Globalization is no longer just a trendy buzzword; it has become a guiding principle in today's business landscape. Once companies have established themselves in their domestic market, the natural next step is to expand into new markets in order to continue growing, or to tap into the global talent pool to gain a competitive advantage.
However, before venturing into new markets, it is crucial to conduct thorough research to identify potential risks and evaluate the potential and feasibility of international expansion for your business. During this process, business leaders and decision-makers may wonder if their industry is well-suited for global expansion or if it may not be the best fit.
In this article, we will outline various industries that are well-positioned for global growth and highlight key factors to consider before embarking on an international expansion project.
What is international expansion?
International expansion, also known as global expansion, involves the process of expanding a business's operations to foreign markets with the aim of broadening the customer base and increasing sales of the company's products and services.
There are many advantages associated with expanding into new markets. In addition to creating new opportunities for business growth and generating revenue, it allows companies to tap into new talent pools and expand the reach of their brand, among other benefits.
Global expansion typically involves various activities and strategies. While some businesses opt to establish a subsidiary right away, others may prefer to test the waters by hiring local freelancers or employing full-time staff through an Employer of Record.
Going global: Key considerations for globalexpansion
To ensure the success of an international expansion project, organizations need to consider several key factors, including:
• Global expansion strategy
Expanding globally is a significant undertaking that requires a well-planned strategic approach.
• Experienced team
The success of your international expansion largely depends on the expertise of your team. It is important to build a team of experienced global expansion specialists.
• Choice of location
While a particular market may seem like a great business opportunity, some countries make it challenging for foreign companies to establish themselves. Extensive researchis essential before deciding where to expand, or alternatively, choosing one ofthe top countries for international expansion.
• Legal restrictions
In addition to understanding the local customer base and market, organizations must have a thorough understanding of local regulations pertaining to trading, employment, payroll, incorporation, and other related areas.
Top Industries for global expansion
The factors mentioned above are essential for achieving success in international expansion. Although thorough planning and research are necessary regardless of the industry, some industries are better equipped than others to succeed in global expansion. We have compiled a list of these industries below.
When selecting the industries featured in our list, we considered those that inherently possess advantages for successful global expansion, as well as those industries that should contemplate expanding overseas due to strong worldwide demand for their products and services.
Tech industry
Technology is a key driver of global expansion and has tremendous potential for growth worldwide. Big names likeMicrosoft, Apple, Amazon, Netflix, and Google are prime examples of this. The tech industry is well-suited for global expansion due to its practice of hiring the best talent regardless of location and the high demand for digital solutions in today's world. Emerging markets offer significant growth opportunities, with growth rates in some tech sectors projected to reach 104%, according to Statista.
Energy
Renewable energy is in high demand due to climate change concerns, creating global opportunities for production and distribution companies. Certain locations are particularly suitable for specific energy sources, providing guidance for international expansion. However, legal regulations can pose a challenge for energy companies.
Retail and e-commerce
COVID-19 had a significant impact on e-commerce, leading to a surge in demand and opportunities for expansion into new markets.The retail industry, including e-commerce, is naturally suited for global expansion as it involves gaining new customers and accessing new markets. Retailers can take advantage of opportunities abroad by conducting thorough research on potential markets.
Automotive
The automotive industry is a prime example of global brand success, with its products in high demand worldwide due to their essential nature. Outsourcing production to cheaper locations can be a significant advantage due to high production costs. Additionally, companies should consider relocating their research and development centers to countries with better conditions and a skilled workforce.
Pharma industry
The pharma and biotech industry is alwaysin demand due to the need for pharmaceutical products where there is a risk of diseases. Although R&D and production facilities are located in WesternEurope or North America, emerging markets offer lucrative opportunities. With more regions gaining access to health facilities, the demand for medication increases, but the industry is highly regulated and requires thorough research for global expansion.
Other industries
The industries mentioned earlier are not the only ones that should be considered for global expansion. According to a study of Fortune 500 companies, the hotel, restaurant and leisure industry has the highest number of international locations, followed by retail and apparel. Other industries with potential for international expansion are telecommunications, travel, media, and finance.
Master global expansion with ChaadHR
ChaadHR helps businesses expand globally. We provide support for testing new markets, hiring employees, and setting up subsidiaries. Our platform offers compliant onboarding of international contractors, remote employee hiring, and consolidated payroll management through a single dashboard. Book a demo to learn more.