Designing Expansion Strategies For Companies Entering New Markets

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Growth is fundamental for the sustainability of any business. However, it can become problematic if one doesn’t have a strategy to resolve any barriers to trade. As a result, a good Market Expansion strategy is critical for businesses that want to survive and succeed in their many goals. It is assumed that if a good strategy is in place, 60% of the predictable war is won. 

An expansion project strategy that may look perfect on paper can be imperfect in the real world. This failure results from internal or external factors. Knowing how internal and external environmental factors affect your company can help your business overcome the hurdles and thrive.

A company must cover all fronts to avoid a hassle-free expansion. The two most important ones under external factors are macroanalysis and microanalysis. Microanalysis refers to the analysis of the environment in direct contact with the company and affects the routine activities of business straight away like customers, competitions, etc. The macro analysis includes the PESTEL components, which are as follows:

  • Political Factors: These determine the extent to which government and government policy may impact an organisation or a specific industry like the political policy and stability and trade, fiscal and taxation policies. 
  • Economic Factors: These factors impact the economy and its performance, directly affecting the organisation and its profitability. Factors include interest rates, employment or unemployment rates, raw material costs and foreign exchange rates.
  • Social Factors: These factors focus on the social environment and identify emerging trends. This helps a marketer to understand their customers’ needs further. Factors include changing family demographics, education levels, cultural trends, attitude changes and changes in lifestyles.
  • Technological Factors: These factors consider the rate of technological innovation and development that could affect a market or industry. Factors could include changes in digital or mobile technology, automation, research and development. There is often a tendency to focus on developments only in digital technology, but consideration must also be given to new distribution methods, manufacturing, and logistics.
  • Environmental Factors: These factors relate to the influence of the surrounding environment and the impact of ecological aspects. With the rise in importance of CSR (Corporate Sustainability Responsibility), this element is becoming more critical. Factors include climate, recycling procedures, carbon footprint, waste disposal and sustainability.
  • Legal Factors: An organisation must understand what is legal and allowed within the territories they operate in. They also must be aware of any change in legislation and its impact on business operations. Factors include employment legislation, consumer law, health and safety, international and trade regulation and restrictions.

A PESTEL analysis helps an organisation identify the external forces that could impact their market and analyse how they could directly impact their business. Hence the given factors must be analysed for the area the company is planning to expand into to avoid any last-minute hassle. 

The internal factors refer to anything within the company and under the control of the company. These factors are as follows:

  • Product: The demand for a product will be impacted by several factors like its value, customer tastes and preferences, competition etc. Hence all must be kept at a check.
  • Human resources: Employees are the company; the place ideas come from, the ones who execute plans and handle emergencies as they happen. Hence, their needs must be met and satisfied.
  • Organizational and operational: This includes organized and accurate record keeping.  Interruptions to your supply chain and outdated or faulty IT systems are also factors you should evaluate to support smooth functioning in the company.
  • Financial resources: The financial risks depend on the financial structure of the business, transactions and financial systems. Funding, investment opportunities and sources of income play a huge role in deciding the survival and success of any business. 
  • Marketing and branding: The brand is an intangible asset that’s difficult to measure but important. Hence monitoring mentions on social media, articles, forums, etc. and looking at how branded search volume is trending is essential. 

Regardless of the business expansion strategy you choose, remember that it is important to remain competitive. By investing in new technology, processing data more efficiently, and using other tools such as social media, your company will remain at the forefront of its industry. If you stick to a proven business expansion plan, your company can continue to grow and prosper for years to come.



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