Growth-minded businesses are always thinking about global expansion. If you have a clear objective about expanding globally it becomes a lot easier to take your business overseas. There are several advantages associated with the expansion of business overseas if it is done properly. The companies that are planning to expand globally need to take time to explore what benefits they are looking to achieve. If some organizations and businesses are still not decided about entering some foreign markets, we are giving five compelling reasons here for taking a step forward and entering the global market.
1. Less competition in the developing markets
Developing a competitive advantage over the existing business competitors happens to be one of the biggest reasons to opt for a global expansion. The companies and businesses that initiate a global expansion often benefit from being the first movers. This move lets them leave a saturated domestic market to look for new clientele in the developing areas. An entry into newer markets provides better visibility to the companies. It also allows the business to have strong brand awareness and you can establish a connection with the local consumers.
The hindsight is that by entering a new market your business may face cultural differences the marketing and sales teams have not been prepared for. Pricing is another trap as the purchasing power of your target buyers may vary a lot across geographies. The same is applicable to the minimum wage and the average market pay rate if you are planning on opening an office and hiring distributed workforce overseas.
2. Allows you to offset the fluctuations in the existing local market
A diversified market presence and global expansion offer a business, a way of mitigating long-term risks involved in a fluctuating local market. If you can enter a global market overseas successfully, it reduces the dependence on the local market. Rather than feeling the effects of the highs and lows of the local market, the businesses can use the profitable operations from the new markets to offset a negative performance in the current market. For instance, if you open a company in Hong Kong, you can introduce newer products and services in the region. As the buyer preferences across the globe vary a lot, you can balance production and supply chain overload and focus on those products and services having the highest profit margin. Sometimes, having a presence overseas may cut the delivery time and address some supply chain shortages which are additional advantages.
3. Improvement in profit margins
When you go global you are providing your business access to a new talent pool and a different technology. This can bring down operational or production costs permitting the companies to improve their profit margins. Moving some divisions of your business to foreign countries is not a new concept. Singapore, China, India, and some other Asian countries have become economic production areas. More affordable materials, a skilled workforce, and an abundance of talent pave the way for keeping manufacturing costs down and yet maintaining the quality of products. Moreover, in some countries, you may tap into a much large talent pool due to the size of the population or the cultural preferences to certain degrees. Free or subsidized education in many countries across the globe also means a bigger and highly skilled workforce within your reach. Cutting talent acquisition costs, the time to fill a role and increasing the retention rate have a positive effect on both the quality of products or services and profit margins.
4. Take a unique opportunity
Any changes in the industry, management, and local markets are ideal for international expansion. Acquisitions, mergers, and the opening of new offices are good opportunities for capitalizing and moving forward toward international expansion. Some unexpected events can also develop unique opportunities for overseas expansion. One prime example of this is the global development of the digital expansion of businesses when the pandemic was rampant. We observed a 3-digit percentage rise in e-commerce sales in 2020. One thing is certain, the consumers no longer limit their buying to what is locally available. The same is applicable to building remote teams. The easy access to global talent and the seamless implementation of global payroll on-demand and EOR ( Employer of Record) inevitably cut costs and enhance the level of expertise on your team. By leveraging technology you may gain insights into the median pay rate per given skill set and role across the globe, the predicted success rate of a candidate and much more. When thinking of an ATS ( Applicant Tracking System), sophisticated and user-friendly do not necessarily come to mind in this order, but that’s what the AI-powered ATS of Transformify has to offer.
5. Easier response to demand
One of the more common and telling reasons why many businesses go overseas is the existence of big demand. The businesses that do not take their operations internationally after watching a big demand for their products and services may miss out on great opportunities. It is quite easy to see the foreign markets responding to your products even when some of them are not available to them yet. Thanks to social media and digital advertising, your products may become known to your target buyers long before you invest a penny in local marketing activities.. If you see international customers showing interest in your products it is advisable to test the market by completing a small expansion.
So, is global expansion always a great idea?
Expanding your organization overseas requires a lot of time, effort, and commitment to make sure that the entire process goes forward smoothly. By having a foreign expansion strategy in place, you will be improving the chances of establishing a presence at the international level. A proper business plan will lead to the successful expansion of business globally. Proper foreign expansion strategies will provide your business with the right structure it requires to become sustainable in new markets. You can create a business model that will work well in the new country you are entering for business. Proper foreign expansion strategies account for several factors that can prove challenging to business growth.