Companies big and small are expanding their operations abroad - and with great success. Your peers and competitors are considering it, so why shouldn’t you? International expansion offers a lucrative opportunity to tap into new markets, diversify your product offering, and build a world-class team. But it’s not easy.
That’s why we’ve put together the ultimate guide to global expansion to help support you through the whole process. From initial consideration to launching your business abroad into a global market, you’ll discover all the information you need to make your expansion project effective and long-lasting.
We break down the complex topic of overseas expansion into easily digestible and referenceable sections, covering everything from strategies to localization to company culture, so you can feel confident in your decisions and move forward with a robust plan of action.
Use our contents table to find exactly what you’re looking for.
What Is Global Expansion?
Global expansion is a growth strategy that involves taking business operations, products, and services from a home market into target markets abroad. It’s also referred to as “international expansion,” “overseas expansion,” and “foreign expansion.”
While some businesses may choose to expand one international market at a time, others opt for regional expansion, taking advantage of cultural similarities and free trade agreements. Similarly, there are many different approaches to market entry, including exporting, franchising, acquisition, and setting up foreign subsidiaries, among others.
Ultimately, global expansion will look different for every business at every stage of its growth. There’s no one-size-fits-all solution, and businesses have to continually revisit their approach to accommodate for change. That’s why planning a unique strategy is the key to your international success.
Types of Expansion Models
Before moving forward with international expansion, it’s important to figure out what type of model to follow. Based on your business, one type of expansion strategy may work better than another.
Types of expansion models include:
- International Strategy: This approach is one of the most common among businesses. Typically, organizations will enter new markets without making serious changes to products or services. For the most part, pricing will remain at a similar price in the new market as well.
- Multi-Domestic Strategy: With a multi-domestic approach, businesses will adapt their products and services to the local market that they are entering. This customization allows them to cater to the preferences of that specific region and remain competitive. Similar to an international, the pricing of these products doesn’t change significantly.
- Transnational Strategy: A transnational approach allows businesses to combine customized products and services as well as minimize costs. With this strategy, businesses can customize products to cater to specific markets, while also having control of the individual costs.
- Global Strategy: As opposed to a multi-domestic approach, a global strategy focuses on providing businesses with the most cost-effective solution. The products themselves are sold in different markets, but stay the same, reducing costs and helping companies stay competitive.
Why Should Your Business Expand Internationally?
There are many reasons your company should consider global expansion; most importantly, it can help you grow your business and increase profitability. Here’s how:
Tap into Lucrative New Markets
Why restrict product sales to just one market when there’s strong demand for it elsewhere? By globalizing your business, you can enter promising new markets and secure a bigger customer base. This is especially true if your product or service is “first to market” or fills a niche gap.
Gain a Competitive Advantage
Taking your business international can help you stay competitive in an increasingly globalized world. Being “first to market” is an effective way to position yourself as an innovative market leader and get ahead of your competitors by building a well-established brand before they do.
Acquire World-leading Experts
The remote revolution is your friend; working from home has become widespread, and it’s never been easier to tap into top talent from across the globe. After all, building a competition-crushing team is much more attainable when your talent pool is limitless.
Reduce Business Costs
If you’re on a tight budget or simply want to make savings, going global could be the right move for your business. Moving certain operations to less expensive parts of the world can help improve your company’s return on investment.
Provide Greater Stability
By diversifying the markets you operate in, you no longer have to rely on just one country's economic and political stability; you can spread risk across multiple. Global expansion can also help you create new revenue streams, so if one suffers, another can pick up the slack. It ultimately makes your business more resilient in the face of uncertainty and change.
What Is Global Expansion?
Global expansion is a growth strategy that involves taking business operations, products, and services from a home market into target markets abroad. It’s also referred to as “international expansion,” “overseas expansion,” and “foreign expansion.”
While some businesses may choose to expand one market at a time, others opt for regional expansion, taking advantage of cultural similarities and free trade agreements. Similarly, there are many different approaches to market entry, including exporting, franchising, acquisition, and setting up foreign subsidiaries, among others.
