Aspects of Global Expansion

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Table of Contents

Introduction
Perspectives
Recommendations
Conclusion
References

Introduction

Global expansion refers to the process when a business expands its operations beyond its home country into lucrative foreign markets, achieving the next level of growth. Global expansion is a strategy for most businesses in the modern globalized economy, once reaching a certain size domestically. It can offer a wide variety of benefits including access to high-quality talent, increasing sales by accessing new consumer bases, and building more efficiency through global supply chains (Hill, 2020). However, it also poses several risks due to potential competition, barriers to entry to markets in other countries, and significant upfront costs necessary without a guarantee of returns.

Perspectives

An article by Crawley (2022) discusses how cryptocurrency exchange firm FTX has fueled its global expansion recently by opening branches in Europe, Africa, and Australia. The article indicates that the aggressive market expansion is driven by the profitability and valuation of the firm combined with inclusive policies in some countries to promote crypto adoption, directly benefiting the company operations. It highlights the effect of business climate on expansion efforts for some industries. An article by Spencer (2022), talks about an American medium-sized software maker hiring a new VP of sales who is based in Europe to oversee the company’s entry into that market. This indicates that global expansion is a challenging process requiring specific, on-the-ground expertise to adapt to local markets and cultures. Finally, an article by Park (2022) highlights a Japanese major drone company securing over $70M in funding to accelerate global expansion. The funds will be used for expansion through hiring, marketing, and acquiring regional smaller companies. This highlights the tremendous cost of global expansion, requiring funding efforts and diluting the valuation of the company.

Recommendations

In the article by McLarney and Becker (2019), the authors indicate that global expansion is a natural growth for a business, but it is highly complex. It requires navigating a range of challenges in a highly competitive field, all striving to achieve a competitive advantage. There are many factors to consider such as changing customer needs, new logistics and technologies, diverse workforces, and a rapidly shifting business climate. The study argues that global expansion is a crucial element but requires strong leadership, competent planning, and so-called due diligence, which is not only a fair estimation of financial strength but a strategic analysis and logic that brings value to the firm.

Meanwhile, the chapter by Thompson and Kossek (2018) discusses that global expansion carries its various nuances as multinational companies must adapt to a range of contexts and maintain high levels of workplace flexibility. Workplace flexibility is one of the main drivers of success according to the authors, allowing one to adapt not just to multicultural teams, but help to navigate global challenges ranging from different time zones to differing workloads, and communication across teams. The policies and practices of the business must be oriented towards global expansion to guide the company through such major transitions.

Conclusion

The first question that arises is, what can a business do if they had reached a size where expansion is necessary, but the organization is not prepared for it properly? The answers to this can be found by investigating the literature on the lengths and resources necessary to achieve global expansion. Furthermore, articles examining successful large businesses that operate in a single country or a small region, determine the business decisions best made in such contexts, as it is not always critical to go global, but simply test out markets in the nearby region. Another question is whether global expansion will be relevant going forward as recent years have shown many risks in terms of supply chains, geopolitical risks, environmental and social factors, and others. Perhaps, it will be left for the largest corporations while medium businesses will remain largely domestic and regional. This information can be found by reading analysts’ perspectives on recent events and examining different perspectives on whether it is the end of globalization.

References

Crawley, J. (2022). FTX Australia will offer exchange and over-the-counter (OTC) products and services, including derivatives.CoinDesk.

Hill, C.W. L. (2020). International business: Competing in the global marketplace (13th Edition). McGraw-Hill Higher Education (US).

McLarney, C., & Becker, J. (2019). In global expansion, due diligence is key.The IUP Journal of Corporate Governance, 18(4), 7-19.

Park, K. (2022). Japan’s Terra Drone lands $70M Series B funding to accelerate global expansion.TechCrunch.

Spencer, M. (2022). Beaverton software maker eyes global expansion, adds new exec. PortlandInno. Web.

Thompson, R. J., & Kossek, E. E. (2018). Workplace flexibility: Strategies to help organizations navigate global expansion. In K. M. Shockley, W. Shen, & R. C. Johnson (Eds.), The Cambridge handbook of the global work–family interface (pp. 533–554). Cambridge University Press.

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Aspects of Global Expansion

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