Looking for the best international business expansion example? Read this article to find out.
One of the biggest achievements and the biggest challenge for a business is to break into the global market through international expansion. When products and services are limited to local customers and can reach out to multiple countries, the business revenue and growth will also increase substantially. But along with growth, there will also be a lot of obstacles and uncertainties before you can successfully spread your business across borders.
Of course, many companies and organizations have successfully established themselves as global leaders in their respective markets. Most of them started locally on a small scale. If you aim to replicate their success and expand your business globally, then learning from their example will provide valuable insights. So, in today’s post, we’ll look at five cases of highly successful companies that have expanded internationally by overcoming the limitations of geographical and cultural differences.
Top 5 International Business Expansion Examples
1. Food and Restaurant: McDonald’s and Domino’s
McDonald’s was founded by two brothers – Maurice and Richard McDonald and started as a modest drive-in restaurant in California in 1940. And by the 1960s, they had grown to more than 1000 outlets in the US. But their first efforts for international expansion came in 1967, when the first McDonald’s out of the US was opened in Richmond, Canada. Fast forward to the current day, and there are more than 35000 McDonald’s outlets in over 100 countries.
So, what has been the driving force behind their massive global expansion? Three main factors have led to their enormous success in the international market.
McDonald’s established itself as an international brand mainly due to its franchise strategy. Every McDonald’s outlet is owned and operated locally in their respective regions under their franchise. There are fixed guidelines on running a McDonald’s outlet, making it easier for people to become a part of the franchise. In doing so, the company continuously grows as a brand while also allowing people worldwide to start a fast-food business.
Diversity in Local Offerings
Another important factor behind the success of McDonald’s is the diversity in its local menu. In every country, McDonald’s offers a wide variety of local menus such as McSpaghetti in the Philippines, Cookies and Cream Pie in Malaysia, Gracoro Burger in Japan, Bubblegum Squash McFlurry in Australia and New Zealand, McShrimp in Germany, and so on. As such, every McDonald’s outlet has managed to draw in plenty of local customers.
Consistency in their Main Menu and Services
Despite the diversity in their regional menu, the main highlight of McDonald’s – burgers and fries – remains consistent in its outlets. Another consistent aspect is their service and operation. From the very start, the idea behind this food chain was to offer pocket-friendly delicacies with fast service and minimal staff. This is something that still holds for all their outlets.
Similar to McDonald’s, Domino’s Pizza was founded by Tom and James Monaghan. Technically, it wasn’t founded by them, but they purchased an existing pizza place called Dominick’s in the 1960s. Later on, their delivery driver Jim Kennedy suggested that the name be rebranded to Domino’s. Their initial menu was relatively modest – just two different sizes of pizza with the choice of 11 toppings and one choice of drink – cola.
With more than 17000 outlets under their franchise, they have also achieved similar success as McDonald’s. And the very same factors can be attributed to their international growth:
- A strong franchise strategy that lets any local business start their own Domino’s outlet
- Diversity in their menu is easy because the base of pizzas is always the same, and they simply need to change the toppings to suit local flavors.
- Consistency in their service is their main highlight – pizzas. While McDonald’s has always prioritized low costs and fast service, Domino’s has consistently focused on deliveries, evident by their famous “30 minutes or free policy”.
Lessons to learn from the successful expansion of McDonald’s and Domino’s
- If there’s one thing that these two companies have proven, franchise business models are highly effective for food and restaurant businesses to expand globally.
- Adapt to local culture. McDonald’s and Domino’s did this by introducing regional dishes. But no matter what products and services you are offering, it can be beneficial to make some changes to integrate local elements of the target region into your products. For example, adding the regional language for different countries on your website or setting up a local customer service center.
- Focus on your core objectives and brand identity. McDonald’s are known for their fast-food service. Domino’s are known for their fast pizza deliveries. Make sure you establish a similar identity for your business no matter what part of the world it’s situated.
2. Streaming Services: Netflix and Spotify
Netflix was only available in the US until 2010. Five years later, they had spread to around 50 countries. By 2017, those figures jumped to 170 countries. To say that they have been successful in international expansion is an understatement. Three important lessons can be learned from Netflix’s expansion strategy.
Study The Market Religiously
Perhaps the strongest aspect of Netflix’s strategy is its effort to study and understand the local markets in various regions and offer content accordingly. In each country, Netflix offers a wide range of regional content which resonates well with the local viewers. Before stepping into any country, they always do thorough and intensive market research, analyzing potential viewership, preferences for different types of content, and even possible competition from local services. That allows them to develop highly efficient strategies to increase viewership and subscription in each country.
