A Detailed Guide To Successful Geographic Expansion

The market is ripe with opportunity, globalization has increased interdependence, and there’s no better time for businesses to expand their horizons. 

Simply put, Geographic expansion is the process of extending an organization’s reach into new countries, cities, and regions. It does not always have to be done physically by means of a new office/outlet, but can also be achieved by launching products/services or even by marketing there as well. For several businesses, this is a key goal that they envision when mapping out the company’s future as it is regarded as a mark of success and helps to drive incredible growth, increases revenue, and makes the brand known.

It’s important to remember that it’s not entirely a rosy picture! Geographic expansion comes with a fair share of challenges. According to McKinsey, 4 out of 5 attempts to enter a new market fail as the business wasn’t doing well in its own geography to start with. It requires significant time, resources, capital, and most importantly perhaps, a kick-ass team. There are regulatory frameworks to navigate, cultural differences to adjust to, and logistical hurdles that can be daunting and overwhelming. However, when done right, it is just as rewarding. 

This is exactly why a strategic and carefully planned approach to geographic expansion is necessary. In this detailed guide, we’ll walk you through the different aspects of the process, leaving you with clarity about whether this is for you or not, and if it is- how do you go about it? 

Read on!

As discussed above, geographic expansion can prove highly beneficial. Here’s how. 

It’s a no-brainer that expanding into new markets allows businesses to tap into new markets and gain access to new people that are potential customers. Each new geography brings with it different revenue streams and different demands, and the organization can successfully increase its customer base if it markets and positions itself correctly. 

Research by Bain and Company displays that companies can achieve long-term growth and success with lower risks if they diversify their customer base and product/service offerings through geographic expansion. Simply put, the more regions you’re present in, the more resilient your business is. The entire world is unlikely to suffer an economic downturn or turmoil at the same time, so if processes are tough in one region they might be thriving in another. Diversification is the key to consistent profitability.

Expanding into new regions can help build your business’s brand awareness and reputation as it is now more visible and recognizable across the world. A study by Nielsen revealed that global marketers prioritize increasing their brand awareness even above acquiring new consumers. The more a brand is known, the more likely people are to trust it and purchase from it. 

It might seem odd, but it’s true. Expanding into new geographies can actually help a business cut costs due to increased economies of scale, lower labor and production costs. They can leverage their existing infrastructure and processes in new regions to set up fast, and post that, everything falls into place when done right. A report by the ITA displays how selling to the world’s markets can help build the bottom line, increase competitiveness, and reduce expenditure.

It’s often assumed that it would take years for a business to stand making profits in a new geography, but that’s a myth. In fact, several organizations crack a different market and are more profitable there than where they began originally due to a number of factors like product fit, consumer needs and requirements, price point, etc. 

According to a study in the Academy of Management Journal, international expansion fuels a venture’s survival, profitability, and growth.

One of the best benefits of expanding into new geographies is that a business is able to access new suppliers, distribution networks, and skilled professionals in these regions. According to an article by Frost & Sullivan, geographic expansion unlocks several growth opportunities and provides access to a robust talent pipeline which further enables long-term success. 

Here’s an interesting case study comparing the Geographic expansion of Kmart and Walmart by Stratechi.

Both retail giants launched in 1962, yet after 15 years, Kmart had surged ahead of Walmart in size and revenue. In 1977, Kmart boasted a whopping $9.9 billion in revenue, while Walmart only had $479 million. Kmart's CEO was laser-focused on geographic expansion, and by 1977, the company had already established a presence in 196 of the country's 261 standard metropolitan districts.

Meanwhile, Walmart was more methodical in its approach, honing its value proposition, go-to-market strategy, and operational efficiencies. After 15 years, Walmart had just around 100 stores, all located within 350 miles of a single distribution center.

Fast forward to 1988, and the tables had turned. Kmart still had higher total sales than Walmart, but Walmart had twice the sales per store, generating 50% more operating profit for every $1 of sales, with 30% lower operating expenses. Walmart's merchandise expenses were higher, but this allowed them to offer prices that were approximately 10% lower than Kmart's. Walmart had perfected a superior business model that prioritized value proposition, go-to-market strategy, and financial efficiency.

