Companies tend to expand. It’s what they do. But have you ever spent any time thinking about why you should expand? The answers aren’t always obvious. Many times, it’s not about profit. In fact, expansion is expensive, so it can reduce the amount of money that you make. Instead, expanding globally is more about bringing your business to its full potential. For many entrepreneurs, it is simply a question of how far they can take things.
In this post, we take a look at some of the benefits of expansion. Please, note, however, that growing a business globally is not without its challenges. You’ll need to learn more about accepting payments in multiple currencies, marketing in foreign markets and dealing with local regulations.
Before you expand overseas, make sure that you do all the proper research. Also ensure that you take a country’s employment laws into account before you start hiring people. Be sure that you have a legal team in place who can assist you and ensure that you are making the right operational decisions.
So, without further ado, let’s take a look at some of the advantages of expanding globally.
Get Access To New Talent
Businesses are obsessed with talent. They want people who have a certain spark about them and are able to complete a myriad of tasks with apparent ease. Finding these people domestically isn’t always easy. But when you expand internationally, you improve your options. You have a much wider pool of people from which to select.
Hiring overseas is also essential for anyone wanting to tap into a local market. Employees who are from the country you are expanding into can provide advice and suggestions that no amount of market research could ever provide. They can tell you whether your marketing strategies are going to work and how to overcome local language barriers. They can even interact with local suppliers on your behalf, ensuring that you get the best deal.
While expanding overseas is expensive, many businesses do it because it provides them with an opportunity to diversify. An economic crash in the domestic market could lead to a downturn in sales that a company can’t offset by increasing sales elsewhere. Expanding overseas increases revenue streams from multiple sources and limits the impact of local events such as political change, natural disasters and stock market crashes.
In today’s world, many global brands are trying to expand into Asia to take advantage of the continent’s growing middle class. Even as western markets slow, places like Thailand and India are offering new sales opportunities to keep revenues high. In the future, we could see Western brands pivot even further in that direction, setting up shop in parts of the world where incomes are growing fast.
Become More Competitive
If the domestic market is saturated, expanding overseas could provide your brand with a competitive edge. Competition can be quite fierce in mature markets because entrepreneurs have already exploited most of the available opportunities and niches. But that’s rarely the case in developing parts of the world – or regions that don’t have industries based around what you sell. Here consumers are often begging for options and are willing to pay a premium to get them. That, in turn, helps to increase your margins.
Expanding internationally can also generate profound marketing benefits. When you have a much broader audience, it is easier to benefit from economies of scale.
Bring Your Product To More People
Some businesses aren’t overly concerned about profits. What they want most is to bring their products and services to as wide an audience as possible. That’s because they believe that what they do has the potential to generate real value in people’s lives.
Expanding overseas helps to facilitate this. Doing business in more countries allows you to fulfill your company’s mission to serve others and make the world a better place. It lets you bring award-winning products to people who wouldn’t otherwise have the opportunity to experience them.
Many companies have done this in the past, especially when they saw that they had no real competitors in foreign markets. Canadian health fast food brand Freshii, for instance, opened operations in Eastern Europe because it was the only company providing a service of its kind.
Benefit From Scale Economies
In the short term, expanding overseas is expensive. But in the long-run, it can help you reduce your costs. For instance, you can reduce unit costs by increasing factory utilisation. You can also negotiate with suppliers to provide you with lower-cost inputs if your volume is high enough.