Global Business Expansion: What Does it Take?
With the ever-increasing scientific and technological developments, reduction in communication barriers and increase in global consumer demand, the importance and requirement of globalization for any growing organization is undeniably evident. Global market expansion for any organization refers to the expansion in its activities on a global scale, outside its home country through foreign investment.
The idea is to make a global presence and serve multiple regions in a globally competitive environment. With the increase in trade-friendly policies and competition, it has become more of a necessity for a large brand to make its global presence eminent. However, the decision to expand geographically is not an easy task. It in itself requires careful consideration of multiple factors that affect the organization as a whole. Some of the key factors that an emerging business may consider before expanding globally are as follows.
1. Develop a Corporate, Business and Functional Strategy
This is an initial step for any organization, especially if it is a small emerging business opting for a global presence. The requirement is to develop an overall corporate strategy concerning your business expansion. This will include significant long-term decisions by the top management. The decisions undertaken will define the core basis of your objectives and goals to be later set out.
Based on this corporate strategy, management will develop further business and functional strategies for short-term day-to-day tasks, such as marketing & sales, finance; HR, production & procurement and IT-related decisions. These strategies will further assist the decision-makers in defining their goals and objectives.
The planning process may involve the following:
The legal team that confirms the entity structure and composition of the board of directors, shareholder(s) and local representative as per the corporate governance regulations under which it is governed:
– HR management for the selection of competent staff– Tax guidance for the determination and evaluation of the potential tax impact;
– Accounting and Finance expertise required for carrying out the local reporting regulations and for the financial analysis of business; and
– Operational staff for administration of the real estate, bank and other related matters
This process involves significant resources from different areas. One way to overcome this limitation is to work with a global business solutions provider and outsource the process for a more streamlined and consistent outcome.
2. Define Your Global Market Expansion Goals and Objectives
Once you have developed your strategy, it is time you set out your goals and objectives. You can do this by making a detailed plan that is comprehensive enough to define all your objectives and aims you have laid out. This can include your focus towards the market as a whole, the general competition and the primary objectives that you wish to achieve for your stakeholders.
3. Develop Your Budget And Set Out Your Milestones
After setting out your goals and objectives, it is time you take a realistic approach and determine the necessary requirements for achieving them. This includes the preparation of budgets and various market analyses. Set out your milestones and deadlines for achieving them.
This part requires the involvement of the entire organization for it to be effective, considering all the limitations within the organizational hierarchy and giving them due to deliberation so they align with the overall corporate strategy.
4. Perform Global Research to Expand Operations
When it comes to global market expansion, your business has to learn about the emerging markets where you want to expand. It is of utmost importance to conduct research studies on factors, such as market rivalry to ensure competitiveness, human resource procurement for selection of local or expatriates, analysis of laws and regulations to comply with trade policies and taxation requirements, and above all the finance requirements of the business, such as raising capital or obtaining loans.
The global market expansion is an inherently complex process that requires considering the following matters:
– Legal presence;
– Tax regulations and its impact;
– HR / Labor laws;
– Social security burden;
– Compliance requirements;
– Capital requirements and gearing analysis;
– Capital repatriation;
– Funding the local operations;
– Corporate governance – composition requirement of shareholders and directors differ by country;
– Accounting and Tax applicable reporting frameworks;
– Banking relations;
– Import/Export procedures;
– Immigration/work permits requirements.
Each of these areas requires specific planning and timing, considering the fact how long it takes for initial set up in foreign countries for being operational. However, with the right direction and insight, businesses can successfully overcome all the limitations and achieve a competitive advantage globally.
As you see, global business operations require the efforts of many disciplines, including Finance, HR, Tax, Legal and Accounting. Blueback Global elaborated an integrated model that provides a one-stop solution for your business. With our services, you can utilize as much or as little as you need, and engage the full spectrum of accounting, finance, legal, tax and compliance expertise, or just a subset – the choice is yours.