Going global understanding overseas opportunities

Going global: understanding overseas opportunities

International expansion can create big opportunities for the UK middle market, offering the chance to target new customers, secure larger workforces and reduce production costs. But in an uncertain global economy, how can businesses make confident decisions about overseas growth?

The road to global expansion is often long and hazardous; businesses must successfully navigate significant cultural, political and financial risks. Recent events in Europe and the United States have only magnified challenges, with new question marks over global economics, currency trends and future trade tariffs.

To make sure rewards outweigh risks, businesses must explore all routes to international growth. The right approach and timing has become ever-more critical. 

Those that develop strategies that can adapt to changing world markets will reap the biggest returns.

When to grow overseas

When to grow overseas

When should businesses start thinking about international growth? Ultimately, there must be a compelling reason to expand overseas. A useful first step is to consider where the business wants to be in ten years’ time, and whether goals can be met through domestic growth alone.
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When to grow overseas

When should businesses start thinking about international growth? Ultimately, there must be a compelling reason to expand overseas. A useful first step is to consider where the business wants to be in ten years’ time, and whether goals can be met through domestic growth alone.

To reach the right decision, businesses should look at the dynamics of their target customer base, including its size, growth rate and future spending power. If there are question marks over its long-term sustainability, overseas expansion may offer new opportunities for success.

In many sectors, customers are fast becoming increasingly global. Following key clients into new territories can be a fast-track to overseas success, but risks remain. Assessing long-term sustainability is crucial. If your major customers pull out of the market, will your international operations survive?

Businesses must also weigh up whether UK labour supplies will support growth ambitions. For some, increasing skills shortages or an ageing workforce could become a barrier to long-term growth. Moving certain operations overseas may allow companies to access to a larger, more sustainable or cost-effective talent pool.

While many will never feel completely ready to expand internationally, the right timing remains important. Early losses are likely when entering overseas markets. To ensure success, businesses must confront some uncomfortable questions: Will we be able to absorb international shortfalls? Can we afford to fail?

Cross-border challenges

Cross-border challenges

Global expansion is now a strategic goal for nearly 50 per cent of middle market businesses, but only 32 per cent are very confident about their plans. High-profile reports of major corporations retreating from international markets or scaling back overseas operations will have done little to allay concerns.
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Cross-border challenges

Global expansion is now a strategic goal for nearly 50 per cent of middle market businesses, but only 32 per cent are very confident about their plans. High-profile reports of major corporations retreating from international markets or scaling back overseas operations will have done little to allay concerns.

Setting up any venture is inherent with challenges, and these are only magnified when working overseas. With tighter margins, fewer resources and less well-known brands, middle market businesses face some of the greatest risks. Even the most successful will likely face losses initially.

When expanding internationally, business must overcome significant cultural barriers. While Brand Britain can be a successful proposition in some territories, not all UK goods and services resonate overseas. Products, services and marketing strategies may need to be tailored to the local market.

In other territories, political and financial risks pose even greater challenges. Local red tape and stringent monetary policies can create significant tax liabilities and make it difficult to remove money from the overseas market. Corruption, currency fluctuations and political shifts can also quickly undermine cost savings.

Despite the risks, opportunities remain for businesses with the right strategies. Robust research is critical if businesses are to understand market nuances and successfully sidestep challenges. The costs of failure should not be underestimated.

Global opportunities

Routes to international expansion

There are many ways to expand overseas; businesses must understand all options if they are to minimise risks and move forward with confidence.

Entering a market by setting up a branch or subsidiary is often the riskiest option. Many businesses may prefer to realise their global expansion goals through a step-by-step approach.

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