In late 2011, American electronics retail giant Best Buy pulled out of the United Kingdom, where it once had a vision of market dominance. It closed its 11 stores, wrote off almost $2B, and went home to Minnesota to lick the wounds of a failed go-global strategy.
History suggests Best Buy’s retreat is a common outcome.
Deciding when, where, how and even whether to expand a business across international borders is one of the highest stakes decisions Boards and CEO’s will ever make. For a small-to-medium business, experiencing growing success in their domestic market, arriving at an informed decision can seem daunting.
After all, if the biggest companies often don’t get it right – what chance do the rest of us have?
While there is no shortcut to doing your homework and being prepared, Sibyl’s framework is a tool to organise the information you do have and to figure out what you don’t know. Most importantly, it’s designed to prevent you from eternally spinning the research hamster wheel of indecision by focusing on drawing actionable insights from your data.
Step 1 – Research & Analysis
The structure below needs to be contextualised to a business using it, but is a good framework for organising your research.
Maybe the least intuitive is the first step: defining how to slice and dice the opportunity. For many companies, that’s going to be on a country-by-country basis, or maybe by region. But if your business model requires scaling a dense, hyper-local network, London and Paris might be a more suitable target cluster than the UK.
Various buckets of research are combined into a single analysis tool that helps identify the best international market clusters along the vectors of addressable market size, ease of entry, and product-market fit.
The goal is pretty simple: to choose one (or more) expansion targets to start getting serious about.
Step 2 – Stress-Testing Your Readiness
Maybe until this point, a CFO or a VP of International have been doing most of the leg work. By primarily looking outside the company, they’ve determined the Venezuelan market for toothpicks is the opportunity to propel your business into next year’s Fortune 100 list.
Now, it’s time to deep-dive and self-assess- with your extended leadership team. How ready you are in each key operational activity required to be successful. It also means speaking with actual customers, distributors, and partners to understand the target market on a more nuanced level than in the previous step.
To prevent over-investment, two levels of readiness are plotted on an abstract linear scale: the minimum you can get away with to be viable testing a market, and a “sweet spot” where you’re operating at close to full commercial potential.
From there, you can build out an action plan, timeline & budget for each step needed to get you from where you are to where you need to be. That detailed planning informs your financial models to take to the Board.
Or, maybe, to realise it’s all a terrible idea.
Sibyl Entertainment is a boutique strategic advisory for the entertainment & technology industries. Feel free to reach out to us at sales@SibylEntertainment.com to say hello and explore how we can help.