A recent CFO research report found that capturing a greater market share was the top reason to expand a business internationally, but there was also an interest from companies to expand their sales, diversify investments, and acquire talent from around the world.
What are the benefits of expanding internationally?
- New revenue potential: by extending your business model to new overseas territories you gain access to a whole new audience, meaning millions of potential new customers, and more sales.
- A greater breadth of investment opportunities: taking your business abroad could attract international investment and you can benefit from opportunities that may not exist in the UK. Many governments, for example, offer incentives to companies to do business in their country.
- Diversify company markets: by entering new markets you help create a safety net for your revenue stream. For example, if sales are going down in your domestic market, you lean on profit from sales in other regions.
- 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.
- 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.
- 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 planning international business expansions. 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 account 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 barriers
- Economic and political stability
- Customer service expectations
- Buying habits
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How to choose a country to expand to internationally – the emerging market opportunity
By moving 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 34% 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 and Brazil. China and India have a huge amount of potential for international business, so here’s 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 2.3% 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. With its huge population too, India offers robust market opportunities for businesses considering international expansion.
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