Written by Miguel Sepulveda, Beata Janaszkiewicz-Cavalcanti, and Laszlo K. Varga.
Why go global?
In today's interconnected global economy, the pursuit of international growth has become a strategic imperative for businesses seeking to unlock new opportunities and drive competitive advantage. However, the process of globalization is complex and costly and requires a meticulous approach and a deep understanding of diverse markets.
But what does going global entail? There are 3 main processes in place:
Globalization (or G11N for short) can be defined as a broad range of business development and engineering processes necessary to prepare and launch products and company activities globally.
Internationalization (I18N) encompasses the series of technical processes that a digital product must undergo to be able to offer it in different markets. During this planning process, the aim is to prepare the software code of the product (application, website, etc.) so that it can be easily adapted to different languages and cultures.
Localization (L10N) means adapting a product – prepared via I18N – for a specific market. It involves translating and adapting linguistic, cultural, and regulatory aspects such as time format, currencies, or units of measurement.
Translation (T9N) refers to the conversion of written text from one language to another.
Each of these require different actions. This article focuses on the best practices of globalization as the overarching discipline of going global, sharing key insights and best practices for navigating the challenge effectively.
Key factors for choosing a country for international expansion
The first and probably most important factor of a successful globalization strategy is choosing the right market. Once the demand for your product is proven among the initial, local customers, the natural step is to consider where to expand. There are three important questions to ask at this stage:
- What are the countries to start with?
- How do I enter the markets there?
- What is the cost vs. profit outcome?
The answer to each question will depend on multiple factors, and almost all will be product- and industry-specific. Nevertheless, some principal factors can provide a good indication of whether the countries considered are indeed a good fit for the product.
1. Market potential
- Size and growth rate: Larger and more rapidly growing markets generally offer more opportunities.
- Purchasing behaviors: Demographic and social details of the potential customer base vary across locales and cultures and often pre-determine the demand for the product or service.
2. Economic environment
- Economic stability: Countries with stable economies usually have lower risks associated with economic fluctuations.
- GDP and income levels: Higher GDP and income levels indicate stronger purchasing power.
3. Regulatory environment
- Ease of doing business: Expanding to countries with favorable business regulations, lower bureaucratic hurdles, and supportive legal frameworks is more likely to be successful.
- Trade policies and tariffs: Prior to expansion, it is important to analyze trade agreements, tariffs, and import and export regulations to avoid potential financial burdens.
3. Technology maturity
- Uptake velocity: Some markets are faster than others in disseminating and adopting novel technologies and paradigms, indicating a more open approach to new products and services.
- Technology acceptance: The extent that widely used, foundational technologies (e.g., mobile telephony, cloud computing, or internet penetration) are accepted and implemented across a given market is crucial in understanding the way a company’s products and services can build on those foundations.
4. Cultural compatibility
- Costumer behavior and preferences: It is widely recommended that the product or service aligns with the culturally infused local customer behavior. For example, a company specializing in vegetarian products might find a receptive market in India ( where a large portion of the population follows a vegetarian diet) or in Western Europe and the USA (where the vegetarian trend is gaining popularity).
- Cultural sensitivity: Awareness of local festivities, traditions, and taboo topics may significantly increase market acceptance.
5. Competitive landscape
- Level of competition: Entering markets with high competition might require significant resources and differentiation strategies in order to create and maintain a unique selling proposition (USP) to stand out.
- Market saturation: Identify whether the market is saturated or if there is room for new entrants. Emerging markets like Vietnam or Nigeria might offer less saturated environments compared to mature markets, but they are also subject to different challenges.
6. Infrastructure and logistics
- Logistical efficiency: While looking for a new market, it is important to research the quality of infrastructure, including transportation, communication networks, and supply chain logistics, as these factors can hinder performance in a new market.
- Access to material resources: For companies depending on the supply of raw materials, parts, or manufacturing equipment, proximity to suppliers can reduce costs.
7. Political stability
- Political environment: A stable political environment reduces the risks associated with political unrest and unexpected policy changes.
8. Human capital
- Labor market: The availability of skilled labor and the overall labor market conditions can increase chances for success. Expanding into countries with a high level of education and skilled workforce can be advantageous for labor-extensive companies such as those from the technology and R&D sectors.
- Cost of labor: Countries with lower labor costs may be interesting as they can lower the overall costs of production and might be attractive for outsourcing operations.
Selecting the right countries for business expansion involves a multifaceted analysis of market potential, economic stability, regulatory environment, cultural compatibility, competitive landscape, infrastructure, political stability, and human capital. In this article, the Nimdzi Insights team will guide you through globalization best practices step by step.
The most important aspects of going global
In the next sections, we will unwrap each of the following main aspects of going global:
- Assessing target locale population and market size
- Analyzing the purchasing power
- Creating an optimal price localization strategy
- Choosing the right local language
- English Proficiency Index (EPI)
- Preparing for possible legislative hurdles
- Conducting competitor analysis
- Prioritizing the right content
- Maintaining inclusivity and diversity in language localization
- Establishing the right organization model for the localization team
Buckle up, it's a long read – we have a lot of globalization best practices to share in this article.
This has been a preview. The full report can be accessed online by Nimdzi Partners.
The article was researched and co-written by Miguel Sepulveda.
The article was researched and co-written by Beata Janaszkiewicz-Cavalcanti.
The article was co-written by Nimdzi's Lead Researcher and Analyst, Laszlo K. Varga.
