The Secret Recipe for Success in International Expansion

By Fernando Faria, Founder and Managing Director, Global Expansion Summit

The way companies approach expansion strategy is changing. I recently met with the Head of Expansion of a fast growth technology company and learnt more about his thought process when deciding which country to go next.

We also discussed how under-served the community of global expansion leaders is when it comes to access to structured, comparable and reliable information as well as opportunities to meet and share ideas with peers.

When the opportunity arises, I always ask our speakers (most of whom are senior global expansion decision makers) about how fast growth companies like theirs assess market opportunity, political environment & risk, company readiness and resources and the competitive landscape.

Where time allows, some are kind enough to write insightful articles for our GXP Blog, like Shawn Xu, who runs international expansion at Square who recently wrote “How do you identify the next market to launch your product?”.

What really impressed me in his article was how he walked us through a sophisticated model for weighing up their next steps, but doing so with such clarity and simplicity on the key fundamentals of that decision-making process.

Reading this article made me think of how else companies out there make such important decisions.

In another equally insightful article our Board Advisor Adam Breeze mentioned how important it is for companies to do appropriate research on the markets they are considering launching and mentioned the World Bank’s “Doing Business” ranking as an example. For those who don’t know it’s an incredibly complex ranking, which uses dozens of different weighted criteria to measure which countries have a friendlier environment to setup and run a business.

My impression is that switched on Heads of Expansion develop and maintain their own versions of the “Doing Business” ranking adjusted to their companies’ realities.

While the “Doing Business” methodology is mostly focused on a variety of structural criteria on country level such as interest rates, corruption levels, broadband availability, rule of law, access & transport links, GDP per capita, literacy, Gini coefficient etc.… this new in-house model that is being used by expansion leaders tends to balance country data with very detailed and specific indicators which are relevant within their industry and their company.

One example is workforce. At some point, a company looking to expand into a new market will need people on the ground. Some companies call them “launchers” some call “country managers”. Some will send someone from HQ, some will try and hire locally. Some will use a mix of both.

The most fortunate ones, however, have such a diverse workforce in their corporate HQ that they can find within their own ranks foreigners who can play a key role in their homeland, leveraging not only their language skills but also local connections and ability to understand idiosyncrasies of local employment law, tax code and regulatory environment.

Another example is a trendy buzzword called “localisation”, which is the ability to seamlessly launch an existing product or service into a new market in a way that will appeal to local customers as much as it does in the original market.

Localisation is much more than mere translation. It requires companies to be aware and able to adapt to cultural nuances - consumer preferences, naming adjustments, payment methods and value perception – local regulation regarding taxation, licenses, permits etc. as well as understanding how the product is delivered/offered to the end user, be it via distributors, direct channels or remotely.

I am seeing a new and encouraging trend where more models will be developed in-house and become a key part of each company’s success – of failure – on their expansion strategy.

I am looking forward to seeing dozens of Heads of Expansion at Global Expansion Summit in June and continuing to hear about their methodologies and success stories.