The Financial Benefits of the Global Market

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The Financial Benefits of the Global Market

21/11/2022  |  Emilie Mary Categories: BlogGlobal Expansion

According to a Wells Fargo study, 87% of United States companies agreed they needed to expand internationally if they wanted long-term growth. If you’re interested in creating a successful business, consider expanding into the global market.

However, it can be challenging. But keep reading to discover why the benefits will make it worth it.  

New Growth Potential

If you’re an American company, especially in the tech industry, then the rest of the global market means you have unlimited potential new customers. If you’re only selling your product in America, you’re missing out on a massive chunk of the market. In the Wells Fargo study mentioned earlier, 87% of those companies said that an emerging market could give you the best opportunities. 

However, you should have an excellent strategy to expand. Many factors go into choosing a potential market, like the quality of the infrastructure, the regulations you’ll have to deal with, the GDP growth, and the availability of workers in that region. If you’re in America, the two most popular markets right now for expansion are Western Europe and Asia. Places like Singapore, China, and Hong Kong have undergone rapid progression and growth, and their population is growing. 

Western Europe is also a great place because they are close to a western customer base, and it’s a great staging opportunity for going international and entering new markets. 

Expanding into these markets will increase your company’s purchasing power, and getting new customers will also help you generate more revenue. You must ensure that your profits are more significant than the cost to break into that market. 

Lower Costs

Another benefit of expanding your business into the global market is that you could find lower costs to produce your product. Doing this will also increase your competition, increasing prices overall. 

The lower costs will also help people in developing countries find better solutions and products for less money. 

Diversification

Many businesses can expand internationally, which can help diversify their assets. This can protect your company’s bottom line from events that might have otherwise devastated your company. 

For example, if you have international operations, this can offset any negative growth by potentially performing better in a different global market. Companies can also create new products and services for various markets, which can help you create a steady revenue stream. For example, Coca-Cola did this by growing in China, South Korea, and India. They bought the Mexican brand Topo Chico to also expand their portfolio and diversify their products. 

Economies of Scale

You’ll also get economies of scale when you expand. This will help you increase your output, but it can also make your company more efficient.

When you expand into new markets, you’ll have a lower cost per unit when making your products. This will help you manage your budget with fixed and variable costs. 

Generally, with an economy of scale, you’ll see more cost savings if you have a more significant business. That’s because there is bulk ordering from suppliers, which can lower your capital costs. You’ll also have a specialization of labour that can increase output. 

Access to New Talent

You’ll also have more global talent access when marketing in a new global market. This will let companies find new talent that might be cheaper as well.

An international PEO can help companies hire workers compliantly. This way, you can enjoy new talent while not worrying about any fees associated with hiring violations. For example, you could find a cheaper engineer in India or South America than you could in Silicon Valley. 

Competitive Advantage

Companies might want to expand internationally to gain a competitive advantage. For example, businesses in multiple markets can operate without competition, significantly if that business isn’t expanded. 

This can help you with your brand awareness, but it will also let you establish a presence. You can use this advantage to build stronger relationships with your customers. This can be crucial in the long run. 

New places will always represent new opportunities. It would be best if you did market research to determine where your company can fill a gap in products and services. 

Improve Employer Branding

Your employer branding can have an impact on your profits. You’ll need to manage this image to expand globally and offer your products elsewhere. 

In general, international companies have more prestige. It’s not easy, but they can help you reach more customers, whether it’s domestic or international. People may want to buy from your company rather than a small business because you have a global presence. 

An international business can also help you build recognition. This recognition can help you with things like: 

  • New marketing campaigns
  • Additional expansion
  • Contract negotiations

In the long run, these things will help you bring in more revenue. But it will also help you save on expansion efforts.

Discover More Benefits of Branching Into the Global Market

These are only a few financial benefits of branching into the global market, but it can be challenging to get these benefits without the right strategy. Branching into a new global market can be challenging, but with the right partner, it can be effortless. 

Check out our website to learn more about how we can help you with your global expansion.