Essential Practices in International Expansion
By Sanjay Nijhawan COO, Guoman Hotels (UK) | June 06, 2010
International expansion is fast becoming a priority for companies of every size. The decision to extend operations beyond domestic borders is not without challenges, but the potential payoffs are enormous.
What's driving the global push? First, there's the Internet, with its power to effortlessly cross borders and tap into previously hard-to-reach markets. Intense competition on the home front is another factor. All companies now face more pressure than ever from both domestic rivals and international players. Expanding internationally is one way to offset these competitive pressures. By broadening the potential universe of customers, companies also broaden their revenue sources. Globalization can also enhance a company's long-term survival as well. Companies that expand into international markets lessen their dependence on a single country's economy. This is especially relevant in these challenging times. And, specifically for the hospitality industry, there is a demand from international travellers for a guaranteed standard, and for the comfort factor of a recognised and understood brand, particularly in a new and alien environment for the guest. Whatever the motivation for international expansion, there are a number of key practices that all organisations should observe to successfully enter a market.
Understand the new market you are entering
It is important to recognise the social, cultural and economic differences between your domestic country and the market(s) you are planning to enter. These will range from subtle to dramatic, but fully understanding these issues is essential for effective market entry.
Key questions that need to be understood include:
The Macro economic condition of the country - is the economy growing, and if
so at what rate? China's economic growth has made it a very attractive
market to enter, despite the significant cultural differences to be overcome
by Western companies entering the country.