International business is a great opportunity for businesses looking to expand their market share. However, international investments involve a delicate process that should be approached with due diligence, plenty of research, and a healthy dose of caution. This is because the entire international business aspect is shrouded in various myths and misconceptions. Here are some of the predominant myths that have been perpetrated over the years, as well as the truths that debunk them.
Myth: High population equals more sales
Companies that seek to expand internationally are often duped into believing that highly populated markets and continents directly increase the chances of successful investment. Asia, North America, and South America have particularly high populations, and are key targets for international business. The population density of an area, however, does not equate to great penetration in sales and lead conversion. Convincing the mass market to follow your business by adapting its products and services may be so demanding and too involving, meaning you’ll lose more money than you’ll earn. Look for locations that have a need for your business, not just the most populous areas.
Myth: Physical presence is not necessary
Another predominant global business myth still upheld today is that a company expanding internationally can just use a website to break into the local market. Unfortunately, a website may not be enough to convince international consumers to purchase your product, especially if you don’t have stock in those countries. At the very least, a warehouse, local offices, and a point-of-contact for any areas of expansion should be considered. It is important to establish this physical presence, especially to avoid creating an international tax barrier for potential consumers. In some countries, imports are already pricier; don’t make the price skyrocket by shipping everything from your country of origin.
Myth: Success locally converts to success internationally
Businesses that thrive within the local market often tend to replicate their operations, structure, and strategy verbatim when expanding globally. However, this can cause companies to fail, as I covered in a recent blog covering Amazon’s globalization struggles. The dynamics of the local market may be so different from those of the international market that you may need to create a second strategy. Before expanding internationally, it is important to conduct research on the kind of operational strategies to put in place. In the end, thorough research is key to holding your own in a new international market.