How to Compile a Global Expansion Strategy for Your Workforce
Updated November 16, 2022.
Successful global expansion is a long-term goal of many businesses. Unfortunately, this goal isn't always achieved because the process often comes with unexpected challenges some companies can't seem to overcome. However, developing and implementing a global expansion strategy—an official plan detailing how the company plans to expand into international markets—can prepare you for some of these challenges and increase your chances of success.
Your plan should disclose timelines, budgets, and clear expectations for everyone involved in implementing the strategy. Here are some tips on how you can develop a global expansion strategy for your workforce.
6 Steps to Compile a Global Expansion Strategy
Developing an effective strategy that will contribute to achieving the company's expansion goals demands considerable time and effort. To make the process easier, consider the following steps:
1. Set Clear Goals
Before deciding how to implement your expansion plan, you need to define why you want to invest in global expansion. Are you looking to grow your talent pool? Lower the cost of labor? Introduce your products and services to new customers?
Your expansion goals should align with your company's vision and be clearly defined in your strategy. Setting goals helps provide guidance and objectives for your team, such as budget needs, timelines, and task prioritization.
2. Perform Thorough Market Research
Once your goals are clearly defined, you should conduct comprehensive research about each global market you want to enter. This will help you spot each market's opportunities and potential barriers, making it easier to identify the best locations for profit maximization and risk minimization.
Your research should include topics like demand for your product, local regulations, diversity and quality of the talent pool, and the current social-political environment.
3. Know Your Budget
For your global expansion strategy to be successful over the long term, you need to understand your budget. How much will you need to spend to expand into this market? What's the expected revenue or cost savings associated with this expansion? You want to be sure this project will be profitable and that you won't run out of money in the process.
The budget should include the sources and costs of financing the project. In some markets, the local government offers incentives for businesses entering the market, which you should also include in your budget.
4. Research Expansion Strategies
Do you want to develop an entire subsidiary in this new market? Should you license another company to sell your product/service for you? Would exporting your goods or services to these new markets make more sense?
Various expansion strategies can be used to enter new markets, but your chosen method will depend on your budget, risk tolerance, and business goals. Research each potential strategy to determine which will work best for your situation. For instance, licensing your goods and services is less expensive than setting up a subsidiary, but you probably won't have the same control over your product quality and delivery.
» Should you outsource your employees? See whether outsourcing employees within a small company is a good idea.
5. Consider Hiring Locals
Hiring local talent will help you integrate more smoothly into the target market. Locals know the culture, the language, and have existing business relationships in the area, which would be a great asset to your company. Plus, you won't need to spend your budget on relocating employees or traveling as often.
You could set up a small office or hire employees to work remotely. Either way, you'll want to ensure you follow all local employment regulations.
» Need help managing global employees? Here are our tips on how to manage your global workforce.
6. Form Local Partnerships
Work to build relationships with local partners in the new market, such as attorneys, logistics and shipping providers, advertising agencies, or financial institutions. These new partnerships will help you carry out your global expansion plan. Look for partners with a solid track record with past clients, competitive prices, and excellent communication.
HR and Compliance Considerations
Hiring employees in a foreign territory requires substantial consideration of the local employment regulations. Each territory's tax and labor laws will be different, and it's vital for businesses entering these markets to ensure compliance. There are different laws regarding employee salaries and wages, the classification of full-time employees and independent contractors, benefits, and employment taxes.
Many companies opt to engage a professional employer organization (PEO) to handle much of the HR administration in foreign territories. Partnering with a PEO can help you remain in compliance with all local rules and regulations.
» Unsure whether you're payroll compliant? Follow our tips to ensure payroll compliance.
Compile a Global Expansion Strategy to Ensure Success
Global expansion is a goal for many businesses. To increase your chances of success, developing an expansion strategy that details your goals, budget, and timelines is important. Without a strategy in place, your project may be over sooner than you expect.