The current population of the United States of America is 326,766,748. That seems like a lot of people. The US population makes up 4% of the world population.
The international market is open and full of opportunities. Many companies have expanded to international markets which has allowed them to grow. However, if you’re on the fence about taking your company global, consider some of the following benefits of international business expansion. As stated before, the US population only accounts for 4% of the world population. International expansion offers a chance to conquer new territories and reach more consumers. Access to these new markets can help drive an increase in sales. By expanding in to new markets, companies can take advantage of a company’s resources. For example, Holland’s connection to European markets is one reason why UPS recently opened a new $150 million facility in Eindhoven, one of the company’s largest investments in Europe.
The 300,000 square foot facility will be able to sort up to 29,000 packages per hour.
Another benefit to international expansion is Diversification. Businesses that expand internationally create an opportunity to diversify their assets. This can protect a company’s bottom line against unforeseen events. For example, a company that has an international presence can offset negative growth in one market by operating successfully in another. International markets can also be used to introduce unique products and services, which can help maintain a positive revenue stream. On the other hand, if diversification isn’t approached with caution, the result can be over extension of a company’s resources.
Lack of expertise can also drive a company down a negative path. For example, if a car company takes over a food distribution company it should retain proper expertise from the original company.
Companies that diversify into areas that require added infrastructure, employee training and travel between widely separated areas run the risk of increasing their costs beyond the value of the business venture.Going global is an opportunity to access new talent pools. International labor can offer businesses advantages such as;increased productivity, language skills, and diverse educational backgrounds. Sourcing talent is very important for any rapid-growing business. Companies want to provide the best service to their customers. For example, in this economy software skills are in high demand. Software Engineers seem to be in short supply and depending on experience will require higher salaries. The reality is that a software engineer in another country can work just as productively as someone sitting in the same office. This is where recruiting internationally adds value and creates a distributed company. On the other hand, the distributed model needs to be carefully managed. By not having the employee in the office while most of the staff is in the office is divisive.
Businesses may also choose international expansion to gain competitive advantage over their rivals. Expanding in international markets where competing companies do not operate in often creates a first-mover advantage. This allows for brand awareness with consumers before rival companies. The operation can also improve with access to new technologies and industry ecosystems. Once a company establishes an image as a global company it can help build brand name recognition to support future business opportunities. To gain lasting global competitive advantage a company must leverage its capabilities around the world so that the company is greater than sum of its parts. Selling globally, having global brands or having operations in different countries will not be enough.Businesses may also take advantage of foreign investment opportunities that foreign markets can offer.
For example, companies are to develop new resources and forge important connections by operating in global markets. There are alsogovernments around the world that offer incentives for companies looking to invest in their region. Investing internationally could help guard against some of the risks associated with a U.S.-based portfolio. With a portfolio that includes domestic and foreign stocks, you could potentially reduce the risk of losing money if U.S. markets decline.Investors in foreign countries also must be aware of potential political risks. Investing overseas requires you to closely follow news and trends from various regions and keep a keen eye on potential currency fluctuations.An example of a global company is Coca Cola. Coca-Cola is one of the most well-known brands in the world, operating in over 200 countries. This company has applied some of the key principles listed above. While the road for Coca Cola has not been an easy one due to some countries banning the use of its products, they have adapted well to stay relevant.
Their rapid expanding beverage industry is ranked as the largest in the world. As such, 70% of its income is generated from sources outside of the USA. This globally diverse company has over 20 brands with over $1 billion in annual sales. Having so many brands provides the company with a safety net protecting their bottom line should a brand fail. Two major competitors of Coca-Cola are Pepsi and Dr Pepper. The size of Coca Cola makes it difficult for both companies to compete. Coca- Cola’s financial resources create a competitive advantage. They are using their funds to invest in other potential markets. Coca Cola spends billions of dollars in annual advertising. Their technological resources used to study new brands increases the competitiveness with its rivals. Coca Cola invests a lot in employee engagement.
They believe that the success of the company is dependent of the motivation of their employees. Through surveys and tests, they measure engagement levels throughout the company globally. This large multinational company has a total of 146,200 employees (Forbes, 2012). Their employees come from all over the world from countries with different socio-economic conditions and cultures. To remain competitive, they employ human resource managers from around the world to manage in their own country. The international training programs organized by Coca Cola promote an international management team and identify talent for senior positions. A key contributor to Coca-Cola’s ability to grow globally is technology advances. The company had to look for way for product transportation to become more efficient and cost effective. Coca-Cola had to manufacture and ship products quicker and farther to remain competitive.
These same technological advances helped distributors and warehouses to accurately track inventory levels and fill shipments, resulting in lower operating costs. Computerized and automated manufacturing equipment increased speed and volume in which products were produced. The use of technology enabled Coca Cola to remain completive on a global scale. In conclusion, the international market is open and full of opportunities. To become a global company is not an easy task. Coca-Cola needs continuous innovation to create new product lines while maintaining the quality of their existing products. Investment in technology including product transportation, telecommunication, and Computerization will be the driving force behind Coca-Cola’s ability to capitalize on the rapidly expanding marketplace across the globe