One reason internationalization often fails is lack of focus. This can take two major forms: lack of definition of intent in the new country and overexpansion to too many countries too soon.
It seems like a great idea to internationalize, but does our new market really need what we have to offer? Several decades ago one notorious European company persuaded large numbers of African women that its powdered milk was much better for their babies than breast milk. This company exploited people with little, tried to create demand where there was no need, and their product actually had a comparitively negative affect on the health of the children. For long-lasting growth we need to identify a real need and meet it before anyone else does. This kind of entrepreneurial marketing is fundamental to real market growth in the future. Richer economies have one set of market needs while poorer countries have others. Some obvious current examples of market needs for poorer countries are products and services that create greater wealth and the capacity to expand business. In richer countries entrepreneurial marketers may need to listen for specific adaptations of existing products and services that will give them the edge. Obtaining this information is key, and requires both great cultural insight as well as great instinct to see niches that even the host country may not yet have seen. Once identified the key is to focus narrowly on promotion of this one product or service. Diffusion of focus results in unclear messaging and often failure.
In the same way, the rate of international expansion needs to be focused and planned. Companies contemplating their first international expansion will do well to select only one country and one target market at first. Some companies may consider it best to try a “familiar” country such as Canada to the US, the Republic of Ireland to the UK, Belgium to Holland or Luxembourg to France. It is likely nationals already exist in the company structure and it is easy to communicate and learn lessons. Other companies may see a niche in the former Eastern Bloc countries, or in the Majority World. In both cases good research should select one country to start with. I would argue that even within one country the focus be narrowed down to a true geographic center. This way as the inevitable lessons are learned they can be learned and put towards future expansions with minimum cost.
Expansions take an incrementally increasing amount of resources. What looks like little output to start with can quickly become major output, unless the new international structure produces returns quickly. This will be the subject of tomorrow’s blog.