A complete guide to global business expansion strategy

Overseas expansion can seem a farfetched dream to most, while even those considering the process may be daunted by its complexity. Yet, though expansion can be time-consuming and involved, it need not be exclusively the domain of giant corporations like McDonald’s, Google, Apple, or IKEA.

With a comprehensive and carefully-composed global business expansion strategy, even start-ups and SMEs can expand their operations into new, potentially lucrative markets.

This article provides a broad, overarching guide to international business expansion: what it is, how it can be beneficial as well as challenging, when to consider it, how to build a solid global business expansion strategy, and how partnering with an Employer of Record may drive the success of your overseas venture.

Why go global? A look at the benefits and challenges of international expansion

An important part of considering global expansion for your business is being aware of both the pros and cons, and balancing these carefully. For whilst there are many potential benefits to expanding overseas, there are a number of challenges you may first have to overcome, and the nature of your expansion will be informed by whether or not the pros outweigh the cons.

Potential pros of global business expansion

• Increasing global sales and expanding client lists by tapping into new and lucrative markets; including the potential to reset the lifecycle of older products and services.
• Maintaining a competitive edge in an increasingly globalized world by positioning yourself and your brand as a leader in untapped markets.
• Widen your available talent pool to include employees and contractors operating all around the world, with expertise in new and expanding areas.
• Increasing cost savings through relocation and access to new, more affordable markets.
• Securing the financial future of your company by diversifying your revenue streams and the markets you operate in - essentially building greater business resilience.
• You must comply with all applicable labour and tax laws and regulations in the countries and regions you intend to expand into. This can be complex and costly, especially if you fail to comply.
• The culture, languages, and politics of different countries can vary dramatically, and should be researched thoroughly prior to expansion otherwise your offering may be met with confusion, apathy, or hostility.
• Local competitors who are already long-established in your new target market may have an advantage over you, owing to their local, innate understanding of that market.
• Managing remote and international teams requires a reframing of your managerial practices and office culture to be best effective; for example, you must consider how you will work effectively across multiple different time zones.
• It can be prohibitively costly to expand overseas, depending on the global business expansion strategy you choose to develop, especially when expansion is conducted independently.

Challenges of global business expansion

• You must comply with all applicable labour and tax laws and regulations in the countries and regions you intend to expand into. This can be complex and costly, especially if you fail to comply.
• The culture, languages, and politics of different countries can vary dramatically, and should be researched thoroughly prior to expansion otherwise your offering may be met with confusion, apathy, or hostility.
• Local competitors who are already long-established in your new target market may have an advantage over you, owing to their local, innate understanding of that market.
• Managing remote and international teams requires a reframing of your managerial practices and office culture to be best effective; for example, you must consider how you will work effectively across multiple different time zones.
• It can be prohibitively costly to expand overseas, depending on the global business expansion strategy you choose to develop, especially when expansion is conducted independently.

Defining global business expansion

Global business expansion looks different for each individual business. What it means and what it requires will change depending on the industry you’re in, the reasons for your expansion, and how you hope to enter the new market.

Having said that, we can generalise. Global business expansion – also known as international expansion, foreign expansion, or overseas expansion – is a business growth strategy used to enter new markets in other countries. It can include the movement of business operations, resources, workforces, products, and services.

Successful expansion requires the tailoring of a global business expansion strategy unique to the enterprise’s industry, offering, and goals.

How to know when your business is ready to expand overseas

Not every business needs to expand overseas, nor will every business naturally come to a definable point at which international expansion is the logical next step. Knowing when your business is ready to expand often depends on whether you have the time and resources to develop a watertight strategy.

If global expansion is something you want to see in your business’ future, then we’d suggest you begin planning today. The more prior preparation you can inject into a global business expansion strategy, the more evident it will be when the time comes for your enterprise to take that leap.

How small businesses can also expand internationally

Traditionally, international expansion has been the realm of large corporations with deeper pockets than most start-ups and SMEs can ever hope for. Thankfully, however, in our present era of expansive and accessible globalisation, the opportunities for smaller businesses to expand overseas do exist.

