3/6/2019 How to Create Your Geographic Expansion Strategy | Free PPT Templates

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GEOGRAPHIC STRATEGY

THE BIG PICTURE ON GEOGRAPHIC STRATEGY

1. Prerequisite – Amazing Value 2. Most Companies need to Focus or

Proposition Densify
If you try to scale in competitive If you don’t have an amazing value
geographies, you better have an amazing proposition, rst x it and your go-to-
value proposition. market, then densify.

3. Synergies 4. Develop & Execute a Strong Business

(https://www.stratechi.com/synergies/) Plan
is the Key to Geographic Strategy Commit enough resources to win in a new
Target new geographies where there are geography, since most companies don’t.
high customer, go-to-market and
operational synergies.

THE TRUTH – MOST COMPANIES AREN’T READY FOR

GEOGRAPHIC EXPANSION

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If you aren’t winning in one geography, don’t think you’re going to kill the competition
in another geography. According to McKinsey, 4 out of 5 attempts to enter a new
market fail. With limited resources, rst focus on creating an unbelievable value
proposition and go-to-market strategy (https://www.stratechi.com/market-
strategy/). Then use the geographic expansion rocket ship to scale.

A QUICK STORY ABOUT GEOGRAPHIC STRATEGY

Both Walmart and Kmart were launched in 1962. Most people don’t know that after
15 years, Kmart was 20 times the size of Walmart. In 1977, Kmart posted $9.9 billion
in revenue versus Walmart’s $479 million. Kmart’s CEO summed it up, “We are a
company in a hurry…we are already in 196 of the country’s 261 standard metropolitan
districts.”

While Kmart focused on geographically expanding at a breakneck pace, Walmart was

perfecting their value proposition, go-to-market, and operational ef ciencies. After
15 years, Walmart had ~100 stores all within 350 miles of their one distribution
center.

Comparing Walmart and Kmart 1988 nancials tells the story (graphic below). Kmart
was still much larger than Walmart in total sales but look at the 2X sales per store of
Walmart vs. Kmart. Total operating pro t is the same but look at the marginal
economics. For every $1 of sales, Walmart was generating 50% more operating
pro t, with 30% less in operating expenses. They also spent more on merchandise
expense, which translates to ~10% lower prices for Walmart customers vs. Kmart
customers. They had a superior value proposition, go-to-market and nancial model.

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In 1988, while Kmart was in all 50 states, Walmart was in 22 states. Only after
Walmart developed a superior business model, did it turn on the geographic
expansion lever. Below are the historical revenues of Walmart vs. Kmart.

https://www.stratechi.com/geographic-strategy/ 3/20
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Below is one of the most impressive videos on geographic expansion outlining the
historical growth of Walmart stores from 1962 to 2010 and $400 billion in sales. It
showcases Walmart’s deliberate geographic expansion strategy.

Growth of Walmart and Sam's Club (by FlowingData)

https://www.stratechi.com/geographic-strategy/ 4/20
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THERE ARE 3 MAIN OPTIONS WITH GEOGRAPHIC

STRATEGY

The strategic decision on which way to grow always comes down to opportunity cost
(https://www.stratechi.com/opportunity-cost/), which comes down to the
fundamental question, “with limited resources, what strategies
(https://www.stratechi.com/strategies/) and actions will create the most value?” As you
think about strategic growth opportunities, think about the big picture. First, focus
on the value proposition and go-to-market until you create more customer and
nancial value than the competition. Once you back those up with robust functional
and organizational strategies and execution (https://www.stratechi.com/execution/),
then the business has the blueprints for scaling geographically, or in new markets or
new customer segments. When it comes to geographic strategy, there are three
strategic options; focus (eliminate unsuccessful geographies), densify (grow in
existing geographies), and expand (grow in new target geographies).

