If you run a successful business in your home country, you might assume that there’s not much point considering scaling internationally. Why expose yourself to all that extra work and unnecessary risk?
Once upon a time, that might have been true, but times are changing.
Megatrends are reshaping the global business landscape and creating massive opportunities… and significant threats for companies that choose not to engage.
Trend #1 – Technology has shrunk the world
Technology has shrunk the world, enabling us to do things we could scarcely imagine even a decade ago. Here are a few examples of things I do daily that demonstrates this:
- Reach a global audience with a podcast
- Create intellectual property in real-time with a virtually distributed team.
- Sell products and services to people in places I’ve never heard of.
The rapid technological developments of the last few years mean that companies can reach international customers and work with suppliers in ways that were impossible just a few years ago.
This stuff isn’t just for the big guys.
Even micro-businesses making candles on their kitchen table at the weekend are getting their products into the hands of international customers, using Amazon, eBay and Alibaba.
Trend #2 – Global Value Chains
Over the past decade, Global Value Chains (GVCs) have boomed.
It was once the norm that all the parts of a product were sourced from a single country. These days, it’s common for the stages of making and selling a good or service to be split across several countries.
For example, if you run a company that does cloud-based accounting for small businesses, you might get customer service inputs from the United States and back-office services from the Philippines or India.
The growth of GVCs has boosted intra-industry trade and international trade, because companies increasingly rely on suppliers from other countries to provide inputs for their good or service.
The combination of trend #1 and trend #2 mean that we now live in a globally interconnected economy, where international business transactions are rapidly becoming the norm rather than the exception.
Trend #3 – The rise and rise of Asian economies
The rapid development of Asian economies and the economic and social transformation of these countries – particularly China and India – has created 3-4 billion new consumers with purchasing power and big dreams.
The good news is that suddenly, there are a lot more people to sell to. These are your potential clients.
The bad news is that they are also your potential competitors. Asia’s rising middle classes are smart, educated and aspirational. And many of them are already pursuing opportunities in global markets.
It doesn’t require much imagination to see that companies from overseas can enter a domestic market using technology and gobble up market share. If that happens and a company hasn’t diversified its risks by operating in more than one market, it could spell disaster, especially if competitors are using inexpensive inputs inputs from countries where things cost a lot less.
What do these trends mean?
Technology, GVCs and new consumers have combined to create a global market with massive opportunities.
To get a sense of the scale of these opportunities, you need look no further than India’s electronics market, which is expected to increase in value from US$28 billion in FY17/18 to US$100 billion in 2020.
Or take the case of China, where high quality Australian milk can sell for up to $9 per litre, compared to $2-$4 per litre at home.
Alternatively, you can create the market, like Siteminder did with its guest acquisition software for hotels, going from zero to $35,000 customers – and $100 million in recurring revenue in a decade.
These are exciting times, but not just because of the opportunity to make more money.
Companies that operate internationally
- Generate higher revenues
- Retain more profits
- Innovate more
- Are ranked as better places to work
…. than companies that operate in a single market.
Just a few great reasons to think again about ‘going global’.