The digitization of businesses has enabled most local companies to explore other markets besides their own. And more local enterprises are leveraging the technological trend by taking their operations to various markets, hoping to increase their sales and revenue. Successful companies even go so far as to consider taking part in the biggest market of all – the global marketplace.
In the retail industry alone, $6.51 trillion of sales is attributed to the e-commerce industry. Online shops have garnered a lot of attention, making up 22.3% of global retail sales. Moreover, talent acquisition has become more diverse and global with the prominence of remote work. As a result, the Global digital talent acquisition market is projected to reach the $30 billion mark by 2023.
Although the numbers sound promising, owners must first understand the global marketplace thoroughly. Let us first define what it is and how it can make or break your business.
What is a Global Marketplace?
A Global Marketplace is a collective term used to describe the entirety of all local markets in the world. This will include all the sellers, consumers, and the products and services being exchanged.
There are multiple ways on how the Global Marketplace operates. It can exist online for participants to conduct business seamlessly or through a standardized set of goods and services that are sent across internationally.
The scope of a global marketplace transcends the borders of every country, city, or region. To paint you a picture of how this accumulated term operates, the following are some examples:
- An international restaurant chain operating in multiple countries across the globe.
- A software company with multiple offices globally being supported by Employer of Record (EOR) services.
- A company operating remotely and employing talents from everywhere with the help of a Professional Employer Organization (PEO)
- A lifestyle brand company that customizes its services based on the market region they are operating.
- An online retail platform that offers shipment of products worldwide.
Advantages of the Global Marketplace
The Global Marketplace offers a wide range of opportunities for businesses to grow and explore other customer demographics. Below are some of the benefits when engaging into the world market.
Creates stability through multiple income streams
Companies naturally expand their operations globally to grow their business further. And entering the global marketplace could increase their revenue and provide a greater reach for their company branding.
A broader market scope provides businesses with multiple income streams. When one market performs poorly, global companies will have another market to rely on for financial stability. The global marketplace allows companies to manage their financial health in varying ways and protect their operations from any potential ruin.
Provides access to new markets
Businesses operating in an actual locale or region are often limited by the type of customers they are targeting. But allowing cross-border transactions for their business opens up a myriad of opportunities to increase their sales.
Companies opting to explore the world market will give them unrestricted access to varying markets. They will have the advantage of reaching out to mass consumers, getting their business recognized across regions, and tapping into the world’s talent pool; this leads us to the next item on our list.
Opens doors to diverse workforce
The advent of technological solutions, such as EOR and PEO, has paved the way for headhunters to seek out highly-skilled employees wherever they may be in the world. And with remote work gaining popularity after the pandemic, more businesses have adapted to diversify their human resources.
International recruitment provides insights into different markets around the world. Foreign hires become an asset for most businesses to understand better the customers they are targeting. In turn, companies will be able to inculcate their consumers’ culture and preferences into their products.
Moreover, the varying costs of employing workers from different regions can give your companies some options for operating on a budget, which will be discussed in the next item.
Provides cost-effective opportunities
Businesses opting to explore the global market will have the opportunity to discover ways on how to cut costs and save money. This is due to the varying taxes and operating costs from country to country. For example, some countries will have a cheaper cost of living, so employing workers from that area will allow you to save money on wages. Another will be tax costs, to which some countries have lower rates, and some (income taxes in countries like Monaco, Kuwait, and Qatar) even have it for free.
These advantages come with businesses gaining familiarity with their target markets, as well as their own. And to further prepare you for when you decide to explore the world markets, the following section should prepare you for the associated challenges.
Challenges and Risks with Global Marketplace
Tax and legal Liabilities
Taxes can be a double-edged sword in the Global Marketplace. While low tax options can be a good opportunity for most investors, dealing with varying taxation laws and rates can take time for your HR and Finance management.
Different consumer laws should be considered when acquiring your business’ target customers when appropriating products for a chosen region. For example, raw materials used in your services might not be legal in one country. Another will be practices that your current business may be involved in that may be deemed violating the customer protection law of one state. These factors must be well-researched and taken into account before your business attempts to enter a new market.
Another case will be the varying labor laws in talent acquisition. Employers are expected to be familiar with the labor laws for each region their employee belongs to. Fortunately, PEO and EOR services are there to alleviate these challenges and minimize business legal risks.
Business culture alignment
When entering the global marketplace, businesses face the reality that each region, country, or area has different practices.
Inclusivity and diversity are what most companies aspire to cultivate in their business culture. But in attempting to achieve it, companies must face the reality that differences must be accounted for.
The best way to address this risk is to research the similarities and differences between your employees’ cultures. One way of achieving this is to create a survey and gather their impressions on the company or the services it offers. Businesses can also ask for their workers’ and customers’ suggestions to include them in every corporate decision. Your company may be surprised about how much insight you may gather and the benefits it can provide.
Personalization of strategies across regions
The market activities in every region do not behave synonymously. This would mean businesses must be flexible in observing different policies in each market. But the varying strategies puts companies at a high risk of misalignment in the goals of their operations. Ultimately, personalizing strategies will result in mismanagement.
One way to address this challenge is to create a base policy across each region. That way, the company’s identity will not be lost due to personalization. It can also be a branding opportunity for the company to have a solid and unique business strategy.
Participating in the Global Marketplace
The Global Marketplace is a vast enterprise for any business to venture into. Due to its all-encompassing nature, there are multiple ways of penetrating it. Below are some of the methods for businesses to participate in new markets:
- Talent Acquisition – Hiring employees worldwide is a great way to enter the global marketplace. This provides opportunities for companies to diversify their human resources. At the same time, it can provide insights into the potential customer market through the employees living in the region. It provides an entry to the rest of the methods in this list.
- Direct Sales – This is a traditional method of selling the company’s product in the new market. This will involve sales visits to regions you intend to reach. This is a simple way of participating in any market. But it will be limited to your business resources and capabilities.
- Distributor – This method is where you sell your products to other businesses for them to resell. This is a cost-effective way to make your products and services known to new markets without setting up operations in that area. Your business can provide seminars for distributors to have better product knowledge. However, businesses may not control how distributors sell their products to consumers.
- Licensing – This method allows other businesses to use your property in a new market. This property could be a trademark, patent, or process that you own legally. The licensee will be responsible for recreating or manufacturing your product, saving you the cost of your business doing it.
- Joint Venture – This method requires a business to partner with a local company to establish its presence and operation in a definite area. This method will contractually obligate the local partner to work with the foreign partner when managing the business in the market. Businesses seeking these arrangements must take legal advice since some countries limit foreign companies in their area.
Building a Global Marketplace Strategy
In creating an effective global marketplace strategy, it is important to understand the challenges and various methods of participation mentioned earlier. Start by exploring your potential customer demographic to determine whether your company is ready to enter the global market. Seek legal and expert advice from credible organizations to iron out the details of your expansion, such as onboarding international employees compliantly with PEO or EOR services.
Once you have finalized the legal details, set up your budget and create performance benchmarks for your business to achieve during the expansion. These benchmarks will serve as the basis for determining whether the expansion has been successful.
However, before making any decisions, it is crucial to research and understand all the details of the global marketplace thoroughly. Your business must approach the global market with confidence and knowledge to overcome any challenges and risks that may arise.