The benefits of global expansion: 6 compelling reasons to go global

If you have a successful business in the U.S., expanding globally could be a logical step to grow revenue. Companies of all sizes have found new opportunities and gained a competitive edge by entering global markets.

Why go global? The advantages of international business

When done right, globalization delivers sizable advantages for your business, including expanding your customer base, opening up new talent pools, driving revenue, and increasing profits. A well-defined global expansion strategy is crucial for companies entering international markets. Establishing your business in new markets can require considerable investment, so it’s important to carefully assess how well-positioned your company is for global expansion before making the move.

Factors to consider when evaluating if global expansion makes sense

Here are some things to consider when determining the feasibility of global expansion for your company:

Investment required

Globalization requires a significant commitment of resources. It’s important to carefully estimate the time and money needed for international expansion to determine whether it’s truly the right move for your organization and how it will impact your business operations.

Human resources

Doing business in a new market means navigating differences in employment regulations and cultural norms. Having the right human resources processes and procedures in place is crucial for success.

Market opportunities

Choosing the right markets is key to maximizing the benefits of global expansion. A well-defined market entry strategy is essential for businesses looking to expand internationally, as it helps navigate new markets, address localization challenges, and capitalize on emerging opportunities. Consider which international markets offer the greatest potential for new customers and revenue, where your company already has some traction in the marketplace, and how difficult it will be to adapt your current offerings to fit local needs.

Legislative and regulatory compliance

Laws vary widely from country to country, so it’s important to understand the regulatory environment in each new market you’re considering entering. It will also help you to evaluate whether doing business in that market makes sense, given local regulations.

Local culture, trends, and norms

Business is shaped by culture and customs as much as it is by local laws. For your global expansion to succeed, you’ll need to consider how your organization can do business in overseas markets in a culturally relevant way. This approach includes adapting to local tastes, essential for successfully navigating international trade and enhancing market penetration.

6 key benefits of international business

If your company decides to invest in global expansion, here are some of the benefits you can expect:

1. Access top talent on a global scale

Employees are a company’s most valuable resource. Businesses that excel at talent management grow 58% faster and are 72% more profitable. Globalization expands your company’s talent pool worldwide, allowing your business to hire the very best employees and reap the benefits of a more diverse workforce. However, managing a global workforce comes with complexities, such as compliance and cultural adaptation, which are critical for organizations looking to expand internationally. Diverse companies have 2.5 times higher cash flow per employee, and 3 out of 4 job seekers prefer to work for diverse companies.

2. Improve cost efficiency

When your company expands internationally, you increase the market for your offerings and can boost production, which allows you to enjoy even greater economies of scale. Access to new labor markets, resources, and technologies can also help you increase efficiency and lower costs.

3. Leverage financial incentives for entering new foreign markets

Expanding into overseas markets increases opportunities for foreign investment in your business, which brings with it a wide range of benefits, including spurring innovation, opening up access to new technologies and business models, and increasing connections to global supply chains.

4. Expand your customer base

Globally, consumers spend 44 trillion US dollars each year, and the value of the global B2B e-commerce market is nearly 18 trillion US dollars a year. Understanding your target market is crucial when taking your business global, as it allows you to strategically navigate different markets and adapt your operations and strategies according to their specific characteristics, legal requirements, and cultural nuances. Expanding your customer base can help increase sales and revenues and generate higher profits.

Additionally, diversifying your markets and customer base helps create greater business stability. Suppose there is an economic downturn or some other unforeseen circumstances that disrupt sales and revenues in one of your markets. In that case, you have other markets that can help to balance your company’s finances.

5. Increase consumer trust within overseas markets

Investing in new global markets allows your company to win the trust of new local customers, and doing that successfully is good for business. In a survey, 7 out of 10 consumers said they purchase more from trustworthy brands. On average, people spend 25% more with trusted brands.

6. Cultivate competitive advantages

Globalization can give your company an edge over competitors in a number of different ways. Leveraging technology to enhance communication and collaboration among global teams is crucial, especially when establishing operations in new countries. If you expand into a market where your competitors don’t do business, you’ll likely gain a first-mover advantage. 

Moving into overseas markets expands your options for potential suppliers, increasing competition for your business, which can lower costs and ultimately improve the quality of your products. 

Likewise, globalization also gives you a larger talent pool, increases your access to new technologies, and lowers production costs—all of which enable your company to offer high-quality products or services at a lower price for your customers.

Challenges of global expansion and international business

Naturally, there will be some hurdles your business will face as you expand internationally. International growth involves navigating regulatory challenges, optimizing resource allocation, and considering strategies like partnering with Employer of Record (EOR) services or hiring international contractors. Here are some potential challenges to be aware of:

Linguistic and cultural barriers

In a survey, 76% of shoppers said they prefer purchasing products with information in their language. Similarly, 66% of B2B buyers are willing to spend more for a product or service that delivers a localized customer experience. To win over customers in new global markets, you’ll need to speak their language and communicate with them in a culturally meaningful way.

Compliance issues

As your business expands internationally, you’ll encounter vastly different legal environments from one market to the next, affecting everything from governance to hiring to financial reporting. Staying on top of changing regulations is crucial for your global success.

Significant costs for both expansion, and termination in the case of failure

While expanding your business internationally offers important advantages, it also has significant costs. If you establish a foreign subsidiary or legal entity, which many companies do to comply with local regulations, you’ll need to budget for the initial setup and annual maintenance fees. 

Other costs you’ll need to consider include real estate, taxes, transportation, and labor, which may have stricter protections for workers that raise costs, depending on the market. If your expansion effort doesn’t meet your business goals and you ultimately decide to leave the market, termination costs can also be significant.

Managing a global workforce

While globalization opens up new opportunities, it can also create additional complexity for your organization. Developing global expansion strategies is crucial for managing a workforce that is spread across countries and time zones, which can certainly pose a challenge. 

In a survey of executives heading up global companies, 74% agreed that maintaining control of international activities was difficult. You’ll need to consider varying employment regulations, how to organize scheduling and workflows, how to train and offer professional development for all your employees, and how to navigate cultural differences.

A professional translation and localization partner is key to your global success

Globalization offers your business a wide range of advantages—everything from expanding your talent pool to lowering costs to building new customer bases. However, there are challenges to navigate on the way to global success. Establishing strategic business partnerships is crucial for overcoming these challenges and achieving success in global market expansion. At Acclaro, we partner with your company during every step of your international expansion. We can help you determine your globalization strategy and develop a translation and localization program specifically designed to meet and exceed your goals. 

Get started today to learn how we can help your business open up new opportunities worldwide.