Question

What is a beachhead strategy and how does it contribute to a company's decision to internationalize?

Answer 1

Beachhead Strategy
Beachhead strategy term references the 1944 invasion of Normandy where allied troops targeted their attention on Omaha Beach, that they exploited to stage a counter-invasion of Europe and winning the second world war. What it advocates that as you arrive at enemy territory, you should focus all of your resources into winning a small space and use that as a defense space and from that you finally advance into the enemy territory. Geoffrey Moore’s book, Crossing the Chasm, first presented this concept.

For start-ups, the beachhead strategy is all concerned with concentrating your resources on one little market segment. The business has got to win that market initially, solely then will it move towards larger and a lot of broad markets. It all starts with one market segment and then starts to attract customers from adjacents segments, Every time using those already acquired customers as a way to win over the new market.The beachhead strategy is additionally replicated in mergers and acquisitions. A beachhead acquisition happens once a business acquires another business in a new geographical location as some way of setting itself up for future growth potential. A business will implement a beachhead strategy once the market is just too massive, and the business is not ready to complete a new acquisition in an entirely new market because of the risks involved with it. Beachhead acquisition allows a business to check if people accept their product or not and whether to invest more in that market or not.

Why Beachhead Strategy is effective in Business

• It Increases the power of Word of Mouth
  Word of Mouth is marketing in which your customers are the ones who do the marketing for you. It is amongst the most powerful type of marketing and also the most difficult one to achieve. Think for a moment and remember to your past purchases, how many of those purchases did you create simply because somebody you trust told you about it or even you read a review from somebody you trust. Now once you hear a lot of people talking about that product you are going to get interested and that's how word of mouth works.
  
• Make mistakes without paying the full price
  If you are considering launching a new product, then its either going to work out or not. People either are going to be interested in it or not. Now because you were focusing on a small segment at first, even if it backfires chances of a huge loss are still not there. By following this strategy even if you make any mistake, you can learn from and improve your product or the service you are offering. Choosing a small focused segment, it is easier for you to tweak the product until it is ready to hit the big markets.
  
• Making optimal use of limited resources
  As your business is in its early stage, resources available to you are probably going to scarce and you would want to effectively and efficiently use them to maximize the potential of your business. By focusing on a small segment and the people who are interested in the type of product you are selling, you effectively reduced the resources required as compared to if you had just simply laughed your product in a big market without prior experience and expertise.

Companies that used the beachhead strategy successfully.
Defy Media, Alloy, Amazon, Facebook, Tinder, Mcdonalds are some of the companies that successfully used the beachhead strategy. Wondering how two university students with very limited resources build one of the most successful social networks ever. It is because in the beginning, the focused their entire resources on securing one university and within months they secured the whole university and now almost everyone uses Facebook. Tinder only focused on the west coast at the beginning and that too on college students and for years Mcdonalds had just one location in Port Louis and just by focusing on a small market segment and tweaking there products, these companies are now famous World Wide.