FOCUS
(Too many geos)

Lack of synergies and competition winning

Hard decision to make, but typically the right one
Will help focus the organization and decision making
(https://www.stratechi.com/decision-making/) to improve the value
https://www.stratechi.com/geographic-strategy/ 5/20
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proposition

DENSIFY
(Room to grow)

What most companies should do and typically provides the most synergy
with existing business
Typically, create a superior value proposition, GTM (go-to-market), pro t
structure, and high market share, before expanding

EXPAND
(Ready to scale)

The prerequisite to scale is a killer value proposition

Opportunity to create superior value proposition in new geography, while
generating substantial go-to-market and operational synergies
In more centralized business, geographic scale may be necessary to drive
operational scale

THERE ARE TWO MAIN OUTPUTS TO A GEOGRAPHIC

EXPANSION STRATEGY

If your company is ready to scale through geographic expansion, then focus on

creating two main outputs. The rst output is a prioritized list of target geographies
and rationale. The second output is the expansion plan that details out the goals,
budget, and major initiatives needed for the value proposition, go-to-market and
organization to be successful in the new geo(s).

https://www.stratechi.com/geographic-strategy/ 6/20
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PRIORITIZED TARGET GEOGRAPHIES
How to Create Your Geographic Expansion Strategy | Free PPT Templates

EXPANSION PLAN

https://www.stratechi.com/geographic-strategy/ 7/20
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THERE ARE 4 MAIN STEPS TO CREATING A GEOGRAPHIC

EXPANSION STRATEGY

In practice, companies too often approach geographic expansion strategy with less
rigor than the potential opportunity and risk warrant. Geographic expansion can
quickly take down a company as it siphons off critical resources from existing
geographical battle elds to ght new battles, in new geographies, against often new
competitors. So, whether you have a team spend a few weeks or months to create a
geo expansion strategy, build in the necessary rigor to create a robust strategy to win
in the new geographies. The four main steps outlined below will help you ask and
answer the right questions to drive that rigor in your project.

Typically, companies start off with too many potential expansion geographies, and
the rst step is to do the necessary customer, competitive and market research to
help prioritize down to a reasonable number of target geographies. The second step
is to do a deep dive by geo on the competitiveness of the value proposition and go-
to-market while outlining the necessary changes across the business model to win in
each geo. The third step is to utilize a decision matrix
(https://www.stratechi.com/decision-matrix/) to score and prioritize the actual
target expansion geographies. The last step is to develop a comprehensive expansion
plan to drive a high-level of execution and success in the expansion geographies.

STEP 1: TARGET RESEARCH & HIGH-LEVEL

PRIORITIZATION

https://www.stratechi.com/geographic-strategy/ 8/20
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The rst step of target research and high-level prioritization
(https://www.stratechi.com/prioritization/) is necessary to whittle down all of the
potential geographies to expand into to the ones that make sense based on customer
synergies / opportunity and competitive intensity.

CUSTOMER RESEARCH
What is the size, growth, density, and needs of target customer base in target
locations, regions, states, countries?

Typical analyses include:

– Market Research
– Demographic Research
– Geographic-Demographic Models

MARKET & COMPETITIVE RESEARCH

What is the market size, maturity, dynamics in the target geos? What are the
competitive dynamics (https://www.stratechi.com/competitive-dynamics/) and
intensity?

https://www.stratechi.com/geographic-strategy/ 9/20
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Typical analyses include:
– Market & Competitive Research
– Adoption Curves (https://www.stratechi.com/adoption-curves/), PESTLE Analysis
(https://www.stratechi.com/pestle-analysis/), Porter’s Five Forces

PRIORITIZE INITIAL TARGET GEOS

Out of the potential target geos, what are the priority geos to deep-dive into based
on customer & market opportunity?

Typical analyses include:

– Decision Matrix
– Prioritization Matrix
– Problem Solving (https://www.stratechi.com/problem-solving/) Workshop

STEP 2: BUSINESS MODEL RESEARCH

The goal of the business model research is to assess the competitiveness of your
value proposition and go-to-market, and the necessary changes to the business
model needed to compete and win against the competition in a new geography. The
level of research and analysis often ranges from a quick high-level scan to costly and
complex geographic data and analytic models.

https://www.stratechi.com/geographic-strategy/ 10/20
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VALUE PROPOSITION ASSESSMENT

In the prioritized geos, how does the value proposition (product, service, pricing)
compare to the competition? What changes or improvements are needed to enter
and drive better customer value (https://www.stratechi.com/customer-value/)?

Typical analyses include:

– Competitive Benchmarking (https://www.stratechi.com/benchmarking/)
– Market & Regulatory Research
– Surveys

GO-TO-MARKET ASSESSMENT
In the prioritized geos, what are the go-to-market (distribution sales, marketing)
dynamics? Are there potential partners go-to-market partners (especially for new
countries)?

