Expanding a business internationally can be an enticing prospect for many startups and scaleups seeking to tap into new markets and unlock growth opportunities. However, this journey is often fraught with challenges and obstacles that need to be carefully navigated. We caught up with Paul McIntosh, our CEO and Founder to discuss the top barriers that businesses commonly encounter when venturing into new international markets.
1. Culture and Values: The Key to Successful Internationalisation
Paul says contrary to popular belief, the most significant barriers to international expansion are often internal rather than external. A company’s internal culture and values can hinder businesses seeking to expand internationally. Paul said: “The key to entering a new market successfully is to have an open mind. Be willing to adapt strategies, operations, and communication styles to resonate with the target market.”
Be prepared to understand and embrace cultural nuances, local customs, and business practices. For instance, cultures that are highly person-oriented value socialising, before doing business together. You may be invited to places you never expected, for example, a trip to the sauna in Finland could be on the cards.
2. Product/Service Localisation: Embracing Adaptation for Success
“One of the common pitfalls that hamper international expansion is the reluctance to adapt products or services that have been successful in the domestic market.” adds Paul. While a product might be well-received locally, its success is not guaranteed in a different cultural context. Businesses must be willing to invest time, effort, and resources into understanding the specific needs and preferences of the target market. This may involve modifying the product, tailoring marketing messages, or adjusting pricing strategies to meet local demands.
Let’s look at big successful global brands as an example of best practice such as the fast food chain, McDonalds. Their menu is always adapted to suit local tastes. For example, Germans like beer with their food, so McDonald’s outlets in Germany serve beer.
3. Investing Adequately: No Cutting Corners in International Expansion
Expanding into new markets requires sufficient financial investment. Paul says that many businesses make the mistake of underestimating the costs associated with international expansion, attempting to pursue it on a limited budget. The results of a half-hearted approach are often disappointing. To achieve sustainable growth and establish a strong foothold in foreign markets, businesses should be prepared to allocate sufficient budgets for market research, localisation efforts and marketing initiatives.
Tribe Global Ventures, the VC that helps B2B tech businesses scale up to the UK and USA interviewed Paul during London Tech Week which took place in June 2023. Paul shared insights and tips for businesses looking to establish a presence in the UK. Watch the interview here.
While external factors such as competition and demand play a role in successful international expansion, businesses must primarily address internal barriers to ensure a successful entry into new markets. Need advice? Contact us today.
