When does it make sense to enter the U.S. market?

We’ve worked with some 20 international firms – from Canada, across Europe, New Zealand and Australia – all of whom have reached the point of asking: does entering the U.S. market make sense? In our experience, that question is best answered by first addressing five questions.

Why enter the U.S. market at all? There are plenty of reasons to expand into the U.S. market – growth, achieving economic scale, increasing enterprise value, access to specialized labor and strengthening the firm’s appeal to global customers. Yet, what might be a sound reason for one company may be a terrible reason for another. There is no one-size-fits-all rationale that universally applies. A company’s situation has to be examined, as well as its objectives in light of that, to determine if entering the U.S. is a sensible option.
Why now? Why not two years from now … or five years? The much ballyhooed notion of a narrow window of opportunity is more a product of raising investment funds that it is a potential roadblock. Having sufficient cash to fund U.S. market entry carries considerably more weight than does market timing.
How large is the opportunity for the company’s offering? “Big enough!” is a response we often hear – the belief that in a market so large that there is always room for one more at the party. That the U.S. market represents significant potential for almost any product or service is true. However, often overlooked are two biggies: competitors and the appeal of their offerings. Investing the time and effort to determine the addressable market in the U.S. for a company’s offering is a great way to determine if the market is genuinely “big enough”.
Can you effectively compete in the U.S. and achieve our goals? Competitive capability is the flip side of the addressable market size coin. The two go hand in hand, for what might be a rock solid offering in a home market may not fare well in the U.S. Though Toyota and Nissan garner large U.S. market share today, initial entry was rocky. Others like Yugo, Lada, Rover, Peugeot and Renault never made the grade. Your product may be a unique fit in your market, but it is a choice to American buyers that is typically in a long lineup of competitive choices.
Finally, can you devise and execute a go-to-market strategy in the U.S. that can profitably achieve your goals. Spreadsheets have an uncanny way of incorporating biases and false assumptions, yielding outcomes that fail to materialize in reality.

In the next few blogs these questions will be dealt with individually.

Written by Michael

Michael Douglas has held senior positions in sales, marketing and general management since 1980, and spent 20 years at Sun Microsystems, most recently as VP, Global Marketing. His experience includes start-ups, mid-market and enterprises. He's currently VP Enterprise Go-to-Market for NVIDIA.