A waterfall approach to entering foreign markets is described as entering countries simultaneously.

In deciding to go abroad, the company needs to define its marketing objectives and policies. What proportion of international to total sales will it seek? Most companies start small when they venture abroad. Some plan to stay small; others have bigger plans. Typical entry strategies are the waterfall approach, gradually entering countries in sequence, and the sprinkler approach, entering many countries simultaneously. Increasingly, firms—especially technology-intensive firms or online ventures—are born global and market to the entire world from the outset.

The company must also choose the countries to enter based on the product and on factors such as geography, income, population, and political climate. Competitive considerations come into play too. It may make sense to go into markets where competitors have already entered to force them to defend their market share as well as to learn from them how they are marketing in that environment. Getting a toehold in a fast-growing market can be a very attractive option even if that market is likely to soon be crowded with more competitors.3

Many companies prefer to sell to neighboring countries because they understand them better and can control their entry costs more effectively. Also, given more familiar language, laws, and culture, many U.S. firms prefer to sell in Canada, England, and Australia rather than in larger markets such as Germany and France. Companies should be careful, however, in choosing markets according to cultural distance. Besides overlooking potentially better markets, they may only superficially analyze real differences that put them at a disadvantage.4

In general, a company prefers to enter countries that have high market attractiveness and low market risk and in which it possesses a competitive advantage. Also, regional economic integration—the creation of trading agreements between blocs of countries—has intensified in recent years. This means companies are more likely to enter entire regions at the same time.