Why Global- International expansion key to diversifying risk

Globalization is not simply a trend

Diversification is now a necessity for companies to remain competitive in their space. For companies that want to pursue international expansion, there are many opportunities to take advantage of. These include gaining access to new markets, growing teams, and increasing revenue.

Companies of all sizes should be aware of the business benefits of globalization. And these are the top Seven reasons companies should be thinking about going global.

1. Establish New Revenue Streams

According to a recent report, 45% of middle market companies make more than half of their revenue overseas. If your business is doing well domestically, you’re already a step ahead to succeed globally. With a new customer base, you can identify and create unique opportunities in local markets for your business to fill in the gaps.

2. Gain a Competitive Advantage

Thinking globally is becoming less of an option and more of a requirement when it comes to outpacing the competition. In fact, 56% of middle market companies include international expansion into their growth strategies. Taking your business international presents growth opportunities by expanding options for talent, customers, and creating cost-savings for imports and manufacturing.

3. Find New Global Customers

When you have been in a local market for a while, it can be tough to find new customers. They are used to your product and your competitors, and new sales can be a battle hard-fought. An international expansion opens new doors and gives you access to a whole new set of customers who have never seen your product or service before. About 95 percent of consumers and 84 percent of spending power resides outside the U.S. As the middle class grows around the world, an increasing share of spending power will be outside the U.S. The majority of smaller businesses that do export are reactive or passive exporters rather than strategic exporters.

4. Diversification

A diverse global market and broader customer base help to reduce the risk to your business if an individual market begins to slow down or if your products experience seasonality due to such things as political unease (elections, conflict, pandemics) or weather (Sumer/Winter seasonality). Think of it just like diversifying an investment portfolio. It is not wise to rely solely on domestic sales or a single country/hemisphere.

5. Extending Product Lifecycle

By reaching markets with lesser technical requirements or competition, including emerging economies, you can find vibrant markets for last years cutting edge technology and liquidate past product versions, last seasons colors or designs, older technology and overstock created by new product requirements required elsewhere.

6. Your Company Becomes Global

New and existing customers feel additional confidence working with a global company. It can help your company attract new customers and recruit new talent. Your company can develop "First in Market" strongholds (Blue Oceans) in foreign markets ahead of the competition. Your company can develop a solid understanding of how foreign markets do business.

7. Larger Market for Acquisition and EBITA Growth

International expansion strategy can significantly add to your companies Total Addressable Market (TAM). Increasing TAM and building a book of global multi year contracts will significantly pad your EBITA. Furthermore potential future buyers globally, or domestic competition that is looking to expand internationally may pay a premium for the markets you have developed. Your next acquisition partner now just went global too!

Include International Expansion in Your Strategy

The reasons above are three great benefits that your business could experience when you think global and expand internationally. Once your team is aligned on your global initiatives, you are ready to start developing a strategic plan.

Hyperio Global Consulting- International collaboration