How to Find International Customers and Partners as Your Expand Your Market Building relationships is the key to new opportunities.
By Parwinder Singh Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
As companies expand beyond their core market, they need to create new relationships with consumers, partners, and firms operating in other countries as well as develop a deeper understanding of culture and business practices in international markets.
It is important because they allow businesses to access all kinds of resources that can enhance competitiveness, such as technology transfer or knowledge sharing. It also allows businesses to identify and use new opportunities. In addition, it may be critical in order to reduce the risk of entry and enable venturers to achieve a sustainable competitive advantage in the country of expansion.
Related: 8 Mandates For Growth
However, research shows that firms tend to underestimate the cost of creating new relationships, especially when they operate in foreign markets. This is because they focus on developing strategic-level relationships which are considered "high touch" and require intensive investment both in terms of time and resources. However, it is important for companies to understand that initial efforts to develop strategic-level relationships should not be at the expense of developing other types of relationships.
The idea of using relationship assets to provide a competitive advantage in international expansion is not new. Relationship management has been used by both multinational firms and smaller start-ups for decades to increase their effectiveness when outside their base country. However, recent studies show that companies who pay attention to these relationships often outperform those who do not. Here are some strategies you can put into work while internationalizing your business.
A bridge for understanding
Relationship assets create a bridge between the incoming and outgoing cultures, as they provide a common ground for communication between them. For example, Companies shifting from a local to a global market may have to compete with similar product brands. Although the business is successful in its home country, this doesn't mean that relevant marketing would help create a loyal consumer base elsewhere. Many companies scaling their business from Europe try to utilize the power of relationship assets to familiarize their product in unknown marketplaces. Amazon, one of the most popular online marketplaces eliminates the requirement for direct contact with the consumer and hence, provides a much smoother experience for transition. The real point is that an intermediary company can provide closer contact between companies than would be possible if the closing deal was done directly, which means it can offer solutions to any potential problems much more effectively than an unsatisfactory сommunication.
Resources to eliminate challenges
In a globalizing market, companies need to adjust their strategies, organizational structure, and performance measurement systems to meet customers' increasing demands for local responsiveness. These adjustments often require managers to shift how they view the firm's operations, markets, products, and services. Relationship assets are particularly useful for internationalization because they consist of a set of specialized resources that can be flexibly used in foreign markets and cross-border alliances with companies operating in different countries or regions. For eg, a leading fashion retailer can leverage its relationships with designers and celebrities, information on trends and consumer behavior, country-specific buying power data, distribution channels (e.g., wholesalers), and retail outlets.
Related: How to Gauge Marketing Success in a Shifting Business Landscape
BRC: Borrowed Relationship Capital
Borrowed relationship capital is a key asset for international presence. It is the best strategy for entry into new markets, particularly those with high barriers to entry. Borrowed relationship capital includes the value from network members' experience with similar companies in different countries, which helps businesses better understand the competitive environment in a foreign country. For example, a local company that is involved in automotive production will have a hard time accommodating in a foreign market where OEM has created a comprehensive Tier 1 supplier base. In order to engage with them, small suppliers use other Tier 1 subsidiaries or Tier 2 companies to gain access to the network.
Winning the market
Besides, the internationalization strategy is an opportunity to use the existing relationships with other companies with a strategic objective. For these kinds of opportunities, you need to ask yourself if you should bid for a new contract or try to form a partnership. You will have to look closely at how much it costs and whether the relationship capital gained from this engagement will be sufficient or sufficient enough.
In order to create a beneficial network and convert it into a relationship asset, you must have the following:
• A strong relationship with your partners
• The ability to influence the behavior of other market players
• To maintain a sustainable positive reputation in the international market
• The ability to invest resources to build and maintain relationships
Building reputation
The globalization process is the most profound and far-reaching. It is an ongoing and dynamic way to create a new organization. It leads to the development of a new global strategy and a new business vision, which often involves changing processes, products range, organizational structure, management system, etc. The characteristics of the global strategy are based on relationships with partners that can help you establish a positive reputation in foreign markets as well as provide resources for global growth. For example, when Walmart tried to enter the Indian Market, it wasn't successful. It then decided to launch Flipkart, a website that sells all kinds of merchandise, ranging from consumer electronics to food and medicine. Flipkart has been successful in India because it has partnerships with a local company, Myntra (which makes women's apparel), and an e-commerce company; Snapdeal.
To conclude, the importance of relationship assets during international expansion cannot be overemphasized. Doing so will lead to a smooth transition and reduce the risks associated with doing business in new countries. The success of your business enterprise is dependent on the people you are working with in the foreign country. You must be sure that they are committed and reliable enough to help you achieve your long-term international growth goals.
