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How to Build a Global Strategy for Your Business?

Crafting a global business strategy is paramount for companies that want to expand beyond geographical borders. This comprehensive approach considers market landscape, cultural shades, and regulatory frameworks to navigate international markets successfully.

This blog explores the complexities of building a global strategy that optimizes opportunities while mitigating risks. From understanding different global strategies to real-world examples from top companies, it offers valuable insights for organizations seeking sustainable growth globally.

What is a Global Business Strategy?

A global business strategy serves as a blueprint for organizations seeking to expand their operations beyond domestic borders. It encompasses a holistic approach that considers market dynamics, cultural nuances, and regulatory frameworks to formulate a plan that optimizes opportunities while mitigating risks in the global arena.

Types of Global Business Strategies

Some different approaches to building a global business strategy are as follows:

• Global Standardization Strategy: This strategy revolves around offering uniform products and services across diverse markets, with minimal customization to cater to local preferences. Embracing this approach enables companies to leverage economies of scale and maintain a consistent brand image.
• Localization Strategy: In contrast to standardization, localization involves tailoring products, services, and marketing strategies to align with the cultural sensitivities and preferences of specific markets. A study by Common Sense Advisory reveals that 56.2% of consumers prefer purchasing products in their native language, underscoring the importance of localization.
• Transnational Strategy: This strategy blends elements of both standardization and localization, aiming to strike a balance between global integration and local responsiveness.
• International Strategy: Companies pursuing an international strategy operate in multiple countries with minimal customization. They often focus on exporting products or establishing a presence through partnerships or acquisitions.
• Globalization Strategy: This strategy seeks to establish a cohesive global presence by integrating operations across various countries. Companies adopting this approach typically exhibit a centralized decision-making process and a strong corporate culture.

Devising a global business strategy demands meticulous analysis and the adoption of a tailored approach that aligns with the organization's objectives and capabilities. Whether through standardization, localization, or a blend of both, organizations must craft strategies that resonate with the diverse demands of global markets to achieve sustainable success.

Why is a Global Business Strategy Important?

A global business strategy is crucial for organizations looking to expand their presence and thrive in today's interconnected world. It serves as a roadmap, guiding companies on how to navigate the complexities of international markets and make informed decisions that drive growth and profitability.

This strategy enables companies to expand their market reach by tapping into new and diverse markets, diversifying revenue streams, and staying ahead of the competition by understanding market trends and consumer preferences. Additionally, a global strategy allows companies to mitigate risks by spreading them across different markets and provides access to a larger talent pool globally.

Overall, a well-crafted global business strategy is instrumental in positioning companies for sustainable growth and success in the global marketplace.

What are the Benefits of a Global Business Strategy?

A meticulously crafted global business strategy offers a myriad of advantages to organizations seeking to expand their footprint and harness international opportunities.

• Access to Global Markets: Expansion into new markets reduces reliance on any single market, spreading risks across a broader geographical area. This helps mitigate the impact of economic downturns or geopolitical uncertainties.
• Increased Revenue and Profitability: Global expansion can lead to higher sales and revenue streams. Internationally expanding companies are more likely to experience higher revenue growth compared to those focusing solely on domestic markets.
• Access to New Customers and Markets: A global strategy enables companies to reach new customers and tap into emerging markets with growing demand, driving sales and fueling business growth .
• Economies of Scale: Operating globally offers economies of scale, leading to lower production costs and higher profitability. This competitive pricing edge can bolster the market position.
• Enhanced Brand Image and Reputation: International expansion can elevate a company's brand image and reputation, positioning it as a global industry player. This can attract top talent and forge strategic partnerships.
• Innovation and Learning: Global expansion exposes companies to new ideas, technologies, and business practices, fostering innovation and driving continuous improvement.

A global business strategy offers diverse benefits including market diversification , increased revenue, access to new customers, economies of scale, enhanced brand image, innovation, and competitive advantage. By embracing strategic international expansion, companies can position themselves for long-term success and sustainable growth.

How To Create a Successful Global Business Strategy?

Creating a successful global business strategy requires careful planning, thorough research, and a deep understanding of international markets.

• Market Research: Conduct comprehensive market research to identify potential markets and assess their viability. This should include an analysis of market size, growth trends, competition, and regulatory environment.
• Target Audience: Understand the needs and preferences of your target audience in different markets. This will help you tailor your products or services to meet their specific requirements.
• Competitive Analysis: Analyze your competitors in each market to identify their strengths and weaknesses. This will help you develop strategies to differentiate your offerings and gain a competitive edge.
• Risk Assessment: Identify potential risks and challenges associated with expanding into new markets, such as political instability, currency fluctuations, or cultural differences. Develop strategies to mitigate these risks.
• Legal and Regulatory Compliance: Ensure compliance with local laws and regulations in each market. This may include obtaining permits, and licenses, or adhering to specific standards.
• Localization: Adapt your products, services, and marketing strategies to suit the cultural preferences and nuances of each market. This may involve translating your materials into local languages or customizing your offerings to meet local tastes.
• Technology and Infrastructure: Invest in technology and infrastructure to support your global operations. This may include setting up local offices, establishing distribution networks, or leveraging digital platforms for marketing and sales.
• Human Resources: Build a diverse and talented team with experience in international markets. This will help you navigate the complexities of global business and drive success.
• Partnerships and Alliances: Establish strategic partnerships and alliances with local businesses or organizations to expand your reach and leverage their local expertise.
• Measure and Adjust: Continuously monitor and evaluate the performance of your global business strategy. Make adjustments as needed to ensure it remains relevant and effective in achieving your goals.

5 Global Strategy Examples from Top Companies

Studying successful global strategies from top companies can provide valuable insights into effective approaches for expanding into international markets.

• Apple Inc.: Apple's global strategy focuses on product innovation and brand loyalty. By consistently introducing innovative products and creating a strong brand image, Apple has expanded its presence worldwide. According to Apple, its revenue from international markets accounted for 61% of the quarter’s revenue in 2020.
• McDonald's Corporation: McDonald's global strategy emphasizes localization. The company adapts its menu and marketing strategies to suit local tastes and preferences. This approach has helped McDonald's become one of the most recognized and successful global brands. According to McDonald's 2021 Annual Report, nearly 75% of its restaurants are located outside the United States.
• Amazon.com: Amazon's global strategy focuses on customer convenience and market penetration. By offering a wide range of products, fast delivery options, and localized services, Amazon has become the world's largest online retailer.
• Toyota Motor Corporation: Toyota's global strategy emphasizes quality and efficiency. The company is known for its reliable and fuel-efficient vehicles, which appeal to customers worldwide. Toyota has a strong presence in various international markets, with sales offices and manufacturing plants strategically located around the globe.
• Coca-Cola Company: Coca-Cola's global strategy revolves around brand consistency and marketing. The company maintains a consistent brand image and marketing message across different markets, while also adapting its products to suit local preferences. According to Wikipedia, Coca-Cola operates in over 200 countries and territories worldwide.

These examples demonstrate the diverse approaches companies can take to develop successful global strategies. By understanding and adapting these strategies to their own business models, companies can expand their reach and achieve sustainable growth in international markets.

Final Words

Crafting a successful global business strategy is a multifaceted endeavour requiring astute market understanding, meticulous planning, and strategic implementation. By adhering to the key steps outlined in this article, organizations can devise a roadmap that fosters expansion, fuels growth and capitalizes on global market opportunities.

Thorough market research, a deep understanding of target audiences, and a comprehensive analysis of competitors are paramount in developing a strategy that resonates with diverse markets. Flexibility and innovation play crucial roles, with companies needing to strike a balance between standardization and localization to adapt to varying cultural landscapes.

Emphasis on risk assessment and compliance with local regulations is critical to navigating the complexities of global expansion successfully. Investing in technology, infrastructure, and a skilled workforce forms the backbone of a robust global strategy.

Continual monitoring and evaluation of the strategy's efficacy are essential, enabling companies to remain agile and responsive to evolving market dynamics. By embracing these principles, companies can position themselves for sustained success and growth in the global arena.