Ultimately, global expansion will look different for every business at every stage of its growth. There’s no one-size-fits-all solution, and businesses have to continually revisit their approach to accommodate for change. That’s why planning a unique strategy is the key to your expansion success.
When Should Your Business Expand Internationally?
It’s never too early to think about international expansion - even if you’re not quite ready to start the process just yet.
As you initially develop your product or service offering, you should draw up a long-term plan for scalability, including your aspirations for expansion. This gives you plenty of time to research target markets before investing a lot of money and resources into them.
Once you’ve set down solid foundations in your home country and have enough funding, it may be a good time to draw up and execute your global expansion strategy.
While global expansion is typically associated with huge enterprises, many smaller and younger businesses successfully expand into a global market, too. Omnipresent is one of them!
Established at the end of 2019, we founded Omnipresent to simplify global employment for growing businesses. Today, we operate in over 160 countries and regions worldwide. Our own global business expansion process has involved hiring top remote talent from around the world, partnering with trusted local service providers, and setting up our own local entities in viable, emerging markets.
Through our Employer of Record (EOR) service, we’ve helped hundreds of other businesses - many of which are start-ups and SMBs - to hire talent abroad, supporting their own international business expansion projects.
The Pros & Cons of Globalization
Globalization is the interaction and interconnection of people, governments, and companies around the world. Due to advances in transportation, communication, and technology, globalization allows people, businesses, and information to move and operate across national borders with relative ease.
Before expanding internationally, you need to understand the different pros and cons of globalization for your business.
Benefits of Globalization
The main benefits of globalization for your company include market expansion, standards to guide cross-border business, and the ability to build a more skilled workforce and thus competitive business.
Access to New Markets & Customer Bases
As a result of globalization, governments have formed trade agreements that make it easier for foreign companies to do business in new, emerging markets. This gives you the opportunity to reach new customers, diversify your product offering, and build your brand on a global scale. In other words, globalization is what makes international market expansion possible.
Development of Universal Standards
Globalization has accelerated the establishment of universal standards, which help shape international labor laws and tax regulations around the globe. For example, the United Nations’ International Labour Organization (ILO) brings together 187 members states to promote work rights, encourage decent employment opportunities, enhance social protection, and strengthen dialogue on work-related issues. These universal standards can guide your business practices during international market expansion.
Creation of Diversely Skilled Workforces
Globalization has made remote working accessible to most businesses. You can now hire talent from pretty much anywhere in the world! By expanding your talent search, you have access to a much more diverse talent pool with a broader range of skills and experiences, which helps to better position your business for growth.
Challenges of Globalization
While globalization has many advantages, it also presents some difficult challenges for businesses and governments alike to tackle, including worker exploitation, local unemployment issues, and climate change.
Preventing Worker Exploitation
Outsourcing labor to cheaper countries can reduce business costs. However, this has inevitably exposed local workers to higher levels of exploitation. Avoiding exploitative practices is a complicated and time-consuming task, but it’s crucial if you want to expand your business in an ethical manner.
Overcoming Local Unemployment & Job Loss
Exploitation isn’t the only challenge associated with finding cheaper labor abroad; it can also lead to job loss in your business’s home country. While governments are ultimately responsible for protecting the local workforce, you need to assess how you can tackle this challenge as a business too.
Avoiding Environmental Degradation
Fossil fuel-intensive activities, such as international goods transportation, are another major drawback of globalization. Consumers are increasingly looking for brands to play their part in helping protect the world around them. But as demand for goods rises, so will your business’s carbon footprint. To combat environmental degradation, you need to invest in truly sustainable practices, which can be expensive.
Globalization can clearly help you grow your business abroad, but you need to carefully consider your ethical and environmental responsibilities throughout the process to avoid the downfalls.
How Can Small Businesses Expand Internationally?