Typical analyses include:

– Market Research
– Consumer Research & Surveys

https://www.stratechi.com/geographic-strategy/ 11/20
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ORG & FUNCTIONAL NEEDS ASSESSMENT

For the prioritized geos, what are the high-level organizational and functional needs,
investment, and costs to win? What are the risks?

Typical analyses include:

– Internal Analysis
– Supply Chain & Regulatory Research
– Problem Solving / Brainstorming (https://www.stratechi.com/brainstorming/)

STEP 3: SCORE & PRIORITIZE TARGET GEOGRAPHIES

Step 3 of a geographic expansion strategy is to ultimately decide on the expansion

geographies. Follow an objective process utilizing a decision matrix, an insightful fact
base, and collaborative deliberation. Decision makers need to be entirely behind the
nal prioritized targets.

You solve the size and investment of a geographic expansion strategy within the
broader context of the overall business model strategy. A geographic expansion
creates opportunity cost by taking potential funding, resources and time away from
investing in other strategies such as targeting new markets, customer segments,
improving the value proposition and go-to-market, and driving the ef ciency and
effectiveness of the organization and functions.

https://www.stratechi.com/geographic-strategy/ 12/20
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SCORE POTENTIAL TARGET GEOS

What dimensions will be scored? Weighting? Scoring criteria? What are the objective
scores for each potential target geo?

Typical analyses include:

– Decision Matrix
– Problem Solving
– ROI Analysis

DELIBERATE WHICH GEOS WILL CREATE THE MOST VALUE

What is the governance (https://www.stratechi.com/governance/) for deliberating
the scores, targets and overall expansion? Who needs to be involved?

Typical analyses include:

– Facilitated Workshops
– Business Case & ROI Analysis
– Goal Setting & Scorecard

https://www.stratechi.com/geographic-strategy/ 13/20
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CHOOSE TARGET EXPANSION GEOS

Who are the ultimate decision makers and how will the decision be made,
communicated, funded, etc.? What are the ultimate expansion goals? Time line?
Initial resources?

Typical analyses include:

– Internal Analysis
– Supply Chain & Regulatory Research
– Problem Solving / Brainstorming

STEP 3 OUTPUT – THE TARGET GEOGRAPHIC DECISION

MATRIX

The output of step 3 is a decision matrix utilized to deliberate and decide on the
expansion geographies. Below is a good example of a geographic expansion decision
matrix, with criteria covering each dimension of a business model.

https://www.stratechi.com/geographic-strategy/ 14/20
3/6/2019 How to Create Your Geographic Expansion Strategy | Free PPT Templates

STEP 4: DEVELOP GEOGRAPHIC EXPANSION PLAN

Once you determine the target expansion geographies, then the last step is to create
robust plans to enter, grow, and ultimately win in the expansion geographies. The key
to this step is to align and involve the functional and geo owners that will drive the
success of the expansion. Furthermore, it is important to assess potential partners or
acquisitions that may help in scaling in the new geographies.

VALUE PROPOSITION IMPROVEMENT PLAN

What changes or improvements need to be made to products, services, and pricing to
drive better customer value than competitors in new geo(s)? What is the necessary
https://www.stratechi.com/geographic-strategy/ 15/20
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funding, resources and timing?

Typical analyses include:

– Product Strategy (https://www.stratechi.com/product-strategy/) Toolkit
– Service Strategy (https://www.stratechi.com/service-strategy/) Toolkit
– Pricing Strategy (https://www.stratechi.com/pricing-strategy/) Toolkit

GO-TO-MARKET STRATEGIC PLAN

What are the distribution, sales and marketing strategies and necessary resources to
gain target share in the new geos?

Typical analyses include:

– Distribution Strategy Toolkit
– Marketing Strategy (https://www.stratechi.com/marketing-strategy/) Toolkit
– Sales Strategy (https://www.stratechi.com/sales-strategy/) Toolkit

ORGANIZATIONAL & FUNCTIONAL PLAN

What are the organizational, functional, people, process, infrastructure and resource
needs of the new geos? Are new partners needed?

https://www.stratechi.com/geographic-strategy/ 16/20
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Typical analyses include:
– Organizational Strategy Toolkit
– Functional Strategy Toolkits

STEP 4 OUTPUT – THE ONE-PAGE GEOGRAPHIC

EXPANSION PLAN

You should synthesize the geographic expansion plan should into a one-pager that
outlines the goals, budgets and strategic initiatives necessary to win in a new
geography. Of course, there will be supporting analysis and details, but the one-pager
is critical to help align leadership, stakeholders and the organization behind the
expansion strategy.

