Taking your business to new global markets is a big decision. Once you’ve decided to embark on the journey, entering global markets can be a significant undertaking, and like any undertaking, it requires know-how.
One of the most important keys to success is preparation and planning. As the old adage goes, ‘if you fail to plan, you may as well plan to fail’.
You will need to carefully plan the where, when and how of entering new markets.
When: The timing of market entry is crucial.
How: Choose your method of market entry carefully.
Why strategic planning is so important
When entering a new market, your choices could include direct exporting, indirect exporting, transfer-related strategies and foreign direct investment-related strategies. Different markets and industries will require a different approach.
To select the best strategy, you need to consider the markets you have selected, the products or services you aim to bring to those new markets and your global objectives.
12 questions to ask
- Business goals: What are our objectives for entering this market? Which strategy will best meet these goals?
- Size of business: Does our size mean some strategies might not be possible?
- Resources: Are there strategies we cannot use because of a lack of resources, such as direct investment?
- Product or service: Which strategy will align best with the product or service we’re offering?
- Remittance: How will each strategy impact the price we can get for our product/service? (For example, would direct importing be so expensive that our product will have to be overpriced?)
- Competition: What is the level of competition in the market? What entry strategies are our competitors using? Which strategy will give us the best competitive edge?
- Intermediaries: Will we need to work with intermediaries? Are there intermediaries we can use in the market?
- Control: How much control does our company need over activities? (For example, direct exporting enables a lot of control, whereas indirect importing does not.)
- Investment: How much investing will be required for market entry?
- Time: How much time is available to enter the market? Do we need a strategy that will provide returns quickly?
- Risk: What level of risk can our company face? Which strategies are the least risky?
- Flexibility: How much flexibility do we need? Can we withdraw from a market quickly if we need to?