What are two important reasons to do business globally?

Globalization has reshaped the way organizations function, offering new opportunities for growth and competitiveness. Among the many reasons to operate on an international scale, market expansion and access to global talent and innovation stand out as the most critical.

Before we get deeper into the explanation, you can get assignment help or research paper writing help from top writers in the world.

1. Market Expansion: Reaching a Wider Customer Base

Expanding into global markets enables companies to increase their customer base, sales, and revenue. Instead of being limited to a local audience, businesses can tap into new regions where demand for their products or services is emerging or underserved.

“Going global is no longer an option but a strategic imperative for sustained growth.”
— Harvard Business Review

Why it Matters:

• Increased revenue potential: Entering international markets exposes businesses to millions of new consumers. For example, Apple generates more than 60% of its revenue from outside the United States, especially from markets in China and Europe (Statista, 2024).
• Risk diversification: By operating in multiple regions, companies reduce their dependency on a single market. This can buffer against local economic downturns or political instability.

Example:

Starbucks’ global expansion illustrates how market diversification can fuel growth. By opening stores in Asia, the Middle East, and Latin America, Starbucks grew its brand from a Seattle-based coffeehouse to a global leader with more than 35,000 stores worldwide as of 2023 (Starbucks Annual Report).

2. Access to Global Talent and Innovation

Another powerful reason to do business globally is the ability to access a diverse talent pool and new sources of innovation. Operating in multiple countries allows organizations to hire skilled professionals from around the world, often at lower labor costs and with specialized expertise.

Key Benefits:

• Innovation through diversity: According to McKinsey’s 2020 report, companies with ethnically and culturally diverse leadership teams are 33% more likely to outperform their peers in profitability. Global teams bring varied perspectives that drive creative problem-solving.
• Skilled workforce access: Countries like India, the Philippines, and Eastern Europe are known for their strong educational systems in technology and engineering. Businesses often outsource software development or customer service to these regions to leverage top-tier talent.

Quote:

“The world’s best minds are not confined to one country. Companies that tap into global talent unlock innovation and competitive advantage.”
— World Economic Forum

Example:

IBM has research labs in multiple countries including Switzerland, Japan, and India. This global structure allows IBM to benefit from regional expertise and innovation ecosystems, leading to breakthroughs in AI, cloud computing, and quantum technology.

Other Reasons to Do Business Globally

1. Cost Reduction: Operating in countries with lower production costs or cheaper labor can significantly reduce overall business expenses.
2. Access to New Technology: Expanding globally allows companies to tap into new technological advancements and innovative practices from different regions.
3. Economies of Scale: Global operations enable businesses to scale production and operations, leading to cost efficiency and greater profitability.
4. Improved Brand Recognition: International presence can enhance brand recognition and reputation, as companies gain visibility in multiple global markets.
5. Competitive Advantage: Entering new markets can provide a competitive edge over rivals that remain limited to a single region or country.
6. Access to Raw Materials: Global expansion can provide easier access to raw materials that may not be available or are more expensive in the home country.
7. Increased Profitability: With access to new markets and resources, businesses can increase their revenue streams and overall profitability.
8. Political and Economic Stability: Operating in multiple countries provides a buffer against political or economic instability in one particular region, thus protecting the business.
9. Learning and Knowledge Exchange: Exposure to different cultures and business practices can lead to valuable learning opportunities and knowledge exchange.
10. Enhancement of Operational Flexibility: A global presence allows companies to adapt more swiftly to changes in demand, supply chain disruptions, or market trends.

Wrapping up

To remain competitive and sustainable, businesses must think globally. Market expansion opens doors to new customers and diversified revenue streams, while access to global talent and innovation drives efficiency and creativity. In a rapidly evolving economic landscape, these two reasons form the foundation of long-term success in global business.