Economies continue to develop around the world—despite the unprecedented obstacles brought about by the pandemic. In fact, challenging times bring about ingenuity and innovation, where new markets, more business investment opportunities, and enhanced economic synergy spring forth. For example, the advanced air mobility industry attracted investments of more than $5.4 billion in the first nine months of 2021 alone, according to a November 2021 McKinsey Executive Briefing. Meanwhile, the IMF’s October 2021 World Economic Outlook Report projects the global economy to grow by 4.9% in 2022. This, despite rising inflation and supply chain shortages. While countries, entities, and markets find creative ways to overcome challenges and adapt to the “new normal,” international business expansion and going global remains a vital tool for micro- and macro-economic growth.
Besides these overarching factors, though, why else should you look to expand your business abroad? Here are the top five reasons.
5 Benefits of Going Global
Tap Into Untapped Markets
Entering new domestic markets is an obvious benefit of global business expansion. But considering the devastating effects of the pandemic, companies might be hesitant to implement any international expansion strategies, right? Nope, not according to a survey conducted by CFO Research. It polled over 200 international senior executives with annual turnovers of at least $1 billion, revealing that:
- Implementing a global business expansion strategy was a top priority, superseded only by optimizing costs of goods and margins.
- Introducing new or additional products or services was the third priority while maintaining working capital ranked fourth.
- Geographic business expansion factored in 81% of respondents’ long-term growth strategies.
Even if you dominate your current local market, saturation and fierce competition mean limited growth potential—and consequently, a capped profit margin. Extending your business operations to new countries means access to previously-untapped target markets. Each one represents a new potential source of revenue from a wider customer base. With a well-executed and implemented global business expansion strategy, you’ll increase your revenue income, profitability, and long-term survivability.
A Tidal Wave of Talent
Expanding your business internationally means you’ll have a pool of global talent at your disposal — a competitive edge over your competitors back home. Besides that, the broader availability of global employees allows you to hand-pick the best experts for the job. Some skill sets are scarcer in certain countries than others. By hiring internationally, you’ll have in-house expertise for all the facets of your business. Global expansion is nuanced, with cultural, linguistic, socio-economic, political, and even technological factors to consider for successful entrance and dominance in a new market. Sure, research and statistics are essential. But they can’t replace first-hand insights and the experience a local professional has within a specific market.
Double Down on Diversification
Most companies expand to enter the same markets in different countries. But with a global presence, you can also introduce new or modified products or services to entirely different market segments. It’s also possible for a brand that dominates locally to find a steady foothold in a more niche market abroad. One example is Heineken. On the flip side, a business operating in a local niche market can expand into more mainstream global markets. Market diversification comes with its own advantages. Besides boosting revenue, expanding into different markets also enhances overall financial security. If performance lags in one market, another thriving market can pick up the slack. This is especially valuable when industry-wide issues affect your business.
Financial Incentives for Foreign Investment
Developing markets and economies want to attract foreign business and investment. Some countries offer financial incentives to expanding companies for this very reason. Such incentives include but aren’t limited to:
- Industry-specific financial incentives such as loans and grants
- Minimized regulatory requirements
- Exempted, reduced, or deferred taxes
- Development guarantees
- Preferential treatment in a domestic market
To maximize this advantage, your global expansion strategy must identify countries with the best available financial incentives and determine whether the requirements are viable.
Boost Brand Exposure
Companies with an international presence enjoy global prestige and credibility. Their success is partly due to establishing a trustworthy relationship with their worldwide customers. When you go global, you expose your brand to a wider audience. An effective marketing plan is vital, though. You need to strike the right balance between presenting a unified brand image and message while considering specific cultural preferences for each local market you enter. This also applies to your products or services. Get it right, and international expansion will boost brand exposure and establish your market dominance.
Consider This Before Going Global
Before expanding your business abroad, you need to conduct in-depth market research to find the most promising target markets. Deep dive into a domestic market’s nuances to see whether your product is the right fit. Stay flexible, though, because you’ll often find that products or services need local adaptation. Some factors worth considering include:
- Licensing
- Legal and compliance risks
- Taxation requirements
- Industrial and employment regulations
- Customs and shipping
- Affordability
- Currency
- Cultural differences and language barriers
- Economic and political stability
- Unique value proposition and competitive advantage
- Customer service expectations
- Customer buying habits
Up the Ante With Innovation Park
Global business expansion is fundamental for sustained long-term growth in an ever-changing world. If you implement the right strategy, you can tap into new domestic markets, utilize a talented international workforce, boost brand exposure, and even diversify your offerings in different markets. Financial incentives like grants, loans, and corporate tax deductions are other potential benefits of expanding your business internationally. Of course, benefits come with putting in the work. You need a cost-effective, efficient, and impactful global expansion strategy to reap the rewards of growing your business. At Innovation Park, our business experts from around the world tailor end-to-end solutions that suit your needs for going global. Book a paid consultation with us today.
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Sources: McKinsey, IMF, CFO Research