Benjamin Stewart | National Sales Manager - US, CloudPay
The world has been moving toward a more globalized future for decades. Three years ago, the coronavirus pandemic swept across the planet, shocking the market and causing unprecedented levels of uncertainty. No one knew what would come next. Would the nations of the world huddle up and forget about globalization altogether? Or would they press on, unfazed?
As it turned out, the pandemic only served to strengthen the market's resolve. With high-powered businesses, leading the way and industries right across the board thriving, the market finally seems as though it is regaining its confidence.
Companies usually decide to go global when they reach a point where they want to grow and expand. Novel markets offer new opportunities and access to a wider audience. From a revenue standpoint, an effective global expansion campaign has plenty of upsides.
With that said, there are some things to consider before you get the ball rolling. The first is to understand how the current players in your industry perform in the global markets. Some industries are more poised for growth than others — it’s as simple as that. With that said, here is our list of the top five industries that are primed for global expansion.
Technology is at the top of the list for a variety of reasons. The most obvious is that one of the tricky parts about expanding your operations to foreign lands for most industries is hiring local employees.
There are two choices: hiring remotely or creating a legal entity to employ local workers. The latter is complex, expensive, and time-consuming. At the same time, the former has a learning curve and requires the business to integrate the remote worker into their team effectively.
Tech industries typically don’t need to worry too much about this aspect of global expansion because they are already familiar with hiring remote workers. So by going global, a lot of the guesswork of hiring locally is eliminated.
Businesses in the tech industry can also take advantage of the technological gap in emerging markets. Business-to-business (B2B) tech companies that enter these markets can introduce advancements like high-tech options to help modernize the local market. Take a MedTech company with cutting-edge technology, for instance. They can tap into a foreign market with comparatively low-tech hospitals looking to upgrade their equipment.
When it comes to retail, international expansion and accessing new markets go hand in hand. For some retail firms, expanding into new areas looks like opening additional brick-and-mortar locations, which may also be an efficient way to boost your consumer base. Reach is particularly crucial for eCommerce businesses, which often need the addition of warehouses and the arrangement of logistics in more distant locations.
Even grocery stores, which have historically been more of a regional market, are expanding worldwide. If there is a demand for what you offer in another nation, expanding operations there might be a wise decision.
The automotive industry is no stranger to the global market. Walk down any busy street in any country in the world, and you will likely see a variety of cars that have been made by companies from just about every continent. For the past 38 years, all major automakers have gotten a piece of the US auto market by investing in the country and producing high-demand vehicles locally.
To say there’s a market for cars in the world is an understatement.
With demand driving innovation, the auto industry is always on the cutting edge of new technology. According to Auto Alliance, the worldwide auto industry spends $105 billion per year on research and development in areas such as low emissions and electric vehicles. What can we learn from this?
Well, for companies in the automotive industry looking to expand internationally, it may be worthwhile to consider localizing your R&D facilities since that is where a lot of your resources are likely to go.
Similarly, auto companies that expand globally often build local manufacturing plants to help save on costs. Both will have the added benefit of opening up their workforce to new talent pools, which can give it the edge it needs when trying to succeed in a foreign market.
Pharmaceutical companies that think it's time to enter new markets have their work cut out for them. Countries worldwide all have their regulations on pharmaceuticals, so to successfully expand into a new market, you will need to understand the laws to stay fully compliant.
Additionally, most pharma clients are either government or government-sponsored organizations, complicating matters.
That being said, with an aging global population and widespread access to healthcare, there is an abundance of opportunities for companies in the pharmaceutical industry.
The worldwide need for energy and the global drive for renewables present several opportunities for enterprises in this area seeking to develop abroad. Opportunities abound in developing nations in particular. Six of the top ten utility firms already have operations in multiple countries.
Worldwide oil production shows no signs of slowing down due to high gas prices and streets filled with gas-hungry vehicles driving demand. Add to that the surging demand for renewable energy, and you can see why global expansion is a highly lucrative option for companies in the energy industry.
Like the medical profession, energy is extensively controlled by government authorities, and there isn't always space for competition in other nations, making global expansion more difficult. The reward, on the other hand, may be well worth it. Expansion into new countries may offer access to new resources and consumer markets.
Making global expansion a success in these top five industries
Knowing if it's time to take your company abroad takes more than gut instinct and a quick check to see how your competition is faring. To truly understand if the move makes sense for your company, you need to dig your heels in and conduct a thorough cost-benefit analysis.
What works for one company may not work for yours. It doesn’t always come down to how many resources you have at your disposal, either. Take Target’s failed expansion in Canada, for example. They spent billions trying to fit a square peg in a round hole and eventually retreated home.
You also need to have a bulletproof strategy for global payroll to make international expansion work in the long term. Without an end-to-end and standardized system, managing your global workforce can quickly turn into a time drain — putting your global vision at risk.
The truth is that global growth may make sense for a company in almost any sector. Whether it's a wise move for you is more dependent on your specific objectives, the hurdles you're willing to confront, and the partners you bring in to help.
Benjamin Stewart | National Sales Manager - US, CloudPay