Going global can be intimidating and thus many U.S. companies wait too long before taking their products into international markets. This delay allows competitors to gain a significant market advantage, which may limit the U.S. company’s ultimate growth potential and could require that they buy out competitors in order to get traction in some global markets. There are many reasons to develop an international business and those reasons become more important as a company matures.
Companies decide to go global for many reasons. Here are 11 of them:
1. Revenue Growth
As companies look to grow and meet their revenue goals, they should consider global expansion with existing products as another path to real growth. Product extensions and completely new product categories are also other options but eventually most companies recognize the need to grow globally.
2. Born Global
‘Born global’ is an intentional strategy that many companies in the EU and Asia embrace. The goal is to have an international footprint from the beginning since their home markets are often not large enough to sustain growth. This strategy also means global competitors don’t entrench and have time to capture large market share.
3. Competitive Forces
Competitors within the home market could also be forcing companies to grow into new markets to stay competitive as the competitors expand into new countries. There will also be new competitors within the global markets to stay ahead of.
4. Prestige
Recognition as a global leader adds to the perceived value and influence of a company. Most market leaders have a global footprint.
5. Talent Acquisition
It’s hard to access skilled labor pools as companies grow. Finding talented employees especially in very competitive job markets and certain job functions is a constant struggle for high growth companies. Having an international footprint allows those companies access to broader talent pools and it gives employees more career options. Many ambitious workers would like the option to work abroad and staying within one company is attractive to employees.
6. Investors
Institutional investors like investing in global companies because over time, those companies have shown to be more successful and resilient.
7. Hedging Business Risk
Markets fluctuate and having investments and revenue coming from different markets will help companies withstand some of the natural ups and downs in each business.
8. Innovation
Diversity in thinking from global teams leads to better products and more innovation in the long term. Giving your company access to a variety of perspectives and ideas is another great reason to have a global strategy.
9. Margins
Increased margins in some broader markets that can bear higher prices can change the overall margins of a business. Finding attractive high-margin international markets to mix into your existing revenue is key.
10. Future Trends
Digital communication and access to information has made the world more accessible. Leaders in any space recognize that the trend for going global is important and worth pursuing.
11. Efficiency
Being global often forces companies to become more efficient in their product manufacturing, sourcing, and distribution. The discipline and complexities of being an effective global company are healthy processes for companies to develop.
There are many reasons that going global is important for a business and its long-term health. Having an international footprint is becoming mandatory for success and the resources, expertise and communication options available make it much more affordable and easy to go global today.
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