Exit Strategies and Their Impact Entering new market always poses risks. However, a well-structured go-to-market strategy can minimize risks in a new area. This guide aims to help companies develop a data-driven go-to-market strategy that can mitigate potential expansion risks. Simply put, a go-to-market strategy is a planned system for distributing and delivering goods and services to a new target market. This includes communicating your marketing messages and brand values A go-to-market strategy aims to achieve product-market fit in a specific region or niche and establish your company’s presence in the target market.
Many companies seek to expand into new markets to achieve brand recognition, increased sales, and business stability. For these companies, developing a good go-to-market strategy is essential. This is precisely what we will cover in this guide. Expanding a company into new markets carries a similar type of risk as opening a new business. It requires detailed strategic planning, and results do not occur randomly or suddenly. Before committing to expanding your business, your entire team needs to be on the same page as your company’s journey into a new international landscape.
What is an exit strategy in business?
To begin the process, start by addressing the following points Goal alignment. Before making strategic decisions, ask yourself this question: What do I want to achieve with global expansion Be specific when it comes to your ultimate goals and make sure they are measurable. Internal capabilities. You must seriously consider the capabilities necessary for success in international markets. Do you need to invest in new infrastructure? How much will it cost? Do you have an additional budget for expansion Human resources. Think carefully about the current state of this area in your company and consider any staffing gaps you may have.
Ask yourself Do I have the staff I need to manage the expansion Can my existing teams allocate time for global projects? Do I need to hire new professionals or contract with an external agency Optimal timing. Last but not least, determine the best time to expand. This factor involves a careful analysis of the target market, its current political climate, the global economy, among other factors. You must assess your product’s positioning in the current market (and region) before beginning to evaluate a new market for expansion.
Different business exit strategies with pros and cons
When developing a go-to-market strategy, your task is to research your ideal future customers in detail and estimate potential demand You can analyze your potential market with SEMrush’s Market Explorer tool. This way, you’ll understand if there’s enough demand for you in the region and whether it’s worth exploring these options further. You can obtain relevant results with this tool without lengthy and costly market research To start, you can use your domain or choose one of your potential competitors who are already present in your target market. Don’t forget to choose a target country.
The first thing to pay attention to is the market’s traffic from the previous year. If traffic is decreasing, this indicates that the market may be less attractive for business. If the market’s traffic is growing, this may be a good option for investment and development for your company. Carefully assess the state of the economy in your chosen region to see if it’s a good fit. Starbucks has gained many foreign markets but has been unable to replicate this success in Australia. First, it began entering the market without fully understanding potential customers.
Disadvantages of management and employee buyouts
Starbucks began promoting coffee as a product, but for Australians, going to a coffee shop was a social experience, more than just a “fast food” location. Furthermore, the company failed to understand Australian coffee preferences: Starbucks coffee was simply too sweet for their taste. Second, the economic situation played a crucial role in slowing Starbucks’ expansion in Australia. As a result of the 2008 global recession, the company was forced to close two-thirds of its stores in that country, as the purchasing power of potential customers in the new market had been affected.
Starbucks had enough financial resources to stay afloat, but not all brands can survive in such a scenario. Even big brands can struggle when it comes to local laws. For example, when Uber attempted to expand into South Korea, many assumed they would be successful. After all, the company had well-established markets in many nations. To control a location’s business climate, you also need a good understanding of local politics. Some markets may not be as attractive due to an unfavorable political climate or general instability.
Conclusion
In business, this is reflected in the PEST (ELI) analysis, which the global business community generally refers to when it comes to market expansion. Let’s examine WhatsApp’s expansion in Germany. WhatsApp successfully acquired 1.2 billion users worldwide. But before expanding to Germany, they failed to translate their terms of use into German. As a consequence, the German Federation of Consumer Organizations filed a suit against the company claiming that the technical language was largely incomprehensible to German users. A small oversight cost the company over a quarter of a million euros.
A smaller brand likely wouldn’t have overcome this challenge unscathed. Look at factors like the average amount of disposable income residents have. If the margin is too low, residents may not be able to afford your products. Last but not least, geographical realities, such as reverse seasons between the Northern and Southern Hemispheres, can have a major impact on consumer demand. Cultural differences are a potential obstacle when developing a go-to-market strategy. Not all potential markets have the same consumer behavior patterns.