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Globalization is changing. Here's how your business can adapt

The changing face of globalization: disrupting old norms and establishing new connections Image:  Shutterstock

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Our world has moved from globalization euphoria in the early 1990s to a globalization backlash over the past decade. We are witnessing a profound transformation of globalization – of its original definition as “the development of an increasingly integrated global economy marked by free trade, free flow of capital, and the tapping of cheaper foreign labor markets”- shaped by new actors like China, trends in e-commerce and new technological dimensions, such as artificial intelligence and machine learning.

I was among many who stood in line at Moscow’s Pushkin Square as McDonald’s opened its first branch in 1990. It was preceded by KFC’s first store in Tiananmen Square. These companies quickly became the poster children of globalization. Many firms followed suit, pursuing acquisitions, courting new customers and rapidly opening factories around the world. The International Monetary Fund has estimated that foreign direct investment surged by an average of 50% during the 1990s.

Today, we are witnessing a reverse trend. The Economist has examined the track record of the 500 largest firms worldwide and found that in eight out of 10 sectors, multinational firms have expanded their aggregate sales more slowly than their domestic peers. For US-based firms, returns are now 30% higher in their home market. Other moves by multinationals reflect similar trends: Uber retreated from China in 2016, after spending nearly $1 billion a year competing with Didi. In India, Vodafone is losing customers to Reliance, a domestic firm.

Further stoking this uncertainty is the rise of China’s cultural, economic and business influence. The greatest example is its bold Belt & Road Initiative. Touching dozens of countries across Asia, Africa, the Middle East and Europe, with over $60 billion in infrastructure investments, it bids to increase regional and global connectivity - and heralds an era of globalization with Chinese characteristics.

The rise of technology is introducing opportunities and obstacles for global and domestic companies alike. Brookings Institution estimates that five years ago, the free flow of data contributed $2.8 trillion to the global economy, a figure that could reach $11 trillion by 2025. Global digital platforms from Amazon and Facebook to Alibaba, internet connectivity and the new oil – big data – are enabling small businesses to become “micro-multinationals”.

Individuals are participating in globalization directly, using digital platforms to learn, find work, showcase their talent and build personal networks. Some 900 million people have international connections on social media, and 360 million take part in cross-border e-commerce.

At the same time, this brings growing competition, and inequality continues to increase. The rates of disparity and inequality – between rural and urban areas in developed countries, between developing and developed markets and ultimately between people and machines – are on the rise. Multinational companies are increasingly seen as agents of inequality and face growing pressure and criticism from governments and consumers alike.

APCO Worldwide’s recent research revealed that only 14% of business executives surveyed feel very prepared to deal with unexpected geopolitical threats, and only 18% felt they were equipped for the challenge of recruiting and retaining the talent needed for growth. The key takeaway of the study is that enterprises today need to lean into risks and have a process to embrace and adapt to them. The model that emerged from the research identifies three critical building blocks of an agile enterprise: active leadership, shared advocacy and enterprising culture.

Components of active leadership include honesty, transparency, visionary thinking and action, embracing diversity of thinking and opinion - and most importantly, willingness to take decisive action. There are numerous examples of companies taking a stand – from proactively setting a “living wage” to protecting the more vulnerable like immigrants and refugees. In all cases, this action was clearly driven from the top of the C-suite.

Salesforce Chief Executive Marc Benioff said he didn’t set out to be an activist CEO, but was pushed by his employees. Citigroup’s Michael Corbat took multiple public stances to embrace the gender pay gap problem at the bank and vowed to address it. Fortune’s CEO Initiative, Coalition for Inclusive Capitalism , and the B-team , among others, are a testament to a rising trend of leaders compelled to speak and act on key social issues.

APCO found that among the engaged public (on political/social issues), an overwhelming majority – 77% – would admire a company that uses its business strengths to address a social issue (as opposed to donating money for a charitable cause). As many as 88% of business leaders agreed that solutions to society’s greatest problems will rely on the resources and innovations of businesses. But no corporation can do it alone; it requires external engagement and bringing diverse partners to the table – from the UN and other multilateral organizations to NGOs, foundations, civil society and the next crop of academic talent – to establish incubators to jointly solve intractable challenges. There has been a proliferation of new public-private partnerships, including Johnson & Johnson’s JLABS , MIT Solve and UN Global Compact .

How a company treats its employees is viewed as a direct reflection on how the company is run and operates around the world. It is critical to build an organization and culture that learns quickly from failure, empowers the middle and questions the status quo. For companies to succeed, leaders need to understand what motivates people across generations, different cultures and geographies. Another important element of success is empowering employees and allowing for ownership and autonomy.

Multinational companies are on the frontline of the battle for a more inclusive globalization, and for growth prospects in an era of geopolitical uncertainty. Considering these three elements is crucial to building an agile enterprise that can weather the storms of tomorrow.

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The power of global thinking in business.

Globalisation has taken the business world beyond the confines of borders. New technologies have made it possible to think globally and act locally in business – increasing the connection between local and overseas markets. It’s also meant that information, data and ideas can be shared at lightning speed. Here are 4 ways globalisation can create threats and opportunities for business:

1. The social impact

Globalisation has transformed the way we think about societies and business. As the world continues to shrink and we witness the rapid integration of a global economy, it’s become crucial to value diversity and cultural differences. Diversity is about recognising the unique qualities, perspectives and ideas of people despite racial, religious or cultural differences. And globalisation has created plenty of opportunities to learn from different cross-border interactions.

There are several studies that outline the economic benefits of embracing cultural diversity including its value to the Australian and American markets. Organisations that adopt diversity policies can increase return on investment , foster innovation and increase organisational reach.

When it comes to conducting business on the world stage diversity matters, and organisations need to do more than just appreciate other cultures. There needs to be a commitment to serving customers’ local needs, whilst managing scale on a global level. Knowledge of local customs and of the local language are also important. An example of this can be found in India with the success story of fast-food giant McDonalds . It may be a restaurant known for its beef-based products; however, it was able to break into a new market by tailoring its meals to suit local taste-buds with more vegetarian options.

Researchers from Canada and Morocco point out that globalisation is not about the homogenisation of different cultures or a western way of approaching business. For companies that think like this, it poses a risk to global expansion. For instance, the 2018 TransPerfect Global Retail Forum showed that 72% of the internet’s three billion users do not speak English, and 90% of European browsers only act in their native language. 

So, it pays to learn how people live, what they like and what they will and won’t buy. To truly localise the experience, it’s important to factor in several levers such as gender roles, cultural sensitivities and geographic conditions. 

2. The economic impact

Economists agree that globalisation is beneficial to the world economy and business. Globalisation helps spread growth and potential across countries. For instance, the information technology revolution has created multiple opportunities for business, helping stimulate new technology development. This has lifted economic output by making processes more efficient. According to the International Monetary Fund, emerging market economies have used available foreign knowledge to boost domestic productivity growth by about 0.7 per cent per year.

The increased integration of various national economies has meant greater free trade – this has given businesses the ability to specialise in the production of goods and services. It has also driven lower prices for consumers, increased exports and allowed businesses to capitalise on the benefit of economies of scale. 

However, there are also drawbacks and it’s important for businesses to understand the trade policies at play. Governments enter bilateral trade agreements to establish a free trade market, but this can increase competition from other countries and impact on local businesses. In addition, many countries have implemented tariffs – barriers to international trade. For instance, 161 countries have value-added taxes (VATs) on imports which are as high as 21.6% in Europe.

In the economically borderless new world order, China and India are forecast to surpass the USA as the two largest global economies. There’s also Russia and Brazil in the mix, and these four emerging powerhouses have commonly become known as the BRIC countries. In the context of globalisation, the expected power shift from BRIC’s growing market strength will bring about new opportunities and threats for business.

To tap into these latest international opportunities from the shores of places like Australia, local organisations need to develop an understanding of how these countries conduct business and what services and products they need. To thrive locally in the global economy, small and large businesses must meet global standards and tap into global networks. For example, it took Procter & Gamble 27 years to get Pampers into 20 different countries, whereas it took just two years to get Vidal Sassoon into 40 countries as a result of having a better understanding of local opportunities.

3. The political impact

At the start of this new century, world trade was worth around $8 trillion—25% of global GDP. That's up from $1.5 trillion, in comparable dollar terms, in 1970, when it was 13% of world GDP. While this growth is good for business, markets can be subject to significant changes and challenges due to political decisions. Political uncertainty or diplomatic disputes can cause instability for business. For instance, the election of President Trump in the USA and the British vote to leave the European Union – with the ongoing Brexit saga – have had a dramatic impact.

