If you’ve been thinking about expanding your business into a new market you may be trying to decide whether to go abroad or stay domestic. This can be a complex decision with much to weigh out. Most companies would rather stay domestic if the market share is large enough. After all, it’s far less complicated and less costly to do business in a local market.
When you are deciding whether you new market should be abroad, you need to consider the following:
- Your managers and staff may have to learn a new language
- Laws will have be learned and understood
- Currencies can be volatile
- Political uncertainties
- Legal uncertainties
- Redesigning of products to suit the customer needs of the new market
- Meet customer expectations
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If you enter a global market and can compete product wise and with lower prices you have the opportunity to be very successful. There are several reasons why a company might choose to enter a global market.
- Opportunity for higher profit than the current domestic market
- Enjoy a larger customer base
- Allows a company to reduce its dependency on one market
- The company’s customers are moving abroad and you follow to ensure you keep that market share
Reasons for companies to fail when entering a market abroad include:
- The company doesn’t fully understand the culture of business in the foreign country
- The company doesn’t know how to deal with foreign nations
- The company underestimates the costs to move into a foreign market
- The company doesn’t fully comprehend foreign regulations
- The company does not have adequate management with international experience
- Political uncertainty, devaluation of the currency, and changes to commercial laws
Traditional markets and the boundaries that defined them are a thing of the past. Today’s major marketers participate in global e-commerce. Look at the automakers who have reached into every part of the world, or Nike the running shoe company.
For others marketing into a foreign market has been more of a hit and miss scenario. Many businesses are using the internet to branch into the foreign markets. Before a company decides to expand into a foreign market either physically or through web e-commerce you need to consider all the pros and cons. Only then will you know if it’s the right decision for your company. If the abroad market is right for you, the next thing you’ll need to decide is just how many abroad markets you plan to infiltrate.