Pros and Cons of Globalizing Your Business
Globalization is a huge step forward for domestic businesses. This allows them to serve larger markets and generate more sales but could also lead to wasting funds and efforts. While Globalization can be both beneficial and destructive to one’s business, many are still willing to toss the coin. Some worked hard and became more successful, while many fell in the pit of failure and never managed to continue the game. The latter usually happens due to miscalculations and lack of preparations.
Timing is everything, or as the saying goes.
Most people fail because they don’t fully understand what they are about to face. Globalizing your business isn’t just about the benefits you may reap but also the hurdles you have to go through and the possible loss waiting at the end of the line. Anticipating which will definitely help you prepare better and understand when is the best time to start.
Whether you are planning to globalize your business soon or simply doing a research for your own interest, our list of Pros and Cons will definitely give you a nice jump-start.
Let’s begin with the Pros:
1. A Larger Market Leads to More Sales
This goes without saying. The larger market you serve, the more potential customers you have. And more customers means more sales. Now, there is no reason why a business would say no to more earnings, not that we know of.
2. Better Opportunity for Funding
Exposing your business to the global market also leads to attracting new investors. It’s no secret how globalization could cost an arm and a leg so boosting funds with more capital investments is never less than helpful.
3. It Extends a Business’ Life cycle
New businesses are born almost everyday and there is no guarantee that even half of them will make it to the 3rd stage of the business cycle. Every company is prone to getting eliminated at anytime of the day. One reason for this is the gradual decline of product users. Expanding your market will help you avoid this from happening sooner. By having a larger customer base, you will have a higher chance of surviving because it’s next to impossible to just lose them all at once. Except of course you’re doing something terribly wrong.
4. Possible Business Partners
Strategic partnership is a part of an effective business management both in the aspects of marketing and operations. Building alliances with other firms and even your own competitors will add to your company’s strength while reducing possible threats at the same time. Globalizing your business essentially helps add exposure and credibility to your brand, hence making it easier to convince potential partners to join forces with you.
5. It Adds More Value To Your Brand
Just as mentioned on the statement above, going global helps your business position a positive value in the minds of your customers and other stakeholders. A brand that is known by more people stands a better chance of being preferred than the one only a few had heard of.
Now, the Cons:
1. More Marketing Effort and Budget Needed
Now this is quite obvious. A business serving a larger market has to extend its effort to reach more customers. Budget, being a variable of which, will definitely even out the scale. And to make it more complicated, people from different countries hold distinctive norms. This means that a promotional campaign that works for one doesn’t guarantee to work on the other. As a result, different marketing campaigns must be designed, tested, and evaluated before putting it to play. And trust me, it ain’t cheap as much as it ain’t easy.
2. Higher Risk
What are the chances of failing to sustain your business in your own country? Now triple that and see how much risk you have to deal with once you go global. There’s no denying how perilous your voyage would be in the first few years. There are just so much things to consider before even starting. Spending on intensive research, building strategic partnerships, expanding network, raising funds, all of which could end up wasted when not used right.
3. More Competitors
Your market share might be looking good now, but wait until you enter the global market. With over 7.5 Billion world population, you can’t be the only one to see the golden opportunity of globalization. Many already are and more will soon. The more rivals you have, the less likely your brand to be noticed. But if odds are in your favor, you might even use the situation to your advantage.
4. Cultural Differences
While a “thumbs up” is widely known as a gesture for approval, using it in countries like Bangladesh, Iran, or Thailand could make people hate you. Slurping your noodle soup could irritate other people around you but Japanese will appreciate it. These show how various cultures shape people differently. You could end up being biased on your marketing due to self reference criterion. Sure you can avoid doing so but it takes a lot of effort to study what offends who, let alone an entire culture.
5. Product and Service Distribution
Serving the global market means making your product or service accessible to different countries. As much as it’s difficult to execute, there is also a great need for maintenance and consistency. This will be extra harder for businesses offering tangible products. It’s either they put up a manufacturing building in each country they serve or send cargo ships every end of the day. Businesses which sells virtual products on the other hand, also have problems of their own. One is the unavailability of customer service due to both lack of physical store and time zone differences. Another is the lack of better payment options. Customers can pay through; bank transfers, which cost customers expensive fees; Cash Remittance that is hardly safe; Or Third Party Payment Processors which charges the business for every transaction.
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