Why would a business expand internationally?
In spite of the global economic downturn caused by Covid-19, a report carried out by CFO research found that 45% of respondents were either currently expanding their businesses globally or were planning to do so within the next year or so. Whilst the research reported that capturing a greater market share was cited as the top reason to expand internationally, there was also an interest from companies to expand their sales, diversify investments, and acquire talent from around the world. Whilst companies are largely inspired to expand their businesses overseas to generate more revenue, there are several benefits to going global, especially as the ongoing coronavirus crisis unlocks a new digital age and a shift in consumer trends.
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What are the benefits of expanding internationally? Take a look at our top 6 reasons to go global:
1. New revenue potential: by extending your business operation to new overseas territories you gain access to a whole new audience, meaning millions of potential new customers, and more sales.
2. A greater breadth of investment opportunities: taking your business abroad could attract international investment and you could benefit from opportunities that may not exist in the UK. Many governments, for an example, offer incentives to companies to do business in their country.
3. Diversify company markets: by entering new markets you help create a safety net for your revenue stream. For an example, if sales are going down in your domestic market, you lean on profit from sales in other regions.
4. Access to a larger talent pool: an international talent pool means you can localise your business to better suit the needs of your new market. By employing a local workforce with native language skills and diverse professional backgrounds, your business will have the local expertise and experience needed to serve your new customer base.
5. Outpace the competition: if you can cater to an overseas audience you could gain a competitive advantage by leaving a saturated market for somewhere your competitors don’t operate.
6. Global brand exposure: by successfully establishing your business internationally, you not only attract new customers, but nourish your company reputation and gain greater credibility.
What should a company consider before expanding overseas?
There are several factors to consider when expanding business internationally. As you set your sights on international expansion it’s important to think about market attractiveness and whether or not your product is right for the country you want to sell in. Other factors to be accounted for before embarking on international growth include:
- Legal and compliance risks including task and employment regulations
- Shipping, fulfilment and returns
- Taxation requirements
- Competitive advantage
- Cultural differences and language barrier
- Economic and political stability
- Customer service expectations
- Buying habits
For more information, take a look at our top 3 things to think about when going global.
How to choose a country to expand internationally – the emerging market opportunity
By rebalancing exports towards fast-growing emerging markets, and away from poorer performing developed markets such as the Eurozone, UK businesses could see significant trade-driven growth going forward. Emerging markets account for around 59% of total global GDP (gross domestic product), and globalisation is not merely a trend, but instead a necessary requisite for international expansion. Some of the top emerging market economies include China, India, Russia, Africa and Brazil. With China and India holding the positions of the top two emerging markets in the world at present, find out more about what makes them so attractive to businesses looking to expand internationally:
China has experienced exponential growth over the past few decades, breaking the barriers of a centrally- planned, closed economy to evolve into a manufacturing, exporting, and consuming hub of the world. Doing business with this large and complex market has become critical to many businesses buying and selling internationally. What’s more, the shift in China’s economy away from trade-driven growth to consumer-driven growth could provide significant opportunities for several exporting sectors in which the UK has strengths, such as luxury goods and financial services.
Vying to become the “next China” as the developing market success story, India has emerged as the fastest growing major economy in the world, contributing almost 3.2% of world GDP. With a strong growth in infrastructure fuelled by rapid urbanisation and robust acceleration in manufacturing, India is fast becoming a front runner among the emerging markets. In spite of the coronavirus pandemic, India’s stocks outperformed other emerging markets for close to six months with VanEck Vectors crediting “an improving policy environment, corporate response to the pandemic, and an attractive starting point of valuations” as the main reasons for success.
Extend your global reach with WorldFirst
With the WorldFirst World Account you can turn your small business into a global enterprise. With a World Account you can open one or more multiple foreign currency accounts for free at the click of a button. Once you are a World Account customer, you can open a local currency account online in 10 currencies. Opening a currency account only takes a matter of minutes and there is no need to visit a local branch or have a local address. What’s more, you’ll be able to repatriate your earnings via our 24/7 online platform. Sign up for a free World Account today or contact us to speak to one of our dedicated London based Account managers for more support and information on how take your business to new markets.
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