As politics have shifted towards anti-globalisation in two of the world’s most developed nations, this has had implications for business. In the UK, for instance, Britain’s carmakers warned they will be “permanently damaged” if a transitional deal wasn’t secured. The EU departure also has the potential to reach into little-known crevices of the British economy , such as a Butterfly Farm.

Brexit won’t just affect the UK; however, it will have repercussions for many other economies. In Kenya there are concerns about the potential impact of Brexit on the local flower industry. The risk of being unable to take advantage of preferential tariffs when selling to the substantial UK flower market could have severe consequences. On the other hand, Australia is well-positioned to redefine and expand Australian trade and investment relationships with the UK.

4. The environmental impact 

To think globally, act locally in business, more organisations are discovering that it’s essential to find a balance between economic and environmental sustainability. Environmental factors such as global warming have made it imperative to adopt environmentally friendly trade policies. The World Trade Organisation’s green provisions direct countries to protect human, animal or plant life and conserve their exhaustible natural resources. And these days consumers expect companies to care about the environment.

Businesses can remain competitive, cost-effective and be commercially viable through environmental accounting. For example, minimising inefficiencies such as excessive waste discharge through careful waste management can increase the profit margin. There are several examples of global brands working towards a zero-impact company and finding sustainable ways to grow while remaining profitable. Levi Strauss & Co with other big-name brands have launched the Better Cotton Initiative. According to John Anderson , the company’s President and CEO, “Better Cotton reduces chemical use and goes beyond that to try and address other environmental impacts, such as water use and soil health. It also includes labour standards and tries to improve financial profitability for farmers.” 

While environmental risks from extreme weather events can wreak havoc on businesses – such as the £2 million (AUD$3,642,410) loss in sales endured by one of the world’s largest drinks makers after experiencing prolonged water shortages at its facilities in Ghana – they can also present an opportunity. Latin America’s Chile, for instance, is a storehouse of knowledge for managing earthquakes and tsunamis. In 2015, the country experienced its sixth strongest earthquake ever recorded, but only 11 people were killed, given the institutional experience. As a result, Chilean businesses are now a valuable resource for other countries threatened by such seismic events.

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Building a Global Strategy for Your Business

Want to expand your business internationally? A global strategy means building market dominance without sacrificing what makes your brand unique. See how successful companies focus on standardization to build market share and brand awareness worldwide.

No matter where in the world you live, you’ve probably experienced or heard of some of the top global brands like Apple or Amazon. Whether you’re interacting with these companies in Canada or Cambodia, your experience is more similar than it is different in terms of products, website, mobile app, and look and feel.

That’s because these companies employ a global strategy as their model for international expansion — one that prioritizes standardization across different markets.

For many companies, a global strategy is the endgame. It means you’ve “made it” because you don’t have to worry about the whims of specific market pressures or competition — you’ve grown to the point where that doesn’t matter. Here’s what a global strategy looks like in practice.

What is a global strategy?

With a global strategy, the world is your market .

Rather than approaching each country as its own market with different tastes and preferences, companies employing globalization standardize as many elements as possible, including colors, messaging, and operational models. As a result, the top global brands are instantly recognized in any country.

Take Apple, for example. They’re one of the most successful examples of a global strategy. Think about the iPhone — you may be reading this on one right now! The keyboard may be slightly different to accommodate a different language (depending on accents and alphabetical characters), but otherwise, the layout, functionality, colors, and buttons are the same no matter where you purchase in the world.

Choosing a global business strategy gives you several advantages:

• A global, standardized brand that is immediately recognizable
• Economies of scale deliver a more efficient process and operations
• One product line with minimal changes makes it easier to streamline operations and scale faster
• Competitive advantage across a global market

However, there are some trade-offs companies make by pursuing such high global integration:

• Gambling on the brand equity and international appeal
• Requires global footprint and recognition to be successful
• Competing with local brands that already have established market share
• Consumers demand transparency in supply chain and global operations
• Localization and translation (don’t worry, we can help with that! )

Of all the strategic models available, a global strategy has the highest global integration and the lowest local responsiveness. This means the focus is operating with the most standardization possible and optimizing supply chain management, so there’s one brand, one suite of products, and one message from a central headquarters. There may be local offices or manufacturing sites in foreign markets, but everything rolls up to a corporate hierarchy in the domestic market that determines everything down to the size and shape of the smallest button.

But a global strategy isn’t the only answer to international expansion . In fact, it’s not the best model for everyone at every stage of growth. Most brands employing a global strategy standardize their business slowly over time after moving through one or more of these business models below:

• International strategy : Usually the first type of international expansion a business undergoes, this strategy focuses on imports and exports, keeping most of their operations in their home country. Think about luxury goods like wine, caviar, or cheese as an example of this kind of business strategy — where the region of origin is a significant part of the product’s appeal in the first place.
• Multi-domestic strategy : Multi-domestic businesses take a local-first approach for every decision and use entirely different sales, marketing, and product strategies based on the specific companies they’re operating in, creating country-specific brands in a portfolio. Many food and wellness brands like Johnson & Johnson, Frito-Lay, and Nestle use this strategy.
• Transnational strategy : Transnational businesses coordinate local subsidiaries in international markets with one central or head office in their local market. This model is the most similar to a global strategy in that there is one overarching brand and decision-making body for strategic management but it takes a local-first approach with specific marketing, localization, and product campaigns. Companies like McDonald’s and Coca-Cola are experts at this strategy.

5 global strategy examples from top companies

A successful global strategy model focuses all of its energy on global integration, delivering one overarching brand that looks, feels, and operates cohesively regardless of the market. While not every global company is the same, many of the most successful sell products and services that have universal appeal or are easily customizable to individual users, rather than the market, like software.

Take five of the most successful multinational companies (MNC) in the world:

One of the largest companies in the world, Amazon operates in 58 countries and reaches more than a billion people online every day. The leading e-commerce company in every country except China (where Alibaba is #1), you can see Amazon’s ever-present “smile” on trucks and packages — and enjoy same-day shipping — pretty much everywhere.

Spotify uses a hyper-personalized approach to individual users based on their music preferences and tastes rather than across markets. While some music may not be available in every country due to licensing and legal issues, you can generally browse over 1,000 different genres from more than 1.2 million artists around the globe.

It’s a small world, after all . Whether you’re visiting parks in Shanghai or California, you’ll be able to experience the same magic. Disney’s team works to make sure it’s as globally inclusive as possible for movies, merchandise, and television shows, with only minor changes if needed based on audience feedback (say, for the title of a film).

IKEA uses subtle tweaks based on the target market, like specific measurements, adjusting for plug types or electricity needs, and dimensions. But overall, IKEA furniture is the same Swedish engineering for small spaces that require customers to put it together themselves — and you’ll still be able to browse their large blue-and-white warehouses in every country they operate.

Since releasing the original Mac in 1984, Apple rose to dominance for its sleek lines, clean interface, and easy-to-use software. Globally, Apple’s technology is the same (with a few minor changes) wherever you go. Considered one of the biggest global brands today, Apple operates in over 175 countries worldwide with more than 100,000 employees.

Why you still need localization, even with a global strategy

Even though a global strategy is the least concerned with local responsiveness, that doesn’t leave you off the hook for localization. Even some of the most successful international brands still use localization and translation services.

While they may not change their product specifications, invest in market-specific imagery, or operate with local company managers or offices, global brands still provide information in multiple languages. Continuing with the Apple example, here’s a quick snapshot of their homepage, advertising the iPhone 12:

You can see from these screenshots from Apple’s home page in the United States (top) and Spain (bottom) that prices look a little different across the markets, but the message and imagery are the same.

There may be subtle differences that a global brand uses per market based on legal requirements or payment processes. Still, overall, even with Apple’s flagship product, the iPhone, their website looks and feels the same, just in a different language. You can also see that with their product pages:

Everywhere you purchase, the colors, specifications, and information is the same. While Apple does offer different plug styles to accommodate electrical needs worldwide, an iMac is an iMac no matter where you go — including the product messaging.

