WHY IS YOUR GLOBAL EXPANSION STRATEGY FAILING? We’ve done research across a broad spectrum of companies, and have ten answers that might help you.
The Strategy Execution Gap in Global Expansion Given current global economic dynamics, executive leaders get it – to find high-yield growth opportunities they should be looking beyond the confines of North America and Europe. And we are seeing this across an array of B2C and B2B industries, not just in manufacturing or CPG. Regardless of having well-developed strategies, even the most equipped companies have a hard time getting their global expansion strategies right. Despite a concerted push for a globalized portfolio, few companies are able to build and run global organizations and operations. A smart strategy is necessary, but will be ultimately insufficient. The winners in globalization also execute better than their competitors and are able to get the most out of the international investments.
What’s Going Wrong? Well, to start off, companies fail to account for fundamental aspects of global expansion strategic planning, often to their detriment. In many emerging markets, local companies are often able to outgrow multinationals by 25% points annually.1 Even in a continent like Africa, where multinationals historically have not been concerned with local competitors, large global players are losing market share in diverse categories from cement to packaged food and beverages. 1BCG
Even for the biggest incumbents, in-house capabilities are just not there – only 10% of companies believe they have the full set of capabilities needed to win internationally.1 Rethinking Your Global Strategy & Capability Set The implication for global companies is clear: a good strategy is not good enough. Better yet, a great strategy is not good enough. Simply put, companies making or planning on making international moves need improved capabilities in order to better execute on their strategies. To enable this, senior executives need to set clear operational targets, monitor progress and dedicate sufficient funding.
Local Dynamos: How Companies in Emerging Markets Are Winning at Home, July 2014
© Market Strategy Group, 2017
Insights - May 2017 www. mkt-strat.com
Understanding Common Pitfalls The following list is an accumulation of the research we have done as well as our first-hand experience in helping companies get their global expansion strategy right. We find there are 10 common mistakes companies continue to make in the execution of their global expansion strategies. We hope that this list can help as a quick diagnostic to identify where you might be running into challenges.
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Forgetting Internal Market Research Third-party data sources don’t know your customer or understand your brand. Decide where your strategies are currently succeeding and consider the implications for your global expansion strategy.
Forgoing Sufficient External Market Research Extensive research into local markets has to be aimed at understanding the market size, the challenges customers face, the solutions they currently have, and where your product can fit in.
Ignoring Local Competitors Many companies fail to think about the basics of product positioning at the country level and overlook things like strong local competitors. Doing so could be detrimental.
Overlooking the Importance of Micro Locations Identify locations at the national level and remember that every country has its own local laws, cultural norms, forms of currency and payment, and unique business practices.
Underestimating the Importance of Customizing Overseas Operating Model Operating models may need to be adjusted to better empower local decision-makers and to allow for smooth local and regional operations.
Resisting the Adaptation of Existing Products or Services Companies should start with more basic versions of their product or service and add features according to popularity and relevance within the region.
Refraining from Sales and Marketing Channels Adjustments While brand consistency is important, different markets favor different sales and marketing approaches. These should be taken into account.
Forgetting the Importance of Company Culture Backing An eye towards globalization should be underlined in the overall company culture for it to truly make an impact. Fast-growing companies prioritize global marketing and localization.
Passing on Leveraging Partners to Reduce Risk Partnerships can substantially reduce risk in global expansion by increasing agility and domain knowledge and providing greater overall competitive advantage.
Failing to Empower Those with Local Knowledge Don’t forget to include local employees or experts in strategic decision making. Their insights will provide invaluable feedback.
Š Market Strategy Group, 2017
Insights - May 2017 www. mkt-strat.com
Getting Global Expansion Right MSG understands both the diverse opportunities and the extreme complexities of the global market. Growth in developed nations is as such the leaders of technology companies can no longer count on growth from markets at home. Instead, it is time to look strategically at international options to achieve growth goals. We know that doing this is hard, and have a team of seasoned experts who get it. We answer your hardest global expansion questions.
Target Market Selection WHERE?
WHEN & HOW?
• Detailed market analysis with overview of market size and growth potential, competition, channel analysis, economic drivers and political climate, conducted by region, country or sub-country levels • Country- and region-specific feasibility analysis to determine viability of expansion and universe of strategic and operational risks
Market Entry Strategy • Develop value prop, positioning, target customer, price levers and channel strategy specific to region, country or micro-geo • Assess potential partners and formulate partnership strategy • Determine roadmap for immediate-term launch & post-launch stabilization • Design and implement custom operating model to achieve strategy
Value From Our Services WHY?
• We support company leadership in developing data-driven market penetration strategies and getting the most out of their global expansion investments. We have done this across industries, business types and geos • We help executives to be better equipped to allocate limited resources across a domestic and international portfolio of growth opportunities
Global Expansion Service Line Leadership With a focus on international markets since the beginning of her career, Alex Kruzel has been assisting companies and public sector organizations to develop and execute their strategies for more than 10 years.
ALEX KRUZEL Partner
Alex has served clients across a variety of industries, including CPG/Retail, Technology, Energy, Travel, Hospitality & Leisure, Life Sciences & Healthcare, Financial & Professional Services and Public Sector. She specializes in helping clients identify opportunities for growth via global expansion and then implementing strategic initiatives by translating them into tactical, measurable and self-sustaining programs.
About Market Strategy Group Market Strategy Group sees business differently. To us, winning isn't about going from Point A to Point B. It's about aligning three distinct dimensions — business direction, people & process, and markets & customers — to drive growth. Getting this right is critical to your bottom line. And it’s more than an operational challenge, it is often a strategic issue. We have helped organizations get to an answer custom to your unique situation. We should chat if this is an issue: Alex Kruzel (alex.kruzel@mkt-strat.com).
© Market Strategy Group, 2017
http://mkt-strat.com/
Insights - May 2017 www. mkt-strat.com