If conquering a local market is a titanic-sized job, imagine how harder it is to enter a new one altogether where you know no one, or your target market preferences. Even harder though is when it is an international market the one you wish to enter. Even when the spoken language is the same, it is so easy to misinterpret words or actions and stall or bring your entry to a new market down. I highly recommend an analysis before entering international waters, some insights might seem logical on first sight, but if we don’t frame them into a system, we could easily omit one of them. This analysis tool is called PESTCL.
- Political
- Economic
- Social
- Technological
- Competitive
- Legal
Nowadays it is easier to make this analysis thanks to millions and millions of bytes of information that goes into the cloud, specific data that is oriented to certain regions and/or industries.
Political: One of the main barriers you will find when entering a new country may be their political structure. You need to soak yourself in their current political panorama and understand in which way it will affect your company’s income or which benefits it may bring to you as well. There are some tools that you may use such as Wikipedia or you may also take advantage of the fact that in these days almost every Government or Public institutions have their own websites where they facilitate helpful information about themselves.Another great tool which you can use are the local newspapers.
Economical: The first analysis you have to do is the currency exchange rate. One example which I like to quote is when I travelled from Guatemala to El Salvador. Even though they are neighboring nations and with an open commerce treaty, I forgot the small detail of the different types of currency. I crossed the border and when I reached the town of Santa Ana to have some of the famous Salvadorian Pupusas, I wasn’t able to purchase them. I had to exchange my Quetzales to their local currency (Dollars) to a higher exchange rate which in turn made my budget decrease considerably. Moral of the story: You have to take in account every economical aspect of the country or region you are trying to enter.
Just like in the political analysis and the ones we will be discussing later, I recommend to make a thorough study in the economical websites that are offered in every country. Take into account everything from the economical history to the future projections. This will help you to make those important decisions.
Social: Doug Ladd, a marketing and sales leader from the United States of America, mentions four key components to create an accurate social or cultural analysis of a specific region:
- Values
- Traditions and customs
- Symbols
- Language
These components vary from place to place and must be taken into account and studied before entering a market.
Technological: Technological Analysis is very important for both services and products alike.
In services, for example, the means of communication might represent a problem. There are countries where the internet bandwidth is so low that it doesn’t support the requirements of applications which need a specific speed in order to transfer information.
In the other hand, when we talk about products which are supposed to be moved on a GPS directioned transportation, where you rely on such GPS to monitor the route. There will be cases when the connection might get lost the moment said transportation crosses from one country to the other.
You need to define the technology you will be using and then verify which providers are available on the region you are aiming to enter in order for you to avoid any problem. If such problems would come to arise, look for different alternatives to maintain the quality and functionality of your products or services.
Competitive: It is well known that when you enter a new market, all the odds in the competition game are against you and your business, this is why we have to do whatever it takes to lever that disadvantage in every possible way. For this to work out for you, you must focus on those aspects where you know you have the total advantage against all of your competitors.
To do this you have to understand the position where your competition currently is. If this is something that would be unpractical for you due to distance, economical or other situations, you should reach to key factor on which to grade how strong the other companies are and which are their strengths and weaknesses. A very common method of doing so is by focusing on the four P’s: Products, Price, Place and Promotional Tools.
This might give you that information that will help you boost your company above everybody else’s.
Legal: You have to be aware of the legal implications that every country has since they are the most important framework that delimits everything you can and cannot do on a specific region. Another important part of the legal aspects of the countries is what is related to patents and intellectual property since you must protect your brands and avoid unfair competition. There are some questions you should ask about the legal aspects of the countries. For example, does the country require registration? Do you need to have a local address? Are there laws related to the handling and transportation of products like yours? Are there limitations on disposal or recycling? Does the country have a history of respecting intellectual property laws in your industry?
As you see, the things you need to take into account when entering to a new international market seem to be common sense, but it is worth making a chart and going environment by environment to avoid missing something that later on could bring your business down. Try the PESTCL analysis and you will see that you will have a great view of your new market.
Prepare and enjoy the adventure!