**WHY?
**
Purpose: To determine if international expansion is strategically justified.
Questions & Explanations:
1. Positive economic logic?
➤ Does the expansion make financial sense? Will it generate profit, scale op-
erations, or improve long-term value?
2. Supported by our differentiators? (differentiator is something unique or dis-
tinctive about a company that gives it an advantage over competitors.)
In other words:It means:
Do our existing strengths still apply in the new country?
Can they help us compete and succeed there?
➤ Do we have unique strengths (like brand, technology, or process) that will
help us compete effectively in the new market?
3. Strengthens/adds to our differentiators?
➤ Will the expansion help us improve what already sets us apart — such as
market reach, innovation, or cost advantage?
✅ Relevance of “Yes”:
A yes here validates that the move aligns with your core strategy and creates
value. If the answer is ""no," the recommendation is to stop — because mov-
ing forward would waste resources and dilute strategic focus.
---
**WHERE?**
Purpose:To assess which countries or regions are most suitable for expansion.
Questions & Explanations:
1.What new countries fit our differentiators?
➤ Where do market conditions match what makes us successful? (e.g., pre-
mium segments for a luxury brand)
2. Which ones can strengthen/add to our differentiators?
➤ Will a market help us develop new advantages or refine existing ones?
3. What hard and soft criteria did we use to evaluate them?
➤ Have we assessed markets using:
Hard criteria (e.g., market size, regulatory environment, customer needs)
Soft criteria (e.g., political stability, human resources, cultural compatibility)
4. Where is business the best? The worst?
➤ Based on performance and projections, which markets offer the best or
worst potential?
5. If there are multiple opportunities, which ones should be first, second, etc.?
➤ What’s the optimal sequence for market entry based on risk, potential,
and resource availability?
Relevance of “Yes”:
A “yes” answer here means you’ve identified strategic-fit markets and priori-
tized themproperly. It confirms you're expanding not just where it's possible,
but where it aligns with your long-term success.
---
**HOW?**
Purpose:To decide the entry strategy and execution plan.
Questions & Explanations:
1. Do it on our own?
➤ Should we establish a fully owned operation (e.g., branch, subsidiary)?
This gives control but is more costly and risky.
2. Do we need a local partner?
➤ Would a joint venture, distributor, or franchise help overcome legal, cul-
tural, or operational challenges?
3. How big and how fast?
➤ What’s the right pace and scale for entry? Should we start small to learn
and scale later, or launch big to seize a major opportunity?
Relevance of “Yes”:
Answering “yes” here ensures clarity on resources, risk management, and op-
erational design. It means you’ve defined how to expand effectively, effi-
ciently, and competitively in the chosen market.
---
FINAL THOUGHT:
Each “yes” in the framework acts like a green light to move forward. If the an-
swer is not “yes” at any stage, it signals a **potential risk or misalignment**
that should be addressed before continuing. This structured, sequential ap-
proach helps businesses **expand globally with purpose, preparation, and
strategic fit.**
Hard Criteria = Quantitative, measurable factors; numbers and laws
Soft Criteria = Qualitative, judgment-based factors; environment and people
factors
Fit Criteria = Factors that evaluate how well the target market aligns with
your company’s strengths (differentiators), mission, and strategy.
Examples:
Do local customers value what makes us different? (e.g., sustainability, qual-
ity, innovation)
Does this market align with our brand positioning?
Are our capabilities (e.g., supply chain, tech) useful or transferable here?
Will entering this market strengthen our competitive advantage?
RATIONALE FOR INTERNATIONAL EXPANSION
NAA SA PPT
FOR EXAMPLE MCDO:
How McDonald's Improves Cost-Effectiveness by Expanding Internationally?
1. Economies of Scale
The cost advantage a company gains when it increases its production or out-
put. This advantage arises because the per-unit cost of production decreases
as the overall output increases.
Other example where in ang company ni global sya for lower costs
Company, like microprocessor maker Intel, in 2010 opened its first manufac-
turing facility in China to take advantage of the less costly and increasingly
sophisticated production capabilities. For example, Intel built a semiconduc-
tor manufacturing plant in Dalian, China, for $2.5 billion, whereas a similar
state-of the-art microprocessor plant in the United States can cost $5 billion.
Planning for International Expansion
As companies look for growth in new areas of the world, they typically priori-
tize which countries to enter. Because many markets look appealing due to
their market size or low-cost production, it is important for firms to prioritize
which countries to enter first and to evaluate each country’s relative merits.
For example, some markets may be smaller in size, but their strategic com-
plexity is lower, which may make them easier to enter and easier from an op -
erations point of view. Sometimes there are even substantial regional differ-
ences within a given country, so careful investigation, research, and planning
are important to do before entry
International Market due diligence
Market due diligence relies on using not just published research on the mar -
kets but also interviews with potential customers and industry experts. A sys-
tematic analysis needs to be done, using tools like PESTEL and CAGE.(CUL-
TURAL, Administrative, Geographic, and Economic).The initial attraction of the
Chinese market is its large market size. However, a more thorough analysis
reveals that a significant portion of the population cannot afford high-priced
US goods. Further investigation, however, might uncover a growing middle
class with increasing purchasing power, presenting a viable target market for
appropriately priced products.
Regional Differences
For example dialects Tagalog and Cebuano: different tastes in food: Finally,
the purchasing power of consumers varies in the different cities. City dwellers
in can afford higher prices than villagers in a province.
Entering a market means understanding the local consumers and what they
look for when making a purchase decision. In some markets, price is an impor-
tant issue. In other markets, such as Japan, consumers pay more attention to
details—such as the quality of products and the design and presentation of
the product or retail surroundings—than they do to price. The Japanese de-
mand for perfect products means that firms entering Japan might have to
spend a lot on quality management. Moreover, real-estate costs are high in
Japan, as are freight costs such as fuel and highway charges. In addition,
space is limited
at retail stores and stockyards, which means that stores can’t hold much in-
ventory, making replenishment of products a challenge. Therefore, when en-
tering a new market, it’s vital for firms to perform full, detailed market re-
search in order to understand the market conditions and take measures to ac-
count for them.
How to Learn the Needs of a New Foreign Market
The best way for a company to learn the needs of a new foreign market is to
deploy people to immerse themselves in that market. Larger companies, like
Intel, employ ethnographers and sociologists to spend months in emerging
markets, living in local communities and seeking to understand the latent,
unarticulated needs of local consumers. For example, Dr. Genevieve Bell, one
of Intel’s anthropologists, traveled extensively across China, observing people
in their homes to find out how they use technology and what they want from
it. Intel then used her insights to shape its pricing strategies and its partner-
ship plans for the Chinese market.
Differentiation and Capability
Corporate fit is the degree to which the company’s existing practices, re-
sources and capabilties fit the new market. For example, a company accus-
tomed to operating within a detailed, unbiased legal environment would not
find a good corporate fit in China because of the current vagaries of Chinese
contract law. [6] Whereas a low corporate fit doesn’t preclude expanding into
that country, it does signal that additional resources or caution may be neces-
sary. Two typical dimensions of corporate fit are human resources practices
and the firm’s risk tolerance.q
