Why should my business consider International Expansion?

If you are serious about building a substantial business you should benchmark your progress against global industry peers not just your local competition.

You will soon find that the world offers the opportunity to build truly global businesses on a scale that your domestic population alone just cannot match.

A franchise network spanning multiple countries offers better diversification and insulation from local economic or competitive forces and early access to high-growth markets. It also provides multiple parallel growth paths to drive enterprise value.

For example, Outback Steakhouse, like many QSR businesses in the United States, is currently seeing soft sales in their home market but its South Korean operation is thriving. Its International operations in multiple countries are adding more units to the network than the US market alone could generate, thus driving revenues and profits well beyond that which its home market could deliver.

UK sandwich and coffee operator Prêt a Mange has developed its London based business model to facilitate expansion into to the US and now feeds hungry New York residents from a multi-store base which it plans to expand across America.

Gloria Jeans Coffees are approaching the maximum number of stores Australia can sustain for them but with Gloria Jeans beachhead stores now established in over 20 countries there will soon be more of their coffee shops overseas than in their home market.

In tiny domestic markets like Australia which represents less than 2% of the world’s economy, Subway may only be able to reach 1000 units before saturation but its growth in China may mean there will be more stores in Asia than the rest of the world by 2015.

A further example in Australia is the Boost Juice network which had reached saturation with maximum store numbers in this county of just 20 Million people. It had a choice of managing a maturing business simply maintaining static store numbers and sales of around $100 Million in one country or looking overseas for growth. Boost Juice Bars can now be found in Indonesia, Singapore, Malaysia, Thailand, Hong Kong, Macau, Kuwait, Chile, Brazil, South Africa, the UK, Estonia and Portugal with more countries coming on-line as a result of a well developed and executed International franchise program.

International expansion is not just confined to the foodservice business. Many retailers from body care retailer Body Shop, hairdresser Toni & Guy, and child development franchise Helen O’Grady’s Children’s Drama Academy are just a few of the hundreds of retail and service businesses who now have multi-country global networks.

Even franchised businesses located in major markets like the United States need to develop a global outlook as competitive pressures impact growth, the domestic economy slows and the future global growth opportunities are shifting to China, Brazil, Russia and India where franchising is a newly emerging opportunity for both domestic and foreign franchisors.

The reward for a multinational player that has successfully executed an international growth strategy is significant growth in enterprise value.

Whether your franchised or company-owned network is located in Europe, North or South America, Africa, Australia or Asia, a global strategy needs to be considers earlier rather than later in your domestic growth phase.

You may feel the development of a global business strategy should be delayed or is too complex and overwhelming but with the right advice and a staged approach to developing the strategy, structure, economics and commercial policies needed to plan a successful international network you too can adopt a “born global” attitude that will allow your business to join the hundreds of franchise systems now operating in foreign markets.

If you want to explore the opportunities international expansion offers, contact us to learn how we have assisted our clients to create global brands.