Learning by Doing
Netflix has demonstrated a systematic expansion strategy where they started with the neighboring country Canada. By doing so, they would be facing fewer challenges than expanding to far-off countries. Their efforts in Canada helped them learn more about what it’s like to operate overseas. They used this knowledge to steadily spread out to a few more countries, gradually entering about 50 countries by 2015.
All the time, they gathered more customer data, improved their analytics and algorithms, and constantly kept learning and implementing. That is why they could make the massive jump from 50 to 190 countries in just two years.
Promoting Original Local Content
An essential part of successful international expansion is the ability of a business to adapt to the local market. And Netflix is an excellent example of this. The main challenge in the global market is competition from local services. To beat such competition, Netflix needed to have something it didn’t. And it achieved that by partnering with content creators and producers to bring exclusive local content to various countries. Not only did it give them the upper hand, but it also gave creators a digital platform to showcase their work. It’s a perfect win-win situation for everyone.
Lessons to learn from Netflix’s strategy
- Netflix serves as a great example of the power of proper planning combined with dedicated market research and data analytics. Their marketing strategies have been heavily based on consumer data and valuable insights into regional markets. Businesses should learn from this and spend considerable time, effort, and money in the thorough study and analysis of different needs and groups of consumers in target countries.
- The next valuable lesson from Netflix’s strategy is expanding from neighboring countries and gradually using the experience to enter other distant markets. Directly jumping to many countries at once and targeting other continents from the very start is a risky approach. Starting close to home offers a safer way to expand your business without running into many roadblocks.
What Netflix did with movies and visual content, Spotify did with music and audio. Its growth was not as quick and widespread as Netflix’s, but Spotify’s story is just as insightful to understanding how businesses can expand. Let’s go through some key aspects that boosted their growth worldwide, making them one of the top music streaming services.
Meticulous Attention to Product Development
From the very start, the creators of Spotify – Daniel Ek and Martin Lorentzon, who hailed from Sweden – were adamant about perfecting their ideas into a solid product. The product development started in 2006, and instead of focusing on quick scaling, they took time to build the product with very close attention to detail. Right off the bat, they aimed to create a perfect user experience for music lovers. From 2006 to 2011, Spotify had not even reached ten countries in Europe. But all that time, they were constantly upgrading and improving the platform.
Partnerships and Collaborations
Spotify’s beta version garnered a massive response in Sweden because of one smart marketing decision – to collaborate with popular Swedish music bloggers. Their next big masterstroke was partnered with four big music labels – Warner Music, Universal, Sony, and EMI. These four labels offered their music catalogs to Spotify to be used outside the US in exchange for large portions of the company’s shares. Even when Spotify spread across Europe and finally entered the US, they established a partnership with big names like Reebok, Coca-Cola, and Chevrolet to run their ads on the freemium platform. All these factors were essential milestones to propel Spotify into the international market, and they all arose from partnerships and collaborations.
Lessons To Learn From Spotify’s Success
1. Value product development. It is much easier to market your product globally if it’s well developed and offers a great user experience. Rushing to launch your product in the market can backfire, so it’s better to take it slow but make sure that the end product is as close to perfect as possible.
2. Be willing to form beneficial partnerships. It’s a big decision to involve other parties as shareholders and get into business deals with other companies. But if done strategically, it can pave the way to the global market. If there are any reliable companies in the target countries that can help your business adapt and survive in their regional market, don’t hesitate to collaborate with them.
Social Media: Facebook
Mark Zuckerberg was a coding prodigy since an early age, but he chose to major in psychology at Harvard.
While there, he made a website called Facemash where students could rate each other’s pictures, but it was shut down in just a few days due to backlash because he didn’t acquire permission from the students to make their photos public. He even had to issue a public apology. The next year, he created Facebook (then named as Thefacebook).
Soon after, he was sued by co-students with whom he had collaborated on a project. The students claimed that the project was similar to Thefacebook and that Zuckerberg stole their ideas. The lawsuit went on for some years and was finally settled in 2008. Despite all these obstacles, Zuckerberg made a bold decision – he dropped out of Harvard in 2005 to fully work on Facebook, even hiring employees for his company.
One thing is clear from all of these events
Mark Zuckerberg had a plan, a goal, and the guts to take risks and make big decisions to make those plans come true. Facebook was initially limited to Harvard students, but the idea of this social platform was so innovative that in the first year itself, it spread to universities across the US and even crossed national borders right away, as students from Canada began to join as well.
