If an ASX-listed company expands overseas, it often dominates the news cycle for a couple of days, but what should you look for when a company wants to grow internationally?

These three companies operate very different business models, and have varying chances of success in expanding overseas – find out why.

The Wesfarmers Ltd (ASX: WES) expansion into the United Kingdom is the largest of its kind for an Australian company for some time. The estimated $1 billion spend it will take to roll out the Bunnings brand in the UK is an indication of the cost it takes to build a substantial position in traditional retail, as well as the large-scale and labour intensive nature of Bunnings stores.

There are some red flags, however, with the large capital amount required and a strong local competitor in the UK. Bunnings in the UK appears to be in the same position as Masters was in Australia several years ago, and though the businesses involved might be different, it does show the size of the challenge ahead.

XERO FPO NZ Limited (ASX: XRO) has a great track record of expanding, first taking market leadership for cloud-based accounting software in its native New Zealand, then Australia and most recently, the UK, where it can now boast over 100,000 subscribers. In fact, the company has over 600,000 subscribers globally, each paying a recurring, monthly fee in exchange for Xero services.

The company now has its sights set on 1 million subscribers, and most of those will have to come from the giant US market, where it currently only has 47,000 users. Encouragingly, the pace of user adoption in the US to date has been faster than any other market.

However, working against Xero is the complexity of the differing state-based accounting and taxation rules in the US, and the presence of an enormous, well-funded incumbent, Intuit.

Aconex Ltd (ASX: ACX) is a stock that has aspired to a global presence from its inception. The company provides software that links all of the hundreds of moving parts it takes to build a large scale building or infrastructure project and allows contractors, project managers and employees to interact through one unified portal.

The company has more than tripled its share price since listing, and recently announced an acquisition that will help it expand more rapidly offshore. Aconex will acquire the German company, CONJECT, which provides many similar services to Aconex. The true value of the deal is that CONJECT is a market leader in the high value German, French, Russian and UK markets with north of 650 active clients.

Software companies can expand internationally without the need for large fixed costs (factories, stores, showrooms etc), but Aconex has shown that it is willing to spend in order to gain scale quickly.

Foolish takeaway

The capital-light nature of expanding overseas for a software company coupled with the recent purchase of a competitor with a large client list puts Aconex at the top of this list for international expansions, closely followed by Xero, which has a longer road to travel if it wants to be a major player in the US.

Wesfarmers’ Bunnings expansion carries the most risk as it is early stage, capital intensive and light on experience in the UK market.

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Motley Fool contributor Ry Padarath owns shares of Xero. The Motley Fool Australia owns shares of Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.