Expanding into new markets is an exciting adventure with great potential and many hurdles to overcome. As a board member, you are responsible for making wise decisions that are in the shareholders and the company’s best interest providing the best chances to succeed. Moving ahead on false grounds or with a lack of essential information might have severe consequences such as high costs, fines and perhaps even damage to the brand due to negative press. To be able to do your job as a member of the board, you must know what set-up and information to request.
Five areas to cover before stepping into a new market:
1. Value proposition and ethics
How do you ensure that the value proposition is followed and that your customers and partner relationships are ethical and in line with guidelines and expectations? Regardless of selling method, directly or through partners, it is your brand on the line. Have proper processes in place and routines for regular controls. It is better, and less costly to avoid damage than to repair it afterwards.
2. Do your products fulfil local requirements?
Overlooking local rules and requirements can be expensive, and in worst case could mean that your products cannot be sold at the selected market at all. There are countless examples of companies that have faced major costs due to mistakes regarding this i.e Tesla who’s had products got stuck in a harbour in China as local certificates were missing. Costly, and causing a severe delay to the expansion plans.
3. Do you have a good set-up for partnerships?
Your partners must be good ambassadors for your brand and should be checked thoroughly so that your brand is protected from any scandal related to partners. Furthermore, it is important to continuously evaluate the performance of your partners. If the performance is not good enough, you must have an exit plan — something that is best to have in place at the beginning of the collaboration.
A partnership without an agreement falls under local laws. An agreement allows you to specify prices, volumes, jurisdiction and requirements for the partner to fulfil. Ensure you include the option to terminate the partnership if the partner fails to deliver. By having an end date in the agreement, you have a pre-planned option to re-negotiate the deal.
4. Market analysis
Making a move into a new market is a big step. Are you sure it’s the right market? Have you got the information needed about the market, demand for your products, customer behavior, price level and competitors to take the right decision? Is there a budget set to realize and monitor the export plan?
5. Is the business model adapted to the local market?
There are many reasons why the same business model may not work in different markets. Perhaps local consumer law makes it more beneficial to sell through partners? Or perhaps consumer behavior calls for a different distribution model, marketing strategy, payment method et cetera? These things should be investigated carefully to make sure the company has the best chances to succeed.
Preparation is key and information a must
Make sure to have appointed persons responsible for different areas, who report back to the board and follow up regularly. It is better to spend more time analyzing and preparing than to stumble on an unknown obstacle later. If international business is a new venture to you or the company, getting expert help may well be worth looking into.
Minimize risk, reduce costs and shorten time to market
At Business Sweden, we help companies expand to new markets and grow their global sales. With industry experts, trade and export advisors and local market experts in more than 50 countries worldwide, we can guide you through your expansion process and help you succeed.
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