Late-stage economies like the US are likely where your organization established its first foothold. However, what happens when you “outgrow” that current market positioning or seek to expand elsewhere, pushing your products and developing your market share into new economies primed for its acceptance?
Entering both earlier-stage and competitive economies across the world are moves that forever alter the course of your business. Pivot them toward success by growing fluent in how to navigate today’s global marketplace, understanding global expansion’s unique financial, legal, and operational risks — plus what you can do to leverage those risks into business rewards.
What Is the Global Marketplace?
The global marketplace is a term used to describe the exchange of goods, ideas, and services uninhibited by geographic borders.
In a global marketplace, organizations can target and access relevant customer bases regardless of their proximity. A globally engaged organization may also participate in international supply chain management, logistics, service partnerships, and similarly scaled operations — each conducted to save that organization time, money, and resources by outsourcing particular activities to and through local specialists.
A company engaging in the global marketplace may look something like this: ZYX Inc. is a headquartered in California but manages three flagship offices in Toronto, London, and Germany. To make its products, ZYX, Inc. sources raw materials and manufactured components from Germany, Mexico, China, South Korea, and Indonesia. ZYX’s products themselves are fabricated in China and the United States, then shipped and distributed by multiple companies headquartered in multiple countries to retail stores across North America and Europe. Company goals align with considerable market research to reveal an expansion opportunity for its product lines in India, ushering ZYX Inc. to consider opening another regional flagship office with local employees there to spearhead a long-term Asian-market infiltration plan.
Benefits of Participating in the Global Marketplace
The global marketplace presents unprecedented opportunities for organizations wishing to define its next chapter.
1. Stability During Economic Turbulence
International businesses competing in the global marketplace are not reliant on the sole health of one country’s economy. Such organizations practice keener risk management and are far more likely to weather short and long-term economic disturbances when they do strike.
Downturns or disruptors in one market are buoyed by the financial and operational lifelines in others. And while today’s economies are undoubtedly more interconnected than ever, the nature of those connections and the tools and technologies underpinning them present new means for organizations to evenly distribute risks when geographically dispersed.
2. Expanded Market Share
Cross-border capital flows are music to your company’s bottom lines. The onus of the global marketplace encourages organizations to move outside the limited capacities of its domestic markets and into the scaled-up stages of worldwide customers, vendors, and even employees.
Forward-thinking managers see beyond their immediate country’s consumers and vendors and into dynamic, cost-saving, and profit-generating international frontiers. For small and medium-sized businesses, the global marketplace offers means to reach customers and expand sales in ways that, even a decade ago, were inconceivable. As your market share and brand awareness grows, your business can compete with far larger entities and still provide its same high-quality deliverables.
3. Enriched Workforce
Globalization brings another benefit to today’s organization: The globally remote workforce.
Over 3.9 million employees work remotely full-time in the US. What’s more, nearly two-thirds of U.S.-based companies employ full and part-time employees who work outside of their offices.
The global marketplace directly correlates with improved employment opportunities for those in emerging and early stage economies. Skilled international candidates now have unprecedented passage into working for foreign-owned companies. This is a particularly beneficial development for small and medium-sized businesses, who now have access to a wider network of talent they can leverage for international growth.
4. Improved Technology
Culture and technology vary greatly depending on the country. Expanding globally gives your organization access to new technological equipment and norms — which can be funneled into strategic advantages and competitive innovations both domestically and abroad.
Harnassing tech innovations can have a direct influence on more efficient operations back in your US headquarters, particularly for those in the manufacturing and service industries. According to the Organization for Economic Cooperation and Development (OECD), the US is no longer the global leader in new process or equipment innovations in these sectors. Manufacturing and service organizations can solidify their thought leadership and leverage a competitive differentiator by sourcing technological breakthroughs from the global marketplace.
5. Expedited Access to Vital Resources
Leaner, stronger businesses tend to be ones that source necessary resources as cost-effectively as possible. Expanding your presence into the global marketplace is a leading means to secure a range of key business assets and materials, particularly ones that aren’t available in your immediate area.
