Part 3 of 5: “Let’s Start and See”
A surprising, but not uncommon, market entry fail is when companies expand to a new territory and are not clear about what they are trying to achieve, nor have an approach that defines tactical objectives and a clear estimate of the costs of the exercise. It’s an approach which is entirely, ‘Let’s start and see”.
No Goals, No Plan, No Calculated Losses
It is astonishing that any major business decision that involves so much risk and effort would be taken without specifying goals or having a plan – moreover, without any calculation of how much everything will cost and what you stand to loose. However, when it comes to geographical expansion, time and time again we have seen far too many companies withdrawing from their new market, having spent significant sums of money as they were not clear about what they were trying to achieve, or did not have a realistic plan and budget against which to measure progress. They just started to ‘see how things would go’.
Plan it in Stages
We recommend taking a staged approach to market entry which is a sensible strategy for many firms looking to manage the risk of entering an unknown territory and constraining losses to an affordable level.
Manage your Risks
There are a number of clearly defined stages for Market Entry: from the initial opportunity assessment; setting your goals; preparing your business and market entry plan and strategy; validating and implementing those plans; and then moving from the market entry project phase to consolidating and growing an established business.
Each stage requires you to set goals and define measured steps with clear outcomes, and then adjusting before making the next investment decision for the following stage. In this manner, risk is managed and potential losses minimised.
Our experience is that the companies that do not approach market entry in this systematic fashion fall into the troubling statistic that 4 out of 5 market entry efforts fail.
Part 4 of ‘5 Typical Fails in International Expansion’ will be published next week.
For advice, planning and practical assistance with international expansion, contact email@example.com.