The key to global business expansion for small and smaller businesses is, of course, to minimise the costs involved. The most straightforward means of reducing expansion costs is to partner with a global business expansion solutions provider, whose expertise and existing international presence can reduce the risks you face and mitigate the need for costly foreign subsidiaries.

Developing your global expansion strategy

Every individual expansion requires its own tailor-made international business expansion strategy. Developing such a strategy should take time, care, and consideration. What follows is a broad overview of the 10 components we believe are key to an effective expansion strategy. For a more involved and detailed discussion of these 10 steps, read our post on how to avoid the pitfalls of global expansion.

10 key steps to a comprehensive international business expansion strategy

1. Set your goals: It is crucial you know why you want to expand overseas. A clear set of goals will help you keep your strategy on track throughout the expansion process.
2. Research: Acquire a firm understanding of the market you’re aiming to enter, including the competitors there, and the culture which frames it.
3. Choose an expansion model: You can expand into new markets via a range of expansion models, including exportation, licensing, franchising, partnerships and joint ventures, mergers and acquisitions, and greenfield investments. Knowing which will work best for you is crucial.
4. Consider building overseas infrastructure: International expansion is best supported by the establishment of local infrastructure on the ground. This infrastructure can comprise a foreign office or subsidiary, a remote workforce of employees and/or freelancers, or a network of third-party local partners.
5. Reconsider branding in an international context: A different audience will likely respond quite differently to your branding, compared to the home audience it was developed for. Consider how best to rework your branding in an international context.
6. Tailor your offering to the new market: Similarly to your branding, your offering – whether products or services, B2C or B2B – should be reevaluated with the target international demographic in mind.
7. Equip your teams to work internationally: Working effectively across time, cultural, and linguistic barriers is not easy. Adapt your management style to consider the potential benefits of asynchronous work and strategic human resource management.
8. Budget: Draft a budget which considers all the various costs of international expansion, and which can be consistently guided by KPIs established during your ‘goal-setting’ phase.
9. Risk assessment: Understand the risks specific to your particular international expansion plans, and determine how best to mitigate these whilst ensuring 100% compliance with all relevant labour and tax laws.
10. Partner with an expert in global business expansions: Refocus your own role in international expansion to those elements most important to you and your business, whilst reducing stress, costs, and ensuring compliance, by utilising the expertise of Mauve Group.

How to choose which international business expansion methods will suit your business best

The expansion model you choose – exportation, licensing, franchising, etc. – will very much depend on the goals you set for your expansion. Each model has a different set of requirements, challenges, and potential benefits.

For example, consider that fast-food chain McDonald’s’ success rests on the franchising model: approximately 93% of all McDonald’s restaurants worldwide are “owned and operated by independent local business owners.” For Netflix, on the other hand, partnership deals with local mobile operators and TV providers were key to its successful expansion into around 190 countries across the globe.

Seek the advice of professionals when determining which model might work best for you.

When to establish a foreign subsidiary

Establishing a foreign subsidiary is arguably one of the most involved international business expansion methods. A foreign subsidiary is a separate legal entity based on the ground in the overseas country, and majority owned or controlled by your company whilst remaining responsible for its own taxes and assets.

Establishing a foreign subsidiary gives you a stable and potentially impactful foothold in the target country, but equally carries with it high costs, a great number of compliance hoops to jump through, and many additional managerial considerations.

Oftentimes, establishing foreign subsidiaries may not be cost-effective nor practicable to the smaller enterprise seeking to expand overseas. In such instances, the business owner may wish instead to leverage the existing international presence of an Employer of Record.

Go global with Mauve

It is our hope that having read our complete guide to global business expansion strategy, you feel better equipped to begin your own journey toward international expansion.

Many of the risks and costs associated with business expansion can be mitigated with the help of a trusted partner like Mauve, whose extensive experience in overseas expansion can aid start-ups, SMEs, and larger enterprises with compliant international hiring of employees and contractors, visa and immigration support, global payroll, and expansion strategising.