Despite the drastic effect of the covid-19 pandemic and the lockdown on the international economy, a study carried out by CFO research found that about 45% of the respondents are already expanding their business internationally. In contrast, others are planning to do so very soon by next year.
The research also stated that capturing a significant market share was the main reason behind the businesses going global. There is also another interest behind making the company go global, which is to generate more revenue. Especially in the time of the covid-19 pandemic, it can lead to unlocking a new digital age.
Following are some of the benefits of international expansion of business:
Global Talent Acquisition
When moving out to new markets, new talents come hand in hand. There may be a lack of some knowledge or skill in the talents available in the domestic market. It can easily be fulfilled when the business goes global. Hiring in the international market marks the following way in business development.
It helps in hiring multilingual talents, which also helps in opening doors for more business contacts with new perspectives. Hiring from the overseas market can make way for cultural nuances and is also helpful for navigating the barriers to language and etiquette. Moreover, hiring international employees can help in a better understanding of the global markets.
Using International Financial Incentives
The developing countries all over the world want to attract foreign business. To do so, the governments of various developing nations have different financial incentives for expanding the industry across international borders.
As per globalexpansion.com, the Indian government had announced a cut down in the corporation tax to 22% from 30%. As India is one of the fastest-growing economies, especially for the tech markets, these financial incentives can attract various businesses to invest in India.
Development of New Sources of Revenue
When the business has exhausted the growth opportunities available in the domestic markets, it becomes necessary to expand into the global market to increase revenue generation in the business.
Expansion into international markets provides access to new customers for a business, which is essential to increase sales. This, in turn, would lead to an increase in the revenue generation of the business.
Also, the international market helps diversify the business, which helps generate a stable revenue and not allow it to get reduced.
Cost Savings
As mentioned by the Capital-ges, setting up a business unit in a new country can be very helpful in bringing down the operational cost of a business.
Many companies have found it to be very advantageous and thus have set up their manufacturing units in different countries. It can help bring the benefit of the cheap labor market and more affordable talents in the various countries of the world.
Creation of Better Brand Image
Another critical benefit of expanding the business to the global market is increasing the business’s credibility in the worldwide market. The success of the companies can be traced to the establishment of a trustworthy relationship and a broad audience. A certain number of things are required to establish this credibility which can prove highly beneficial for the business.
The first and foremost thing would be to understand the market intuitively. Secondly, it is required to create a strategy to invest in the global market. It would help in the accomplishment of the long-term goals of the business.
Staying Ahead With The Competition
It is essential to enter into a particular market before your competitors can invest in that market. It would provide an excellent first-mover advantage to the business. The international market allows a company to develop new relationships, gain new customers, and develop brand recognition in the global market.
Also, the business expansion allows access to new markets and new customers where the competitors do not operate. It would benefit the business to capture the market and create a good customer base in a particular foreign market.
Factors To Be Considered By A Company Before Expanding The Business Overseas
Several different factors need to be considered by a business before the expansion of a business globally. As a company sets up its insights on the international growth of a business, it is essential to think about the market attractiveness and try to identify whether or not the product is suitable for that country where the company wants to sell its products.
Following are some of the other factors as mentioned by WorldFirst that needs to be considered before the expansion of the business in the international market:
- Affordability
- Licencing
- Legal and risk compliance
- Currency
- Requirement of taxation
- Cultural differences and Language barrier
- Political and Economic stability
- Customer service expectations, etc.
