Positive Effects of International Expansion

For many companies, the operation of their business are only done domestically.  This might be because the size or resources of the business preclude them from going abroad.  For other firms, the timing for an expansion might not be feasible.  What we are left with are companies that are already abroad and those that are prepared to expand their operations.  To the companies that are in a position to go abroad, there are numerous variables to consider.  For a start, the determination has to be made whether to even expand internationally.  Just because you are capable of going abroad doesn’t necessarily mean you should. In this post we’ll discuss a little more about the positive impacts that can come from broadening your business.  In a future post we’ll tackle some potential dangers and pitfalls of international expansion.  For now, we’ll talk about what a good international expansion might net you.


Taking your business abroad can offer your business several opportunities and benefits if planned and executed properly.  There are a great deal of factors to pay attention to in the initial research phase.  For example, does your target country offer a more favorable business climate compared to where you are now?  A higher tax rate, raising wages or other increasing costs might signal that international  expansion might be an option for you.  A recession or a depression might also be a signal that international expansion is a good idea.  If you are in a recession, diversifying your revenue stream might insulate you from domestic losses.  Conversely, your business or product might be in a good position to do well in a down market.  In this case, you could take advantage of lower costs  to do business in that country.  This situation provides an excellent opportunity for a company to build trust both with the local consumers but with the local government as well.  

Global Expansion

Similarly, if demand for your product or service are down, reaching an untapped market abroad may provide your business with very lucrative gains.  Being able to offer a product where it is in high demand but low supply can very much make headway into the market.  In the right climate, doing this can create a sustainable and loyal customer base.  By being being the only provider of a good or service will very much endear you to the local consumers.  In time as you continue to provide good service you can build forward and solidify new partnerships and relationships.  This is an excellent base for ensuring that you have a platform to continue to expand and grow.  Without this trust, the path to expansion becomes more muddied and more difficult than necessary.  


As you build exposure for your company, you continue to add to your global image.  Building this global image is key to future expansion.  Consider what you do as your resume for potential future endeavors.  You are not only building experience for yourself and your team, your company is also slowly growing an image of its own.   When you get to a point where your public image is solid, it becomes something that you can hang your hat on and open doors into new ventures.  


International expansion can also have several benefits for your workforce and talent pool.  Companies that are gearing up for expansion usually are usually in a position to be able to attract a great deal of highly skilled people.  You will notice that as your prospects go up, talented people will want to work for you.  Also by expanding internationally, you open yourself to a new pool of potential employees.  THis kind of diversity can lead to an influx of new ideas and fresh blood into your business.  New perspectives can always be useful, especially when taking your business into the the relative unknown.  

International Expansion Benefits


By opening up your country or product to the international markets, you are taking the next growth step with your company.  This inherently has a number of benefits as well as a number of risks.  For example, by opening yourself up to the international market, you have to now account for IP, exchange rates, legal issues, partnerships and services.  You also have the issues of stocking and capital allocation.  This indicates that expanding internationally isn’t a breeze, but instead should be treated as a serious undertaking with numerous moving parts to it and because expansion can be filled with hazards, many misconceptions and falsehoods are born from the difficulties.  In this post i’ll go over some common myths and beliefs about international expansion and more specifically, exporting.

What size company should be exporting

Many small business and medium size business owners tend to believe in the concrete myths that international expansion is going to be exclusively too costly or too difficult.  When in reality, there are so many avenues to explore that require different levels of capital and skill.  For starters, how small is too small to export.  It’s a commonly held belief that only large, well established firms with big name recognition are the only candidates for international expansion.  This is a misconception held by a lot of american individuals and business owners.  In reality, much of the world’s exports from foreign countries comes from small to mid level size companies.  These are the kind of companies that have less than 50 total employees and sales in the $1-$10 million range.  On top of that micro sized companies, with less than 20 employees, are seeing a surge in international sales in  the last few years.

Cost of exporting

Along with the size of a company, the total financial picture is also a good indicator of whether or not to start exporting.  The common understanding is that international expansion is going to demand hiring more people, more costly marketing campaign and coordinating logistics in a different country.  The biggest misconception here is, go big or go home.  Again in reality, your commitment to exporting is going to somewhere on an infinite continuum of international expansion. As a company, you can commit large resources and hours upon hours of manpower, but this is only feasible if you are in a position do that.  For others, the financial commitment doesn’t have to be equal to larger firms.  For one, international expansion should be preceded by promotion and research.. These 2 things begin your base for international expansion and give you a jumping off point.  As you continue to promote and do research, you gain more understanding and a stronger foothold.  This might eventually lead to trade agreements or distribution contracts.  These are intended  to be little to no cost ways to begin your journey of exporting.  These avenues should provide enough insight and shed enough light on what your next steps should be.

Overseas competition

There is also always the lingering question about competition.  What’s to say that your product doesn’t get drowned out by the competition in the first year of business?  There are no such guarantees, but these also aren’t predetermined outcomes.  The global marketplace is a massive and varied hub.  The needs and interests will vary from city to city, let alone nation to nation.  For this reason, you might even find that your product is doing better in a foreign market than it was doing in the home market.  Price is an important factor, but it is not always the determining factor to a product’s success.  Quality, customer service, PR and taste are just as crucial factors to determine whether or not your product is a good fit for a certain market.

AI_Exporting blog


Risks and over complication

The other major factors or fear of exporting comes from a fear of risk and over complication of the process.  Doing business anywhere has inherent risks and those risks are usually insulated in some way.  Same goes for the process of exporting.  For starters, as a small to medium sized business, you have a plethora of grants and loan programs that are both privately and federally funded.  Counseling, advocacy and research resources are all available on the www.export.gov website.  Here you can find more specific information and do the required research before you begin your next step.