The Difference Between Success and Failure in International Business Expansion

The opportunity to expand internationally offers businesses a number of potential advantages.  In addition to selling goods and services in potentially more lucrative markets, international expansion strengthens a firm’s competitiveness by allowing it to entrench and fortify new markets and facilitate innovation by encouraging business leaders to focus on new product concepts, manufacturing efficiencies and improved technology.

However, the choice to market internationally comes with varying degrees of risk for different companies.  A small business selling widgets on eBay or Alibaba can simply accept payment through PayPal or by wire transfer and ship the purchase overseas using a number of courier options.  Likewise, a manufacturer of hi-tech scientific equipment can contract with individual brokers in various countries who are specialized in the area of expertise to represent the firm’s product line.   Large orders may be as simple as providing a clearly written contract in English that details the responsibilities of both buyer and seller.  The contract may stipulate that the buyer must provide a commercial letter of credit.  In contrast, many companies, entering foreign markets will require substantial planning and investments depending on the scope of their international endeavors.

 

When to Consider Internationalization

Many companies have no option but to sell internationally. Often their domestic market is saturated, leaving little or no opportunity for growth. Further, each increase in market share may come at a tremendous expense. Because stockholders and other investors demand year-over-year growth, aside from purchasing a domestic competitor, a company’s only option is to enter international markets.

The nature of some companies also makes them compatible with internationalization. Generally, these companies offer a specialized product or service that can easily be adapted to the cultural, legal, geographical and linguistic characteristics of a variety of countries.

When investment risks are high, a company needs to evaluate its degree of expertise and preparedness before embracing an international strategy, as International strategies demand both general operational experience and first-hand market-specific expertise.

From a marketing standpoint, an evaluation should include an audit of the skills and capabilities on hand to support internationalization. Questions pertaining to personnel expertise and knowledge of the international market, including language, cultural fluency, financial and legal expertise and media relations, must all be considered.

Well-financed companies with existing expertise and solid planning have a good foundation for capturing market share and realizing profitability.    Consequently, companies lacking international resources or those unable to compete in their domestic market should strengthen their domestic position before making large investments in an international strategy.

Conversely, a firm with a weak competitive position should consider strategies to improve its attractiveness to consolidators or potential investors. If the company is young and lacks required funding to go international, it should seek to build alliances. For assistance, it should look to independent sales representatives or brokers as good sources of local competitive market data.  They can recommend advertising, trade shows and promotional mediums to use.

The contract made between the broker and the manufacturer should call for lead or contact logs to be submitted to the sales manager on a regular basis.  The company can then follow up with e-mails, webinar announcements, direct mail, and whitepapers.

International Marketing Communication

Regardless of a company’s investment in an international strategy, it will likely require partnering with a language translation company that has local translators who can provide technically competent, linguistically accurate and culturally sensitive translations.  Market communication is essential because customers require timely information when making a purchase.  Aside from the traditional elements of the promotional mix (advertising, public relations, personal selling, sales promotion), a company must be prepared to have its website available in the local language and it should be supported by common social media platforms used in that country.  For example, Facebook and Twitter are banned in China.  The Chinese equivalent to Facebook is renren.com.  RenRen is used by large companies such as Procter and Gamble, Budweiser and Dell to reach the Chinese consumer.  Like any successful content marketing and search engine optimization strategy, continuously updating online properties with useful and interesting content is vital.  Many companies make the mistake of simply translating their English website to a foreign language and then never doing any site maintenance.  Finally, the successful company must appoint someone or a translation company to review and respond to inquiries.

 

Confidentiality

Often, translation companies are trusted with very sensitive and confidential information.  For this reason, companies need to carefully screen translation companies.  It’s estimated that 90 percent of translation companies advertising on the Internet misrepresent themselves.  For instance, a simple search on Google for the phrases “Houston Translation Services”, “Washington D.C. Translation Services” and “New York Translation Services” came up with 9 of the top 10 results claiming to be U.S. companies.  A more detailed analysis shows that these companies have only virtual offices in the United States that are little more than rented mailboxes.  In reality, they have no business license or employees physically located in North America.  A signed confidentiality agreement or non-disclosure agreement from one of these companies offers little protection.  Further, their low advertised rates and high expenditures on search positioning suggests that they are likely employing freelance translators who haven’t been screened, are inadequately trained to translate business documents and are not working on secure computers.  More than likely, their translators are working in Internet cafes.  Therefore, it is essential to vet the company by finding out if it has a business license and any SBA certifications or government security clearances.  Ensuring legitimate translation practice is well worth the time and effort.