In the past, global expansion was only accessible to large corporations with huge budgets. But with the rise of technology and remote work, globalization has made international expansion possible for start-ups and SMBs too. Recently, we’ve seen an emergence of innovative, tech-enabled B2B solutions dedicated to solving some of the biggest challenges of global expansion. More than ever before, smaller businesses can leverage their expertise to overcome logistical and regulatory hurdles at an affordable price. Discover solutions for small business expansion:
- Global employment service partners such as Omnipresent can help you hire, pay, and manage talent in your target markets compliantly - without having to set up a foreign subsidiary. This is particularly useful for the early stages of overseas expansion when you want to keep your footprint light. Omnipresent handles key HR functions like payroll, compliance, onboarding, and benefits, so you can focus on carrying out your global expansion strategy.
- Relocation services like PerchPeek support your colleagues throughout the relocation process. This is especially useful if you want your experienced leaders on the ground during expansion. Using a trusted relocation solution makes moving employees into new markets more affordable, less stressful, and simpler to manage.
- IT support services like Distributed help you find top tech talent from across the globe. While full-time employment is ideal in the long term, hiring vetted freelancers to carry out your one-off digital projects can be a useful option in the short term.
- Market-specific services like Firstbase help small and medium-sized businesses to enter challenging markets. For example, Firstbase helps start-ups set up in the US, offering support in venture capital, regulatory strategy, and local infrastructure.
Working with trusted partners can make global expansion simpler and more affordable - especially for newer businesses.
How to Create Your Global Expansion Strategy
Global expansion can be very rewarding as long as you take the time to carefully plan out your global expansion strategy before proceeding.
Having a clear strategy in place can help you save time and money while mitigating risk and increasing profitability. It will help you decide where to focus your expansion efforts to scale your business faster.
Below we break down the key steps you need to take to build your own global expansion strategy.
- Set long-term company goals to help guide your expansion and global growth.This will give you the structure, direction, and motivation you need to succeed. When you set goals, be sure to make them “S.M.A.R.T.” - specific, measurable, attainable, realistic, and time-bound.
- Do market research to identify your key markets and understand the complexities you’ll need to navigate. By thoroughly researching your desired markets, you’ll better understand demand, regional competitors, the socio-political landscape, and more. This will help you choose the most profitable markets for initial expansion.
- Choose a market entry strategy based on your company goals, financials, and resources. The main options are: exporting, licensing and franchising, strategic partnerships, mergers and acquisitions, and setting up foreign subsidiaries. If you need help deciding which option is best for your business, check out our separate global expansion strategy guide here.
- Hire expert local talent to gain insights into local ecosystems and leverage existing business contacts. An EOR service can help you hire local talent quickly and compliantly.
- Partner with trusted local businesses to carry out tasks your company isn’t capable of doing alone. For example, you may benefit from outsourcing logistics, legal advice, marketing, or PR. Remember, always do due diligence before signing a contract with a third party.
- Launch in your new market(s) using a range of relevant marketing channels to get the word out. This could include social media, a localized website, events, and advertising campaigns. Be sure to continually monitor the success of your expansion and adjust your strategy accordingly.
Should You Establish Foreign Subsidiaries?
A foreign subsidiary is a company that’s more than 50% owned or controlled by a parent or holding company based abroad. It’s a separate legal entity responsible for its own assets and taxes.
Setting up a foreign subsidiary is one way to enter a new market as part of your international expansion strategy. It’s particularly popular among larger enterprises with previous experience of overseas expansion.
Below we outline the main pros and cons you should consider before taking this approach to global expansion.
Foreign Subsidiary Benefits
Establishing a foreign subsidiary generally offers financial benefits such as access to local resources, grants, and tax relief. For example, if you open a foreign subsidiary, you’re typically permitted to own property assets within the local jurisdiction.
As foreign subsidiaries are considered separate legal entities, they can also protect the parent company by isolating legal and fiscal risk.