Many companies push for global marketplace expansion to gain profitable access to direct and indirect resources, such as:
- Specialty labor
- Cost-effective production and manufacturing
- Raw material sourcing (metals, iron ore, lumber, agricultural products, etc.)
- Technology (hardware, software, industry-relevant tech R&D, etc.)
- Thought leadership and consultants
- Expanded capital
6. Compete With Global Rivals
To compete with global rivals (including ones larger than yours in terms of infrastructure, market share, capital and assets, brand awareness, and more), your organization must think globally yet act and ally locally.
It can be an intimidating and unintuitive course of action for many organizations, but especially those expanding internationally for the first time. Yet today’s global marketplace-geared technologies and resources serve to connect you with subject matter experts, consultants, industry insiders, trainers, and potential employees in your new region. By establishing these localized resources, you strengthen your international expansion acumen and can execute operations just like the name-brand powerhouses.
7. Tap Into Emerging Markets Before Others
Organizations that are global marketplace-minded are more prone to recognizing international business opportunities before their domestic competitors. These same organizations tend to make routine market demographic research a strategic priority, alongside thorough data analysis reviewing the financial viability and stability of entering prospective markets. They’ll also conduct their own cultural comprehension tests of that market, considering potential language barriers, government regulations, supply chain management models, potential compliance concerns, and more.
Keeping tabs on this information primes organizations to commit to emerging markets (EMs) when the opportunity arises, with the proactive knowledge and resources ready to integrate smoothly into a new country far ahead of competitors.
8. Leverage Turnkey Globalization
Expanding internationally is not a new business concept. However, today’s organizations have access to tools and technologies that make the sharing of knowledge, data, goods, services, capital, and more nearly instantaneous across borders, creating new opportunities to make a commercial impact abroad.
In other words, preemptively navigating the global marketplace prepares your business for more successful globalization. Businesses have more visibility and resources ready to scale up operations internationally or expand influence abroad. These opportunities are pivotal to locating the best industry talent, accessing a wider pool of direct and indirect resources and — ultimately — increasing company profits.
Global Expansion Risks
Navigating the global marketplace inevitably comes with risks. Consider the following risk categories when your company looks to expand abroad — even just by hiring one remote employee.
1. Tax Compliance
Traditionally, companies expanding abroad were required to set up subsidiaries within their prospective countries. As part of setting up that subsidiary, an organization must register with local tax authorities, receive a tax ID number, and open domestic bank accounts in accordance with corporate records and filing requirements.
This is a long and expensive process. It’s also one that still hasn’t accounted for tax concerns post-hiring any international employees, which includes compliantly categorizing employee types, filing, and paying appropriate taxes on them.
2. HR Management
Hiring international employees introduces a catalog of new filings, activities, and procedures for your HR staff. These include but aren’t limited to international HR concerns like:
- Remote training and onboarding
- Compliant and time-sensitive payroll
- Culturally informed (and in some cases, government mandated) employee benefits
- Proper employee/worker classifications
- Performance reviews
- International terminations (the US is the only country in the world where “at-will employment” is an operating and lawful concept)
3. Legal Complications
Organizations require country-specific legal counsel when engaging in the global marketplace.
While maintaining in-house legal counsel is imperative, having a network of legal subject matter experts within all new countries where you do business mitigates regulatory risks and staves off miscompliance when executing the following:
- Understanding local and national labor laws
- Compliant bookkeeping and accounting filings
- Compliant IT infrastructure and digital/electronic practices (e.g., navigating GDPR in Europe)
- Overall country-specific legal counsel and expertise
Global professional employment organizations (PEOs) provide the solution shielding against this litany of international expansion risks. Since global PEOs become the record of employer for all international employees on your payroll, your business no longer needs to go through the many-month regulatory circus that is establishing a foreign subsidiary.
What’s more, global PEOs execute back-office administrative tasks for you, including compliant payroll, employee benefits, taxes, accounting, HR, and legal consulting. Global PEO Globalization Partners has been shown to reduce the costs of international expansion for our clients by as much as 94%. We’ve helped facilitate expansion into more than 150 countries without registering any branch offices or subsidiaries, saving businesses like your’s time, money, and many headaches.
