Global Expansion - What Is It And Why
Does It Matter?

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Thinking of global expansion?

Well then, this article is your signal that you are on the right path. 

International expansions open up myriad opportunities for business growth. All you have to do is choose the one that best fits your corporate strategy. 

This post is all about global expansion – its challenges, reasons, and process. So, read on to know more about global expansion!

What is Global Expansion?

Global expansion is all about spreading the business beyond domestic boundaries.

Every business runs with the objective of growth. Initially, business expansion starts locally, that is, within the city. Further, companies tend to expand to other states or cities.

The final step of this growth strategy is expanding internationally, that is, to other countries.

Why do Businesses Expand Internationally?

If you ask why multinational companies expand internationally, the answer would be for growth.

Growth is evident in business. The companies that enter the industry with a vision eventually grow beyond the national boundaries.

Besides this explanation, you must know the specific reasons for international expansion. Here are a few of the most common ones.

1. Diversifying market presence

Once you successfully expand in the international markets, it offers you the opportunity to mitigate long-term risks.

Global expansion results in high costs, plus a business face numerous hurdles to enter the market. But getting through these obstacles and successfully expanding is worth it!

International expansion reduces your dependency on the domestic market. You can adjust better to the global market waves. Plus, you can balance the highs and lows occurring in the different markets.

2. Access to global talent

Businesses dream big. Hence, they no longer limit themselves to the local talent pool when hiring.

Technology has made communication easy in international expansion. Also, international teams stay aligned with the help of advanced technology like project management software or document sharing.

Hiring from the global talent pool increases the business exposure. Also, there are certain specific situations where businesses prefer to hire international employees to like;

  • When introducing products or services in a new market, a local presence is an advantage
  • When restructuring the company based on its overall strategic objectives
  • When leveraging the wide global professional networks

3. Extending the product lifecycle

Generally, a product experiences four stages – launch, maturity, stability, and decline. But in an international expansion strategy, there’s a chance to hit the reset button on the lifecycle.

Through global expansion, companies can reinvent their strategy on products/ services that they think will shine in a new market. Also, companies can make up for past errors.

The new market, in turn, might revitalize the products that are nearing maturity in other markets. Hence, it will result in a new branch for the parent company.

4. Increased demand

The most common reason behind the global expansion is probably the demand from other countries.

If you see international interest in your product or service, nothing would be better than global expansion. Test the waters and leap!

However, as exciting as it sounds, global expansion isn’t a day’s work. Take time, research, create a foreign expansion strategy, segment your market, set a budget, and outline everything else before taking action.

A Step-by-step Guide to International Expansion

Like every other strategy, international expansion, too, needs a plan. The international expansion framework involves steps that guide the entire global business expansion plan.

Let’s see what the steps are.

1. Build a solid foundation

International expansion plans start with laying a foundation. Here are three questions that will help you do so.

  • How much investment is the brand ready to make?
  • How important is the speed of global growth for the brand?
  • How much control will the brand maintain?

The answer to these questions will vary from company to company. You might even have different solutions for each international market.

So, before you start looking for the execution strategy, spend sufficient time preparing the international business expansion plan.

2. Choose your target market

Select your target market before you set out on your international expansion plan. Analyze which country holds the highest demand for your products/ services. Here are a few questions to guide you in your decision-making process.

  • Does your product or service seem suitable to the target market?
  • Can the target market afford your product/ service?
  • Is the target market interested in the utility of your product or service?

Once you get the insights into your target market, choose the most suited one.

3. Select an international distribution model

Your global distribution model largely depends on how much you are willing to invest in the international expansion plans.

If you are experimenting with a low investment initially, you can choose the typical method of exporting. Exporting can be an excellent way to enter the international land for initial engagement.

Further, with medium-level investments, you can choose local partners in the market like franchisees, licensees, wholesalers, or distributors.

Lastly, if you are pretty sure about your international business expansion plans, you might try high-level investment. With the high investment approach, you can enter the market with your retail store.

You will also have the option to use hybrids and variations in the investment levels. Plus, you can evaluate the pros and cons of each investment level and entry strategy before entering the market. For instance, high-level investment often indicates greater brand control and slower growth.

4. Integrate technology into the strategy

Along with trusted distributors and partners, the right technical resources are also crucial for the international expansion plan. Once you have developed your international business expansion plan, you must ensure that your technology partner has global capability.

There are a few technical aspects that you must check before jumping into international expansion plans. These include:

  • A strong supply chain and logistics system
  • The best-suited inventory management solution; and
  • A robust financial system that can support the various facets of global trading

Find out the best software supporting these systems. Only through the best technical support can you successfully execute your international expansion plans.

5. Make the first move

An international expansion plan is not something you execute at once. It requires excellent strategic planning, answering crucial questions, and choosing potential partners.

In an international expansion plan, it is always better to dip your toes in the water before taking the plunge.

Once you are sure about the market and your plan, take baby steps towards developing the infrastructure and getting the right resources.

International sales growth is slow. So, make sure to take in people with the right skills and attitude.

What are the Overseas Expansion Challenges? 

International expansion has several hurdles. The bigger your dream to expand, the more your work.

When planning an international expansion, it is crucial to determine the possible challenges of global expansion that you might face. It will help you prepare right and grow in unfamiliar territory.

There are several challenges of international expansion. Here are four main challenges that you must prepare for.

1. Supply chain risks

You probably have an idea of how wide your supply chain will be for international expansion. Hence, you know it’s a big challenge to manage it.

The involvement of international laws, trade deals, and such other complications will affect the intricate workings of exports, imports, logistics, shipping, and other essential tasks.

For instance, if you are shipping goods from Asia to the UK, you must deal with the time and cost factors. Plus, you will also have to manage the risks of environmental factors.

Dealing with these supply chain risks is a must. Take time and create a solid strategy. Plus, prepare for any changes that might affect your activities.

Also, ensure creating strategies that fit your location of expansion. These strategies aren’t a one-size-fits-all type.

2. Compliance risks

One crucial challenge of international expansion is tax and compliance. When operating within different countries, your business must comply with different sets of regulations.

Tax, trade tariffs, fees – these hurdles require undivided attention and experience for the business to operate in compliance.

Stay updated with the tax laws and regulations of your international market. If needed, take professional advice before jumping to action.

3. Acquiring talent and onboarding

Getting the right people is also one of the main challenges of international expansion. Without local, experienced talent taking the lead, your expansion process might lose momentum.

Ensure creating a solid hiring team that can look after the entire talent acquisition and onboarding process.

Contact professional agencies, if required, and build a strong workforce that can impart beneficial knowledge about the market.

Getting the employees that fit just right makes it a little easier to achieve success in international expansion plans.

4. Market competition

Competition among companies producing similar products and services is the most common challenge.

When you plan international expansion, make sure to know your competitors well. Once you know your competition, you can differentiate your product and service.

Consider the barriers of culture language, and hire local talent to help you rise above the competition.

Develop a working knowledge of the market and better understand the customer needs. Only then you’ll be able to know what your customers are looking for.

Ready to Expand Globally with Multiplier? 

Are you planning to take a plunge in the global business market? Is international expansion on the cards in 2022? Well, go for it! 

Multiplier is a SaaS onboarding platform that can be your BFF in this global expansion journey. Here’s why: 

Want to know more? Schedule a free demo now! 

Hiring and onboarding using Multiplier ensures you hire remote talent with locally compliant, fool-proof job contracts, offer emphatic benefits and disburse salaries accurately with absolutely nil errors in payrolls.

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