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4 key strategies for succeeding at international expansion

Marjorie Radlo-Zandi

More posts from marjorie radlo-zandi.

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If you’re an entrepreneur looking to grow your business internationally, expanding into multiple countries can exponentially impact your bottom line business and brand, allowing you to grow efficiently. Scaling your business beyond borders, however, is a path riddled with bumps and obstacles.

In my previous role leading a food diagnostics company for more than 20 years, I guided its growth from one country to doing business in over a hundred. Our firm became a worldwide player and influencer in food safety diagnostics, and in a matter of years, 65% of our business was outside the U.S. We also achieved 38% market share globally.

We succeeded because we secured data through market research and used the data to inform our global strategy.

Here are a few key strategies to achieving this kind of international growth.

Research your market

The first step is to check relevant market research. You may need to hire a research firm to accurately gauge the geographic market for your industry and product. Be sure to tap into research that drills down into the intricacies of your vertical market and separates out the various geographic markets. I recommend research companies such as Frost & Sullivan , Nielsen , Statista and Gartner .

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Research firms can detail the exact market size of specific geographic areas, competitors, market dynamics, expected growth rates and expected revenue — usually over 10 years. This data is critical when planning for an international rollout.

Market research reports are easily accessible online either as abstracts or the full report for a fee. If you want a custom report, research firms typically take 90-120 days or more to deliver a comprehensive report.

If you operate in a niche, this information is worth its weight in gold, and I recommend hiring a professional to secure the information you need. A customized market research report costs generally from $20,000 to $50,000, depending on the industry and market research organization.

As an example, the company I ran engaged a market researcher to determine which international market we should prioritize, and the present and future product demand for our current and future product pipeline. We also readjusted our product pipeline based on the demand in key international markets.

Prioritize international rollout based on ROI

In order to achieve international growth, you need to plan based on ROI estimates.

Narrow down the markets for the first phase of global growth by determining which is most viable and sizable for what you offer. Assess how easy or difficult it will be to enter a particular market, and whether its size justifies the effort it will take to establish a solid footprint.

All countries have regulations for contaminants in food. Regulations we uncovered through market research and a subsequent ROI analysis helped us choose which international markets to pursue first.

For our product, we estimated ROI based on a 10-year revenue projection. For example: For Italy, we estimated $7.5 million in sales over 10 years and invested $350,000. We met these sales numbers, which led to 2,000% ROI and a 36% annualized return each year.

While your local market may seem the most obvious to pursue initially, sometimes it’s not the best choice. I’m currently advising an EV battery accessory company based in the U.S. whose first target market is Sweden, as it has made big investments in EV technology.

Tailor marketing and terms to the market

Hire staff with cultural intelligence and fluency in many languages. Our team was fluent in 15 languages due to our multiethnic and multiracial male and female staff who reflected key markets we were planning to enter. Companies that intentionally diversify at launch stay that way. Our company looked like the United Nations, with representation from every continent.

Be culturally sensitive and smart in your marketing. As with all content, social media and websites, ensure what you present online works in all corners of the globe. This applies to the technical aspects of your website, user experience, content and messaging. Arm your global partners with a choice of marketing deliverables to help them tailor your company’s message to their particular market.

Don’t assume a strategy that works in one country will be effective in another. You need to understand each country’s vernacular and ways of presenting content. For example, my company liberally used social media to promote our product to the Americas. In Asia, we mostly stayed away from some social media outlets because they aren’t used as much in B2B marketing.

Ensure your payment and billing systems work equally well in your domestic and international markets. You have many billing and payment tool options, so be sure to audit the ones most suitable for your company and its global reach.

Expect to offer international payment terms at 60 or 90 days. On the other hand, extend credit gradually: While you’re building mutual trust, make sure your distribution partners follow through on smaller payments and agreed-to terms before offering larger lines of credit.

I can’t emphasize enough how critical trust is when you scale globally. For instance, we worked closely with our partner in India who had a large spice customer and collaborated with them to secure the business, which required a competitive bid.

The partner presented us with numerous regulatory testing protocols and documents that needed to be handled within a certain time frame for the annual bid. Each year, we prioritized getting documentation to the partner so they could complete the bid and secure the business. They trusted that we were thorough, transparent and could be relied on to get the data to them on time. We always delivered on the promise.

Engage key opinion leaders (KOLs) in your space who will vet your product and may publish papers on its performance. In our case, we collaborated with key opinion leaders in the scientific community and internationally recognized science leaders from government or quasi-government agencies in food safety diagnostics around the world.

In many countries, bribery is a way of doing business. Under no circumstances should you or your distributors engage in such malpractice to obtain business or for any other purpose. It is illegal for any United States company to engage in bribery, whether for themselves or their distribution partners. When vetting distribution partners, make sure they do not conduct business using any form of bribery.

Monitor performance and set contractual goals

Set performance goals in writing and in contracts no matter how many referrals you get. Establish performance revenue goals for years one through five. In most instances, the first year’s goal is modest; the second year is usually at least twice the first year, and it increases from there.

For example, my company’s contract goal for an Italian distributor was $100,000 in year one, $250,000 in year two, $500,000 year three, $750,000 in year four and $1 million in year five.

In the much smaller Taiwan market, our product goals were about a third of the Italian distributor’s goals. Each distributor met their numbers in years one and two and exceeded their numbers in the following years. The Italian distributor attained a 70% market share of our product in Italy, while the Taiwan distributor had a 50% market share. We were impressed and happy with the results.

Success is measured by dollar goals met versus the contract amount; number and quality of customers (this metric is usually not in the contract); and the quality of representation, including marketing of the product and brand recognition. Monitor performance on a regular basis — at least once a month. Even though you want each contract to be successful, be sure to build in your ability to exit according to the contract terms if a distributor’s performance is below expectations.

International growth can make a huge impact on your business’ bottom line. Working with people around the world can be an enriching experience. As you scale your startup into new countries, keep data and ROI top of mind to ensure your expansion is successful. Support your expansion efforts with hard facts and numbers, and your business will grow and thrive.

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Home » Guidance » Going Global: Laying the Foundation for Growth in International Markets

Going Global: Laying the Foundation for Growth in International Markets

For many U.S.-based middle market businesses, expanding into new countries can feel daunting—there is complexity, unforeseen risks and other factors to consider. However, if managed correctly the rewards can be great and should not be ignored.

Growth potential in markets beyond the United States is significant. More than 70% of the world’s purchasing power is located outside the United States , according to the U.S. Department of Commerce. Additionally, more than 95% of the world’s consumers are based outside of the United States, according to the International Trade Administration, U.S. Department of Commerce.

Capitalizing on global opportunities is a must for most growth-oriented companies. A successful global expansion strategy must incorporate insightful planning, which serves as the foundation for building the support and infrastructure necessary to successfully navigate the global journey. To assist with framing your thinking around this topic and to help you consider if this is the right moment for your business, we explore what Going Global could look like as well as specific opportunities and risks.

The Many Paths to Going Global

Going Global is not a “one size fits all” strategy. Depending on your stage of growth or your business model, global expansion can take many possible forms, including:

• Exporting products or providing services to clients in new markets
• Opening sales offices, warehouses or other types of facilities outside your home market
• Building or acquiring a foreign manufacturing facility
• Purchasing a competing business in a different country
• Creating contractual relationships with foreign distributors
• Establishing international legal entities for sales, manufacturing or other business functions
• Entering into an international joint venture

Harnessing Global Opportunities

The global landscape offers growth potential everywhere you look—from uncovering new revenue streams and discovering new customers, to finding talented professionals who will help enhance and advance the skills and expertise of your team.

We explore four key opportunities that can result from global expansion:

• Increase your sales and profitability: Going Global can provide new sources of revenue and yield greater returns on investments—helping to secure long-term success for your business. One path to overcoming lower growth in your home market is to look to overseas markets to help fill the revenue gap. This step can be achieved through exporting, leveraging technology to reach outside markets or licensing/franchising your products in additional countries.
• Gain a competitive foothold: Taking steps to enter a new market that your competitors have not yet reached could help bolster your customer base and create a distinct advantage for your organization.
• Find talent: There is a war for talent in the U.S. in the current overheated labor market. Finding qualified professionals for key positions has never been more challenging. Expanding your operations to new markets immediately widens the talent pool from which you can recruit.
• Diversify your business model: By building out your customer base across multiple countries, it so your business is not dependent on economic conditions in just one geographic area. This helps you withstand the risks associated with potential market downturns or other external pressures.

