Key factors in international expansion

The key factors in global international business expansion

The success of an international expansion would be influenced by many factors. Having a clear understanding of the challenges and opportunities that lie abroad would help the companies to make better decisions. There are many factors involved in launching a new business, which includes economic, social, political, environmental, technological, and legal factors (which are also known as PESTLE analysis). However, some factors might be especially important when it comes to international expansion.   

Some key factors:

  • Differences in informal institutions e.g. cultures, social norms
    • This could include differences in working styles and languages, which could highly impact on a business’s efficiency and productivity
  • Differences in formal institutions e.g. legal systems, political systems 
    • These could impact on the speed of entry because countries have different procedures for business registration. Also, these could influence on employment terms and how an organisation manages its workforce  
  • Access to talent pool
    • Choosing a country with desirable talents and experts can reduce difficulties in recruiting finding the suitable workforce for the company 
  • International compliance and regulations
    • Companies should always consider regulatory issues and work with experts to ensure compliance and minimise risk when planning an expansion
  • Local/ Industrial competition
    • The local competition would highly impact a company’s survival. A saturated market requires much more resources on sales and marketing than market with few competitors 
  • Logistics
    • Not all countries have well-developed infrastructure for transportation. If that is the case, logistics might be costlier than in the home country. 
  • Economic stability
    • Companies do not want unpredictability, such as fluctuating currency and inflation. This increases the challenges in making decisions and makes forecasting difficult and unreliable

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