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Strategist and Consultant Alison Larson on the Common Pitfalls of Going Global

Strategist and Consultant Alison Larson on the Common Pitfalls of Going Global

23 September 2015
Author: Alison Larson

Expanding your business beyond your home borders can be a great way of building brand equity, increasing your market share, and growing your company's bottom line. However, this dream can quickly become a nightmare for those companies that are inexperienced, impatient or unprepared for the challenges that lie ahead.

Unfortunately, many companies new to international expansion will make the same mistakes and suffer the same consequences as those companies before them that have ventured overseas and failed miserably.  Don't make the same mistakes!!  Learn from the lessons of others!

In 25 years of doing international business, I have discovered five major reasons why fashion brands often fail overseas:

Reason One: Being Blinded By Love for Your Product

Companies can sometimes be blinded by the success of the business that they are doing at home and assume that their product will meet with the same reaction around the world. This belief may cause them to skimp on the research and/or dismiss the possibility that adaptations may need to be made in order to better suit the consumer or conditions of the market that they are targeting.

Consumers vary radically from country to country.  Depending on the market, your product may be perfect as it is, or it may need tweaking. Even if the product itself is fine, the packaging and/or marketing materials may need to be tailored to suit your new target market.

Solution: Do thorough market research and make sure that there is a real demand for your product. Ensure that your pricing works given your product costs, duties, distribution structure and competitive landscape of the country.  Is there a need for your product? Do you have a unique selling point?  Successful international brands have an excellent understanding of the country's local competitive environment and consumer buying behaviours as well as the country's legal and logistical structures.

Reason Two: Moving Too Fast

Many brands go international by accident and tend to rush into partnerships too quickly. Don’t settle for the first company that approaches you just because they promise big numbers! Developing aggressive business plans is easy, realising them is another story.

Solution: Take your time and move slowly. Check references carefully and do credit checks. Beware the company that wants to move forward too quickly. It takes time and patience to build an enduring global brand, so plan for the long term. Don't chase a quick sale!

Reason Three: Going After ‘Hot', Complicated Markets

Companies with little international exposure are often hell-bent on chasing the country of the moment. Countries like Brazil, China, Russia and India often make headlines for their huge populations and the continued growth of their middle class.

These markets do have enormous potential but are also complicated due to complex import structures, unstable governments, a radically different consumer, strong local competition and/or poor infrastructure, to name a few factors. There is a reason why these markets remain largely untapped!

Solution: Again, do your research. Make sure that you truly understand the environment that you are entering, taking everything from the tax laws to the consumer into account. Also keep in mind that a ‘boom’ is often temporary and these markets can quickly become out of favour as 'cracks' begin to emerge.

Initially, consider markets more similar to your own or explore e-commerce as a starting point. In complicated markets, it is important to get a feel for the desirability of your product and the logistical challenges that you might encounter before going 'all in'. 

Reason Four: Lack of Cultural Awareness

A country's culture is one of the things that many company executives take for granted when entering international markets. They fail to hire people experienced in that market or train their employees in the cultural nuances of that country.

Cultural misunderstandings and communication breakdowns can stop deals from ever getting off the ground. Even if a deal is made, the failure to understand cultural differences can hurt your brand and hinder long-term success.

Solution: Make cross cultural training of your staff a key component when developing your international expansion strategy. Consider hiring an experienced negotiator who understands the cultural profile of your counterpart and can assist you in negotiation.

If you are placing an expat in a new market, make sure that he/she has experience in that country and is willing to work alongside a local team. While they may well be your eyes and ears and help maintain your brand’s core values, the local manager will have the connections, experience and knowledge to make the business work.

Reason Five: Expanding for the Wrong Reasons

When a company's revenue, profit and/or market share begins to drop in one’s home market, a common response is to expand internationally.  While in some cases, this may be the right strategy, often, companies do not want to face the hard truth that there may be cracks in their business or brand that need to be addressed.

Truth be told, being successful overseas is often far more difficult than being successful at home. 

While going international seems like a quick fix, your problems tend to be magnified in overseas markets and can lead to disaster.  Consider also that consumers and retailers are drawn to strong, successful brands - not those struggling in their own domestic markets!

Solution: Make sure business is good at home before venturing overseas. Your chances of success in international markets will be greatly increased if your brand is strong and growing in your domestic market. International expansion is not the solution for fixing a broken business. Address your problems first and then you'll be ready to reap the rewards that international expansion can bring!!

If you need guidance in launching or more fully developing your fashion brand overseas or are struggling with your current international business, please contact Alison Larson (alarson@worldblazer.com/contact) of WorldBlazer Consulting LLC (www.worldblazer.com) in order to schedule a FREE consultation.

Alison G Larson has 25+ years of experience in launching and developing fashion businesses in over 40 markets around the world. She works with apparel, accessory and other fashion-related companies looking to expand or more fully develop their brands or businesses in overseas markets.

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