Launching into Europe
Market-entry strategies for learning technology providers.
In my 20 years of experience in entering new markets I have tried out, failed and succeeded with different market entry strategies. Here are some of my learnings.
My experiences are in the field of IT and learning technologies sectors. Within these sectors I have worked in B2P (Business to Professional) and B2B (Business to Business) markets throughout the UK and EMEA regions.
The scope of this article is to give you an overview of market entry strategies and my experiences with them in the Learning Technology sectors. Most of this is delivered as a Software as a Service.
Coming from the USA or Asia the first European market to enter is either the U.K. or the Netherlands. The U.K. is a good size market, 66 million English speaking people make it a good first entry to Europe if you offer services. If you ship physical products, it’s better to start in the Netherlands. 15 million English speakers combined with the perfect infrastructure for shipping and storing your products.
Companies originating from Latin America often start their European base in Spain or Portugal.
There are basically five strategies for international expansion.
This is well summarised in the following table by Shaker A. Zahra, R. Duane Ireland, and Michael A. Hitt, “International Expansion by New Venture Firms: International Diversity, Mode of Market Entry, Technological Learning, and Performance,” Academy of Management Journal 43, no. 5 (October 2000): 925–50.
Table 1 International-Expansion Entry Modes
This is mostly how international expansion starts. Demand from foreign markets prompts first sales. Measuring demand is excellent data to see what regions you should take your first steps in. Exporting also gives you first experiences with sales and service in other languages, cultures and regulations. Something that should not be underestimated.
Licensing and franchising are not regular vehicles for entering a foreign market in the services and software driven learning technologies sector. If you manufacture a product (such as a smart board) or want to expand your e-learning development business these options might be interesting though.
Partnering and strategic alliances are a very useful strategy. In my experience many companies make a mistake by not setting up the right infrastructure to support these partnerships. The right infrastructure consists of a sound legal agreement, training programmes, local currency support and a resource for localised promotional materials. This last one can range from brochures and slide decks to localised websites. Another essential element is the commitment from senior management to the partner strategy. A strategic partner should be aligned with all departments in your business, not just Marketing and Sales.
Acquisition is a great way to enter a market. If you have the resources you immediately gain infrastructure and market share in a local market. However, I recommend it as a secondary step. Eg gain knowledge of the market by exporting, setting up a partnership or hiring a local sales person before acquiring a local business. A well-established strategy is to set up a partnership and then acquire the partner after a few years. This is called “forward channel integration”.
The last option to discuss here is to set up your own office. This usually starts with hiring a senior sales person who establishes your office in the local market. It can take a while to build and grow the business to a reasonable size. I think you can get the benefits such as local market insights and control over the sales execution also with a well-established partnership.
If you decide to hire your own staff, make sure you work with specialised recruiters who know the local market.
vanDelsen Ltd helps you establish your learning technology business in Europe. We explore the optimal market entry strategy with you and execute it for you. Contact us at email@example.com