The best cities for global expansion

Recent PWC research shows that nearly half of all company CFOs are currently in the process of expanding their business to overseas markets (or planning to do so soon).

In addition to capturing a greater market share, global expansion can provide companies with many other benefits, such as increased brand exposure, new investment opportunities, and simple hiring opportunities in a new talent market. Expanding to a new location will also affect the taxes, zoning laws, and regulations that a business will be subject to.

This article explains what global expansion entails and how it can help your business. It also offers a roadmap you can use to get started with expansion right away. 

What is global expansion? 

Global expansion refers to the process of growing an organization beyond the country or region in which it was originally established. It involves setting up a presence in new countries, building relationships with local customers, suppliers, and partners, and adapting to new cultural and business practices. 

There are many reasons why a company would choose global expansion for its business. One of the most common ones is the desire to reach new candidates and tap into new and wider markets. 

Expanding globally means companies can access new talent and resources, find new suppliers, and diversify their revenue streams. It can also help companies reduce their dependence on any one market, improving their resilience in times of economic uncertainty. 

However, successful global expansion requires a strategic approach. Companies must conduct market research to identify the most promising market and understand local laws and regulations that could impact their operations. 

2 examples of global expansion success 

Businesses around the world are realizing the benefits of expanding across borders and seeing great success from it.

Here are two examples of businesses that have successfully integrated global expansion into their respective business models to maximize their profits and growth potential: 

1. Uber and the “sharing economy” 

Uber is a prime example of a company that has successfully expanded globally to scale its reach and profitability. 

Since its founding in San Francisco in 2009, Uber has expanded its operations to over 10,000 cities. This impressive growth has been driven by the “sharing economy” model and the company’s strategic approach to global expansion. 

The “sharing economy” model is a peer-to-peer economic model in which individuals share assets or services either directly or through an online platform. It has experienced significant growth in recent years and is predicted to be worth $600 billion by 2027.

Uber’s global expansion strategy involved a combination of organic growth and strategic partnerships with local businesses. This was achieved by working with contractors to ensure they stay compliant with local business practices, laws, and regulations. 

Uber has maintained a strong standard of service and safety while continuing to expand into new markets. It continues to invest in research and development, solidify its global business goals, and implement comprehensive policies and procedures for all its workers. 

Ultimately, Uber’s success is a testament to the power of using strategic planning and adaptability to expand a business globally.

2. Mimo and its partnership with a global HR platform 

Mimo, a technology business that teaches customers how to code, is an example of a company that has successfully expanded its business by partnering with a global HR platform. 

Through its partnership with Remote, Mimo has been able to operate through a mixture of employee and contractor roles to maximize its efficiency. At the moment, Mimo has 37 contractors and 17 employees from around the globe, all of whom are managed through one centralized HR hub. 

Managing a global team can be an incredibly difficult task as compliance rules and regulations vary around the globe. However, Remote has helped Mimo stay compliant and understand how different regulations should impact worker contracts, benefits, and pay. 

As a Mimo representative notes, “...Remote helps us to be compliant, but flexible, in what we’re offering our team members.” 

When Mimo was first looking to expand, they were seeking a solution that could help them with their international HR from start to finish. That’s why Remote was such a perfect fit for their company; it helps with their end-to-end employment lifecycle and includes both onboarding and payroll services. 

If you want to see the benefits of partnering with a global HR platform for yourself, speak with an HR expert from Remote today. 

What are the benefits of global expansion? 

Global expansion brings a host of benefits and new opportunities for business owners. 

One is the increased level of brand exposure and revenue potential. International markets offer businesses the chance to reach new demographics, increase sales, and generate higher revenue levels. This is especially beneficial if the business’ home market has become oversaturated and there is a clear opportunity to tap into a less competitive market overseas.

If your company can launch products or services before your competitors, you can establish a strong first-mover advantage. Expect strong brand recognition and credibility with customers, particularly in comparison to other foreign entrants.

Another key benefit is access to a wider pool of skilled talent. Recruiting high-quality candidates from a range of different backgrounds in a new market gives employers unique opportunities to:

• Foster a richer and more diverse company culture

• Fill specialist skills gaps with a new pool of experienced professionals

• Gain an improved understanding of local markets

• Tap into unique sources of creativity and innovation

The top 20 countries supporting global enterprise expansion

To reveal the top countries for expanding your business internationally, we analyzed 100 countries with the largest GDPs in the world against 10 critical expansion metrics.

Factors included the annual GDP growth rate, number of startups, corporate tax rate, labor productivity, and the time and costs required to start a business, to name a few.

The table below shows the top 20 countries ranked by their overall ‘Global Expansion’ score out of 10.

