International Expansion, Your Next Growth Market
In the search for growth and scale most companies turn their sights to international expansion. Entering a foreign market was previously left to the multinationals with large budgets and a robust workforce, whereas small and medium sized firms have often shunned these opportunities because of the historical cost associated with expanding to international markets. For most small and medium size companies in the US, the local market provided enough opportunity for growth, as a market of 300 million people seemed sufficient. Globalization and the continued rise of corporate behemoths like Google, Amazon and Walmart are putting significant pressure on SMEs in the US. The recent retail apocalypse is a sign of how larger corporates are killing local competition with their established efficiency and economies of scale. The question becomes how do SMEs pursue growth in a market where acquisitions and buy-outs are creating few large companies that are slowly becoming monopolies in their industry.
Our suggestion is to consider international expansion. In 2016 a survey by Wells Fargo showed that 87% of U.S firms believe that international expansion is necessary for long-term growth. While it is positive that more firms see the importance of international expansion, we believe that this can no longer be reserved as a “long-term” strategy; companies have to seriously consider this as an earlier growth plan.
For consumer goods companies and SMEs the use of technology and e-commerce platforms like Amazon, Alibaba and Walmart are presenting a medium to access foreign markets without the high cost of international expansion. From the doorstep of your home or business you can now access foreign markets with billions of consumers at the click of a button. It is time for more U.S businesses to start exploring the use such platforms.
As we have repeatedly heard; 96% of the world’s consumers live outside of the United States.* In addition to this the U.S Small Business Administration notes that 80% of global economic growth is projected to occur somewhere other than the U.S. With the global middle class estimated to spend over $60 trillion by 2030**, it is critical for companies to position themselves to tap into this growth. As all relevant data seems to indicate that the time is now.
While international expansion presents its opportunities, it is not without its hurdles. Technology and efficient logistics might help get your products to the market but getting your products to sell successfully requires a broader strategy of understanding consumer behaviors, cultural differences and perceived value in these new markets. That said, firms can no longer ignore that their survival in the near future, will depend on their ability to expand and reach new markets and consumers.
Most U.S. companies that have not expanded into any other country will need the necessary guidance to understand the best strategy to open this new market of consumers.
At Tendy LLC our consultants focus on providing U.S businesses with the best strategies to access the growing emerging and frontier markets.
*https://www.brookings.edu/wp-content/uploads/2017/04/2016_global-dsm_tradeandinvestmentstrategy.pdf, Page 4
**https://www.brookings.edu/wp-content/uploads/2017/02/global_20170228_global-middle-class.pdf, Page 23