International expansion can represent enormous opportunity for brands. Consider Yum China, previously part of Yum!, which was successfully spun off in 2016 and now has a market capitalization of more than $17 billion. However, expanding internationally also has its challenges, and enjoying sustainable success outside of your home country is increasingly difficult.
Operationally, international expansion requires a different approach to logistics, labor and accounting, among other things. Beyond these operating challenges, though, is the challenge of how to "win" with consumers internationally. Today's consumers are more nationalistic and foreign brands have less appeal than they have historically. In addition, local competition is often comparable in quality with international brands, and they "win" in terms of speed to market and local relevance.
FIND YOUR GLOCAL BALANCE
A great example is Luckin Coffee, founded in 2017, with stated ambitions to open 2,500 cafes in China this year and surpass Starbucks in total number of outlets. To compete successfully in international markets, brands have to learn how to be "Glocal," and find the right balance between global standardization and local differentiation.
Finding this balance is not easy and requires regular course corrections as an organization grows internationally and its business ambitions evolve. The most important requirement, however, is to be proactive and thoughtful in determining what level of balance gives your brand the best competitive advantage. To do this successfully, follow these four steps:
Define your ambition for the business.
Be clear on your brand positioning and determine the level of acceptable customization.
Create clear brand guidelines and operating standards.
Establish a process for allowing local adaptation.
While it is difficult to predict how successful your brand will be internationally, it is important to establish what success looks like because your ambition should drive your strategy. For example, if your ambition is to capture significant market share across multiple markets, you will need a more differentiated approach and local organizations to help deliver this ambition.
Conversely, if your ambition is to enjoy targeted success in a few markets, then the strategy should be global standardization leveraging a centralized organizational structure. For example, Outback Steakhouse has significant market share and restaurant...