Anisuzzaman Chowdhury is an experienced business leader with interests in a variety of market segments. This article will look at business expansion, providing an overview of the key benefits of venturing into new markets and offering pointers on how to achieve business growth by pushing new boundaries.
For businesses large and small, the underlying goal of any organisation is to grow and expand. Without continually increasing its customer base, a business is prone to stagnation. In the digital global economy, foreign markets present opportunities for limitless growth, enabling market-savvy entrepreneurs to plug gaps by launching innovative new products or services.
From a commercial perspective, expanding into new markets makes sense. Provided demand exists, growing from one market to two increase a business’s consumer reach, simultaneously building the brand while driving revenue streams. Growing from two to four to six to eight markets and so on multiplies those benefits further.
Expanding into new territories comes with inherent risks. Even multinational titans are not immune to these. Having enjoyed an international presence since the 1950s, McDonald’s is one of the leading fast-food brands globally, with its logo instantly recognisable to people all over the world. Having enjoyed success in the market for more than 70 years, no one would think that the brand could fail in any market segment. Nevertheless, the introduction of McDonald’s franchises to Bolivia fell far short of the mark.
Even though the opening of the first Bolivian McDonalds in 1998 attracted a huge amount of attention, the American franchise’s goal of bringing modernity to the country was not in keeping with local customs and values. Characterised by its rich and diverse cuisines, the Bolivian market catered for a wide variety of tastes, with its customers accustomed to traditional and elaborate foods. McDonald’s failed to conduct sufficient research, lacking an understanding of consumer preferences in gastronomic matters before introducing its products. In addition, the price point was too high in comparison with other local eateries. Consumers were reluctant to spend so much on an imported hamburger when they could pay less for local dishes with fewer calories and more variety.
The first step to expansion is reviewing the current business model, analysing existing audiences and product or service offerings. Reviewing these factors helps leaders to identify potential areas for improvement and how tweaking its offerings could help enhance customer experiences.
Businesses must conduct market research to understand their target market and customer bases, as well monitoring key performance indicators – such as customer satisfaction and revenue growth – to gauge the success of their expansion efforts. They must also identify what makes their brand valuable to their existing markets and how they will need to rebrand to appeal to a new region.
Several factors may make one market more attractive than another, chief among them GDP growth, quality of infrastructure, the complexity of the regulatory landscape and the availability of skilled workers. According to a survey by Wells Fargo, 87% of US companies cite international expansion as an imperative for long-term growth, with emerging markets offering the greatest opportunities. For businesses, accessing foreign markets presents scope to expand their customer bases significantly, particularly for tech companies, enabling them to access billions of ready-to-buy customers.
For a business to succeed, it needs forward momentum. In order to grow, it must hone its internal effectiveness and efficiency while establishing its brand reputation. Once it has perfected both, it becomes possible to direct core applications toward new markets. As Harvard Business Review highlights, even for healthy and strong midsize enterprises, growth plateaus are common, occurring when firms exploit all available opportunities in current markets. In order to grow, businesses need to find ways to transfer their capabilities to new territories and/or industries.