International expansion activities of small business institutions potentially help them in both being increasingly competitive and also in gaining quality access to untapped and new markets. Moreover, the focus on international expansion also helps the small business institutions in gaining newer knowledge about potential markets, supply chain and sales networks, quality technologies and also contributes to developing newer ideas and enhancing innovation. The guide for small businesses expanding internationally is discussed in detail as follows.
Best Methods of International Expansion for Businesses
Ten significant steps are identified that are undertaken by small business companies expanding internationally :
Carrying out an In-depth Analysis
Before focusing on carrying out an international expansion it is highly required for carrying out an in-depth analysis based on the incorporation of analytical tools like market segmentation, product gap analysis, and SWOT Analysis. The market segmentation analysis helps in understanding the target market to which the products can be effectively marketed. The product gap analysis contributes to the understanding of whether a specific market demand is not met by a local firm. Finally, the carrying out of the SWOT Analysis contributes to understanding the strengths and weaknesses of the firm compared to its competitors and also the emerging opportunities and threats that are to be benefitted from and also countered respectively.
Development of Business Strategies and Business Plans
Business leaders are required to define long, medium, and short-term business strategies. Further, different business goals are required to be identified along with effective metrics for estimating the costs and benefits involved with such. Likewise, the business leaders are required to define the specific business model and also frame the annual budget in a top-down manner.
Readying the Product
In terms of focusing on expanding the business to international frontiers, the business leaders are required to review effective compliances with government rules and regulations of international markets. Further, it is also required to determine whether the product is required to be modified to meet local tastes and needs. Likewise, the business institution is also required to initiate patents, trademarks and also carry out testing and evaluation of quality standards based on local needs.
Readying the Business Institutions
The organizational structure needs to be evaluated and modified for helping in the effective execution of business strategies. Likewise, the business policies, procedures, and also handbooks are required to be rightly modified for meeting local requirements. The benefits and compensation programs are required to be rightly generated in terms of complying with localized customs and standards. The information technology infrastructure is required to be redesigned for meeting localized and domestic needs.
Developing a Go-To-Market Strategy
The Go-To-Sales Model is required to be designed based on determining an effective sales and pricing model and methodology. Further, the development of a new brand is also required to be evaluated with also the generation of a comprehensive marketing plan. Effective metrics in regards to the identification of Key Performance Indicators (KPIs) are required to be carried out.
Generating Legal and Financial Readiness
In terms of legal readiness commercial agreements are needed to be ideally localized. Likewise, the industry-specific regulations are required to be reviewed so that they can rightly comply with standards and certifications. Regarding financial readiness effective development of networks is required to be made with banks and financial institutions. Further, a risk management plan along with a study on transfer pricing is required to be carried out.
International Business Expansion Strategy
The small business companies expanding internationally need to incorporate the following strategies.
Employment of Local Teams
The employment of local teams in international markets contributes to earning effective information about the needs and demands of consumers along the respective international regions. The same helps in modifying the product and service portfolios for meeting the needs and demands of the target customers along with diverse international markets. Recruitment of local people also helps in effectively developing supply chain and sales networks for enhancing business presence in international markets.
Development of PR Programs
The business institution also requires the development of public relations (PR) programs for not only generating needed awareness about the company in international markets but also in sustaining needed reputation.
Matching the Business Model with the Entry Mode
No single business model ideally matches the business situation and paradigm associated with diverse economies. Thus, business models need to be ideally developed such that it helps in gaining business efficiency and productivity linked to different target markets. The modification of the business model however is needed to be carried out in terms of associating the same with market entry modes for meeting specific goals and objectives.
How can Investment Expand Businesses Internationally?
For carrying out international expansion of small businesses its business owners and management bodies involved are required to carry out an effective evaluation of the number of investments that are needed for meeting such. In the case of new market entries, the amount of investment needed for carrying out international expansion is estimated to be around 100,000 USD. International expansion of business institutions and international investment mutually work hand-in-hand for enhancing the degree of competitiveness of the firms in the international market. Financial factors promote international expansion in that business institutions benefit from arbitrage owing to pricing differences regarding labor and supply resources pertaining to different countries.
For attracting investment the business managers are required to attract potential investors by presenting the business model wherein it is required to be proved that the domestic business environment is both stable and strong and expansion into overseas market contributes in adding the opportunity to the existing business growth. Likewise, the business plan is required to be prepared in a clear and coherent manner such that the same can be effectively sold to the quality investor for attracting potential investments. The gaining of effective funding in the form of needed investments from quality investors contributes to generating potential security for expanding over to the overseas markets.
Small Business Expansion Strategies
The different strategies that are needed to be undertaken by small businesses for expanding their base to international markets are identified as follows:
Generating Market Penetration
Market penetration is considered an effective strategy through which small business institutions can rightly develop their presence in international markets. Market penetration is effectively generated by reducing the price structures for the products and services so as to enhance market shares, development of sales promotions, and generation of samples for enhancing awareness about the firm in international markets and also in generating trade and sales discounts for attracting potential customers. The above tactics will contribute to encouraging new customers in trying the product or service.