Global Risks in an Uncertain Time

The growth potential related to going global is attractive. But as you might expect, the globalization of your operations also brings complexity and risk that requires due diligence, planning and ample research. Below, we outline key areas to focus on when planning your globalization journey.

• Tax and Regulatory Compliance: Perhaps the most complex step on this journey is understanding how to comply with foreign market tax and regulatory requirements, tax treaties, U.S. expanded reporting obligations, hidden tax costs and tax savings opportunities. Since every jurisdiction differs, you need a resource who can help navigate the complexities and traps for the unwary as well as tax savings opportunities. Practically navigating the expanded U.S. rules and various foreign country rules also requires the right accounting system to achieve compliance.
• Cybersecurity: Cybersecurity risks are rising for companies around the world. It is critical to understand the local cyber risk landscape in your targeted expansion market. Are cyberattacks prevalent there? If so, what form are they taking? Additionally, IP theft is a prevalent risk in many nations, so that should be accounted for as well.
• Supply Chain Disruptions: If you are selling a product, you will need to decide whether you are going to make it onshore and ship it internationally or move some or all of your production overseas. In this scenario, supply chain considerations are critical. Supply chain disruptions have been making headlines since the start of the Covid-19 pandemic. When you introduce additional countries into this equation, suddenly the challenges multiply. Will you be able to get the materials you need where you need them in a prompt fashion? It is critical to understand this landscape before investment is made in overseas manufacturing.
• Banking, Currency and Incorporating: In many cases, you will need to establish a local banking presence that enables you to receive payments from customers, make payment to suppliers or process payroll in the local currency. Patience is critical in these steps as it can take weeks to months to open a bank account, which can impact your ability to form local business entity.
• Reputational Risks: Understanding the culture of the countries you are operating in is critical to your success. It could be that a product popular in one market will not resonate in other places because of cultural differences and nuance. To achieve this, it is important to conduct foreign market research and to identify and understand the local competition.
• Data Challenges: A strong data strategy is a competitive advantage. However, collecting data across jurisdictions brings challenges and complexity. The more your organization expands, the more you need to consider how to collect, store and secure the data you need from across your operations. Compounding the challenges are strict global data privacy rules that must be accounted for and complied with across your data collection strategy.
• Intellectual Property (IP) Protections: To successfully expand your business internationally and maximize global innovation, companies must develop or utilize IP. Where that property gets created and who owns that property are important factors. These factors are key components of a successful business as they determine what legal protections are available and how income related to that property is taxed.

How Cherry Bekaert Can Help

Entering foreign markets can potentially expand your customer base and revenue, but navigating the risks and opportunities is complex. A successful global expansion plan should combine international tax considerations with business objectives and regulatory issues. This backdrop is especially complicated because each country has unique tax and legal issues.

While mid-size companies now have the potential to build the same global footprint as a larger, multinational corporation, they often do not have the same technology and resources to navigate this complexity.

Cherry Bekaert offers a broad array of services that can help you simplify global expansion, including:

• Domestic and Foreign Entity Structuring
• Transaction Planning, including Operational Transfer Pricing
• Foreign Tax Credit Minimization and Utilization
• Tax Benefits Associated with Exports, including IC, DISC and FDII
• Tax Compliance, including FBAR, FATCA and Withholding Tax
• Payroll Taxes and Related Employment Matters
• Cybersecurity / Data Privacy / GDPR
• Digital Transformation & Data Analytics
• Client Accounting Services
• Risk & Accounting Advisory
• State & Local Tax Compliance

Cherry Bekaert provides guidance and support that helps you protect your investments while achieving organizational goals. For assistance or questions regarding specific risks and opportunities to your international expansion plans, please contact your Cherry Bekaert advisor or a member of the International Tax Services practice.

This is the first in a series of articles exploring the opportunities around Going Global. Be on the lookout for upcoming pieces that will dig deeper on the key areas to focus on when planning your globalization journey.

Read Full Report

For other articles in the ‘Going Global’ series, around the tax planning, opportunities, and risks around taking your business global, read more on the Going Global initiatives:

• Navigating Cybersecurity and Data Privacy Risks Across Borders
• Tax Issues to Consider When Just Starting Your Global Expansion

i Source: https://www.journalofaccountancy.com/issues/2014/may/20149387.html ii Source: https://www.trade.gov/why-export

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Why Study Global Business? 5 Benefits to Consider

• 27 May 2021

You may have heard the age-old phrase, “It’s a small world.” In a time of advanced technology, the world not only feels small in terms of accessibility, but in terms of connectivity. It’s impossible to avoid being impacted by the decisions made by others around the globe—and no field showcases this dynamic better than business.

If you own a company or are a key employee, the actions and plans of business and political leaders worldwide impact your organization's trajectory, whether or not you operate internationally.

Because global business is such a multifaceted field that’s often studded with high-risk, high-reward opportunities , it can be intimidating to dive in. Here’s a look at what global business is, five ways studying it can help you as an organizational leader, and how to kick off your education.

What Is Global Business?

Global business , also called international business , is the production and sale of goods and services between countries. The term can also encompass the nuances, politics, and dynamics of doing business in a global economy.

There are three major categories international businesses can fall into:

• They produce goods domestically and sell domestically and internationally
• They produce goods in a different country but sell domestically
• They produce goods in a different country and sell domestically and internationally

If your business produces and sells strictly domestically, you may choose to expand internationally for the positive short- and long-term impacts on financial performance, increased production capabilities, new markets, and opportunities to join global business networks. Some examples of successful international businesses include well-known companies such as Walmart and Starbucks.

Why Is Global Business Important?

Even if your organization doesn’t produce or sell products internationally, the importance of global business can’t be overstated. It can enable you to assess new business opportunities, make informed decisions, and adopt a holistic view of global competition from a strategic standpoint.

For instance, imagine you own a clothing company that sells embroidered T-shirts. Your products are made in the United States from locally sourced material, and you only sell domestically. How might global business impact your company?

• Domestic competitors may produce or sell their products internationally and gain more traction. For instance, a rival company sources cotton from a farm abroad and charges less money for similarly embroidered T-shirts. It then develops a global audience and presence, perhaps where clothing trends differ from those of the US.
• Internationally-based companies could become your competitors, too. For example, a clothing company based in the United Kingdom may expand into the US and win over your customers.
• Laws in other countries regarding the taxation, production, and importation of goods may impact the market you operate in. Policy changes, even those made abroad, can have a ripple effect that impacts your domestic business.

Studying global business can enable you to navigate the challenging, ever-changing business world while capitalizing on opportunities for expansion and connection. Here are five benefits of studying global business to consider.

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Benefits of Studying Global Business

1. understand macroeconomics.

One benefit of studying global business is that you gain awareness of the dynamics of macroeconomics. You develop an understanding of economic metrics you can use to compare countries on a one-to-one basis and several other factors that impact a country’s economic health. These factors provide insights into how a country’s business economics impact its residents and other organizations.

Some metrics you can learn to use include:

• Gross domestic product (GDP)
• Unemployment rate
• Inflation rate
• Degree of income inequality
• Currency exchange rate

“It seems obvious why companies with operations or customers spanning the globe would have to worry about global macroeconomics,” says Harvard Business School Professor Forest Reinhardt in the online course Global Business . “If exchange rates move or inflation changes at different rates in different countries, it’s going to affect the economic performance of those firms.”

Reinhardt also stresses that even domestically operated companies need to understand macroeconomics.

“What about companies that make a product domestically and sell it domestically?” he asks. “Are they exposed to the global economy? It seems natural to say ‘no,’ but that turns out not to be the case.”

Learning a common language with which to assess and compare different countries’ economic performances can provide a foundation for your international business education.

2. Gain an Appreciation for Different Cultures

Just as important as the “hard skills” of macroeconomics are the “soft skills”—such as emotional intelligence —required to tactfully and respectfully navigate an international business world. Diving into global business means exposing yourself to cultures that might greatly differ from your own. Learning about the customs, holidays, beliefs, social norms, and expectations of the cultures in countries where you’ll be working, selling, and employing people is invaluable when making connections.