With a full-time effort as the CEO of Facebook, the then 20-year old Zuckerberg raised a series of investments. By 2005, Facebook was open to universities in five more countries- Australia, New Zealand, the UK, Ireland, and Mexico. By 2006, a little more than two years of its inception, Facebook had gone global. And by October 2007, it had garnered 50 million users.
Do you think Netflix’s rapid expansion to nearly 200 countries in 7 years was impressive? Facebook did it better ten years before them! Innovation and the courage to take risks were significant factors in Facebook’s success, but Zuckerberg’s passion and vision were even more crucial. And he was more than willing to risk his education to pursue that vision.
Lessons To Learn From Facebook
- As already mentioned, an important thing to take away from Facebook’s success story is that you should be ready to take risks. International expansion is an enormous goal to achieve, and there will be many challenges. Having the courage to take risks can also bring huge rewards. You should also assess what can go wrong when making risky decisions and have a backup plan ready to minimize losses if things don’t go as planned.
- Have a clear game plan. Zuckerberg made some risky choices like dropping out of college because he had plans to develop his business.
We talked about market research and analysis in one of the previous points. Use that data and information from your research to formulate an action plan. Which countries should you target first? How will you set up your operations in those countries? Is it better to outsource or set up regional offices? Consider all these things to make a plan before you act.
- Innovate. If you have an innovative product or service and offer something unique that no one else does, it’s bound to be a hit in any market. But remember, what’s ‘innovative’ in one region may be ‘normal’ in other regions. Every country has a diverse set of consumers with varying preferences and interests. If you want to modify your product in some ways to make it more innovative, you must do so, keeping in mind the consumer behavior of your target region.
Technology and Electronics: Apple Inc.
We wouldn’t be doing justice to this article if we didn’t highlight one of the biggest companies to leave its mark in the global market successfully. Apple was founded in 1976 when it launched its first product, the Apple I computer. This single product was enough for the company to earn enough revenue to launch its second computer a year later – the Apple II.
Apple II was largely successful in pulling the company’s revenue for the next few years. However, the next two products – Apple III and Apple Lisa, did not enjoy the same commercial success. Then came the Macintosh in 1984, but that too didn’t bring in as much revenue as the company expected. And by this time, Apple was starting to face fierce competition from IBM. To make things worse, Steve Jobs departed from Apple and replaced John Sculley.
Sculley launched a wide range of electronic products during his tenure as the CEO of Apple. Most of those products performed well in the market, but there was another problem. Now Windows was taking over the market due to cheaper prices combined with powerful performance. After Sculley’s departure in 1993, two successive CEOs could not fight against Microsoft’s growing popularity. But things finally took a turn for good when Jobs returned to his position as CEO in 1997.
There had been significant technological advancements that enabled Jobs to launch a whole new range of digital electronic products by then. The first big hit came in the form of iMac, followed by the iPod, iPhone, iPad, iBook, and MacBook Air. These products were a perfect combination of user-friendliness, innovation, and sleek style and design.
Jobs’ Idea of Groundbreaking Products
The driving force behind the creation of these products was Jobs’ belief that groundbreaking products cannot be created by simply responding to customers’ demands. Giving people what they want was not enough. Jobs wanted to build products beyond consumers’ expectations and realize their value. And that is exactly what he did in his second run as the CEO of Apple. When iPod, iPhones, and iPad hit the market, people didn’t even know that these were products they were in need of. Within no time, Apple was a hit in the US.
Conquering the National Market before Going Global
Another excellent strategy implemented by Apple was establishing themselves in the US first before expanding globally. Even to this date, the US is still one of Apple’s biggest markets. Without achieving such widespread success in their home country, it wouldn’t be possible to conquer the global market for consumer electronics.
Smart Outsourcing Strategy
It’s no secret that Apple has massive manufacturing and assembly units in China. There have been contrasting opinions regarding Apple’s outsourcing strategy, but one thing is certain. By hiring cheaper labor overseas, Apple has significantly boosted its revenue. Their products already have higher profit margins, to begin with, and further cutting down production costs by outsourcing manpower has been a beneficial financial decision for the company.
Lessons to Learn From Apple Inc.
- Don’t just follow consumer demand. Create demand. You may study the market of a particular country and conclude that the market there doesn’t have a huge demand for the products and services you offer. But that doesn’t mean you should step back right away. Think outside the box. Perhaps you can create demand for something new or launch limited products as a test run to see how the local customers respond. Lack of consumer demand should not entirely stop you from entering new regions.
- Before expanding overseas, first focus on building your company’s brand value within your home country. When you have a large consumer base in your own region, it will help you generate constant, stable revenue. You can then use it to implement international expansion strategies.
