Read the full script of Module 5, Episode 3 of the Global Growth Master Class below. Want to get certified on global expansion? Simply click here to access the complete course today.

Now that we’ve explored what NOT to do when assessing market availability, let’s look at the flip side, and in doing so answer the question: What are things I should absolutely do when evaluating and selecting new international markets?

First, as a foundational step, let’s highlight the 4 main aspects of market selection that all companies should consider when evaluating any new market.

• First is Market Size/Opportunity - this is the easy one, the natural and intuitive analysis that most professionals are familiar with that we discussed.

• Next is the Degree of Localization Required - This adds in the layer of complexity and how much the go-to-market and operational models must change to find traction in the new market. While the market size shows the scale of the opportunity, the degree of localization shows how much work you have to put in to capture even some of the market opportunity.

• Then there is Scalability of Localizations - This aspect considers whether the localizations can be scaled (used) in other markets; is making that change for one market help meet a need for localization in other markets as well?

• And finally, there is Organizational Readiness - The most often overlooked aspect of market selection that we discussed in great detail in the last module

Now that we have that outlined, let’s look at 10 recommended actions for all teams evaluating new markets do before making any final market selection decisions:

Evaluate markets in terms of complexity and localization

In conducting this external analysis it is important to use a bifocal lens; first gathering data (both from external sources and from internal sources that track the existing customer base) to determine the best target countries, but then also considering strategic and operational changes required in order to be successful in this market. In other words, don’t just conduct this analysis to determine where you should expand to, but also to help you formulate what your market entry strategy will be and how you will need to adapt your current product and operational model to attain product-market fit in the new market. 

At a high level, it’s not just about finding product-market fit in a single international market - what you should be looking for is transferability. Is your established presence transferable to new markets or do you have to start from scratch? How far do you need to deviate from your initial market product-market fit to find penetration and scale in a new market?

These are questions that should be at the forefront of your mind during this market analysis process. For early-stage companies in particular, expanding to international markets that require heavy localization (and bring added complexity) can be a challenge with a high risk of failure. This all closely relates to the Localization Premium concept discussed in the next module. 

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Transferability is why many companies that start in an English-speaking country like the US will target the UK and Australia as part of the first wave of international expansion efforts. The same would go for LATAM-based companies expanding first in the region. But language is just scratching the surface.

Don’t let minimal language translations or a large market size fool you, there are nuances to these and many other criteria that must be considered to conduct a complete analysis.

Workday, the human capital management (HCM), enterprise resource management (ERP), and financial management application company found that its payroll product only has strong transferability with four countries, given that payroll is one of the most localized and esoteric aspects of how businesses operate. For them, building a payroll solution for China would be very different from a solution targeting the US market. Similarity with taxation, employee data, and privacy issues all must factor into the product itself. Changes would involve heavy lifting with the product, an extended period of time to develop, and an inherently higher level of risk. Despite the size of the market opportunity, the localizations would require significant investment to find any traction in the Chinese market.

Determine your own set of criteria that goes beyond the standard population and economic macro trends. Think about cultural criteria that would drive the growth of your product in the new market. 

When conducting your research, don’t reinvent the wheel. Leverage existing resources like market research firms (Euromonitor, for example) and other tools and resources offered by service providers (like Google’s Market Finder tools).

Develop a robust set of criteria to evaluate market readiness

While your company's analysis of a market, selection thresholds, and criteria will differ both in terms of category and their respective weights, our interactions with dozens of successful Interpreneurs have elevated a set of common criteria that will affect most if not all, companies looking to expand. These criteria can help you quickly disqualify some markets.

Don’t just solely rely on the criteria outlined in the Don’t Do video (following organic growth, whale hunting, falling for the familiarity bias) or the typical TAM and economic indicator figures. It’s important to create your own custom criteria instead. For Docusign, for example, they were able to divide countries into categories based on whether they followed Common Law, which tasks notaries with merely identifying a signer, and Civil Law countries, where a notary has training and duties similar to an attorney, and is authorized to prepare legal documents, authenticate transactions and advise participants in certain legal matters.

For Docusign, entering Common Law countries was much easier, so this became an important criterion. Internal capabilities should also be part of the criteria as well. For example, not selecting a market unless there are employees already present there, may be important for some companies (while for others it might not be) - criteria could relate to government regulation or culture.

A good starting point is to create a list of questions, which will help you formulate your evaluation criteria.

Here is a list of questions to ask that relate to important market selection criteria:

• How big is the market (total addressable market, TAM)?

• How healthy and developed is the economy? 

• How fast is income growing? 

• Is the population growing? 

• Are there any relevant trends in the market?

