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How to Know when to Internationalise

How to Know when to Internationalise
Wednesday, 29 August 2018

A company’s decision to internationalise is personal—some businesses might start out as international entities where as other might never take the leap. And this is okay! In fact there are many factors that should be considered before deciding to take your business overseas. For example, start-ups seem to have an easier time than established businesses when it comes to internationalising [1] and companies from smaller countries tend to go abroad faster than those from larger places [2]. So what do you want to keep in mind before internationalising? Consider these questions:

1. How does being global fit into your business?

Are you a global company from day one or is it something you are thinking about internationalising once you’ve established the business in your home country? Businesses that are able to jump boarders from when they start allow them to add global customers with very little effort. These businesses tend to require no localised operations or logistics, offer a product that is not localised, easily reach customers online, and have minimal local networks. [2]

For example, consider how bloggers can be thought of as global from day one because they use their online platforms to reach people that can be in any country worldwide. These entrepreneurs can offer sales or services online to their clients and can easily expand their reach by electronic ‘word-of-mouth.’

However, if you are not inherently a global company, consider:

2. Are you ready to add a new country?

A company that is firmly established in one country (which infers one main type of culture and cliental) might not have the easiest time expanding. One of the most important things to consider is if your product/service is actually valid abroad and if the price you are asking for is something that international clients will be willing to pay. [2] It is key that you understand the necessity to adapt the product or service to the different markets. [1] In addition, keep in mind that you will probably have to reorganise your team to include someone who knows the target marketplace well and can help you brand and market efficiently in that space. [2]

3. How hard will it be and what costs will incur?

In addition to adapting your product to the local marketplace, you will also have to ensure that you are able to contend with local competition. And don’t forget that the regulatory questions and customary paperwork will most likely change and additional fees might apply. Consider the pros and cons of this international expansion before deciding to internationalise. Then figure out what your budget is and make sure you are able to set aside this money previous to taking any big steps towards your goal. [2] The costs of expanding to different places all at once can be overwhelming and result in failure. Just because you are internationalising a successful product or service, it doesn’t mean guaranteed success abroad. [1] If you are looking for a way to organise potential countries to move to, consider the CAGE (Culture, Administrative, Geographic, and Economic) Framework.

4. How important is the internationalisation for my business?

Depending on where your business is in its growth process, creating a global strategy will be more or less important for continued success. Generally speaking, investment in local growth will, in the short term, provide more benefit that working on internationalising. However, if saturation in the local market is reached, the only option might be expanding the business across borders. Therefore, it is important to analyse the importance that internationalisation has on the overall wellbeing of the company. Perhaps it is important to start off as a global business or perhaps you can get away with internationalising many years down the road. [2]

The timing of internationalisation is also key to have a positive outcome. Going global too soon or too late (when your business is already entrenched in the local market) can both be disastrous for the company. Being aware of the current state of the business and the markets to which you want to expand is important for a success—remember it is better to lead in one place than fail in many. [1]