Globalization has been on the upward surge especially in the late twentieth century into
this twenty first century prompting any business ambitious enough to venture into
expanding across regions and even countries. Expansion of a business can simply be
viewed as implementing a strategy to increasing the products and/or services the
company provides into new geographical regions. It is important for any company to
work out a good plan before expanding into new regions because the chances of failure
and success depend on how well they prepared for it. According to the Latitude study of
74 international expansions, 33% of geographic expansions are not in existence two years
later and only 31% are profitable (Jean, 2002) .
Before expanding out into a new region, like any other new venture it is most
important to prepare the company for the expansion. this means ensuring first that the
company is in order to be able to accommodate such an expansion in terms of funding
available to finance the expansion. Also determining where the factors of production, that
is, land, manpower and capital will be sourced from. Even as important would be
designing a business model that will easily cut across into the new geographical region
and accommodate the expected new team. This model should also outline the order and
manner of how decisions will be made for clarity and accountability because one of the
major problems to be expected is the information flow from the head office to those
who have a better view of how things are on ground in the new regions.
After making adequate preparations, it is now vital to decide on the most
appropriate region or country to move to (Cavusgil, Knight, & Riesenberger, 2012) . An
array of factors should be considered before making this decision. The company should
BUSINESS EXPANSION INTO NEW REGION
consider among many, the good and/or service they provide for example it would be very
unwise to take a casino into a Muslim-occupied region owing to the fact that the
prevalent religion of the occupants there does not allow gambling. Moreover, consider
how big the market will be, how many contacts they have in the new region among
others in a long list of considerations.
With all this information on the target region gathered and all the pros and cons
weighed, the company should now prepare the target region for entry. This means,
informing the potential buyers of what good or service they intend to bring to the
market and even carry out field researches to get the opinions and reactions of these
very same potential buyers. In addition, the company should also do recruitment of
qualified locals in the target as a sign of good faith to help in their attempts of winning
over the buyers. In the case where very few of the locals would be qualified for that
new line of work, the company could offer some training or export some of its current
recruits who have a good awareness about the culture in the new region. After warming
up to the new market it is then important to ensure a commitment by focusing on one
region at a time. This means making the business a success in one region before moving
to the next one.
The process of expansion of a business into a new region has its many
challenges. From seen challenges like financial constraints in funding the expansion to
unforeseen ones like sudden political instability in the target region. Most of the regions
that are open to new businesses expanding in their lands are usually under developed.
This makes it the more challenging because such regions are characterized by cultural
BUSINESS EXPANSION INTO NEW REGION
ways and beliefs that may become problematic and even uncertainty of the future in
both the economic and social platform. However, these risks and challenges are worth the
successes they promise.
Cavusgil, T., Knight, G., & Riesenberger, J. (2012). International business: The new realities
(2nd Edition ed.). New Jersey: Prentice Hall.
Jean, M. (2002). Organic growth cost-effective business expansion from within. Wiley.