The world is no longer a large, unreachable globe. And by that, we are not trying to say that the planet is flat, but are simply trying to explain how communication is affecting our perception of it. We no longer have to worry about our distance from the rest of the world when it comes to the flow of information. Namely, goods, services, and data can travel across the globe nigh instantly, so designing global market offerings which are effective is crucial to any long term success.
Nowadays, customers can even purchase products from companies that operate on the other side of the planet. Brands that originated in the United States are available to people from India or Japan. Of course, there are companies whose work is not open to globalisation. However, they should always consider the benefits that it brings. After all, if their current strategy doesn’t support internalisation, they might work towards changing it. Or, at the very least, they should be ready to globalise their processes should the situation change. And all they require is analysis and research.
Choosing to Go Global
But do companies really need to be global? Placing a product on an international market can be very challenging. The product design and the marketing efforts have to be spot-on for the process to succeed. Of course, the most important factor for most companies is the potential for profit. If research done by a company shows that they can profit more, the company might decide to go global.
Companies might want to work towards economies of scales. They might also go global if their customers are moving from one country to another. But globalising a company can also go bad for the actors. Namely, companies have to bear in mind the differences in the cultures of different countries. There are cultural standards they have to uphold, regulations they have to follow, they have to avoid issues with the political environment,, and they have to survive in the competition against companies that have been in those countries long before them.
Choosing the Markets to Enter
Companies have to work tirelessly in order to identify which markets they can profit from. Most companies start their internationalisation processes by expanding to one other market. Once the experiment is successful, they can decide if they want to enter multiple markets. Other companies prefer diversifying the risks by entering multiple markets at the same time.
Of course, companies have to evaluate potential choices. As a general rule, companies will start by expanding to neighbouring countries. For instance, a company from the US will probably start by expanding into the Canadian market. They feel comfortable expanding into a market that has similar laws, culture, and languages.
Naturally, they don’t only focus on those similarities. Companies will conduct research to find markets that offer lower risk levels and that would give them a competitive advantage over the existing offers on that market.
Entering the International Market
There are multiple ways for companies to enter the international market. The most common ones are through exporting goods directly or indirectly. Indirect exporting includes selling the products to a domestic export agent. Direct exporting, however, involves creating ways to facilitate sales in other countries.
Instead of exporting the product itself, some companies prefer licensing their products. Instead of directly selling their products, these companies allow others to manufacture their products in their markets. That way, they minimise the risk and the effort they have to put in. However, it also reduces the profit margin from those ventures. So instead of just leaving everything to the licensees, some companies prefer making joint ventures. In joint ventures, companies partner up with a local business that helps them enter the market. These ventures usually pop up for economic and political reasons.
Lastly, companies can enter a foreign market by investing in other companies. By leveraging direct investments, companies can become owners of companies that are a part of the global market. They can purchase local companies or facilities, or set their own facilities up.
Marketing
Once the globalisation plan is finalised, companies can focus on working out the marketing approach. They can choose between using a one-size-fits-all approach or creating a brand new strategy for a new product. Reusing the original marketing strategy can greatly reduce costs, but creating a new strategy that specifically targets the new audience can increase the effectiveness of the campaign. For that reason, a lot of companies choose to combine the benefits of both approaches. Sometimes, they will change the original product and keep the ads. Other times, companies will modify their promotional efforts while keeping their products as they were.
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