global expansion

Learning from the Titans: Lessons from Successful (and Not-So-Successful) Global Expansions

Kurt GraverBusiness Development

This blog post examines the global expansion journeys of notable successful and unsuccessful companies to extract key lessons and best practices for UK entrepreneurs.

By examining case studies across various industries and geographies, we aim to provide a comprehensive guide to navigating the complexities of international growth and avoiding common mistakes.

Whether you are a startup founder, a small business owner, or an executive of a growing company, this post will equip you with the knowledge and inspiration needed to chart your path to global success.

The Importance of Learning from Others’ Experiences


Before delving into specific case studies, it is worth emphasizing the value of learning from the experiences of others in the context of global expansion. According to a survey by the Institute of Directors, 62% of UK businesses cite a lack of knowledge about international markets as a key barrier to exporting [1]. Moreover, a study by the British Business Bank found that SMEs with international experience in their leadership teams are more likely to expand successfully abroad [2].

Learning from the successes and failures of other companies can help UK entrepreneurs:

  1. Identify proven strategies and best practices for entering and scaling in international markets.
  2. Anticipate and mitigate common risks and challenges associated with global expansion.
  3. Gain insights into the cultural, regulatory, and competitive landscapes of different countries and regions.
  4. Avoid costly mistakes and pitfalls that have derailed the international growth efforts of other companies.
  5. Find inspiration and motivation to pursue their global ambitions, learning from the resilience and adaptability of successful global companies.

By standing on the shoulders of giants and learning from their experiences, UK entrepreneurs can increase their chances of success and accelerate their international growth journeys.

Case Study 1: Airbnb – Localizing the Travel Experience


Airbnb, the online marketplace for short-term rentals and experiences, has become a global icon of the sharing economy. Founded 2008 in San Francisco, Airbnb has expanded to over 220 countries and regions, serving more than 4 million hosts and 800 million guests [3]. Airbnb’s success story offers valuable lessons for UK entrepreneurs looking to build a global brand and scale internationally.

Localization Strategy
One key factor behind Airbnb’s successful global expansion has been its ability to localize its platform and offerings to meet each market’s unique needs and preferences. Rather than adopting a one-size-fits-all approach, Airbnb has invested in understanding each country’s cultural nuances, travel habits, and regulatory environments.

For example, in Japan, where hospitality and attention to detail are highly valued, Airbnb has partnered with local hosts to offer unique, culturally authentic experiences, such as tea ceremonies and calligraphy classes [4]. In China, Airbnb has localized its platform to integrate with popular Chinese payment systems and social media platforms, making it easier for Chinese travellers to book and share their experiences [5].

Lesson for UK entrepreneurs: When expanding globally, it is crucial to adapt your product, service, and marketing strategies to the local context of each market. Invest in understanding your target countries’ cultural nuances, consumer preferences, and regulatory landscapes, and build local partnerships to gain credibility and market access.

Trust and Safety
Another critical aspect of Airbnb’s global success has been its focus on building trust and ensuring the safety of its users. In the sharing economy, where strangers connect and transact online, Airbnb has had to overcome significant trust barriers to scale globally.

To address this challenge, Airbnb has implemented a range of trust and safety measures, such as:

  • Verified ID: Airbnb requires hosts and guests to provide a government-issued ID and other verification information to create a trusted community [6].
  • Host Protection Insurance: Airbnb offers liability insurance of up to USD 1 million for hosts, protecting them from property damage and accidents [7].
  • 24/7 Customer Support: Airbnb provides round-the-clock customer support in multiple languages to assist users with issues or concerns [8].

Lesson for UK entrepreneurs

When expanding globally, particularly in industries where trust is paramount, it is essential to prioritize the safety and security of your customers. Invest in robust verification processes, insurance policies, and customer support infrastructure to build trust and mitigate risks across different markets.

Data-Driven Expansion
Data and analytics have also driven Airbnb’s global expansion strategy. The company leverages its vast trove of user data to identify promising markets, optimize its platform, and personalize its offerings.

For instance, Airbnb uses machine learning algorithms to analyze search and booking patterns, pricing trends, and supply-demand dynamics to identify high-potential markets and inform its expansion decisions [9]. The company also employs data science to personalize search results, recommend local experiences, and optimize pricing for hosts and guests [10].

Lesson for entrepreneurs

In today’s data-rich world, leveraging analytics and machine learning can provide a significant competitive advantage when expanding globally. Invest in data infrastructure and talent to gain insights into customer behaviour, market trends, and operational efficiencies across different geographies.

Case Study 2: Tesco – Struggling to Adapt in the US Market


Tesco, the British multinational grocery and general merchandise retailer, is a prime example of a company that faced significant challenges in its global expansion efforts. In 2007, Tesco entered the US market with its “Fresh & Easy” chain of grocery stores, aiming to capitalize on the growing demand for fresh, healthy food. However, after six years of struggling to gain traction, Tesco announced in 2013 that it would be exiting the US market, incurring a loss of over £1 billion [11].