Some examples of cultural differences in business include:

• Personal space: While it might be standard in some cultures to greet with a handshake, understand that there are other ways business associates meet one another in other cultures that reflect different comfort levels around personal space.
• Communicating objectives: While people of some cultures are comfortable with short and direct instructions or requests for fast decision-making, others might be accustomed to require more explanation before moving forward.
• Etiquette: Small differences regarding how associates formally address one another, as well as specific gestures to avoid, reflect the importance of learning the nuances of different cultures.

Remember to keep an open mind and lead with curiosity, empathy, and respect. At the heart of every business deal is a relationship between people; set yourself up to forge meaningful relationships with professionals in other countries by expanding your cultural competency.

Related: 6 Tips for Managing Global & International Teams

3. Navigate the Opportunities and Challenges of International Politics in Business

Because political leaders and systems have the power to influence education, transportation, laws, and taxes, they can also alter the global business landscape.

Studying global business can prepare you for scenarios that occur as a result of political decisions. It can also give you a tool kit for thinking on your feet when the unexpected happens.

One such unexpected event was the coronavirus (COVID-19) pandemic , which swept the world starting in early 2020. The pandemic devastated communities with deaths and health complications and caused international tensions and economic and political unrest.

According to an article by EY , the incidence of political risk—defined as a political event that alters the expected value of a business investment or economic outcome—has increased dramatically in recent years, hitting its highest point since World War II between 2016 and 2018. The tensions resulting from COVID-19 are likely to send the incidence of political risk to a new high.

EY outlines five key business areas that can be impacted by geopolitical risk:

• Cost of capital
• Cross-border flows
• Market entry and global footprint
• Corporate responsibility

“While 51 percent of global executives say political risk is having a greater effect on their companies today than just two years ago, 50 percent are also very confident in their ability to effectively manage it,” the firm reported in 2019 .

In a time when political risk is predicted to reach an all-time high, having a background in global business can help you navigate these unexpected dynamics and gain the confidence to capitalize on opportunities for success.

Related: 5 Common Challenges of International Business You Should Consider

4. Learn from Others’ Triumphs and Mistakes

Another benefit of studying global business is learning about the triumphs and failures of international businesses that came before yours. Because global business can be equally rewarding and challenging, familiarizing yourself with other firms’ strategies can help inform your own strategic planning process .

Hearing real business leaders—maybe from your specific industry—tell the stories of their forays into the global economy can bring humanity to concepts and frameworks and allow you to put yourself in their shoes. Would you have made the same decisions they did? If so, what were the outcomes of those decisions, and how did they impact their business? What can you learn from their stories to be better prepared for your involvement in international business?

To ensure your global business education includes this benefit, look for a course offering that uses the case method or be prepared to research examples independently.

Related: The History of the Case Study at Harvard Business School

5. Craft Winning Business Strategies

A long-term benefit of studying international business is developing the ability to think on a global scale, and thus formulate strategies for your business with the big picture in mind.

When crafting winning strategies, it’s important to keep in mind all factors that could possibly impact your business’s trajectory toward its goals. In a global market, that list of factors must include the political and social relations between countries where your organization operates and your market’s global economic trends.

A global business education may also inform the strategic goals your firm pursues; for instance, expanding into another country where your product could fill an unmet need.

It’s important to remember that the international business landscape is always evolving. As such, so should your business strategy.

Demand for International Business Skills

Another important benefit of studying international business is the diversity and strength it brings to your professional skill set. As the world becomes more interconnected than ever before, employers are increasingly regarding international business as a desired skill for future hires.

Some of the top industries hiring people with international business skills are:

• Manufacturing
• Professional, scientific, and technical services
• Educational services
• Transportation and warehousing

This trend is not only reflected across industries, but also across job postings. Some of the most common job titles that require international business skills are:

• Global Trade Analyst
• Conflict Analyst
• Global Services Consultant
• Tax Manager

By seeking education in global business, you can diversify your future job opportunities while also ensuring that you’re a well-rounded professional.

How to Start Studying Global Business

Starting your global business education doesn’t need to be difficult—in fact, it can be as simple as diversifying your daily news intake to include international publications. Keeping up on current events, international politics, and relationships between countries can enable you to envision how your business is impacted by and fits into the global sphere. Research the leading businesses in your organization’s market and adjacent markets. Where are they based? What do their supply chains look like? In which countries do they sell products?

Additionally, learning about other cultures can give you the knowledge and respect necessary for making global connections that serve you well professionally and personally.

If you’d like to take your education one step further, consider taking an online course like Global Business . Taught by HBS Professor Forest Reinhardt, the course equips learners with the knowledge to navigate the global business landscape’s challenges and opportunities. For the full global experience, make sure the course you select has a social component—a cornerstone of HBS Online courses—so you can learn from and share knowledge with business professionals around the world.

Are you interested in breaking into a global market? Sharpen your knowledge of the international business world with our four-week online course Global Business , and explore our other business in society courses. Not sure which is right for you? Download our free course flowchart .

This post was originally published on May 27, 2021. It was updated on August 5, 2022.

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Should You Go Global?

Table of Contents

A more interconnected world and decades of trade liberalization have made the overseas expansion of a business much easier than it used to be. However, opening new locations internationally isn’t suitable for every business.

We’ll explore the risks and opportunities of going global, questions you should ask before committing to a course of action, and how to take your business overseas.

What are the pros and cons of going global?

Expanding overseas brings a slew of advantages as well as some downsides. Consider the following pros and cons of going global. 

Upsides of overseas expansion 

• Brand-new markets: Generate additional revenue streams from a brand-new market to reduce your dependence on one market.
• Business growth opportunities: Growth opportunities may be limited at home, but you can take much of the knowledge and experience you’ve gained in acquiring market share and apply it with a local spin abroad.
• Access to new labor markets: This is particularly helpful for tech companies. Make your hiring process easier by opening premises close to a talent cluster in another country to recruit new employees . In some cases, you may wish to shift some production elements from your home country to overseas because of lower costs.
• Localized shipping: Retailers and wholesalers opening overseas locations can offer more competitive pricing to local customers because of reduced transportation costs and the lack of import tariffs.
• Improved overseas service: A presence in another country localizes customer service, thereby allowing you to develop excellent customer service relationships with clients abroad.

Downsides of overseas expansion

• High startup costs: The cost of opening up your business in new territories expands well beyond leasing commercial premises and establishing infrastructure overseas. There may be a significant time lag between beginning trading and generating enough revenue to cover costs. There also may be additional regulatory requirements to fulfill. For example, a pharmaceutical manufacturer may have to apply for local certification for their medicines.
• Risk of hefty retreat fees: If your overseas expansion doesn’t go according to plan and you must close operations, there will be significant detachment costs, including those related to closing premises leases, terminating employees , and exiting supply agreements.
• Reliance on local contractors: You may have to rely on expensive local contractors for a prolonged time before and after launch to deal with legal and HR compliance challenges . You’ll also need to work with local organizations to process payroll, launch localized sales processes and marketing plans, recruit management and staff, and more.
• Exchange-rate fluctuations: Overseas profitability may suffer if the new operating country’s home currency rate falls.
• Reduced transparency: Although it’s possible to monitor overseas performance through key performance indicators, it’s harder to see where issues may be developing because of distance and differences in cultures and time zones.

What questions should you ask when deciding to go global?

Overseas expansion will test everything about your business to the limit. The rewards are great, but the risks are real. Ask yourself the following questions before you and your C-suite team commit to going global:

Do you really need a physical presence overseas? 

Are you sure you can’t serve international customers well from your current base? If you sell products, could you partner with a local wholesaler or distributor instead of investing in physical infrastructure in a new country?

Do you have the cash to go global? 

Expansion always costs more and takes longer than you expect. This effect can be more pronounced with global expansion. Examine your cash flow management , and ensure you have the funds for international expansion.

Can you afford to neglect your home operation? 

When going global, you and your C-suite team may have to neglect the home country operation for months at a time. Setting up an overseas presence takes an enormous time investment, and you may need to send senior managers out for long stretches. Are you confident in your home team’s management capabilities?

