Businesses are getting back up to speed as the world emerges from the COVID-19 pandemic. This is one of the most opportune times for growth as consumers are now more confident and willing to spend than ever. Now, it's time to think about growing your business globally!
The first step is crucial, and that is conducting your market research. Observing your target market is crucial for obtaining valuable insights which can inform your strategy. Who are the competition? What is the reason for their success? Is there anything your product or service lacks or does better in comparison with them? What do local consumers want?
Performing your due diligence will provide the answers to many such questions, giving you a better understanding of what your next move should entail.
Here are some areas to cover and questions to ask as part of your market research:
- A market segmentation analysis, which determines the depth of demand for your offering in a local market.
- Highlight untapped opportunities with a gap analysis, outlining if there are consumer needs that aren't being met by the competition that your offering can deliver on.
- Establish the size of the market to calculate how long it'll take for your company to break even.
- Will you need to adapt your product or service to this new market in order to suit customer preferences?
- Are there any cultural or socio-political reasons why that market won't accept your product or service?
- Are there suitable talents readily available locally or will you need to relocate your staff?
To get the answers you need, here are 5 handy frameworks for your strategic planning before you fully consider your global expansion. You can use any of them in conjunction with another.
SWOT Analysis
Among the most common frameworks is the SWOT (strengths, weaknesses, opportunities, and threats) analysis, which allows businesses to determine their competitive position and chart out where there is room for improvement.
For example, your product might be priced higher against your competition in the local market – is there any reason for a consumer may want to switch? Is this difference in price made up for by a longer warranty period or faster delivery?
Taking into account internal and external factors, as well as current and future potential, a SWOT analysis gives a realistic look at the strengths and weaknesses of a business, and within its industry too.
It is a practical evaluation model that provides an overview and allows you to explore the differences between your business and your competitors. Based on objective facts. the SWOT analysts serves as a good tool for making business decisions.
Find out more about SWOT Analysis here.
SOAR Analysis
An alternative to SWOT? The SOAR Analysis. This framework identifies Strengths, Opportunities, Aspirations and Results, and focuses on positive attributes and future-oriented thinking.
While the Strengths and Opportunities elements take into account your business's unique situation, Aspirations and Results are more grounded in reality and forward looking. focusing on your desired future situation.
A SOAR analysis is presented as a 2x2 matrix and is a good way of taking stock of your strengths and opportunities, then aligning them with what you want your business to achieve.
It is a very people-centric framework because a SOAR analysis marries the data you have about your business's current status with your people's expectations and visions about its future. As a result, the SOAR analysis is great for fostering collaboration, boosting morale, and energising teams, as it encourages participants to envision a future where their strengths lead to impactful results.
It's important to include your business unit leaders in this planning exercise to get a comprehensive view of where your business is at from different points of view.
Find out more about SOAR Analysis here.
NOISE Analysis
Another alternative to the traditional SWOT analysis is the NOISE analysis. NOISE stands for Needs, Opportunities, Improvements, Strengths and Exceptions.
The NOISE analysis is different from SWOT in that it is solution-focused, because it focuses on framing issues in terms of what you don’t have, instead of what hurdles you need to overcome.
A NOISE analysis is generally considered to be more comprehensive than a SWOT analysis as it focuses on a holistic assessment of a situation, project, or organisation by considering not just the internal and external factors, but also taking into account any unique circumstances — which is represented by Exceptions — and potential areas for improvement.
It is a good option for businesses that want to create a strategic improvement plan.
Find out more about NOISE Analysis here.
MARACA Framework
The MARACA framework was originally developed by HubSpot in 2015 for their own global expansion plans. Even though HubSpot was already a leading global player by then, the framework allowed them to determine which countries would require longer-term investments and efforts, and which countries they could potentially expect to achieve faster growth over the short-term.
The MARACA Framework has three main components to it:
- Market Availability (MA): Evaluating the size of the market and ease of entry relative to other markets — determined in terms of the number of potential customers and amount of potential revenue.
- Real-Time Analytics (RA): Assessing your current performance in any given market against those you are performing best in.
- Customer Addressability (CA): Understanding if you are capable of addressing the needs of your market, identifying gaps that prevent your business from doing so, and the costs of achieving product-market fit
What differentiates the MARACA Framework from the others discussed is that it provides a thorough cost-benefit analysis on whether your expansion into a specific market merits the time, cost and resources it would require. Each market receives an overall score of 0–10 for per component. The higher the overall scores, the better fit a market is.
Find out more about the MARACA Framework here.
Porter's Five Forces
What makes the Porter's Five Forces framework particularly distinct and unique is that it focuses on the external forces underpinning the industry as a whole and assessing opportunities and challenges within that environment, as opposed to looking inward within a business to analyse your strengths, shortfalls, and vision for the future, which typifies the other frameworks we've discussed earlier.
The five forces are:
- Competition in the industry: How many competitors are operating? How much more or less do they offer in comparison to your business? Are they are established enough to convert existing customers of other competitors?
- Potential of new entrants into the industry: How strong are the barriers to entry, whether that's in terms of cost or brand name recognition? What is the likelihood of new players entering and poaching market share from established competitors?
- Power of suppliers: How much power do suppliers have in controlling the cost of inputs, how many of them are operating in any given market, and are there enough suppliers around that loyalty to one is negligible?
- Power of customers: Does the buyer or customer have a significant amount of negotiating power and are they able to impact the prices of goods or services? Do they only make a purchase once, or return consistently? What is the cost of new customer acquisition?
- Threat of substitute products: Are there any products or services that could act as a substitute for what your business offers? Companies that produce goods or services which require high overheads, capital investments, or have no close substitutes have more leverage in terms of price-setting.
The Porter's Five Forces framework is often used by businesses to identify an industry's structure and dynamics, before building on to form a strategy that increases their competitive advantage.
Find out more about Porter's Five Forces here.
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