- Take advantage of outsourcing. Due to economic differences, some countries offer the same quality and quantity of talented workforce at lower rates. And it’s not only about saving money. By outsourcing, you can also lower your own workload and be free to concentrate on your core business objectives.
Beverages: Coca-Cola and Red Bull
Pharmacist Dr. John Pemberton created Coca-Cola in 1886 as a syrup formula with medicinal properties. A year later, the formula was bought by Asa Candler, who put in extra effort into the marketing of the product, such as distributing a limited amount of free vouchers and installing soda fountains under the Coco-Cola brand name. In 1982, Candler established the Coca-Cola company, turning it into a national brand.
Candler sold the company to Ernest Woodruff in 1919. When his son Robert Woodruff took over in 1923, he expanded the product to other countries. The company and the product received global fame when Coca-Cola sponsored the 1928 Olympic Games. The effort towards international expansion was further boosted when the beverage was in high demand among US soldiers stationed overseas during World War II in the 1940s.
Then onwards, Coca-Cola spread across many countries where it established bottling plants while maintaining the drink’s primary formula. It is one of the most popular global beverage brands, selling a wide range of products in over 200 countries. Here are some of the key factors behind Coca-Cola’s international success.
Branding through Emotions
Coca-Cola created its brand identity through its products and infused emotions in its marketing campaigns. Slogans such as ‘Open Happiness’ and advertising campaigns such as ‘I’d like to buy the world a Coke’ were largely successful in evoking positive emotions among audiences. It was not just a mere beverage but a symbol of lovely sentiments, owing to its clever branding and marketing approach.
A series of innovative ad campaigns in various countries often showed happy and cheerful people drinking Coke. It resonated well with consumers all around the world. People started to perceive it as a refreshing drink. Consistent smart advertising was crucial to significantly increasing the demand and sale of Coca-Cola worldwide. In recent times, the company also actively uses social media platforms to connect with consumers, which positively impacts their brand value.
Red Bull energy drink originated in Austria in 1984. The initial years were challenging and the exact opposite of what one would expect from a successful business. Other beverage companies and food authorities viewed it as a potentially harmful drink, even prohibiting its marketing efforts in many locations. Red Bull was even banned in a few countries, such as France and Hungary.
Despite a rough start, the founder of Red Bull, Dietrich Mateschitz, was consistent in his marketing efforts. His persistence and dedication resulted from his experience as a marketing manager. From facing bans and restrictions to becoming a global brand in more than 150 countries, here’s what propelled the international expansion of Red Bull.
Consistent Marketing Efforts
Apart from his own investments, Mateschitz even took a loan just to keep on promoting the product and the company; his consistency eventually paid off, as the energy drink slowly made its mark, mostly in demand among partygoers. It wasn’t easy to keep promoting the company with numerous restrictions right from the start. The strong will to be consistent with marketing efforts against all odds was crucial for Red Bull to break through and become a global brand finally.
Red Bull didn’t just expand their products and reach in different countries. It also expanded its business operations. The energy drink was not its only highlight. The company collaborated with various sporting events and even organized its own events in extreme sports. Their willingness to grow and expand as a brand helped them gain immense global exposure and popularity.
Lessons to learn from Coca-Cola and Red Bull’s globalization journey:
- A key takeaway from Coca-Cola is that businesses should work on their branding and not just focus on the end product. Associating pleasant and cheerful emotions with your product will make the audience receptive and less skeptical.
- Coca-Cola’s global success also highlights the vital role of good marketing and advertising. Creative ads and marketing efforts can help your business attract many customers in different countries.
- Dare to recreate your brand. Don’t be rigid. Red Bull did the same – though the primary products were energy drinks, they associated with sports events to establish their brand’s identity. If your products and services don’t fit into a specific country’s market, don’t hesitate to reinvent your business model.
- Be persistent in the face of challenges. Most people would have given up if they faced the same level of obstacles and failures as Red Bull. But the company has come a long way since becoming a global brand only because Mateschitz stood firm through the thick and thin and carried on promoting the products. Had he not been persistent, perhaps Red Bull would simply become a name in the past. Global expansion of a business is never going to be easy. How you respond to the obstacles along the way will determine whether the result will be positive or failure.
Studying these five successful global brands offer us valuable insights and lessons for international business expansion. These companies underwent different journeys and applied varying strategies to break into the international market. You may not be able to replicate all these strategies at once for your business. Still, these insights will undoubtedly provide enough motivation and innovative ideas for global expansion applicable to your business.
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