How to create an in-depth global expansion strategy 

Expanding your business is an exciting endeavor, but it requires careful planning and strategic execution to succeed. 

Here are some techniques that’ll help you develop a thorough global expansion strategy: 

1. Conduct market research and analysis 

Before expanding your business internationally, you need to undertake extensive market research to understand the target destination’s market landscape. This is vital to assess the demand and competition for your business offering.

Not only will it help to inform your business strategy of the strengths, weaknesses, opportunities, and threats of the new market, but it will also have a direct impact on your overall success.

Market research and analysis involve gathering and analyzing information about markets in the countries where you plan to operate. This includes information on the size of the established market, economic trends, competition, and customer needs based on cultural preferences and behaviors. 

Areas to focus on in your market analysis include the following: 

• Market size and growth potential: Determine the size of the market and its growth projection over the coming years, as well as seasonal and cyclical trends that might affect your business.

• Customer segmentation: Profile your target customers, including demographics, behaviors, preferences, and purchasing power, and use this information to determine whether their needs match the service you’re offering. 

• Competitor analysis: Identify competitors in the market and assess their market share, strengths, weaknesses, and strategies, as well as their pricing and distribution channels.

• Market entry strategies: Evaluate different market entry options, such as partnerships with local businesses or acquisitions of existing local companies. 

This information can help you make an informed decision on whether to expand your business globally and develop effective strategies for sustainable growth and long-term success. 

2. Review local laws and cultural barriers

Businesses must consider the advantages and limitations of laws and regulations when expanding across borders, as they vary from country to country.

Legislation differs regarding employment, trade, investment, data protection, and taxes, to name a few. As a starting point, you can use our country explorer as a guide to employment in any country.

Laws and regulations must not be ignored. Otherwise, you and your business could face strict penalties. Opening local entities, setting up payroll and benefits, and trying to keep on top of local employment laws all take time, cost money, and delay your journey to success.

Areas to focus on during this review include the following: 

• Industry regulations: Research industry-specific regulations and compliance requirements, such as the licensing, permits, and certifications that you’ll need to operate your business in a different country. 

• Labor laws: Familiarize yourself with local labor laws, including employment contracts, wages, working hours, and termination procedures.

• Taxation: Determine the local tax laws, including corporate income tax, value-added tax (VAT), customs duty, and any applicable tax incentives. 

• Intellectual property rights: Ensure your intellectual property (trademarks, patents, and copyrights) will be protected and that you understand local laws regarding intellectual property rights. 

Gathering all this information yourself can be a headache. That’s why Remote’s global employment services are specifically designed to simplify the way you hire and pay international talent. We manage payroll, taxes, benefits, and compliance — allowing you to focus on your global growth.

We can help you hire and pay your global team with speed and security. 

Start using Remote’s Employer of Record (EOR) services and local entities to avoid the time, cost, and risk of building your own. 

3. Decide whether it’s worth setting up your own legal entity 

When expanding your business globally, you’ll need to determine whether setting up a legal entity would be a useful investment for your business or using an EOR would be the wiser and more time-efficient option. 

Setting up a legal entity can be a costly and time-consuming process, possibly resulting in delays that can disrupt your business plans and operations. An EOR, on the other hand, is a streamlined and efficient solution for swiftly moving forward with your expansion endeavors. 

An EOR can save you time and resources in the following ways: 

• Rapid onboarding: With an EOR service like Remote, you can kickstart the onboarding process within a matter of days instead of weeks. 

• Compliance assurance: An EOR helps ensure your business adheres to local laws and regulations and assists you in creating customized contracts with competitive benefits and pay based on local customs and attitudes. 

It’s important to determine whether setting up a legal entity is the optimal choice for your business before embarking on a global expansion journey.

Leading companies like Burger King and DoorDash entrust their international hiring and workforce management to an EOR service so they can focus on expanding their business. 

4. Assess risk mitigation and start financial planning 

Assess the financial risks involved in global expansion and construct a comprehensive financial plan to mitigate them. This strategic approach will not only safeguard your financial stability but also facilitate long-term growth and sustainability. 

Areas to focus on during financial planning include the following: 

• Currency exchange risk: Analyze the potential impact of currency exchange rate fluctuations on your finances and explore strategies or financial loopholes you can use to help mitigate this risk. 

• Cash flow management: Develop a cash flow management plan to ensure you have sufficient liquidity to cover operational expenses, including unforeseen costs, on-time payment cycles, and local banking fees. 

• Operational budget: Develop a comprehensive budget that outlines your ongoing operational costs, such as salaries, rent, utilities, and marketing expenses.