Focusing on Market Development
Small business institutions can also focus on undertaking market development strategies and tactics in terms of generating new products or services for similar market segments like designing health soaps for toiletry and health markets. Likewise, the business institutions can also focus on gaining access to larger consumer segments in foreign markets based on the development of advertisements and sales promotions.
Carrying out Diversification
Diversification is identified as an effective business expansion strategy by small business institutions in that it helps in tapping newer markets based on the generation of newer products and service offerings. Diversification is however identified with both a high risk and high return strategy.
Carrying out Acquisition
The small business institutions can also exercise their capital power for acquiring businesses that has the needed technology and supply chain potential which would help the businesses in developing an effective business presence in international markets. The incorporation of this strategy would rightly help small businesses in countering potential competition in international markets.
Why do Small Businesses Expand?
Small businesses are needed to focus on international expansion in that it confers certain specific advantages underlined as follows:
Helps in Attracting Newer Consumers
Small business institutions focus on expanding their bases to international territories in that it helps in attracting newer and potential customers. The expansion of business carried out along international markets is coupled with the generation of new product or service offerings and the rendering of effective discounts. The stated activities ideally contribute to attracting new customers.
Gaining on Economies of Scale
The expansion of small businesses into international markets potentially helps the business institutions in both ordering and generating larger quantities. The same helps small businesses in gaining discounts and rebates from vendors and suppliers.
Establishment of Multiple Revenue Streams
The diversification of small business institutions in uncharted business segments while aiming to expand along with international markets ideally helps in developing multiple revenue channels. Likewise, the diversification of the business into newer product or service streams would ideally gain access to diverse revenue streams. This would help the businesses to enhance their earning potential.
Enhance Branding Potential
Coupled with the expansion of the smaller business institutions into newer markets internationally the development of advertising and branding campaigns are needed to be carried out based on the application of diverse social media, digital, electronic, and print media channels. The carrying out of larger advertising and branding campaigns ideally helps the business institutions in gaining access to larger target audiences in international markets. The larger the brand the greater is the dependence of customers on the specific brand.
How do you Expand a Small Business?
Small business institutions can be effectively expanded based on the application of different strategies. The strategies serve as an effective guide for small businesses expanding internationally. The same is indicated as follows:
Adding New Products/Services to the Existing Mix
The management body of the small business institutions is required to carry out an effective survey of the needs and demands of the target customers in the new or existing markets. The carrying out of the survey would contribute to gaining effective information based on which new products and services are required to be developed and marketed.
Carrying out a Demographic and Psychographic Analysis of the Existing Market
The management body of the small business institutions is required to carry out both demographic and psychographic analysis of the existing market such that it helps in effectively evaluating the sales and profitability potential of the different segments. The management thereby can focus on selling a higher quantity of products and services along with targeted segments and thereby becomes able to gain on increased profits.
Expansion into Newer Markets or Territories
The smaller business institutions can also be expanded into newer markets or also can be expanded into untapped business locations or markets such that the products or services can be reached to niche segments.
Generating Novel Sales and Delivery Channels
The application of the internet can effectively be employed by small business institutions for reaching a wider number of customers along with both existing and newer markets. Likewise, effective channels of distribution can be generated based on the formulation of virtual networks with other partnership firms for procuring raw materials and reaching the offerings to target customers. Online advertisements are needed to be developed based on the application of Search Engine Optimisation (SEO) tactics that will help in meeting the information needs of target customers.
Business Schools and Small Business
Business institutions like the Trinity Business School based in Ireland focus on supporting the small-scale business institutions based on the generation of online workshops and seminars for free. Effective training is generated to the interested participants about different tools and strategies that are needed to be incorporated for countering the impacts of challenging times like the emergence of the COVID-19 pandemic.
Globsyn Business School (GBS) operating in Kolkata works consciously in promoting the development of entrepreneurs that can effectively develop and run start-up business ventures and small scale businesses initially. Over the last two decades, Globsyn Business School (GBS) has uniquely positioned itself as India’s only ‘Corporate B-School’. It contributes to the generation of different webinars and seminars for the development of skill sets, knowledge, and productivity of the students interested in becoming entrepreneurs and start-up entrepreneurs. Likewise, the entrepreneurship cell of GBS, ‘Embryon’ that has been recognized as an AACSB International 2021 Innovation That Inspires, contributes to helping students set up implementable, financially viable, and scale-able business ideas.
The discussion carried out above is ideally taken to serve as an effective guide for small businesses expanding internationally. Different methods and strategies are discussed here that are incorporated by small-scale businesses for expanding internationally while also the case of business schools promoting the development of small-scale businesses and start-ups is rightly pointed out.