Finally, your business may also benefit from increased brand trust and credibility by having an official local presence.
Foreign Subsidiary Risks
On the other hand, foreign subsidiaries are very expensive to establish and maintain. It can cost anywhere up to $500,000 to get started and up to $20,000 a year in ongoing fees.
To add to that expense, you need to have extensive expertise in local ecosystems to navigate regulations and customs compliantly. If you don’t comply with local laws, your foreign subsidiary may face legal action or incur hefty fines.
Lastly, if you need to exit the market for whatever reason, closing down a foreign subsidiary can be just as time-consuming and expensive as setting one up.
When to Set up a Foreign Subsidiary
Due to the above risks, your business should only consider establishing a foreign subsidiary once you’ve tested out and validated the target market. This will help save your business time and money in the long run.
Before validation, you should use an agile, light-footed approach to expansion, such as partnering with local businesses and hiring international talent through an EOR like Omnipresent.
Adapting Your Product for a New Market
Now that you’ve researched and identified your foreign market(s), it’s time to make your product or service offering appropriate for the local consumer. This is called localization.
The amount of adaptations you’ll have to make depends entirely on the market in question. For example, a market that shares an official language and similar cultural norms with your home country won’t require as much work as a market that’s entirely different.
Here are the key adaptations you should consider when launching your product or service abroad:
Translation
Be sure to research the language your new customer base speaks. Remember, this may be different from the country's official language, and there may be multiple languages spoken. Once you’ve identified the language (or languages), you’ll need to work with a professional translator to start translating key materials, such as:
- Website
- App
- Labels
- Error messages
- Blog content
- Marketing & sales collateral
Cultural Adjustments
While translation is a big part of localization, language isn’t all you have to consider when adapting your product or service for a new market - culture is equally important.
Every country - and region - has its own unique culture, which affects all aspects of a person’s life. Culture is made up of collective ideas, customs, arts, beliefs, and social behavior. Generally speaking, this means a consumer from one culture will interpret and engage with your product or service in a different way to someone from another culture.
To ensure your product or service is successful in a new market, you’ll need to make it culturally appropriate. This process will look different for every new market you enter because every culture is different.
Here are just some of the cultural elements to consider:
- Socio-political landscape
- Historical context
- Pop culture references
- Religion and beliefs
- Symbolism (numbers, colors, imagery, etc.)
The best way to ensure cultural appropriateness is to work with someone from the culture during the localization process. They can help you identify areas that need adjustment and suggest appropriate alternatives.
Price Adjustment
Converting your prices into the local currency is the simplest form of price localization, but it doesn’t work for every market. Remember, what seems like a reasonable price in your home country might not be true in your target market. If you fail to adjust your prices to suit the target customer base, your global business expansion likely won’t succeed.
Here are the main variables you’ll have to factor in when localizing prices and price structure:
- Price sensitivity
- Market rates
- Competitor pricing
- Inflation
- Exchange rates
- Pricing regulations
- Importation costs
Adjusting your prices to a new market is complex. It will involve a lot of market research and some testing before you get it right, but when you do, your business will be in a much better position to thrive.
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Adjustments for Compliance
Finally, you will need to ensure your product and service offerings comply with your target market’s laws, regulations, and industry standards. This will help you avoid delays, extra costs, and legal trouble.
For example, the European Union has strict pricing regulations that prohibit traders from charging more for the same product or service just because of a customer’s nationality or country of residence. This could affect your pricing localization.
Another example would be food labeling. Each country has its own regulations about how ingredients and allergens should be listed on packaging, as well as what other information is required. Not complying with local food labeling regulations could result in fines or legal action.
It’s best to seek legal advice before launching your product or service abroad to help you navigate these complexities.
Real-life Example: Netflix
The US-based streaming company Netflix expanded to over 190 countries in just seven years. In doing so, it effectively adapted its service offering to suit each new market it entered.