Trends and Tips for International Businesses Competing in the Global Marketplace
Over 90% of surveyed senior executives say a global employer of record (EOR) is the superior choice when expanding internationally, compared to managing an expansion’s HR, finance, IT, and legal counsel entirely in-house.
Another 58% of them say they already utilize global EORs or plan to do so within the next three years. Their reason? EORs possess established infrastructure and a network of subject matter experts on-hand mitigating global go-to-market needs, including employee payroll, onboarding, benefits administration, compliant classifications, and more.
Yet partnering with a global EOR is far the only trend forecasted to support organizations entering the global marketplace.
1. Deploy Preemptive Logistics Inspections Alongside Macro Research
Before your business takes its international plunge, it must perform diligent internal and external audits taking the temperature of your readiness to enter a particular marketplace. In addition, organizations must take care to diligently inspect the actual logistics and infrastructure of the country in question — before they ramp up to sell products there.
Inspecting current infrastructure prevents logistics surprises from taking hold after you’ve already invested in R&D, scaled-up production, new partner vendors, fresh marketing and advertising, and local employees, to name but a few pre-market activities. Internal audits assure your business is in an appropriate place to enter the global marketplace to begin with.
Combined, the two are practical assessments of the heal of your global marketplace endeavor: You assure to remedy any pain points revealed during gap and SWOT analyses (and other undertaken internal audit methods) and that your products will actually get shipped and distributed around the new market as they’re intended to.
2. Find and Use Local Reps
Organizations manage more expansion risk scenarios and execute smoother globalization strategies when they utilize country-specific employees, partners and subject matter experts — particularly when expanding in emerging markets.
Versed in the nuances of local culture as well as regulatory compliance, a network of local constituents protects your company from missteps when conducting business in other countries. It’s the same principle behind partnering with a global PEO, whose own international, pre-established network of subject matter experts unburdens you from the hassles of managing foreign subsidiaries.
Hiring local employees and go-to subject matter experts through a global PEO actually allows you to do more with less, all without taking on the compliance burden of international payroll. Compliance accountability rests completely on your partner PEO’s shoulders.
3. Leverage Data Analytics
Continually tracking and reviewing global marketplace data is the key to spotting trends and then acting in your business’ best interests.
Internally, data provides insights allowing business’ to make better operational spend and investment decisions. Externally, similar globalization data catalyzes into diligent information for businesses to incorporate into short and long-term growth strategies, adjusting to and even outpacing tracked markets themselves.
Organizations looking to harness actionable insights to navigate the global marketplace must embrace user-friendly analytics programs, technologies, and service providers, one which break big data into digestible models that point toward linear to-market plans.
4. Stay Atop Political Risks
From political elections and new foreign tariffs to unions’ rights legislation and data privacy regulations, politics has a heavy hand in the health and stability of global markets. To think otherwise is to be negligent of the reality of today’s globalized economy.
Organizations seeking to better navigate the global marketplace must remain fluent in the political happenings of their target markets. Many political disruptions trigger ripple effects that can end up making significant waves domestically, with implications that can last months, or even years.
Globalization risk management plans should be an institutionalized practice at your organization before, during, after infiltrating a new market. These plans are not only a global marketplace best practice — they’re a general business safeguard.
5. Outsource Technical and Administrative Activities
Remember that 58% of senior executives already using or intending to use global EORs? They’re onto something.
Utilizing a global PEO with employment of records services can reduce an organization’s expansion expenses by up to 94%. What could your company achieve with over 90% of globalization-dedicated budget money back in your pockets?
Global PEOs and EORs handle a vast swathe of global marketplace-related activities:
- Finding, hiring, and onboarding a geographically dispersed workforce
- Managing and filing tax returns
- International and remote employee payroll
- Compliant accounting, bookkeeping, and reporting
- Culturally informed, country-relevant employee benefits packages
- International statutory and certificate compliance
- Legal consulting and advisory services pertaining to foreign markets
Leave the Headaches at Home When Taking Your Business Abroad
Globalization Partners is one of the industry’s most renowned global PEOs offering employer of records services to small, medium, and large-sized enterprises.
We want every business to realize borders aren’t boundaries. Contact us today to see which global markets are a best fit for your organization — and how you can access them.