Yesterday I mentioned a new company that was already looking to go expand abroad. Now this was a new start company and there was a distinct possibility that they were trying to run before they could walk.
Certainly, if they were to follow the strictures of the Ansoff matrix, they would have considered whether it was appropriate to expand into a foreign market before fully exploring the potential of their existing domestic market. It certainly appears that very little actual research had gone into their foreign expansion plan and that they were simply acting on a hunch.
British businesses can provide many examples of where foreign expansions have gone wrong. Both Tesco and Marks and Spencer have had to cope with the costs of foreign expansions that have gone badly wrong. In both cases, probably the biggest error was to try and transplant their UK methods of operation into a foreign market without considering whether that model was a good fit with the intended foreign customer base.
If a business is to succeed abroad, it is crucially important that extensive marketing planning takes place to ensure that the product meets the differing environment of a foreign market.
In addition to the normal analysis of the marketplace it is important that the values, laws and beliefs of consumers in a foreign marketplace are considered.
Take the example of the photographer wanting to expand their photo booth business to Greece. What they had discovered was that Greeks don’t like doing things for themselves; they expect to be served. There was clearly a societal difference between Britain and Greece. A difference in consumer’s value norms.
Then their is the economic situation in Greece. It is a country on the edge where roughly 50% of the work force is unemployed. Is a photo booth at a wedding or party currently an expense so far.
It is important to remember the pneumonic VESTREL, Values, Economy, Societal Norms, Level of Technology, Religion, Environment and Law, when considering a foreign market place.
It is also important to remember that these things can change. take Saudi Arabia. For many years it was illegal for a woman in Saudi Arabia to ride a bicycle. They could be imprisoned for doing so. The Saudi government’s stance on women cycling has recently softened. Women can now ride a bike, so long as they do not use it to transport themselves from point A to point B i.e. they can cycle on a closed track or around the local park.
Five years ago, there was no market for women’s bikes in Saudi Arabia. Now an enterprising business may find a lucrative market in Saudi.