Benefits of Expanding Into New Markets
While the main benefit of entering new markets is increasing profits, other benefits exist. These include:
Increased Diversification
Expanding internationally allows you to diversify your company markets, which can safeguard your bottom line against unexpected events. Suppose a natural disaster or other unfortunate circumstance causes a dramatic shift in one market. In that case, your company can still offset negative growth by performing successfully in the global market.
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At the same time, you can diversify your revenue stream to avoid exclusively relying on one product or service. For example, if you operate a bakery, you can expand into a new market by opening a restaurant that offers other types of food. If there is a drop in the demand for baked goods, the restaurant will ensure the survival of your business.
Access to Global Talent
Your employees are undoubtedly your most important business asset. When you expand into international markets, you can benefit from global workers with unique skill sets, languages, and educational backgrounds. This will, in turn, foster creativity and innovation in your business, giving you an edge over your local competition.
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For example, if you are a tech company that is expanding into the Indian market, you may benefit from Indian tech talent that’s both highly skilled and inexpensive. This is due to the Indian government’s significant investment in the information and communication technology (ICT) sector in recent years.
With the U.S. and most developed nations struggling with digital talent gaps, expanding into foreign markets provides a broader talent pool. You can get enough workers with the right skill sets for your business.
Competitive Advantage
If your market has overwhelming competition, expanding into new markets becomes more of a necessity than an option. For example, if you enter a foreign market where your competitors do not operate, you automatically get a first-mover advantage and can establish strong brand awareness with customers before your competitors.
In addition, international expansion gives you access to new technologies, industry ecosystems, and growth opportunities that may not be present in your home country. Your business will have a strong competitive advantage over the brands still stuck in the local market.
Foreign Investment Opportunities
Expanding into new markets also avails additional investment opportunities for your business in foreign markets. You can create meaningful connections with other global players and develop new resources that support future growth.
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Your company can benefit from international financial incentives not in your home country. Many developing markets are looking to attract foreign businesses, offering financial incentives to global companies. Malaysia uses corporate tax deductions to attract foreign businesses. While local companies pay about 19%, multinational organizations pay 17%.
Unfortunately, you may need to know the countries that offer these financial incentives. And even if you do, the regulatory obligations in corporate taxes can be confusing and difficult to understand. This is why you should consider working with a reputable employer of record (EOR), as there will be experts to help you navigate these kinds of things.
Greater Brand Recognition
Another benefit of international expansion is that it improves the credibility of your business amongst a global audience, hence better brand recognition. Generally, branding is all about ensuring your target audience associates specific desirable qualities or ideas with your product or service.
Establishing great brand recognition requires several efforts. First, you need to deeply understand the target market and what the audience in that market needs. Secondly, you need a proper marketing strategy to communicate your brand to that new audience.
Big brands often have an advantage when it comes to branding, as they have vast resources to use in their advertising and marketing efforts. However, this doesn’t mean your business needs to be a huge corporation to get proper brand recognition in your new market. Using the available resources to drive marketing efforts can still put you ahead of other players and provide immense branding opportunities.
Source: https://t-tees.com
Category: WHY
