Back in 2013, U.S.-based retailer Target had what many thought was a brilliant strategy for its first international expansion. By purchasing the leases of failing Canadian discount chain Zellers it could open more than 100 stores in the country within a matter of months. The expansion plan seemed straightforward but it didn’t take long for things to unravel. The inherited urban locations turned out to be an awkward fit for Target’s middle-class brand positioning, while the company’s hasty expansion left key supply chain issues unsolved, causing too many shelves to sit empty. By the time Target pulled out of Canada two years later, the venture had incurred approximately $2 billion in net losses and left nearly 18,000 people unemployed.
Poor preparation, inflexible mindsets and over-reliance on historical tried and proven formulas all too often thwart internationalization efforts. Companies should only internationalize on strategy rather than on the back of opportunity. Gryphon Partners will help remind that the alignment of expansion plans with strategy and objectives has to take center stage. Building and strengthening brand presence, pursuing sustainable growth and profits, and improving market share need to remain top of mind.
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