Netflix approached its global expansion in stages, first entering geographically close and culturally similar markets such as Canada. This meant the company could learn how to expand internationally without having to deal with an overly complex localization process in the initial stages of expansion.
Using this experience, the company then started expanding further afield. It did this by partnering with local companies to gain better traction, adding more language capabilities, and investing in locally attractive content.
Through data analysis and deep market research, Netflix has gained a thorough understanding of its target markets. Its knowledge extends “across political, institutional, regulatory, technical, cultural, customer, and competitor domains…[, which] enhanced its credibility and helped it forge smooth relationships with key stakeholders.”
International Expansion Challenges & Solutions
Internationalizing your business is no easy feat, but there are practical solutions you can implement to overcome challenges and mitigate risk.
Legal & Regulatory Compliance
Every country and jurisdiction has its own laws and regulations that define how foreign businesses can and can’t operate. To remain compliant, you have to carefully research all the local laws that affect your business operations, including corporate taxes, local employment regulations, data protection, import/export licenses, ownership structure, industry standards, and more.
These laws can be complex, opaque, and may be written in a foreign language, making it difficult for your business to truly understand your obligations in regards to global regulatory compliance. If you fail to comply, you risk hefty fines or legal action, both of which could set back your expansion plans significantly.
Solution
Seeking legal and tax advice from local experts is one of the best ways to ensure your business remains compliant. While professional advice doesn’t come cheap, it could ultimately save you a lot of time and money in the long run.
Working with a global employment partner like Omnipresent can also help you stay compliant with local labor laws. EOR services employ your chosen talent for you, so they’re responsible for compliance, payroll, onboarding, and other key HR functions.
Language, Culture, & Politics
Like local laws and regulations, each market will differ in terms of language, culture, and socio-political landscape.
For your product or service to succeed in a new market, you’ll have to localize it. This may involve translation, cultural alteration, and price adjustment. Localizing isn’t a simple process; it’ll take a long time to complete and is very resource-intensive. But without it, your customer base may feel alienated and less willing to buy your product or service.
Solution
Hire local experts to benefit from first-hand experience and insights. There’s no one better to help you localize your product than someone who already knows the local culture and language inside out. They can help you identify areas that need adjustment and avoid awkward faux pas!
If you want to hire local experts without setting up a local entity, consider working with an EOR like Omnipresent.
Local Competitors
Being first to market is advantageous, but in reality, you’ll probably have to deal with local competitors. These competitors may be well established, locally recognized, and already trusted by your target customers.
If you don’t find a way to stand out from the crowd and gain customer trust and loyalty, your foreign expansion is unlikely to take off.
Solution
As always, doing plenty of research before you enter a new market abroad is essential. This exercise will help you identify current competitors, their unique offerings, and their market share. With that knowledge, you can decide whether it’s worth expanding to the market or choosing another.
If your product or service does have something to offer that your competitors don’t, you can build trust through strategic local partnerships. Let’s take Netflix as an example once more.
During the streaming company’s global expansion, it launched partnership deals with cable and cellphone companies around the world to capitalize on their existing customers. This meant Netflix could reach a much larger audience without spending as much on advertising and distribution deals. In return, the local partners got access to Netflix’s exclusive programming.
Netflix is a unique example but clearly shows that teaming up with local companies to launch your own products and services is one way to cut through the competition and increase brand awareness in a relatively cost-effective way.
Managing Distributed Teams
Building a global team is often a key component of overseas expansion, but it can be challenging. If you have remote workers and colleagues working across different time zones, you might worry about their ability to collaborate or bond.
You may also fear that employees struggle to be productive or stay engaged while working remotely. It takes a lot of effort to ensure your distributed teams run smoothly, so you’ll need to invest plenty of time and resources into creating a global-friendly approach to work. Try adopting an asynchronous work policy to help teams collaborate effectively. Tips for asynchronous work include:
- Define your preferred communication channels and etiquette, so all your team members are on the same page.
- Always question if a meeting is necessary and use other channels of communication if it’s not.
