International market entry as a growth opportunity and challenge
Successfully opening the doors to a new market is a challenge for any business, regardless of the size of the company or the industry in which it operates. The fact is, entering a new market can be as challenging as starting the original business.
What is also very clear, however, is that expanding the business into other countries can bring stability to the company and is a great opportunity for growth. Once a company’s products are well established in the first market, consideration is given to whether to adopt the product for a neighbouring secondary market, offer it internationally, develop additional products, or create another customer base. If the expansion strategy goes in the direction of international market entry, the first strategic questions arise.
Strategic decisions on market entry model and market prioritization as the basis of a playbook
First, we clarify which market entry model can be considered for the industry and the target markets in general. There are many market entry models, such as pure export, cooperation with intermediaries like distributors, joint ventures, opening a branch office with own employees, buying up companies, licensing and franchising models, self-employed local sales on a commission basis, and, and, and.
In addition, the management and its team decide on the sequence of individual market entries. Which markets are to be preferred, and which should be prioritized later?
The playbook for international market entry in series production
First, let’s address the question of what a playbook is in the first place. Basically, a playbook describes a repeatable process for using steps that have been tried and tested once when entering a new market over and over again. Doesn’t sound that complicated, does it? If you go into the depths of the contents of an internationalization playbook, the word that sounds so logical does take on a decent dimension of complexity.
Different countries have more similarities than one would expect at first glance. If there is an elaborated playbook, the effort of expansion for each country is reduced, but the reduced effort also depends on the existing synergies. For example, Dropbox has been able to apply its existing sales and marketing approaches in several countries at once, namely Norway, Sweden, Denmark, Finland, Australia, New Zealand, Canada and the UK. Thus, also in countries of different continents.
Uber’s playbook, for example, includes the first steps in market entry, which are made up of a 3-person team. One person takes care of marketing towards customers, one person takes care of drivers and the third does all the project management. Only when the first milestones are reached, local staff is hired. A 3-person landing team is anchored in the playbook as a standard.
What it takes to be successful
A good market entry playbook provides answers to the following questions: How should an initial landing team be put together, when is a market-ready for market entry, what needs to be done and in what sequence, and finally: What should be measured so the landing team knows if things are going well?
The playbook is packed with good practice and comparative figures from your own company, e.g. user growth, well-functioning launch campaigns, and pricing model hints along the following sections:
- Landing team composition and local organizations to dock with.
- When a market is ripe for entry
- Necessary product adaptations
- Goals for the first 6 months and comparative metrics
- Ideal process and recommended actions for the first 6 months (lead generation, sourcing, staffing, etc.)
With the playbook, the landing team receives a manual for the ideal-typical process of market entry, which they naturally adapt to local conditions where necessary.
The playbook supports planning and communication with employees and investors
The playbook helps in planning resources, as a communication tool within the organization. It also gives employees something to learn from past experiences and to critically examine the timeline of the expansion plan. Finally, a playbook is also a good communication tool when communicating with investors who co-finance rapid growth.
The playbook as a guarantee for successful internationalization?
There is no question that international expansion remains a challenge, even with a playbook. Despite a well-elaborated playbook, expansion into some countries may require different models than those in the created playbook due to different factors such as cultural or regulatory specifics. Thus, adaptations to individual markets become necessary. In addition, a playbook evolves.
At the beginning of internationalization plans, market entry models with lower risk are recommended. This allows us to explore and test markets. Subsequently, we develop the playbook into faster market entry models and only then move on to rolling out with the playbook across the board.
Anyone who has successfully implemented a playbook
Companies like AirBnB, Dropbox, Pinterest and Uber have developed a playbook for their internationalization plans in order to have a proven plan to fall back on when entering new markets.
In Austria, after one of our scaling workshops on international market entry, Richard Malovic, and his Whalebone team set about implementing multiple market entries using their playbook and achieved a nice result after 18 weeks. Read more in their Linked-In post after 18 weeks. Congratulations to the team.