• What does the political landscape look like? (example: are their geopolitical forces at play like the rise of nationalism or core value alignment issues like Russia invading Ukraine)

• How friendly would the local government be to your product or service? What does compliance or regulatory approval look like?

• Are there any important government initiatives that affect your product or service? (example: the Japanese government’s paper-free workplace initiative that aligned with DocuSign’s value proposition mentioned in a later module, or GDPR data privacy initiatives throughout Europe affecting company operations)

• What does the competitive landscape look like? Is it hard to compete locally or are there ways to differentiate? (example: Walmart’s low price value proposition not being a differentiator in Germany with existing low-price retailers)

• Are there local pools of talent to tap into in order to run local operations? Are you able to find Interpreneurs in the market? Are there differences in local employment law that would affect our model? (example: worker benefits or contractor/employment status affects many delivery platform models)

• Are there any intellectual property or other legal considerations?

• Does the local market have the proper infrastructure to support our solution? (from mobile networks, like LinkedIn had to navigate when entering the Indian market which had a slower 2G network, as discussed in a later module, to payment processing and beyond)

• Are there any monetary considerations from taxes and accounting to currency exchange and getting funds into/out of the country? (example: companies facing challenges transferring profits from Brazilian operations out of the country).

Don’t Forget about Culture (or Remember Culture)

Often culture takes a back seat to other more quantitative metrics when companies evaluate new markets. Culture can have a profound impact on how you operate in a market, limiting your ability to use your existing model (like we will discuss with the payment process for Evernote in India, in the next module video), or enabling you to grow faster. For example, when BlaBlaCar expanded into Russia the fact, while discouraged in many cultures across the world because of safety concerns, hitchhiking was widely done in Russia because of the lack of cars during Soviet times; Russians give strangers rides all the time. This aspect of local culture was a key driver for the fast growth of BlaBlaCar’s carpooling platform in the market.. 

Make Market Selection guidelines part of Internal Alignment  

It’s important for companies to have uniform and transparent market selection criteria. Not only does this help teams avoid bias or over-indexing based on someone’s level of authority or strength of internal relationships, but it also helps teams focus on the most important criteria. Giving weight to each criterion can be helpful as well, to give the right amount of weight to each specific criterion to align with company priorities and culture. Your ultimate market selection would and should vary based on your criteria and corresponding weight.

Find the best initial international markets

A result of avoiding targeting only large markets is to have more clarity into the best markets to enter. There are benefits in selecting smaller markets to enter. As mentioned before, new market entry skills are like a muscle that needs to be built over time, and starting smaller helps. Outside of size, choosing markets that require less localization can also help build this institutional knowledge, creating confidence and reducing the financial commitment required. Zipline understood this when it selected Rwanda and other East African nations are its initial market, while Spotify also did, as illustrated by its early expansion in Scandinavia described later in this module.

Build your local network and relationships with key stakeholders

Your success in a market is likely to have less to do with numbers than with people. Relationships matter. Building relationships not only helps you better understand the local market (local knowledge from the Global Class Teambuilding framework), but it also proves your commitment to the market, unlocking goodwill and opportunities in the local market.

Validate your assumptions and research with boots on the ground

Go into the market and talk to key stakeholders, including everyday people. This is a crucial step, which we refer to as Localization Discovery, that will be described in more detail in the next video in this module. 

Leverage your diversity

Bring diverse mindsets into the market evaluation and selection process, this goes for not just having a well-rounded group with all functions and departments represented but also refers to the background of people on the team - if the team is too homogenous and lacking the Interpreneurial mindset, then groupthink can creep in and the team is more likely to make a poor market selection. Meltwater, the Norwegian media Intelligence & social listening tools company, has a diverse distributed team, and actually implemented an employee-driven expansion strategy where employees who deeply understood their home markets and could articulate the local market opportunity would have influence into market selection. 

Take your Time

Don’t think that market selection involves a couple of months of research and an in-person trip to the market. Discovering vital details about a market takes time and commitment. Besides internal focus, Global Class Companies leverage local resources to gain a deeper understanding of local markets over time. Our own company has a network of dozens of City Leads, who are passionate about their local markets, serve as local market evangelists, and teach our team about the local context so we best know how to approach growth in the market.

Finally, Think holistically

Don’t think about markets individually, think of how markets are linked together. Think about the scalability of localizations in each market and how they can create momentum in a region. Don’t just choose the next market, map out the progression of markets, in the process being mindful of the expansion muscles you are building and the scalability of localizations. We will discuss market linkages and the scalability of localizations in a later module.

NOTE: Don't miss out on the next episode! If you want to continue learning about global expansion strategies and dive deeper into the course material, simply click here to access Module 5, Episode 3 of the Global Growth Master Class.