The key to global success? Embrace local differences
The NCR story dates back to the 1880s in Dayton, Ohio, with a single product: the cash register. It was invented by James and John Ritty as a way to manage and monitor sales within stores. In 1884, the National Cash Register Company became the first maker of mechanical, self-adding registers. Just one year later, the machines traveled across the Atlantic and were adapted to handle English currency. With that, NCR secured their first international agent in Liverpool, England.
NCR’s journey as an organization is one characterized by growth and adaptation to customer needs shaped by geography, culture, markets and historic events. From its modest beginnings in Dayton to a multi-national corporation with over 34,000 employees in 160 countries, a key to NCR’s success is understanding and embracing local differences.
Whether expanding geographically or into different markets, companies must understand their new customers’ needs and the local dynamics within which they exist.
Understand your new market
Before moving operations into a new market, an organization needs to take the time to understand the area’s nuances and characteristics. Adopting a cookie-cutter approach to growth and believing that what worked in one market, region or country will automatically work in another is risky and won’t work very often.
Study the local environment
An important way to understand how a market works is to understand the reality in which it exists. This could be a region’s political landscape or its business context. Very often, the two are inextricably linked. Some countries might have incentives in place to welcome foreign business, such as favorable tax rates. Other countries’ bureaucratic processes make them notoriously difficult for organizations to set up shop there.
Gao Zhiwen was the head of operations of Toray Industries in Nantong in the 1990s when the Japanese company expanded its operations to China. Now director and vice president of the company, Zhiwen attributes the success Toray has had in China largely due to their expansion strategy, which focused on studying and understanding the local context.
At the time, China was not part of the World Trade Organization (WTO), and “the level of technology at midstream and downstream manufacturers was still relatively low,” according to Zhiwen. Worried that Toray was not in tune with the needs of Chinese customers, Zhiwen proposed a set of reforms centered around working in harmony with the local market. This included more use of locally produced materials and the streamlining of Toray’s logistics operations.
Zhiwen believes that this approach has contributed to the fact that today, “Toray Nantong’s textile business is stronger than ever.” Since March 2021, Toray has invested around 20.1 billion RMB Facilities in the country, employing nearly 10,000 people.
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Embrace and explore customer needs and cultural nuances
Market research is a crucial early step in any organization’s expansion. Find ways to listen to your potential customers to understand their needs and their pain points. This way, you can understand how your products fit into their lifestyle.
“You need to listen to and cater to the needs [of your customers] wherever you have a footprint. As you are thinking about expansion, there probably needs to be some validation to see whether these needs are similar to other pieces of your customer base and whether you have the offerings to accommodate them or not.”
Daniel Herrmann - Executive Director, Product Strategy & Customer Insights at NCR Corporation
Apart from understanding how your offerings can address the particular needs of your potential new markets, it’s also important to understand the regional differences in how those markets interact with businesses. This could be that country or region’s predominant payment methods, purchasing channels or customer support practices. Do consumers in your new market prefer paying by cash or digital wallet? Are they more likely to buy in-store or online? And how do they prefer to get in touch with your customer support team? Do they prefer speaking to a live agent or an automated one?
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Choose the right expansion strategy
Besides understanding your potential markets, your company needs to identify or develop a suitable strategic model that fits in with what you are trying to achieve with the move. “Companies often go wrong by not having a clear expansion strategy in place,” according to Herrmann. “It’s a very structured strategy that you need to really think about as you go down the path of expansion.”
This involves asking yourself questions like, “What are the key steps? What are the key markets we want to evaluate? Where do we want to play?” After answering these questions, you must understand what your value proposition is to win the markets you’ve identified. At this stage, ask yourself, “What are the capabilities and tracking systems that we need to actually ensure that we can be successful?”
Smartling identifies four typical expansion strategies suited for companies seeking global success.
- International strategy: This is focused on the exportation or importation of goods and services while the company retains a physical base in their home country. This is common with companies who sell luxury goods such as wine or high-end automobiles.
- Transnational strategy: This strategy is common amongst big chain brands like McDonald’s or Coca-Cola. Such businesses retain a central office in one location and coordinate multiple subsidiaries across the world. This allows a company to achieve significant scale while maintaining a centralized decision-making body.
- Multi-domestic strategy: Here, companies adapt their sales, marketing and product strategies entirely on the nuances of every country they’re operating in. Very often, brands might create smaller, country-specific brands that are best suited to local preferences. Swiss-owned Nestlé owns over 2,000 food and beverage companies around the world to match local tastes and preferences. These include Perrier, Häagen-Dazs and Toll House.
- Global strategy: For some companies, the best approach is to make little to no changes to their brand regardless of where they are. A good example of this is Apple, a company with a strong presence around the world. Whether walking into an iStore in London, New York or New Delhi, you’ll find the same products and branding on the shelves.
Related: These global marketing trends will make your business stand out
The customer-facing aspects of your product or service also need to be adapted to your new markets. This includes anything from your website, packaging, advertising material or even the way your sales representatives interact with your customers. This is another product of having done the proper research on the needs and cultural differences in your new markets.
Naturally, you need to translate your messaging into the main language or languages spoken in the new markets you will be serving. But simply translating from one language to another is not enough to make a brand feel at home in a new setting. Through the process of localization, you ensure that the language you’re using and the experience you’re providing is also local in character. This includes using colloquial references, relevant imagery and culturally sensitive messaging.
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Harness a global culture amongst your team
If you’re expanding physically to a new location, you need to create a work environment that understands and respects the local work culture while also cultivating a global mindset amongst your team. With this in mind, managers and HR teams need to:
- Build bridges between cultures. Facilitate a stronger sense of teamwork. It is also important to foster communication between the team across borders. This will help your global team focus on the same vision as well as share knowledge.
- Celebrate and facilitate diversity. Start by making sure every cultural or affinity group within your team has a voice. Encourage sharing and give the time and space to recognize and embrace the differences found within the organization.
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Expansion is an opportunity for innovation
Exposure to new markets and regions means exposure to a much larger pool of talent that you can tap into. More diversity and new markets are also breeding grounds for fresh new ideas and innovation. These are the sort of conditions that harness further growth and success.
Expanding globally is a difficult and risky move at which few companies actually succeed at. According to a 2019 study, all Western Internet Firms (WIFs) that have attempted to expand into China have failed. These include heavy hitters like eBay, Amazon, and Google. The study found that many of the reasons why these companies failed are linked with not listening to and understanding Chinese consumer culture.
Yet, the pull of success in new markets is hard to ignore, given the potential rewards. Successful expansion is about more than just better profit margins and besting your competition.
