Mistakes made by companies when looking to expand internationally

When local markets are saturated, or international demand is strong, large companies set out to conquer foreign markets with more or less success. While some of them manage to dominate the market, others, on the other hand, face failures linked to fatal errors. In this article, CEO Ally Spinu will talk about some of these mistakes.

Copy/pasting the same strategy on all markets

Companies often try to apply a standard strategy for all markets to pool resources and reduce costs. But each market is unique. The greater the geographic distance between the primary and other markets, the greater the probability of differences in cultures, tastes, and consumer habits. Certain products and services are consumed similarly worldwide, but adaptations are still required to respect the cultures in other countries.

Sometimes, you have to change the product's design because certain shapes and colors are more suited to specific regions. Sometimes, you will have to study the price because consumers' purchasing power is not the same everywhere. This will potentially lead to a slight deviation in the composition of the product itself to take into account the change in price. Sometimes, finally, it is the commercial approach that will have to be changed to avoid flops, as we have seen with several large companies.

Lacking awareness of the local culture and traditions of the country

A product or service is the ambassador of a brand in the country where it decides to set up. It is, therefore, useful to avoid hitting the sensitivity of potential customers as much as possible. Ignoring culture and traditions is a fatal mistake that consumers can never forgive as it amounts to disrespect.

Several examples illustrate the importance of having a good knowledge of local cultures when deciding to go global. For the 40th anniversary of the United Arab Emirates, the shoe brand Puma has decided to launch a pair of exclusive sneakers in the colors of the flag of the country. But in the country's culture, shoes are a symbol of dirt and impurity. So seeing the country's flag on shoes sparked outrage. And there are several similar examples.

Ignoring the particular risks linked to the socio-political climate in the country

Socio-political risks must be taken into account for a company that wants to set up certain regions of the world, such as West Africa, South America, or certain parts of Asia. Because of these risks, some countries are barrels of powder that the slightest spark can ignite. They are to be considered since they can ruin the company's investments.

A business that ignores them could invest a lot of money in setting up a subsidiary or buying a local business during an election year in an unstable country. This instability can have a lasting impact on several aspects of business life, including the purchasing power of consumers, bank interest rates, and insurance premium rates.

It is evident that risks and errors are part of companies' expansion, but some are avoidable. The best way to avoid most of the risks discussed in this article is to know the market in which the company wants to develop. This is an essential prerequisite when taking your company global.

Sweet Tips from Ally

Keep these tips in mind and expanding your business internationally will be a lot easier!

1. Make sure your strategies are tailored to your target market
2. Educate yourself on the cultures and traditions of your target market
3. Research any socio-political risks that could crop up