Only after achieving this success did Walmart finally turn to geographic expansion, while Kmart was already present in all 50 states. The historical revenues of Walmart and Kmart show the impact of a well-executed business model versus an overly aggressive expansion strategy.

Apart from Walmart, there are several other companies that have cracked the code and achieved immense success.

Netflix is the perfect example of systematic geographic expansion as it entered 190 countries within just 7 years. They achieved this as they were able to identify the markets properly and then customize the content offerings to suit the tastes and preferences of the local population.

Starbucks opened its first international store in Tokyo, Japan in 1996. Since then, it has expanded its operations to over 80 countries. By expanding internationally, the coffee chain increased its brand awareness and revenue and also gained access to new suppliers and customers.

One cannot discuss geographic expansion without talking about one of the biggest eCommerce giants in the world today- Amazon! It started out as an online bookstore in the USA, and since then has made its way into 20 countries, catering its platform to the specific needs of each region and offering impeccable customer service and deliveries. It accounts for 13-15% of all eCommerce sales worldwide. 

These numbers can make geographic expansion seem daunting for small businesses. However, that’s far from the truth. MSMEs can expand into new regions and markets gradually too, and as mentioned above, doesn’t necessarily mean you need to invest a truckload of resources by setting up a new office, etc. It’s best to thoroughly conduct research to see which geographies around the world are most likely to embrace your products/services and then systematically take it one step at a time. 

Before expanding into a new market, it is important to conduct thorough market research. This includes analyzing the size and potential growth of the market, the demographics of the target audience, and any competitors already present in the market. In addition, it is crucial to understand the labor laws and regulations in the new market, including hiring practices, minimum wage requirements, and employment contracts. This information will help you make informed decisions about how to position your brand and what products or services to offer, as well as how to comply with local labor laws and regulations. It will enable the business to avoid any sort of legal hassle later on and function in a smooth and efficient manner. Be sure to have the EOR (employer of record) entity in place as well. 

Each market has its own unique characteristics. It would be unwise to use the same approach you’re using in one country for the others as well- you want to create a brand that resonates with the consumer in each area. A local strategy should utilize all the information gained through market research to craft a roadmap for growth and progress in the new region. It’s essential to identify opportunities for differentiation and create a unique value proposition that addresses the unique needs of that geography. Cultural sensitivity is a must. One must understand the language, customs, and values of the local population which can not only help you operate in a problem-free manner, but help customize marketing messages which will actually convert and resonate with the people there. Ensuring your pricing is suiting the market- a USA price point is unlikely to sell in India. Keeping this in mind can set you on the path to success. 

This is an effective strategy for thriving in new markets. By forming strategic partnerships with established local businesses, you can gain valuable insights into the local market, leverage existing customer relationships, and access local networks and resources.

When seeking out local business partners, it is important to look for companies that share similar values and goals, and that complement your brand's offerings. This could include businesses in related industries or those that offer complementary products or services. For example, if you are a software company expanding into a new market, partnering with a local hardware supplier could be a natural fit.

They can also provide valuable access to local knowledge and expertise and help navigate local supply chains and distribution networks, which can be especially valuable in emerging markets with complex logistics.

Furthermore, this helps build trust and credibility with the local audience and creates a positive image which translates into long-term loyalty.

Technology can help your brand expand its reach, improve operational efficiency, and enhance customer experiences. With the increasing availability of innovative technologies, it has become easier for businesses to expand their operations in new markets and stay ahead of the competition.

Invest in digital marketing channels such as social media, search engines, and email marketing so you can reach a wider audience, drive more traffic to your website, and generate leads more effectively.

Moreover, retail infrastructure can take a lot of time to set up and often would require more resources and cost. The solution to this is to set up an online storefront. 