Have you chosen the right country for your international expansion? 

Try to select a country whose markets are similar to your home market’s. Prioritize lower trade barriers, proximity, currency and cultural similarities. Canada ticks many of these boxes. Emerging markets may offer great opportunities, but they come with bigger risks.

Will your product sell in an international market? 

Your product or service might be in constant demand in your home market, but you can’t take that for granted overseas. Invest in focus groups and a market segment analysis to get customer feedback and assess demand. This will give you a better chance to establish and maintain a strong foothold.

Can you price competitively and still make good money? 

China and other Southeast Asian countries dominate international goods exports with enormous economies of scale. Even if you open a factory and produce locally, will you be able to compete with the powerhouses on prices and still make money?

Are there well-known brands already in your target country? 

According to international growth expert Hanns Schempp, you can’t rely only on digital marketing to expand overseas. Your international digital marketing strategy should include brand advertising and positioning that directly take on competitors in target countries.

Are you prepared to work under a different regulatory regime? 

The European Union is unusual in that its member countries share many government- and industry-specific regulations. If you’re expanding to the EU, you’ll need to become very familiar with those regulations and get the necessary approvals, certifications and licenses. You’ll almost certainly have to invest in localized labeling and language adaptation for your brand, packaging and advertising.

Are you clear on how to maximize tax efficiency and compliance? 

Planning a tax-efficient structure and local operation includes complying with local tax codes and applicable double-tax treaties with the U.S. and any intermediate overseas entities that are part of a tax-optimized structure. Be aware that many foreign banks are reluctant to deal with many U.S.-owned or -connected companies because of the high cost of complying with U.S.-dictated reporting rules, such as those established under the Foreign Account Tax Compliance Act. In any case, because of know-your-client rules, it might take months to open an account.

How do you take your business global?

Now that you’ve answered the questions above and decided that your operation is ready to go global, here’s what to do: 

1. Establish your overseas infrastructure.

Establishing overseas infrastructure and teams is challenging. Consider the following steps during and after your launch:

• Get communication systems in place. It’s essential to establish clear communication both within your company and with the outside world. Does the company have the communication skills to compete in a globally interconnected economy? Digital technologies have made it easier for smaller companies to become multinational. However, your global firm must adapt to different communication methods and remote team meetings. Although your company may gain from the communication advantages offered by digital connectivity, the business also may sacrifice some of the coordination and interconnectedness of face-to-face interaction.
• Familiarize yourself with local resources and customs. Follow international business etiquette , and adapt legal, commercial, and human resources policies and procedures for differences in language, business practices, social customs and regulations. External talent could help lead or complement the beachhead team until they’re ready to go it alone.
• Train managers you’re transferring overseas. Most companies train managers at home and then move them abroad. Whether you train managers in-house or in the new location, they must be able to adapt to the new culture and be effective leaders in that country. Investing in employee training is essential.
• Consider local partnerships to mitigate risks. Whether your business model is distribution, joint venture, franchise or manufacturing, you can cut business expenses and reduce financial exposure and infrastructure costs by partnering with local businesses. Don’t rush; your local partner choices can make or break your success. 

2. Get your C-suite and management team ready.

Executives and managers play big roles in your business’s success. Here’s how to get your team ready:

• Prepare to master cultural differences. Learn as much as you can about cultural differences before you expand overseas, and ask for local employees’ help postlaunch.
• Cultivate local talent. Most overseas teams rely on home country leadership early on, but this drains time, money and resources over time. Consider international recruitment in your new location; look for experienced or developing leaders there who can eventually be responsible for strategy and direction.
• Develop senior leaders. Develop strategic expertise in every country across all business disciplines, including manufacturing, sales, administration and marketing. Train these leaders on how to manage people and resources to ensure things get done on time and correctly.
• Nurture global leaders. Over time, develop emerging leaders at home and globally and prepare them to run the business at the C-suite level when it’s their time. 

3. Use PEST analyses to plan for the unexpected.

Companies that are growing or already trading overseas often carry out PEST analyses. A PEST (short for “political, economic, social and technological”) analysis helps you consider your business’s place in the world from the perspective of events you have little or no control over.

Carrying out regular PEST analyses will help you answer the following questions and provide the information you need to plan for unexpected events:

• Be aware of what’s happening around you. Monitor local and global legislative, regulatory and market developments via publicly available media and customized reports. Consider using in-house hires and consultants to watch for developments, or consult industry associations and advocacy groups.
• Respond proactively. When things change, adapt quickly. For fast-evolving markets, use scenario planning to formulate responses and contingency plans. Local political and regulatory changes can present opportunities or dangers.
• Be aware of each country’s risks. You are at risk on multiple fronts from political instability and the relationship between the U.S. and your new country. Local suppliers may be chosen over you. Your assets may be confiscated. Alternatively, the U.S. government may require you to withdraw for security or other reasons. You may be at risk of retaliatory actions. Consider every potential scenario, and develop ways to mitigate risks and protect assets and investments.
• Pay attention to political events at home and around the world. Political changes at home and abroad can affect trading conditions; Brexit is a prime example. Although the U.K. public voted for Brexit (leaving the European Union) in 2016, the separation did not occur until 2020. The situation is expected to remain fluid for years. Companies exporting to and from the U.K. and EU states have had years to prepare for the transition, and ongoing political statements by both sides give businesses a clear direction on future potential regulations and tariffs.

Overseas acquisitions are another way to go global

Starting operations in an overseas territory can be risky and challenging. You must find the right talent and target customers to bring in sales and revenue.

Overseas acquisition is another way to go global. If you purchase a company overseas, you’re buying a business with a market share, employees and revenues to offset your financing. You’ll also have access to the company’s advisors, lawyers and accountants, who will be keen to retain your business.

There are pros and cons to expanding overseas organically and via acquisition. Both routes require careful initial consideration and due diligence before you commit to any course of action.

Robert Courtney contributed to the reporting and writing in this article.

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Six strategies for growth outperformance

Growth is the lifeblood of any successful business, but achieving growth that is both profitable and sustainable has proved especially difficult in recent years. Business leaders need a strategic approach that combines courage, innovation, and a willingness to make bold moves. In this episode of the Inside the Strategy Room podcast, McKinsey partners Rebecca Doherty and Kate Siegel and senior partner Jill Zucker share their insights on how companies can grow faster and more consistently than their peers. This transcript has been edited for clarity and length. For more discussions on the strategy issues that matter, follow the series on your preferred podcast platform .

Sean Brown: This may seem like a naive question, but why does growth matter?

Jill Zucker: Growth drives performance. It drives culture. It drives employee satisfaction. It helps you retain the best talent. And it fosters innovation in the marketplace. But it’s important to grow profitably. Top-line-only growth tends to catch up with you over time. And while most organizations aspire to grow, we find that growth is quite hard to achieve. Only 25 percent of companies grow sustainably over time. But if you can achieve it, that growth is rewarded, with sustainable growth outperformers generating seven percentage points more annual total shareholder returns than their peers.

Sean Brown: What does it take to be a growth outperformer?

Jill Zucker: We studied what drives growth at more than 4,000 companies around the globe, and we found a set of ingredients that are true across industries. We recognize the challenges that companies are facing today because of the global economy, so our research spans a period of ebbs and flows in the economy.

The first thing that we found is that it’s important to wake up in the morning and actively choose growth. We meet many executives who say they want their companies to grow, but they don’t allocate resources to support that growth over time.

You also need the courage to make bold moves, even in a time of economic uncertainty. In previous decades, you could choose not to pursue growth in a temporarily challenging environment. These challenging events, however, have become so pervasive that we need to have a through-cycle growth mindset. During the financial crisis, the gap between those companies that chose growth and those that stuck to maintaining the core business was reasonably narrow, but as the economy settled, that gap significantly widened. You saw a much steeper growth curve among those that had made bold bets during the downturn.

Sean Brown: How do you ensure that the pathways you choose lead you to the intended destination?

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Jill Zucker: You need to lay the foundation for more dynamic resource allocation, by which we mean both capital and talent. It means being careful in your culture to shut off projects without shutting off the talent. Just because a talented executive pursued a good experiment that didn’t work out doesn’t mean the executive should leave. Talent remains scarce in many business areas, so it’s important to allocate it to growth projects. It also means allocating resources to areas you are convinced will grow and eliminating the hobbies.

