Expanding internationally is a significant milestone for businesses wishing to broaden their commercial horizons. It is not without risks, however. It’s necessary to research and understand the legal and financial hazards which accompany expansion, which can then be addressed as part of your development strategy.
In this month’s Ask Albion blog, we consider international expansion, how it works, what your options are, and how Albion Languages can support the growth of your business.
How can my business establish a presence in a new market?
Entering a foreign market isn’t to be taken lightly. A rushed expansion can cause a real – and significant – risk to your business due to being inadequately prepared.
It is essential to devote sufficient time to research and understand the legal environment in the new target market and to design an approach that is suited both to the company’s expansion plans and the specific target market.
Companies wishing to expand internationally could opt for any number of market entry routes, but, to ensure successful expansion, it is vital to properly define the aims, objectives and timescale of the project, all the while being mindful of key performance indicators. The choice of entry route will depend on the objective the company is pursuing.
Just ask yourself:
- Where will your product be manufactured?
- How will your product arrive if manufactured elsewhere? Shipping?
- Will you require local suppliers?
- Is this part of a short-term or long-term business project?
How can you analyse your new market?
Before embarking on any international expansion project, a company needs to carefully assess its export potential and identify its strengths as well as the means and resources that it can deploy and assign to such a project.
A simple way to analyse a new market is to conduct a SWOT analysis. A SWOT analysis is a classic strategic planning and management technique used to help a person or organisation identify strengths, weaknesses, opportunities, and threats related to business competition or project planning. The degree to which the internal strengths of the business match the external opportunities can be actively used to evaluate the company’s current strategic position.
What are my options when expanding internationally? And how do I know which is right for me?
There are a number of options that can allow your business to expand internationally and establish a presence abroad. Each has its own level of risk:
- Commercial agent
A commercial agent is a self-employed intermediary, who negotiates the sale –or purchase – of goods on your business’ behalf.
- Distributor
In distributor agreements, your business sells its products or services to the distributor, who then sells them on to their customer, adding a margin to cover their own costs and profit. - Representation office
A representation office is where you have no corporate tax presence in the country. If your business only expects to have a limited presence in the country, this arrangement might be appropriate. - Branch
A branch office is a location – other than the main office – where business is conducted. - Joint venture
A joint venture with a trusted local partner could be a suitable route for your business. By relying on a market player with a good knowledge of the market and the way it operates, you can mitigate some of the risk.
Key focal points for international expansion
In addition to these considerations, other factors must be taken into account, such as tax issues, for example, taxation of profits, VAT, parent-subsidiary preferential tax regimes, transfer pricing, labour and employment-related issues. In addition, It’s also looking at the protection of intellectual property rights beyond borders, for example, patent, trademark, know-how, as well as potential regulatory restrictions on foreign investment in the target market.
What is the next step?
With 40 working languages, a customised approach, and rapid turnaround times, the Albion Languages team can offer invaluable insights and expertise to help your business take the exciting step out onto the Global stage. To speak to a member of our team, get in touch today.