How and Why Should Your Company Expand Globally
International corporate expansion is proving to be an eminent step in a company’s pathway to success and prosperity. It can be challenging to take this first step, but the long-term benefits are plentiful. Even with an understanding of the foreseeable benefits, many businesses are left wondering how and where to start their international expansion.
With proper research, networking, and dedication, these steps can be easily maneuvered. The pathway to multinational operations becomes clear, manageable, and profitable once you have all the pieces put together.
What are the benefits of Expanding Globally?
Once a company has a reasonable grasp on its domestic markets, next steps for continued success involve international expansion. The market is always evolving, especially with the technological advances we see on a daily basis. If you don't make the first move, another company or competitor will. Seizing these opportunities on an international scope sets businesses up for long-term success and a competitive advantage.
Be willing to be flexible and make some changes, because there it is probable that the way you run your business at home won’t necessarily work in the country you’re expanding to.
1. New & Diversified Markets
Probably the most indisputable benefit of international expansion is the access to new and diversified markets. At the international level, these are hardly few and far between. It should be noted that ‘new markets’ implies new cultures, different ways of doing business, and new opportunities for your business if you know how to ADAPT. The key is market research married with an in-depth understanding of the culture and business dynamic in the country. Businesses that are able to identify these markets, target them, and serve their needs stand to gain gracious amounts of revenue.
Should a company be experiencing a period of plateaued growth in their home country, international expansion provides them with an alternate source of revenue and exposure. A geographically diversified customer basis helps companies avoid the detrimental problem in business of “having all the eggs in one basket.” Essentially, it spreads out risk across a handful of consumers and locations. Regions like Latin America in particular are starting to show strong trends towards market growth and promising economic futures. Foreign companies stand a lot to gain by including this diverse region of consumers in their portfolio.
To get a better idea of where you should take your company, take a look at developing and existing trade agreements circulating the global market. Not only will you find an appropriate market, but you’ll learn how you can benefit from these trade agreements.
2. Access to Local Partners
Another element of international expansion is access to local partners and professionals. Local partners can mean a number of different things in this sense: they could be a supplier, an investor, a professional employer organization (PEO), etc.
The benefits of having a local partner in a new, foreign market are uncapped. Local partners will provide context and advice on the different ways/opportunities to set up your business. They may provide insight and streamlined processes throughout company formation stages, license/permit acquisition, legal processes, and other necessary steps inevitable within the development of a foreign company’s expansion. This will reduce your risk of making mistakes during the expansion while you navigate the dynamics of the market you are entering.
Ultimately, a local partner takes care of all the big obstacles that could create major problems, all the while letting respective CEOs focus on their own jobs and goals for expansion.
3. Recruiting Benefits: Talent Diversification
Target markets are not the sole aspect of a business which experiences diversification when a company migrates to foreign markets. The talent pool diversifies as well. As the global economy becomes much more integrated, differing perspectives, skills, and ways of thinking are essential for multinational corporations to adapt and effectively serve their broad range of markets and consumers.
A diversified talent pool can greatly benefit a company. Firstly, the company has increased access to different skills, as well as a higher level of proficiency in them. Increased productivity, collaboration, globalized mindsets, and expansive language and cultural knowledge are all desirable skills exhibited in applicants in these new markets. Companies expanding internationally recruit these individuals to not only serve their new market, but also to help strengthen and build up the business as a whole. It better equips the company for understanding the market they are moving into. In this sense, a diversified workforce complements a business in a similar way a local partner does: by giving insight into local customs, culture, etiquette, language, etc.
How to Expand Abroad
The first step in expanding abroad is to commit to the idea and the process. At times, the road will get bumpy, and success and profitability may seem light years away. However, the key indicator of success for entrepreneurs expanding to international markets is dedication and commitment. Find a niche where the business fits perfectly and where the demand is high and growing. With a well-defined niche, dedication, and forward-thinking mindset, the foundations for success in a foreign market are established and unwavering, allowing a company to build further on these ideas and motivations.
Aside from an enduring dedication to the endeavor, success in foreign markets is most often realized with the help of a supporting partner in the country. PEOs and back-office service companies help foreigners navigate the tedious rules and regulations they would otherwise be unfamiliar with. This helps avoid costly mistakes, streamlines processes, and takes a great deal of stress off the foreign enterprise.
Whether partnered up with a local expert or not, all foreign companies must go through similar processes to legally sell goods or services in a country. Detailed formalities differ depending upon the country, but the general steps are all the same. Many require visa processing, company registration, local bank accounts, local address, a sponsoring agent, and sometimes require at least one shareholder to be a native. To best sort out the details and requirements, it is strongly advised to consult a local company which specializes in such matters.
With so Many Options, Where Should a Company Expand to?
Different industries have different ideal markets to expand to. However, an overall positive economic climate of a region or country can indicate a favorable move for any foreign company.
Most recently, the Latin American region has been showing signs of growth and promises of future innovation and expansion. Trade agreements between neighboring countries and global economic leaders like Australia and New Zealand make the region a welcoming site for foreign businesses. Specifically, agreements such as MERCOSUR and the Pacific Alliance have developed relationships with the UK, EU, and Asia. Cross-continent agreements make international expansion and trade much more simplified and lucrative.
Expanding to international markets offers a handful of lucrative opportunities and benefits for any enterprise. Diversified market portfolios, access to local partners, diversified workforce, and foreign investment opportunities all foster an environment for market and financial growth and expansion.
To reap all the benefits of international expansion, a company must understand the risks and costs involved, and do its very best to avoid unnecessary mistakes. Finding a partner is one of the many steps involved in the globalization of a company. Further explanations of processes and regulations are best given by local experts.
Overall, the key is to keep moving forward with each step in a diligent and disciplined manner. The opportunities awaiting in the ever-intertwined global marketplace are endless for companies willing to make the next move.
Craig is a seasoned business professional in Latin America. He is the Managing Director and Co-Founder of the Biz Latin Hub Group that specializes in the provision market entry and back office services in Latin America.