Secondly, you need to think about inorganic opportunities—both acquisitions and divestitures. The third part of the foundation is building functional capabilities, whether it’s marketing or digital or innovation.

Sean Brown: What strategies do you find growth outperformers pursue?

Rebecca Doherty: We looked at what companies have done both during the uncertainty over the past five years as well as over the longer term and found six differentiating strategies. One of the timeless approaches is to continue innovating in the core. Eighty percent of growth comes from maximizing the value of your core [exhibit]. But that’s not enough to put you in the echelon of companies that achieve growth on a sustained basis. To achieve that remaining 20 percent, you need to move into adjacencies in your value stream, such as new geographies, and build breakout businesses.

The third timeless element is putting people at the heart of what you do, whether it’s day-to-day growth or a broader transformation. Having your core people involved in growth initiatives with an ownership mindset is critical.

The three strategies that have emerged in more recent years include building an innovation culture , using sustainability as an accelerant to growth, and portfolio reallocation, including what we call shrinking to grow. The bold moves you make could include divesting assets where you may not be the best owner and then reallocating those resources toward growth opportunities.

Sean Brown: You talked about the timeless growth strategies. What makes them timeless?

Rebecca Doherty: The ratio of growth that comes from the core versus adjacencies or breakout business is pretty consistent over time. We’ve also found that companies that grow in all directions over a ten-year period have double the chance of outperforming their peers.

Sean Brown: How do the strongest growers embed an innovation culture?

Rebecca Doherty: We ran an executive survey of more than 1,000 companies, and I was surprised, frankly, to see how important innovation is across all the growth paths. Historically, people think of innovation as a way to turbocharge the core business. But leading growers look just as much at innovating new offerings and permeating that mindset through the company.

Sean Brown: Many companies still see sustainability more as a cost than a growth generator. How do you envision it accelerating growth?

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Rebecca Doherty: We’ve found that if you already have growth and profitability in place, sustainability can be that extra punch  that gives you a lift over your competitors. Sustainable growth is not a substitute for profitability, but companies that have been able to embed sustainability in their businesses have been rewarded. Perhaps intuitively, those that deliver growth and profits show a five-percentage-point outperformance in TSR. If you add ESG [environmental, social, and governance] into the mix—and this isn’t dabbling but integrating ESG priorities into your strategy and sharing the messages with investors—you see seven points of outperformance. In some sectors such as retail, you have brands that have brought sustainability into the core and have done strings of acquisitions over the years to drive impact.

Sean Brown: How do you balance the bets on breakout or adjacent growth against building up the core? If 80 percent of the growth comes from the core, should that much of your investment go there as well?

Rebecca Doherty: It depends in part on the maturity of the business and where you are on the growth curve. If it’s early, you should focus on propelling that core growth strategy. If it’s a mature business and you’re only making incremental gains, maybe you look to invest beyond the core. How much you invest does matter, though. Companies sometimes simply take last year’s budget and tweak it by a few percent. For a breakout business, sometimes you need to invest more—and not just more money. I worked with one company that put its chief technology officer into the new business to help grow it. The initial investment in dollars wasn’t large but the investment in talent was.

You should also think about the investment in stage gates. Some bets may require a large up-front investment, and you will not see much revenue for a while. Others, you could start with smaller investments, and the funding could grow proportionately with revenue. Different profiles can work, but it’s important to have a sound business plan, understand the operational and financial milestones, and be willing to pull the plug if it’s not panning out—which is a bold move in itself.

Sean Brown: Reallocation of resources includes both people and capital, but people tend to have incentives. How do you maintain incentives when you’re moving somebody from a stable business into a riskier growth project?

Rebecca Doherty: It ties to what Jill said earlier: a failed business doesn’t mean a failed executive. The culture needs to reward risk taking, and management has to accept that you won’t have 100 percent success. In terms of incentives, you can align an individual’s incentives to delivering the project, but also implement incentives that reward thinking about what is best for the broader company.

Jill Zucker: We see some management teams reward managers uniformly on EPS [earnings-per-share] growth of the business or total shareholder return, and therefore whether you’re innovating or you’re maximizing the core, you are rewarded equally. It’s not about giving more money to one person or another but about what will grow the total shareholder return. This encourages managers to give up some capital for innovation if they believe that doing so will improve the company’s growth.

Sean Brown: Can you elaborate on how companies should pursue growth through adjacencies?

Kate Siegel: Finding growth outside your core business is challenging, so we looked at how growth outperformers approach adjacencies. Our sample was about 250 companies that had announced significant adjacency moves over the past 20 years. We found four types of rationales, or approaches, that underpinned these moves. The first was based on customer relationships and the knowledge of customers’ pain points. The second was capabilities, where companies could use their existing assets, people, or processes in new markets. Expansion into the value chain—going upstream or downstream to capture various synergies—was another rationale. The last one was finding opportunities for disruption and business model innovation. What’s interesting is that the more approaches they used, the higher the reward, and that included both outperformers and other companies.

Sean Brown: How do companies identify those adjacencies? Is it based on experience and team discussions, or do they use tools?

Kate Siegel: There is a variety of data you can scan on trends, technologies, changes in preferences. You can also consider similarities of your offerings to certain businesses and capabilities. For example, we recently helped a software company that was struggling with high competition find diversification opportunities. We used AI to scan unstructured online data to identify more than 500 growth ideas based on the value creation approaches . Another set of AI analyses helped prioritize the opportunities based on trends, news mentions, momentum, and patent intensity to give the management team a short list of ideas. The company then considered which were the best fit, what talent they would need, or whether the market was big enough. One of these ideas was one they hadn’t talked about before. AI is a powerful tool for challenging orthodoxies.

Sean Brown: One strategy we haven’t yet touched on is shrinking to grow. What does that mean?

Kate Siegel: We know only about 10 percent of companies are able to maintain positive growth rates across a decade. But suppose you don’t have this consistent growth engine. The next-best strategy is to periodically prune back your portfolio and then grow healthily from a new base. You divest parts of the business one or two years out of the decade, but in every other year, you grow from that new base. We’ve seen that work in some conglomerates, where they regularly look at their portfolio to see if there are less attractive assets they could divest and then reinvest the proceeds into ones that could be better platforms.

Sean Brown: What if the businesses you want to prune have some star performers? How are companies thinking about that talent dimension?

Kate Siegel: Divestitures typically have key-member clauses to ensure business continuity, but you can take steps to understand which talent you would like to retain. The worst thing you can do is not think about talent when you sell a business, because it could have the best technology officer for a new growth entity you plan to reinvest in.

Rebecca Doherty: When we consider an acquisition, we often think about it as one plus one equals more than two. Likewise, when we think about divestitures or spinouts, it’s usually not two minus one equals one, because you’re not the best owner of the business, and someone else might be, or it might flourish on its own. Separations might not only give you proceeds to reinvest but also help the other entity perform better.

Sean Brown: Once you have laid out the various growth paths and developed strategies, you need to execute them well. What does excellence look like for execution?

Kate Siegel: People are at the heart of a successful transformation. Transformations that activate the full organization are eight times more likely to succeed. In addition, those in which more than 20 percent of employees owned transformation initiatives saw nearly twice the excess shareholder return than their peers did. Once you have the right aspiration mindsets and culture, with clarity on the growth pathways, the most important thing is to involve as many people as possible in the growth effort. That includes getting everyone aligned on the growth aspiration, building the skills they need, having leaders consistently talk about the growth targets, and implementing processes to verify whether the bets are working.

Sean Brown: Are you optimistic that companies can revive growth?

Jill Zucker: There is not a single company I can point to that’s not focused on growth today, despite the economic backdrop. When I think back to other periods of economic uncertainty, the hunkering down, the fixation on the core, the focus on efficiency were much more at the forefront. Now, growth remains a priority.

Jill Zucker   is a senior partner in  McKinsey’s New York office,  Kate Siegel  is a partner in the Detroit office, and  Rebecca Doherty is a partner in the Bay Area office.  Sean Brown is global director of communications for the Strategy & Corporate Finance Practice and is based in the Boston office.

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