• Tax planning: Understand the local tax environment and assess the implications it will have on your business’s bottom line. Consider partnering with a global HR platform that can help you develop strategies to minimize tax liabilities.

What factors influence global expansion? 

These are five additional factors that you should consider before expanding your business overseas. 

Consumer and business culture

Another important factor for international expansion is understanding the language, religious, and cultural norms within the target country.

From marketing techniques to business etiquette, social and cultural norms can be complex, but it is vital to get it right to avoid offending customers, clients, or employees. Understanding and adapting to embrace the local culture will allow your company to maximize success in another country.

Remote can help to act as your trusted local partner in each new country of operation. You can expect personalized service from our HR and legal experts during every step of your global hiring journey. Rely on Remote’s in-country expertise to give you the type of knowledge of the local workplace culture needed to ensure your employees feel valued, connected, and supported.

Economic and political stability

Understanding the economic and political landscape of a country is also important when expanding your business overseas.

Conducting a thorough analysis of economic and political indicators over time will help minimize the risks of global expansion. Laws and regulations can change quickly under unstable governing bodies, which can have a big impact on how your business operates.

Managing a distributed workforce

The ability to effectively manage an international workforce is another key component of a successful international expansion. Effectively managing remote employees will set you up for sustainable success in new global markets.

Building a remote-first culture allows you to make your new international employees feel connected from the start and avoids the common mistakes of companies that attempt expansion without integrating new team members into the organization.

Remote’s archive of educational resources is packed with practical advice for leaders managing globally distributed teams, but the following three pillars of remote-first management will help anyone build connection and belonging during the initial stages of international expansion:

• Be available and responsive: Make time for your team and ensure they feel heard and respected. Schedule regular catch-ups, but make sure they know they can come to you with ad-hoc questions and concerns whenever they need to as well.

• Make meaningful connections: On the surface, it might seem that there’s little in common between yourself and your remote employees, but this is unlikely to be the case. Make the effort to get to know your team and facilitate meaningful connections, as this will make working together easier and more enjoyable — especially during rough patches.

• Ensure your feedback is constructive and actionable: If a piece of work needs improvement, be specific about what should be done and empower them with the resources they need to improve the quality of the outcome.

Difficulties you might face when expanding globally 

Expanding your business across the globe can be challenging, so it’s important to be aware of the difficulties that you might face along the way. 

Keep these possibilities in mind when creating your global expansion strategy: 

1. Legal and regulatory requirements

Expanding your business globally means that you must comply with each country’s legal and regulatory requirements. This can be a daunting task, especially if you only have one HR manager in charge of international operations. 

Companies usually go wrong in this area by: 

• Not understanding how different local tax laws can be

• Ignoring the impact of HR trends, local news, and attitude shifts 

Have a team of professionals dedicated to researching local laws, regulation changes, and HR trends in the countries you operate in to avoid these types of mistakes. The best way to do this is by partnering with a global HR platform that can help you build your international team while ensuring compliance with local laws and regulations.

2. Logistics and supply chain issues

Logistics and the supply chain can present significant challenges for companies expanding globally. You might face transportation and shipping complexities or inventory management issues. 

These challenges can impact the cost and efficiency of a company’s operations, as well as the company’s ability to meet customer demand and maintain a competitive edge in the market. 

Companies usually go wrong in this area by: 

• Failing to account for political instability that can impact labor shortages 

• Ineffectively communicating and coordinating teams in the midst of language barriers, multiple time zones, and different cultural customs 

Companies can avoid these mistakes by working with an experienced HR partner to help them streamline their logistics and supply chain operations, improve their communication, and ensure that they’re hiring with compliance in mind. 

3. Talent acquisition 

Expanding a business makes it easier to find top talent that can help your business thrive. However, when hiring workers from around the world, it’s important to avoid making mistakes that can put you at risk of compliance issues and appearing discriminatory or unprofessional to potential candidates. 

Companies usually go wrong in this area by: 

• Failing to advertise their competitive compensation and benefits in their job listings 

• Discriminating against applicants based on their nationality or place of residence 

To avoid these mistakes, it’s a good idea to use an EOR who has experience navigating local labor laws and streamlining hiring processes. Remote offers personalized service from our team of legal and HR experts, who will help you with every step of the hiring journey. 

Start globally expanding your business

Expanding your business globally can be a challenging process, but the right strategy and resources can help lead to significant growth and profitability.

Partnering with a global HR platform like Remote means you can navigate the complexities of expanding globally and ensure that your business remains compliant and successful in every country it operates in. 

Speak with a highly qualified HR expert from Remote today to start your expansion process. 

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