In today's rapidly evolving business landscape, the global economy is driving advancements in technology, travel, and communication, creating a vast and interconnected marketplace. As a result, businesses of all sizes are looking to access new customers, markets, and revenue streams beyond their domestic markets. To achieve this, it is crucial for businesses to adopt a global outlook. Embracing a global perspective can not only enable expansion and adaptability, but also unlock valuable insights from diverse regions to enrich business operations.
Internationalisation – the process by which a company expands its operations beyond its domestic market and establishes a presence in international markets, with an ultimate goal to increase market share, profitability, and competitiveness by tapping into new markets, resources, and opportunities outside of a company's home country, is becoming a vital tool for business growth.
As such, companies are increasingly expanding their operations into new countries and regions, tailoring their products and services to meet the unique needs and expectations of customers in different markets. For instance, startups can align their market focus to research data to better position themselves for maximum returns, middle-sized manufacturers can find more cost-effective suppliers, and conglomerates= can establish diversification.
How then can organisations internationalise?
With shifting demands and emerging markets, the importance of expanding businesses beyond their domestic markets is increasing, and internationalisation is becoming a critical component to growth strategies.
Here are some ways that organisations can embrace internationalisation:
1. Market research
Conducting research and surveys can provide a comprehensive understanding of your target market, including important information such as size, demographics, culture, and legal requirements. Identifying the market trends and needs of the local population can better position your organisation in various countries and regions. This approach allows you to tailor your products and services to meet the specific needs of the target market, ultimately increasing the likelihood of success in those markets.
2. Develop a global strategy
After identifying your target market, it is key to follow up with the development of a global strategy. This strategy should include a detailed business plan with a timeline, budget, and specific goals for entering the new market. This helps to align and reinforce the goals of the stakeholders and reconsider business trajectories,. Which can help position your organisation for success in the new market.
3. Adaptation of products and services
The next step is to adapt the company’s products and services to meet the local needs to facilitate growth in those markets. By tailoring products and services to meet the unique needs of local customers, businesses can differentiate themselves from competitors, improve customer satisfaction, and mitigate the risks of entering new markets. This approach can increase the likelihood of success, establish a strong market presence, and lead to long-term growth and profitability. In this process, innovative products and services that are catered to your local markets could be highly beneficial for your business. During this phase, it could bring out unexpected hit makers, such as the curry sauce for Singapore’s McDonald’s or Kyoto’s iconic Starbucks in a traditional machiya.
4. Establish a local presence
Establishing a strong local presence is important for businesses to improve their competitive position and effectively compete in new markets. For instance, a large organisation can set up a subsidiary, while smaller ones can consider working with local partners or opening physical locations in high-demand areas. These strategies can help businesses gain local traction more quickly and effectively, which in turn can provide a competitive edge in the market.
5. Build and monitor relationships
Building strong collaborations is crucial for finding lasting success in new markets. Maintaining connections with local partners, suppliers, and customers through regular communication and proposing joint marketing efforts and product or service collaborations can ease your business into a new market and provide insights for future expansion. Monitoring progress through regular market research and tracking sales performance is important to adjust your global strategy as your business expands.
6. Expanding knowledge in internationalisation
Attending a programme on internationalisation is critical for businesses that want to expand their operations and tap into global markets. It can provide valuable insights into international business practices, cultural nuances, market trends, and regulatory frameworks that are essential for success in international markets. More importantly, it can also help business leaders to develop cross-cultural communication skills, build international networks, and identify potential partners or investors to gain a competitive edge and position themselves for sustainable growth in a rapidly changing global economy. At SMU Academy, our Internationalisation Series is specially curated for participants who are interested in venturing their businesses overseas namely in Vietnam, Israel, Jakarta, and Bangkok.
Check out our recent webinar where our Programme Directors from the Internationalisation Series shared their insights, and find out what it takes to venture overseas and position your business for growth.
The Benefits of Internationalisation
Internationalisation serves to give valuable insight and augment a company’s sensibilities. With relative comparisons and new understanding, this can give a global perspective to spur the business towards an even more optimised trajectory.
Some other tangible benefits include:
1. Access to new markets and resources
Expanding into new international markets offers a plethora of opportunities for companies, including the ability to broaden their customer base, increase revenue streams, , as well as greater access to resources, including new technologies, talent, and ideas. For example, Singapore businesses looking to a large-scale expansion in a labour-centric market, can tap on Indonesia’s large population of over 250 million and their economy, which is the largest in Southeast Asia.
2. Diversification
Expanding into international operations can diversify a company's business and reduce its reliance on a single market which is particularly important if all operations are concentrated in one country.. As the global marketplace continues to evolve rapidly, economic and political risks could adversely affect a business’ operability and profit margins. However, diversification of products and services into multiple markets could minimise exposure to these risk, whilst increasing your customer base and revenue to ensure long-term stability.
3. Increased competitiveness and networking
Global expansion can help organisations gain a competitive advantage through economies of scale or profit distribution, as lower costs in one market can offset higher costs in another. In addition, global expansion enables organisations to expand their network and gain valuable connections that value-add to their business as they continue to expand across borders. By doing so, organisations can enhance their competitive advantage and position themselves for sustainable success in an increasingly interconnected world.
Expanding into different countries or regions allows businesses to uncover and leverage each location's unique specialisation, which provides access to a larger pool of resources, technology and talent. For example, Israel has a burgeoning investor interest in Artificial Intelligence, cyber-security and deep technology. Organisations looking to tap into these areas can consider expanding into Israel where they can leverage the available expertise to expedite developments and initiatives.
4. Higher profit margins with currency hedging
Expanding into new markets with lower costs and/ or higher prices can increase profit margins for organisations. This can be achieved by leveraging their global scale to negotiate better deals with suppliers, as seen in Vietnam. Vietnam has seen foreign interest in areas such as F&B, retail, IT, and manufacturing and has surpassed other economies with two consecutive years of growth with a positive GDP growth rate of 2.58% in 2021 even with the pandemic over the last two years. This presents a profitable opportunity for businesses, while also offering the chance to hedge against currency fluctuations and minimise exposure to economic and political risks in a single market.
5. Increased cultural awareness and agility
As workplace diversity and inclusivity are becoming increasingly valued, internationalisation can increase cultural awareness for organisations that operate across multiple countries. This helps organisations better design and manage workplace environments tailored to the local market. Increased cultural awareness also helps in developing suitable products or tailoring marketing campaigns to local markets.
Understanding these cultural differences can increase marketing agility to help businesses position themselves for success in a localised market. Organisations should be highly sensitive to evolving trends to boost profits, and highly adaptable to negative events to minimise losses. This can give organisations agility to ride trends that can boost profits or reduce impact when negative events occur.
Internationalisation is highly beneficial for companies looking to establish a strong presence in today's global marketplace. By effectively capitalising on the benefits of international trade and expanding into well-researched new markets, businesses can diversify their operations, access valuable resources, increase profits, and develop cultural awareness. Through internationalisation, this presents several opportunities for companies to thrive, making it a vital strategy for staying competitive and achieving long-term success in the global economy.
Connect with the world and its promising markets at SMU Academy.