Misreading the Market
One of the main reasons for Tesco’s failure in the US was its misunderstanding of the American consumer and retail landscape. Tesco assumed that its successful UK business model, which emphasized private-label products and small-format stores, would translate well to the US market.

However, American consumers proved to be more brand-conscious and price-sensitive than Tesco had anticipated. They were also accustomed to larger store formats and wider product selections than Fresh & Easy [12]. Tesco’s reliance on self-service checkouts and pre-packaged meals also failed to resonate with US shoppers, who preferred human interaction and fresh, prepared foods [13].

Lesson for UK entrepreneurs: When expanding into new markets, conducting thorough market research and adapting your business model to local consumer preferences and market dynamics is crucial. Don’t assume that what works in your home market will automatically translate to success abroad. Engage with local experts, conduct customer surveys, and test your assumptions before making significant investments.

Supply Chain and Operational Issues
Another factor that contributed to Tesco’s US struggles was its failure to establish an efficient and reliable supply chain. Fresh & Easy’s centralized distribution model, which relied on a single warehouse in California to supply all its stores across the West Coast, proved a logistical nightmare [14].

The long distances between the warehouse and stores led to frequent stock-outs, spoilage, and waste. Tesco also struggled to build strong relationships with local suppliers, who were used to dealing with larger, more established retailers [15]. These supply chain issues resulted in poor product availability and quality, further eroding customer trust and loyalty.

Lesson for UK entrepreneurs: When expanding globally, pay close attention to the design and management of your supply chain. When setting up your operations, consider factors such as geographic distance, transportation infrastructure, local supplier networks, and inventory management. Invest in building strong relationships with local partners and adapt your supply chain strategy to the unique challenges of each market.

Brand and Cultural Misalignment
Finally, Tesco’s brand and cultural identity failed to connect with American consumers. The Fresh & Easy brand, with its green-and-white colour scheme and minimalist design, felt sterile and generic compared to the more vibrant and engaging branding of US competitors like Trader Joe’s and Whole Foods [16].

Moreover, Tesco’s British heritage and corporate culture did not resonate with American employees and stakeholders. The company’s top-down, centralized decision-making style and lack of local autonomy alienated US staff and suppliers, who were used to more collaborative and entrepreneurial approaches [17].

Lesson for UK entrepreneurs

When expanding globally, consider how your brand and cultural identity will be perceived in different markets. Adapt your branding and communication strategies to local cultural norms and aesthetic preferences. Empower local teams and partners to make decisions and provide input rather than imposing a rigid, centralized management style.

Case Study 3: Unilever – Leveraging Local Innovation for Global Growth


Unilever, the Anglo-Dutch multinational consumer goods company, has a long history of successful global expansion. With over 400 brands sold in more than 190 countries, Unilever has demonstrated a strong ability to adapt to local markets while leveraging its global scale and expertise [18]. Unilever’s approach to global expansion offers valuable lessons for UK entrepreneurs looking to build a sustainable and profitable international presence.

Local Innovation and Product Adaptation
One of the key drivers of Unilever’s global success has been its focus on local innovation and product adaptation. Rather than simply exporting its existing products to new markets, Unilever invests in understanding local consumer needs and developing tailored solutions.

For example, in India, where many households lack refrigeration, Unilever developed Surf Excel Quick Wash, a detergent that removes dirt effectively, even in cold water [19]. In Indonesia, Unilever created Bango, a sweet soy sauce that caters to local tastes and culinary traditions [20]. By adapting its products to local preferences and conditions, Unilever has built strong brand loyalty and market share in diverse geographies.

Lesson for UK entrepreneurs: When expanding globally, invest in local research and development to understand and meet the unique needs of each market. Be willing to adapt your products, packaging, and marketing strategies to local cultural, economic, and environmental factors. Collaborate with local partners and customers to co-create solutions that address their specific pain points and aspirations.

Sustainable and Inclusive Business Models
Another factor contributing to Unilever’s global success is its commitment to sustainable and inclusive business practices. Unilever has embedded sustainability into its core strategy, setting ambitious targets for reducing its environmental footprint, enhancing the livelihoods of its suppliers and distributors, and improving the health and well-being of its customers [21].

For instance, through its Sustainable Living brands, which include Lifebuoy soap and Knorr bouillon cubes, Unilever has reached millions of consumers in emerging markets with affordable, nutritious, and hygienic products [22]. Unilever has also partnered with local NGOs and governments to train and support smallholder farmers, women entrepreneurs, and other vulnerable communities in its supply chain [23].

Lesson for UK entrepreneurs: Consider how your business can create a positive social and environmental impact in your markets when expanding globally. Align your strategy with the United Nations Sustainable Development Goals and look for opportunities to partner with local stakeholders to drive inclusive growth. By building a purpose-driven brand and business model, you can differentiate yourself from competitors and earn the trust and loyalty of global consumers.

Agile and Localized Organizational Structure
Finally, Unilever’s global success can be attributed to its agile and localized organizational structure. Unlike many multinational companies that operate with a centralized, hierarchical model, Unilever has adopted a “multi-local” approach that balances global scale with local responsiveness [24].

