Why positioning, operating model, partnerships and governance must be designed together

International growth is often presented as a commercial opportunity. A company identifies an attractive market, estimates demand, selects a local partner and expects sales to follow.

In practice, market entry is rarely that simple.

Global foreign direct investment increased to $1.6 trillion in 2025, but UN Trade and Development describes the recovery as fragile and uneven. Attractive markets remain available, yet differences in regulation, infrastructure, institutions and operational conditions continue to shape whether companies can actually compete.

The central question is therefore not simply whether a market offers potential. It is whether the company can build a position, operating model and decision structure that work locally.

Market potential is only the starting point

A market may offer favourable demographics, growing demand or limited competition. None of these factors automatically creates a viable position for a foreign company.

The first questions should be more specific:

• Which customers can the company realistically serve?
• What problem does it solve for them?
• How must its proposition differ from local alternatives?
• Which capabilities provide a genuine advantage?
• What must be adapted and what should remain consistent?

A European company entering an Asian market, for example, may initially rely on the strength of its product and existing reputation. Local customers may assess the same proposition through different criteria, such as price, availability, service, relationships or compatibility with local channels.

This is not merely a matter of translating marketing materials. It requires a decision about where the company intends to compete and why customers should choose it.

The channel shapes the strategy

The choice between direct sales, distributors, joint ventures, local subsidiaries, digital platforms and retail partnerships is not a secondary implementation matter. Each route creates a different commercial position and a different level of control, investment and dependency.

A distributor may provide rapid access to customers but also control the relationship and market information. A local subsidiary creates more control but requires management capacity and a longer investment horizon. A digital platform can open a market quickly, while placing the company in an environment governed by platform rules, price comparison and unfamiliar customer behaviour.

Research into international entry modes has shown that performance is influenced by how well the chosen structure fits the institutional, cultural and transaction conditions of the market. The appropriate model cannot be selected on speed or cost alone.

This became visible in an assignment involving the development of commercial channels in China. The question was not simply how to sell more products. It required alignment between the Dutch commercial leadership, local management and potential Chinese retail and digital channels.

Each channel implied a different customer proposition, commercial relationship and allocation of responsibility. The discussion therefore moved beyond sales and towards a broader strategic choice: which route supported the position the company wanted to build?

Local knowledge cannot be outsourced entirely

Foreign companies inevitably enter with incomplete information. They may understand their products and sector extremely well while lacking local relationships, behavioural knowledge and insight into how decisions are actually made.

The OECD describes internationalisation as a learning process in which local networks and partners help companies overcome this disadvantage. A partner can provide access, credibility and knowledge. That does not mean the company can delegate its market understanding to that partner.

Management must remain capable of testing assumptions independently. It should understand:

• how customer decisions are made;
• who controls access to the market;
• which interests influence the local partner;
• how performance information is produced;
• where dependencies are developing;
• when the entry model should be reconsidered.

Without this knowledge, headquarters may receive reassuring reports without being able to assess the underlying commercial reality.

The challenge is therefore to combine local autonomy with informed oversight. Local leadership needs sufficient room to respond to the market, while headquarters must remain able to question results, allocate resources and change direction.

The operating model must follow the choice

International expansion often creates new priorities without changing the organisation behind them. The company announces entry into a new market, while budgets, management attention, processes and decision rights remain largely unchanged.

That is not a market entry strategy. It is an additional ambition placed on top of the existing organisation.

In one international distribution business, the challenge emerged after the commercial footprint had already expanded across several countries. Growth had created teams, customers and delivery responsibilities in different locations, but the organisation also needed clearer coordination between commercial operations, finance and execution.

The central task was no longer entering another market. It was ensuring that the operating model could support the international structure already created.

Market entry must therefore establish:

• who owns the commercial outcome;
• which decisions are taken locally;
• which decisions remain with headquarters;
• how finance and operational delivery are connected;
• which capabilities must be developed locally;
• how performance and risk are reported;
• when additional investment is released or stopped.

If these questions remain unresolved, local teams are held responsible for results without receiving the authority or resources required to deliver them.

Adaptation should be deliberate

Companies regularly face a false choice between global consistency and complete localisation. Neither extreme is usually appropriate.

Some elements should remain consistent because they protect quality, reputation or efficiency. Others must be adapted because the local customer, cost structure or route to market is different.

In a Taiwanese commercial assignment, improving performance required attention to the local proposition, cost base and delivery model. Options included adapting the commercial offer, developing white label opportunities and reducing waste.

These were not isolated operational improvements. Together, they determined whether the business could create a locally viable position while still benefiting from the wider organisation.

Adaptation should therefore result from deliberate choices rather than gradual exceptions. Management should be able to explain what is being adapted, why it is necessary and which limits remain in place.

Governance determines whether the model holds together

International growth creates distance. Not only geographical distance, but also distance between information, responsibility and authority.

Headquarters may approve investments without seeing local conditions directly. Local management may understand the market but lack authority over budgets, pricing or partnerships. Commercial teams may be rewarded for growth while financial and operational risks appear elsewhere in the organisation.

Governance connects these perspectives.

Effective governance for market entry should clarify:

• the assumptions on which investment decisions are based;
• the indicators used to test those assumptions;
• the responsibilities of headquarters and local management;
• the approval process for partnerships and expenditure;
• the risks that require escalation;
• the moments at which the strategy will be reviewed.

This should not become a heavy reporting structure. The purpose is to ensure that information reaches the people who must make decisions and that responsibility is matched by authority.

Treat market entry as a sequence of decisions

A practical approach can be organised around four stages.

1. Define the position

Identify the customers the company intends to serve, the problem it will solve and the advantage it can defend locally.

2. Design the entry model

Choose the channel, partnership structure and level of local presence that fit the market and the company’s objectives.

3. Build the operating model

Allocate responsibilities, resources, capabilities and decision rights between headquarters and the local organisation.

4. Test and adjust

Review whether the original assumptions remain valid. Use commercial results, operational performance and local intelligence to decide whether to invest further, adapt the model or withdraw.

This approach recognises that internationalisation is a learning process. It also prevents learning from becoming an excuse for entering without clear choices.

International growth requires organisational commitment

Market entry succeeds when commercial opportunity and organisational readiness are considered together.

A promising market cannot compensate for an unclear proposition. A strong partner cannot replace internal market understanding. Local management cannot deliver without authority and resources. Governance cannot repair an entry model that was never consciously designed.

International growth begins with a commercial opportunity, but it becomes credible only when positioning, channels, operating capacity and governance support the same direction.

The quality of market entry is therefore not demonstrated by the decision to enter. It is demonstrated by the organisation’s ability to learn, commit and make increasingly informed choices.

David Monge Vega is the founder and independent adviser at Monge Vega Advisory.

Sources and further reading

UN Trade and Development, World Investment Report 2026: International Investment in a Turbulent Era

OECD, Incubation in Entrepreneurial Ecosystems: Hatching Growth, 2026

World Bank Group, Business Ready 2025

Keith D. Brouthers, Institutional, Cultural and Transaction Cost Influences on Entry Mode Choice and Performance, Journal of International Business Studies, 2002