How you succeed with your international expansion

Besides being world-famous brands, do you know what Walmart, Starbucks and Tesco have in common?

They have all failed in their global expansion.

The US big box retailer Walmart failed to consider cultural differences when the company opened its shop in Germany in 1997. In 2006, Walmart said “Auf Wiedersehen” and left Germany at the cost of USD 1 billion.

The US coffee chain Starbuck's expansion to Australia in 2000 turned out to be a coffee nightmare rather than a fairytale – mainly because the Australians found the coffee too expensive. In 2008, Starbucks closed its 61 stores and reported a loss of USD 143 million.

In 2007, the UK-based grocery chain Tesco went for the American dream. But convincing American consumers to buy fresh supermarket meals was too hard. In 2012, Tesco closed its 200 stores on the west coast. The cost of the failure? Nearly USD 1.8 million.

We have asked:

• Anne Gretland, CEO of Fotoware and Chairman at Smartminds
• Frederik Murmann, Co-Founder of LendMe
  
• Bo Møller, Danish Entrepreneur & Founder of companies like Twentyfour, ResOS and EasyPractice 

... to share the most valuable lessons learned during their international expansion by answering these questions: 

1. How did you prepare your company for international expansion?
2. What are your top 3 tips for other companies expanding to international markets concerning digitalisation and business processes?
3. What do you see as the biggest challenges of international expansion?
4. How do you create an overview of your company's resources and finances cross-border?
   
   

"Including your employees in your internationalisation process is vital"

How did you prepare your company for international expansion?

We wanted to expand by specifically acquiring companies that could add new knowledge and skills to our team while adding valuable technical expertise to our product portfolio.

Customer case: How Symetri benefits from using TimeLog across countries

What are your top 3 tips for other companies expanding to international markets concerning digitalisation and business processes?

1. Be compliant with customer data and GDPR

Get the right internal tools for customer data and support/account management flow immediately.

It is also essential to ensure you are compliant regarding customer data and GDPR - this needs to be consistent across the entire company/companies to ensure all local laws and regulations are being followed and that customers can be sure you are compliant in every way.

2. Prioritise security in every aspect of the company

Security is essential. You must ensure everyone gets the proper training and understanding of security on every level and in every aspect of the business.

In FotoWare, we are ISO-certified and follow a structure related to internal and external processes, including technical, business, and workflow security.

3. Communication is key

Use standard internal business tools and internal communication platforms. Being in different countries and having employees from many cultures requires frequent and consistent communication and information sharing. Everybody must get the same overall information no matter what part of their business.

What do you see as the biggest challenges of international expansion?

Despite many companies working across borders these days, and even though most of us as consumers buy goods and services from across the world, most countries still have a strong local culture for their country and their ways of doing things. Even a local sense of humour, for instance!

It is essential to understand and be open to other cultures and to be inclusive of things like humour and way of work. “This is the way we do it here”.

Respect, inclusion, and two-way communication are key for everyone who works and does business internationally.

How do you create an overview of your company's resources and finances cross-border?

We have always had employees in different countries. We are used to doing digital all-hands every quarter, as well as having our overall goals, vision, and KPIs visible for all to see on the company-shared spaces in Confluence.

With employees in 10 different countries, we are mindful of the need to communicate broadly and keep information updated. We use Slack to post information about new customer wins, the status of financial numbers, and releases.

You might also like: "5 tips - How to prevent your IT system from slowing your global expansion."

We also send welcome emails about every new employee, with information about the employee and the role, so everyone can get to know them, even if it’s digitally at first.

"You need to have your business case in place first" 

How did you prepare your company for international expansion?

For me, every action you make in a company should be based on reasonable assumptions and business cases that make sense. It might sound boring and not like a true entrepreneur, but it is the recipe for success.

We spent – what others would probably describe as an unproportionate amount of time - making a thorough business case before launching LendMe. It took time, but it also allowed us to plan to make plans two or three steps down the line that made sure we focused on the most important things when we got going.

The same principle still applies to me today, whether I am launching a new product or expanding to other countries. So the short answer is that we made a business case we believed in and showed it was worth the while, and then we executed it.

What are your top 3 tips for other companies expanding to international markets concerning digitalisation and business processes?

Rules 1, 2 and 3 are “Never assume that what works in one country automatically works the same way or just as well in another country.”

Always look at international expansions as starting something new and revisit all assumptions as even the most subtle differences can make your product or service unsellable, even though we think that our neighbours must think and act just like us. The devil is in the details, and I have seen the mistake made so many times in my career.

Frederik Murmann

Co-Founder of LendMe

What do you see as the biggest challenges of international expansion?

People do not use enough time on bullets 1 and 2 above but start running. Secondly, never underestimate how much time you spend on expansion, which takes time away from your existing markets that may/will suffer.

How do you create an overview of your company's cross-border resources and finances?

The initial overview is made by creating a well-worked business case/plan. Once you have expanded, it is about ensuring you have the same reporting and KPI structure and that your accountant and bookkeeper help you build a similar system in all countries.

Learn more about how you can extract reports in TimeLog where the performance of all your legal entities is collated.

"A marketing-led analysis will give you the best start to your global expansion."

How did you prepare your company for international expansion?

I have been involved in working on global expansion for multiple companies. The strategy for internationalisation that I am most fond of is simply conducting a "marketing-led analysis" of potential international markets.

Instead of spending a lot of time analysing various markets, I am often in favour of selecting f.ex. 10 or 20 markets and simply start marketing to these markets without having an actual presence there.

Bo Møller

Danish software entrepreneur & Founder of companies like TwentyFour, Resos and EasyPractice

When we launched EasyPractice outside of Denmark and resOS.com outside of Denmark, we also followed this strategy. Launching international marketing and evaluating the results after a few months is highly effective.

What are your top 3 tips for other companies expanding to international markets concerning digitalisation and business processes?

1. Keep it simple in the beginning

There is no reason to open an office abroad before knowing if the market can be penetrated.

2. If you're selling something digital, you can open several international markets at once and close down the least effective ones.

Do this.

3. Develop a "minimum viable internationalisation strategy", as execution is king.

Doing a lot of analysis can be expensive and inefficient. Let your marketing or sales strategy be the analysis.

What do you see as the biggest challenges of international expansion?

I believe companies set up too many boundaries for themselves by seeing many potential challenges that might not exist. The biggest challenge of internationalisation is within oneself.

How do you create an overview of your company's cross-border resources and finances?