Unilever’s organizational structure is divided into three main levels: global, regional, and local. At the global level, Unilever sets overall strategy, manages key brands and innovations, and provides shared services. At the regional level, Unilever has established “Category and Innovation Centres” that adapt global strategies to regional market needs and drive cross-country collaboration. At the local level, Unilever empowers country teams to make pricing, distribution, and marketing decisions based on their deep understanding of local consumers and competitors [25].

Lesson for UK entrepreneurs

Design your organizational structure to balance global integration with local responsiveness when expanding globally. Give local teams the autonomy and resources to adapt to market conditions and make fast decisions while providing them with global support and expertise. Foster a culture of collaboration and knowledge-sharing across geographies, functions, and levels to drive innovation and best practice transfer.

Conclusion


Airbnb, Tesco, and Unilever’s global expansion journeys offer valuable lessons for UK entrepreneurs looking to grow their businesses internationally. While each company’s experience is unique, common themes and best practices emerge from their successes and failures.

First, localization is key to winning in global markets. Whether it’s adapting your product, brand, or business model to local preferences and conditions, investing in understanding and serving the unique needs of each market is critical to building customer trust and loyalty. Airbnb’s success in tailoring its platform and experiences to different cultural contexts and Unilever’s focus on local innovation and product adaptation demonstrate the power of localization in driving global growth.

Second, expanding globally requires a strong and resilient supply chain and operational infrastructure. Tesco’s struggles in the US market highlight the importance of designing and managing a supply chain that can handle the complexities of international logistics, supplier relationships, and inventory management. Unilever’s agile and localized organizational structure also shows how balancing global scale with local responsiveness can help companies navigate the challenges of operating in diverse geographies.

Third, building a purpose-driven and sustainable business model can be a key differentiator in global markets. Unilever’s commitment to embedding sustainability and social impact into its core strategy has helped the company build a strong reputation and customer base in emerging markets. As consumers worldwide increasingly prioritize environmental and social responsibility, UK entrepreneurs who align their global expansion strategies with these values can gain a competitive edge.

Fourth, learning from failure is as important as learning from success. Tesco’s experience in the US market serves as a cautionary tale for UK entrepreneurs who assume that their domestic business model will translate seamlessly to international markets. Entrepreneurs can avoid similar pitfalls in their global expansion efforts by studying the root causes of Tesco’s failure, such as misreading consumer preferences and failing to establish a reliable supply chain.

Finally, expanding globally requires a long-term, adaptive, and resilient mindset. Building a successful international presence takes time, resources, and a willingness to learn from successes and failures. Airbnb, Tesco, and Unilever have all faced challenges and setbacks in their global expansion journeys but have demonstrated the ability to pivot, innovate, and continuously improve their strategies and operations.

The lessons from these case studies provide a roadmap for success for UK entrepreneurs looking to expand their businesses globally. Companies can increase their chances of building a profitable and impactful international presence by prioritizing localization, operational excellence, sustainability, and learning from failure. As the global economy becomes increasingly interconnected and competitive, the ability to expand beyond domestic borders will be a key driver of growth and resilience for UK businesses in the years to come.

References:

  1. Institute of Directors. (2020). IoD Exporting Survey 2020. https://www.iod.com/news/news/articles/IoD-Exporting-Survey-2020
  2. British Business Bank. (2019). UK SME Exporting Trends 2019. https://www.british-business-bank.co.uk/research/uk-sme-exporting-trends-2019/
  3. Airbnb. (2021). About Us. https://news.airbnb.com/about-us/
  4. Airbnb. (2019). How Airbnb is Empowering Hosts and Guests in Japan. https://news.airbnb.com/how-airbnb-is-empowering-hosts-and-guests-in-japan/
  5. Airbnb. (2020). Airbnb China: Embracing the Future of Travel. https://news.airbnb.com/airbnb-china-embracing-the-future-of-travel/
  6. Airbnb. (2021). Airbnb’s Commitment to Trust and Safety. https://www.airbnb.com/trust
  7. Airbnb. (2021). Host Protection Insurance. https://www.airbnb.com/d/host-protection-insurance
  8. Airbnb. (2021). Help Center. https://www.airbnb.com/help
  9. Airbnb Engineering & Data Science. (2019). Using Machine Learning to Predict Value of Homes on Airbnb. https://medium.com/airbnb-engineering/using-machine-learning-to-predict-value-of-homes-on-airbnb-9272d3d4739d
  10. Airbnb Engineering & Data Science. (2018). Scaling Knowledge at Airbnb. https://medium.com/airbnb-engineering/scaling-knowledge-at-airbnb-875d73eff091
  11. BBC News. (2013). Tesco confirms US Fresh & Easy sell-off. https://www.bbc.com/news/business-22351646
  12. Harvard Business Review. (2015). Why Tesco Failed in the United States. https://hbr.org/2015/06/why-tesco-failed-in-the-united-states
  13. Forbes. (2013). Tesco’s Painful Lesson: The High Price Of Value For Money Shouldn’t Be Fatal. https://www.forbes.com/sites/paulfletcher/2013/