- Use asynchronous tools like Loom or Monday to enhance collaboration and reduce silos.
- Document everything, from policies to processes to those important meetings.
- Set your boundaries and clearly indicate when you’re available to respond. This can help prevent burnout.
- Sync up to socialize, whether in person or virtually, to help your distributed team bond, even if they’re located halfway across the world!
Expanding Your Business into Europe
Regional expansion is one approach your business can take when going global. Instead of focusing on just one market, you can enter multiple countries using a similar strategy.
Europe is one of the most popular regions for this type of expansion for a number of reasons, including regional trade agreements and highly educated talent pools. But expanding into Europe isn’t always simple.
Below we weigh up the main advantages and disadvantages of European expansion so you can make the right decision for your business.
Benefits of European Expansion
- One of the most attractive reasons to expand into Europe is the free movement of goods. Within the European Union (EU), businesses are free to buy and sell goods and services without customs duties or quantitative restrictions. As a result, it’s much easier to expand across the region once you’ve established a base in Europe.
- While many European countries are part of a larger economic and regulatory entity, each market offers businesses something unique. This market diversity allows you to pick and choose which markets are best suited to your business and diversify your products or services to meet local customer demands.
- Expanding into Europe also gives you access to highly educated talent pools. The region is home to a wealth of top talent, from academics to software engineers, eager for exciting work challenges, such as joining an international team like yours.
Challenges of European Expansion
- Market diversity is a double-edged sword; cultural and linguistic differences can be challenging to navigate as you expand. You’ll likely have to spend a long time and plenty of resources on adapting and localizing your products to meet customer expectations in each country.
- Not all countries are part of the EU, which makes trading within them more difficult. You’ll need to research other tax and trade agreements to understand how to sell your products compliantly and efficiently.
- The EU provides some regulatory uniformity, but each country has its own unique laws too. Local laws dictate how your business operates, how you employ staff, and more. These legal and regulatory differences make it very challenging to comply as you expand across Europe.
Researching your target market(s) in depth can help you plan for the above complexities and tackle challenges head-on, ensuring your European expansion runs as smoothly as possible.
Expanding Your Business into Southeast Asia
Southeast Asia (SEA) should also be on your radar for global expansion. Below we discuss the main advantages and challenges of expanding into the region, and we provide some top tips to help you expand successfully.
Benefits of Expanding into SEA
- Southeast Asia is among the fastest-growing economic regions in the world. Coupled with a rapidly increasing middle class, it’s a lucrative market for foreign investors.
- With 440 million internet users and a large digital native population, Southeast Asia is the ideal expansion destination for e-commerce and digital services businesses. In fact, the internet economy is expected to reach $360 billion by 2025.
- Southeast Asia offers a promising tech talent pool with developers aplenty! Young people in Southeast Asia also show a strong desire for continuous growth and development.
Challenges of Expanding into SEA
- To successfully launch your product or service in Southeast Asia, you’ll have to overcome multiple cultural and linguistic barriers. English is widely understood, but levels of fluency vary considerably. Southeast Asia is home to diverse cultures and politics, so you can’t take a “one size fits all” approach to expansion.
- Each Southeast Asian country has complex laws and regulations that affect foreign businesses and employment. If you don’t comply with these laws, your business could face fines or legal action.
- In Southeast Asia, business has traditionally been done via family ties and conglomerates, so foreign businesses may lack the key contacts necessary to make expansion a success.
Tips for Expanding into Southeast Asia
While those challenges may seem daunting, they’re not insurmountable. Here’s a brief step-by-step guide to help you expand into Southeast Asia successfully:
- Create an expansion strategy to help you plan ahead, set goals, and determine the optimal entry method.
- Hire local talent to gain first-hand knowledge of the target market and overcome cultural and linguistic barriers.
- Work with professionals to adapt your product or service for the new market, including translation, localization, price adjustment, and compliance.
- Launch and test your product, continually monitoring its performance and making adjustments as necessary.
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