Uncertainty is a symptom of the times – market downturns, a global pandemic, and political change mark the current global business environment. The truth is that you can always find reasons to hold back your expansion plans and avoid risk, and now is no different. However, the potential for moving your organization through this period and into a phase of sustainable, rewarding growth lies in your ability to see opportunities where others do not.
Here are the top three reasons expanding your business to a new international market, and doing so now, could offer a significant competitive advantage.
Reason #1: New Markets + New Customers = Revenue
In a study on which companies bounce back the fastest after a recession, Harvard Business Review stated that organizations that struck a specific offensive and defensive balance in the face of an economic downturn had the greatest chances of success on the other side.
In particular, companies that defensively cut costs through improving operational efficiency (versus just reducing headcount), and also pursued two offensive strategies – developing new markets and investing in new assets – did markedly better than companies that acted too defensively or didn’t fully maximize their opportunities.
Of course, while companies are evaluating offensive moves during times of economic uncertainty, the research into which market to move into proves even more critical. Look at factors that indicate where the lowest barriers of entry may be for your product or service. For example, a country where the population speaks the same language means product documentation doesn’t have to change drastically. Also, look at where the highest potential lies. Where are consumer bases showing signs of stability and growth?
During the 2008 financial crisis, while many companies suffered huge losses, Danish toy manufacturer Lego saw profit growth of more than 63% through global market expansion. While the U.S. market was suffering, they looked across the world for opportunities. Companies that have been able to analyze and adapt during difficult times, rather than just react, discover new runways for growth.
If executed properly, opening a new market and bringing in new customers means more revenue. And in these times, increased revenue means more stability and capital to invest back into your business. This is what will help you come out ahead months and years down the road.
Reason #2: The Best Talent is Waiting to Join You
The recent shift towards a worldwide remote workforce has shown business leaders that a location-centric approach to hiring talent may be outdated. Shopify CEO and founder Tobi Lutke tweeted, “As of today, Shopify is a digital by default company. We will keep our offices closed until 2021 so that we can rework them for this new reality. And after that, most will permanently work remotely. Office centricity is over.”
Even if your company doesn’t plan on a remote-by-default approach once conditions are safe to return to the office, it’s worth considering where there is flexibility on that stance, depending on the role you’re filling on your team. With many companies laying off highly-skilled workers around the world, the global talent pool has never been richer. Not only is this an opportunity to stack your team with high-performers, it also gives you a chance to reduce overall cost margins, since market rates are currently determined by a location’s cost of living, and it’s one less employee in a physical office building.
Another note: even if your company may not currently be interested in selling into a new global market, having talent in the location when you do could provide a unique advantage when it’s time to execute a market entry plan in that region.
Reason #3: Diversification Is Your Strength
Companies that depend on one product or service selling into one market to one specific customer, supplied by a single-source supply chain, their revenue may not be stable enough to withstand a global crisis. As a business leader, the current climate has made you not only react to the now, but look ahead and wonder, “what else should our organization prepare for, and how?”
While no one has a way to tell what will come, as with any high-performing portfolio, an investment’s strength lies in its diversification.
Multiple products and services in more than one market mean a diverse stream of revenue. Access to multiple markets and consumer bases also means you’ll have greater visibility into trends, and more insight that can be gathered for future product development.
You can strengthen your business today through a diversification strategy, and beyond beating the competition, it gives you an advantage on any challenges the future will bring.
International Growth: It Starts with Research
No business grows across borders successfully without a thoughtful, data-driven strategy. Are you ready to build yours? Read “4 Tips for Developing an International Expansion Strategy” next.
Globalization Partners enables companies to quickly and easily expand into more than 187 countries without the hassle of setting up local branch offices or subsidiaries. You identify the talent, and we employ your team member via our in-country payroll. This enables you to quickly and easily hire around the globe, and lifts the burden of figuring out HR, tax and legal matters from your shoulders to ours.
Globalization Partners: Succeed Faster