Arguably the most important! When aiming to expand into new geographies, it’s important to bring on board a specialized team of professionals with different backgrounds and skill sets, preferably with global exposure, especially in the market you want to tap into. 

They, obviously, have an in-depth understanding of the audience there, the markets there, the competition, local language, and can provide you with culturally relevant solutions based on the challenges and opportunities that present themselves.  A study by Dimension Data found that 84% of consumers value personalized customer service, and 70% of consumers expect companies to understand their unique needs and preferences.

This expertise is invaluable for geographic expansion and is likely to speed up the process of profitability and success. 

A well-managed supply chain can help ensure that your products and services are delivered on time, at the right quality, and at a competitive cost. This can help you meet customer expectations, differentiate your brand from competitors, and position your brand for long-term success in the new market.

The worst you can do for your business is remain in denial and continue to operate in the same way despite clear signs and feedback that something isn’t right. It’s important to regularly track your progress and make necessary adjustments to your strategy based on the market conditions and how customers are reacting to you. 

Before you set up, leadership should define specific objectives that are SMART (specific, measurable, attainable, relevant, and time-bound). It’s easier to track progress later on with this. Don’t shy away from feedback, in fact regularly seek it out. Based on the data and insights you collect, make necessary adjustments. This may include changing product features, adjusting pricing, modifying your marketing approach, or making changes to your supply chain.

It’s important to remember that all of these steps aren’t only to be followed when you’re expanding your business for the first time in a new geography. This should and must be done whenever you are attempting to sell in a new market!

This might seem like a trivial issue and something that can be easily overcome, but regions vary tremendously from each other and if you are looking to tap into a market halfway across the world, you must be prepared to make a lot of adjustments. When expanding into a new region, it's important to understand and respect the cultural differences that may exist. Failure to do so can lead to misunderstandings, miscommunications, and ultimately, a breakdown in business relationships.

To overcome this challenge, organizations should invest in cultural sensitivity training for their employees, as well as hiring local staff who can provide insights into the local culture and business practices. 

In any market you enter, unless your products/services are entirely unique, you’re likely to encounter several established competitors with a loyal customer base in the region and a well-known brand reputation. This can make it difficult for new entrants to gain market share and establish themselves as a viable option in the minds of potential customers.

To overcome this challenge, organizations need to invest in thorough market research and analysis to understand their competitors, their strengths and weaknesses, and the market trends that are currently driving customer behavior. A good way to do this is through effective marketing and outreach efforts. This can include developing targeted campaigns that speak to the unique needs and preferences of the local market, leveraging social media to build a following and engage with customers, and investing in customer service and support to build trust and loyalty. This would require impeccable employer branding, but will ultimately be hugely rewarding.

If expanding into a new geography seems hard, try approaching the process without bringing on board skilled professionals that understand the region and have had significant global exposure. Not only does this provide your business a strategic advantage over your competitors, but it also helps speed up the process of adjusting to new regions and profiting. 

This makes it necessary for any MSME or large-scale business to partner up with the right people that can help them access talent to make this possible. 

If you’re looking out for that, fortunately, your search ends here. 

At Global Talent Exchange, we know that finding the right talent is crucial to success, but it's not always easy. That's where we come in.

Our platform is designed to help businesses of all sizes find the talent and skills they need to succeed in new markets. We connect employers with a global pool of skilled professionals who have the experience and knowledge to thrive in any environment. By leveraging our cutting-edge technology and data analytics, we're able to identify top talent from tech hubs around the world and match them with the right job opportunities.

But we don't stop there. Successful geographic expansion is more than just talent. That's why we also provide comprehensive employer branding services to help businesses establish a strong presence in their target markets. Our team of experts works closely with each client to develop a customized employer branding strategy that speaks directly to the needs and preferences of local job seekers. This includes creating engaging job descriptions, crafting compelling job ads, and developing a strong employer value proposition that resonates with people. 

Our platform streamlines processes, allowing businesses to focus on what they do best while we take care of the rest. Whether you're a small business looking to expand into a new market or a large corporation with global ambitions, we're here to help you achieve your goals.