5 Reasons Your Company Needs International Expansion

Companies of all sizes are finding new opportunities in foreign markets and depending on the extent of the investment and the potential niche, great success awaits those taking the leap into global diversification. According to a recent survey, approximately 87% of firms in the U.S. believe that long-term growth can only come from international expansion. If you have been thinking of joining the overseas movement, consider the following benefits from extending your operations.

1. New & Emerging Markets

In spite of the robust economic situation in the U.S., 96% of global consumption occurs outside of the United States. That’s right. Most of the consumers of all shapes, sizes and prices do not reside in America. As a result, there is greater potential to expand your consumer base and increase sales when you open up opportunities in international markets. Though the shoe and clothing manufacturer Nike is decidedly American, there is a substantial operation located in the Netherlands because it can service over 170 million European consumers within a 300-mile radius. Holland is also home to a recently opened $150 million UPS facility because of the connection the location has to European markets. Increased market access, especially in areas where there are few existing competitors and favourable operating costs, can provide security for the longevity of your company.

2. Diversification of Assets

Most companies have contingency plans in place when financial chaos strikes, and expanding to the international market is one way to diversify assets and protect the bottom line in these situations. Should the local market take a downward turn or one location fall under hard times, the negative growth in this area could be offset by the success of another operation or operating location elsewhere. International markets are also places to introduce new or unique services that aren’t readily accepted or needed on the home front. These international demands, however, can help companies maintain a positive revenue stream. While Coca-Cola seems to be about as American as apple pie, the company has diversified its operations around the globe, with significant sales occurring in India, China and South Korea. The global success led Coca-Cola to purchase Topo Chico, the Mexican sparkling water brand, to extend its global expansion and create a more diverse portfolio. Expanding overseas also allows you to safeguard your financial assets through reputable banks like Guyana Bank for Trade and Industry Limited, BNP Paribas, or the Credit Suisse Group.

3. Access to New Talent

Another key benefit of going global is access to new labor pools. Though English is understood across the world, by looking at talent pools across the globe, you can gain competitive advantage through advanced language skills, increased productivity and more diverse educational backgrounds or experience. The streaming giant Netflix recently expanded operations into Amsterdam, and the company was impressed by the labour pool of employees who were able to understand the culture and languages of consumers located across the multiple european service territories. Foreign markets hold the promise of skilled labour with innovative ideas and diverse experience portfolios.

4. Increase in Competitive Advantage

Companies looking to maintain a competitive edge over their competitors should consider international expansion. There are many international markets where your company could establish operations and secure the first-mover advantage. This is where your products or services take root in the community and facilitate brand awareness with new consumers long before your competitor has a chance to enter the field. New markets and territories could also present access to innovative equipment or technologies that can be used to improve the efficiency of your operations, but there may also be cost savings with suppliers and vendors that make your business structure more profitable. Moving overseas can also help build a company’s reputation and brand recognition that could come in handy for future expansion scenarios, more effective marketing campaigns and more favourable contract negotiation terms.

5. Greater Investment Opportunities

Once you make the move overseas, the possibilities of entering other global markets are endless. There are opportunities to network or merge with other companies already operating in a market, but there is also the potential to move countries to form multinational operations. Business savvy investments into foreign countries are often accompanied by host-country incentives, tariff reductions, and other lucrative enticements. There could be challenges with regulatory standards and compliance issues, however, so it is important to thoroughly research any expansion decision before bringing the idea to your business.

International markets can improve a company’s financial position and longevity, but it takes knowing what you are doing to be successful. With the right people in place, the right product, and the right commitment, you could find expansion overseas brings you greater business opportunities.