In the early stages of expanding your business internationally, you’ll be faced with a number of important decisions. One of the most significant is choosing a market for your global growth. But before you can narrow your expansion down to a specific country or region, you need to decide what type of market is best for your business. Both emerging markets and developed markets offer distinct opportunities, as well as potential pitfalls – here’s how to weigh the pros and cons of both, so you can determine the right market for your international expansion.
Consider What You Provide
First, you must reflect on the product or service you are bringing to the market. Is there a place for your business within an emerging market, or do you need the established structure of a developed market to thrive? If you run a business selling smartphone accessories, it won’t be of any use in an emerging market where few people use smartphones to begin with. In this case, a developed market would make more sense. However, if your business would benefit people in emerging markets and faces heavy competition in developed markets, then choosing the less saturated emerging region could be the wiser choice.
Think About the Resources You Need
Similarly, you must take into account what infrastructure you require to get your business off the ground, and if the market can support it. Do you rely on social media to reach new customers, or can you use word of mouth to popularise your products or services? Research demonstrates that consumers in emerging markets are more likely to rely on word of mouth recommendations for their purchases, while developed market consumers look to digital forms. Therefore, a business that leans heavily on digital marketing might want to think twice about entering an emerging market.
This consideration applies to physical resources as well as technology. If you have to manufacture a product, would an emerging market have the systems in place to do so? Would you have to allot part of your budget to building facilities or shipping your products in from another location? Your business’s requirements can largely determine the markets you’re able to expand to.
Size Up the Risk
Any time you’re doing business abroad, you’re bound to encounter some degree of risk, both due to the nature of the market and your particular industry and circumstances. Emerging markets are typically associated with political instability and deeply rooted economic challenges. While these risks are undoubtedly still present, developed markets are facing similar problems, though perhaps to a lesser degree. In terms of your individual situation, you need to figure out whether you have the means to absorb any financial losses you may face in either a volatile emerging market or a highly competitive developed one.
The choice between expanding to an emerging or a developed market is a complex one, but the experts at Galvin International have the in-depth knowledge to help you decide. Not only do we analyse your business and select the best regions and countries for your expansion, but we offer compliance services to ensure that your business thrives once it’s established abroad. Get in touch with us today to discover how your company can conquer global growth.