The Advantages of Doing Business Globally
Inherent in any overseas business expansion are the unknowns. In addition to cultural and language differences, there is simply the issue of not knowing the country or the market. While these can be unsettling issues, the benefits of expanding overseas sometimes create such a compelling case that business owners must at least explore the possibility. Increasing brand value, finding new customers, seeking tax incentives and reducing a reliance on the domestic market are just a few of the reasons many business owners may seek to expand.
Market Share
First, increasing market share is important. While a domestic company may have a great deal of market share already from a domestic standpoint, expansion overseas offers the ability to take that to the next level (see Resources below). Additional customers, if planned and priced right, will always mean additional revenue and profit. Further, a proven business model often will work in more than just one country, especially those set up under similar rules of commerce.
Diversification
Most investors know the value of diversification--not putting too much into one stock or one industry. Business is no different. If the economy is going bad in one country or region of the world, it may be doing better in another region. Those businesses that are located in more than one location may find they are better able to weather the storm.
Brand Value
Next, building brand value must be considered. Though this may seem like it goes along with market share, they are two different things. Brand value incorporates not only financial success but also more intangible terms such as respect in the industry. Those who conduct business overseas may be seen as more serious about their products and business. This can lead to greater opportunities both at home and in the foreign market.
Tax Havens
Considering tax incentives should also be a priority. Tax incentives are another reason some businesses may choose to expand to overseas markets. Some companies may even move their headquarters to those countries that offer better tax rates or incentives. While this strategy could backfire, it could also lead to a greater financial gain to the company, and possibly lower price for the company's customers. Common tax havens include: the Cayman Islands, Bermuda, the British Virgin Islands, Lichtenstein and Luxembourg.
Choosing Countries
Once an owner has decided to expand overseas, it is important to understand the options available. If an owner already has a familiarity with a country, the choice may be obvious. If, on the other hand, a business owner is looking at a country for tax advantages, there may be a myriad of other things to consider. Some countries offer tax incentives only to companies that start or file articles of incorporation there. Others may offer advantages to nearly any company.
Warning
While these benefits are attractive to business owners who have a product or service they believe will work overseas, there are some drawbacks that also must be taken into account. The cost of doing business between multiple overseas locations is often substantially higher. Those who do not know the business laws of a certain country may need to hire business consultants or business lawyers specific to the country in question. This will add to expenses and could possibly make any move overseas financially unfeasible.
Tags: business owners, market share, Advantages Doing, Advantages Doing Business, Business Globally