FINAL THOUGHTS ON GEOGRAPHIC EXPANSION

STRATEGY
https://www.stratechi.com/geographic-strategy/ 17/20
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Geographic expansion strategies can scale a company to the next level, but they can
also quickly drive a company to nancial distress. Before considering geographic
expansion, ensure you have the prerequisite of a killer value proposition and go-to-
market strategy to beat out the competition in a new geography. As you develop a
geographic expansion plan, do it in the broader context of the overall company
strategy, since it will siphon off critical resources from other potential value-driving
strategies. Moreover, if you decide to expand geographically, allocate enough
resources and time to win in the new geographies.

DOWNLOAD THE GEOGRAPHIC STRATEGY TEMPLATES

To get you started on your geographic strategy, download the target geographic
decision matrix and the one-page geographic strategy plan.

DOWNLOAD NOW

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MANAGEMENT ASSESSMENTS (https://www.stratechi.com/management-assessment-

strategy/)
STRATEGY WORKSHOPS (https://www.stratechi.com/strategy-workshop/)
THE STRATEGY SURVEY (https://www.stratechi.com/leadership-strategy-survey/)
THE ORG SURVEY (https://www.stratechi.com/org-survey/)
STRATEGY COACHING (https://www.stratechi.com/strategy-coaching/)
EXECUTIVE COACHING (https://www.stratechi.com/executive-coaching/)

https://www.stratechi.com/geographic-strategy/ 18/20
 EXPLORE OTHER TYPES OF STRATEGIES
3/6/2019 How to Create Your Geographic Expansion Strategy | Free PPT Templates

(https://www.stratechi.com/strategies/)

BIG PICTURE
WHAT IS STRATEGY? (https://www.stratechi.com/what-is-strategy/)
BUSINESS MODEL (https://www.stratechi.com/business-model/)
COMPETITIVE ADVANTAGE (https://www.stratechi.com/competitive-advantage-strategy/)
GROWTH (https://www.stratechi.com/growth-strategy/)
TARGETS
MARKET (https://www.stratechi.com/market-strategy/)
CUSTOMER (https://www.stratechi.com/customer-strategy/)
GEOGRAPHIC (https://www.stratechi.com/geographic-strategy/)
VALUE PROPOSITION
PRODUCT (https://www.stratechi.com/product-strategy/)
SERVICE (https://www.stratechi.com/service-strategy/)
PRICING (https://www.stratechi.com/pricing-strategy/)
GO TO MARKET
DISTRIBUTION (https://www.stratechi.com/distribution-strategy/)
SALES (https://www.stratechi.com/sales-strategy/)
MARKETING (https://www.stratechi.com/marketing-strategy/)
ORGANIZATIONAL (https://www.stratechi.com/organizational-strategy/)
ORG DESIGN (https://www.stratechi.com/organizational-design/)
HR & CULTURE (https://www.stratechi.com/hr-strategy-employee-journey-culture/)
PROCESS (https://www.stratechi.com/process-strategy/)
PARTNER (https://www.stratechi.com/partner-strategy/)

EXPLORE THE TOP 100 STRATEGIC LEADERSHIP

COMPETENCIES (https://www.stratechi.com/competencies/)

TYPES OF VALUE (https://www.stratechi.com/value/)

COMPETITIVE DYNAMICS (https://www.stratechi.com/competitive-dynamics/)
PROBLEM SOLVING (https://www.stratechi.com/problem-solving/)
OPTION CREATION (https://www.stratechi.com/option-creation/)
ANALYTICS (https://www.stratechi.com/analytics/)
DECISION MAKING (https://www.stratechi.com/decision-making/)
PROCESS TOOLS (https://www.stratechi.com/process/)
PLANNING & PROJECTS (https://www.stratechi.com/planning-projects/)
PEOPLE LEADERSHIP (https://www.stratechi.com/people-leadership/)
PERSONAL DEVELOPMENT (https://www.stratechi.com/personal-development/)

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