local laws.
Businesses need to understand that there are peculiarities to how some legal and economic issues are addressed when operating in a foreign market, hence, the need to understand the laws guiding the existence of such business especially regarding employment or labour, taxes, customs, import and export restrictions, data protection etc.
Having a deep understanding of the local regulations can be achieved by working closely with a local partner to provide country-specific information and guidelines which would help mitigate compliance risk.
Explore and maximize the local talent pool
Having the right local talent is crucial to enter new markets and succeed. The knowledge and understanding of the culture of the new environment can easily be acquired through the influx or immersion of locals into the business operations.
An in-country business would be successful in a new market when it aligns its business strategy with execution and this requires that it has access to the right talent that would support it in achieving the immediate and long-term goals.
Partnering with local talent hiring agencies will solve the problem of not hiring right and resolve the issues around countless recruitment to get the right candidate and help businesses to operate seamlessly and scale within a short period.
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Understand the Culture
Seeking first to understand the culture of a new market is a big venture because the cultural difference is a huge consideration before commencing expansion plans. Businesses need to carry out extensive research to obtain consumer insight if the business offerings would fit the culture of the new market.
A food chain business that offers a menu with certain elements of food ingredients like beef and pork that are prohibited in some parts of the world would need to offer an alternative menu that would suit the taste and culture of the new market.
Working closely with the market experts to conduct quantitative and qualitative research will help businesses to better understand the new market in terms of price sensitivity, values, tastes, and preferences.
Identify a trusted local partner
Mitigating risks that are associated with business expansion into a new market can be achieved through leveraging local market expertise to navigate the complexities of the new market.
Local market experts are highly required to support market entry businesses in carrying out extensive market research, setting up the business, recruitment of key talent, supporting operational functions and complying with regulatory remittances. The operational activities that are critical to the success of the organization should be handled in partnership with experienced local partners so that such businesses concentrate on more strategic functions and activities.
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