Why Go Global? 6 Benefits of International Expansion

Spinning Globe - A Symbol of International Expansion

Photo by Kenyee

Business has to scale up to meet the demands of this global market. The scaling-up process is unavoidable.
– Richard Parsons, former CEO and Chairman of Time Warner

The answer to “Why go global?” is a simple one. If you want your business to remain competitive you have to expand internationally. If you don’t, your competitors will – and in the process they will increase their cash-on-hand, acquire better employees, improve their production efficiency, and iterate faster.

You’ve heard it before – we live in a global village. Teenagers around the world – from Thailand to Canada to Turkey – are texting 24/7 and have an opinion about whether the iPhone or Android is a better phone. KFCs and Diesel jeans are in every major city and you’d be hard-pressed – even in remote, 2nd-world countries – to find someone who has never used the Internet.

Every day more and more products make a trip half-way around the world, either by air or sea, into the hands of consumers who have never visited the country of origin.

Growing your business must include a plan for international expansion. Now, I know you’re not going to be convinced by a bunch of anecdotes, so here are the facts about why you should go global (or at least start thinking about it seriously!).

The Benefits of International Expansion

  1. You will have more customers.

    The United States has roughly 4% of the World’s population (and it’s shrinking every day). India has 17%, China has 19%, and Southeast Asia as whole has 9% (these are all growing every day).

    And it’s not just the populations of these growing economies that are rising – their GDP per capita is too. The USA currently holds about 1/3 of the World’s purchasing power. But – as I’m sure you guessed – that’s falling like a rock as a consumption-driven middle-class is forming in the rest of World.

  2. You will have access to a larger talent pool.

    Steve Jobs told President Obama that he needed 30,000 skilled engineers but he couldn’t find that many in the U.S.

    When you expand internationally you’ll have access to greater numbers of highly educated professionals, skilled workers, and unskilled laborers.

  3. You will have more profits.

    Not only will you increase the number of potential consumers of your product or service, but you may also be able to extract higher margins.

    When exporting products your costs will undoubtedly change, but it’s been shown that consumers in developing countries will pay-up for access to high-quality and well-branded products.

  4. You will become more efficient.

    It’s no secret that economies of scale are what made the largest companies of this era – think Walmart and Apple. When you increase your output via international expansion, you can often do so with lower variable costs.

    The importance of this is three-fold:

    1. You can increase your margins
    2. You can offset exporting costs with your decreased production costs
    3. You can keep your prices more competitive in your home country
  5. You will iterate faster and create better products.

    Exporting your products will instantly expose them to consumers with different tastes, opinions, and ways of interacting with the world around them.

    The knowledge gained will serve your company well – either by providing new insights about your current domestic offerings or sparking ideas for new products that can serve both markets.

  6. It’s the future.

    International expansion will soon be standard operating procedure for all but the smallest of ventures.

    15 years ago it was the rare, forward-thinking company that had an online presence. It was unheard of for all but the largest companies to sell products online. Now almost every company has some kind of online store.

    The next wave of commerce is here – and (forgive the pun) it’s going overseas!

Think we’re missing something? Leave a comment letting us know!

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2 Responses to Why Go Global? 6 Benefits of International Expansion

  1. Justin September 17, 2012 at 4:41 pm #

    Great post!

  2. lordfree March 5, 2013 at 3:38 am #

    excellent stuff

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Quality vs. Cost in Developing Countries