7 Tips for Developing an International Expansion Strategy

New markets, fresh revenue streams, high returns on reinvestment — International expansion is an exhilarating prospect for many business leaders. According to a recent G-P report, 3 in 5 global executives see growing their workforce as a top priority.

But expanding globally requires more than just ambition — strategy is key to international success. With a best-in-class Employer of Record (EOR) partner in place, companies have all the tools and expertise they need to expand beyond borders and boundaries with ease.

Let’s explore how to develop an international expansion strategy and how an EOR can streamline the process.

What is an international expansion strategy?

International expansion, also called global expansion, offers businesses of all sizes the potential to tap into new markets, boost revenue, and grow their customer base beyond existing markets.

Global expansion strategies are multi-dimensional and tailored to address critical initiatives, including market selection, market entry, product strategy, risk mitigation, local compliance, and exit strategy. A strong global expansion plan leverages detailed research and analysis to expand beyond borders and boundaries quickly and compliantly.

What are key international expansion strategy examples? Examples of international expansion strategies can include:

• Franchising: an approach that allows a company to expand globally with a relatively low capital investment and risk profile.

• Joint ventures (JV): a business arrangement involving a partnership between a company and a local firm in a target market.

• Mergers and acquisitions (M&A): a more direct method of expansion that allows a company to tap into an established customer base, local expertise, and even a pre-existing infrastructure. Companies are increasingly turning to EORs to streamline global M&As.

• Strategic partnerships: involves exchanging resources or collaborating with another entity for mutual benefit, such as joint marketing or distribution efforts.

• Exporting: consists of selling products or services to international customers that are domestically produced.

• International entity establishment: a subsidiary or branch office gives companies greater control and potential for long-term growth in a target market. With that said, there are many financial and legal implications, so many companies turn to EORs to hire in new markets and mitigate global employment risks.

Each of these international expansion strategies offers specific advantages and challenges. The best strategy for you depends on your unique company goals, resources, market conditions, and the level of autonomy your company would like to maintain in a specific market.

What are the benefits of international expansion?

G-P’s 2024 World at Work report revealed that 97% of leaders agree that establishing a market presence in multiple countries is essential for remaining competitive in today’s business landscape.

From access to specialized talent to risk diversification, here are a few benefits of international expansion:

• Access to new markets. Expanding across borders and boundaries allows businesses to access new customer bases and increase market share, reducing dependence on domestic markets.

• Potential for revenue growth. Businesses can diversify revenue streams and enhance their growth potential. Expansion to new markets may also mitigate risks associated with economic downturns in their home market.

• Diversification of risk. Operating in multiple countries may help mitigate business risk. After all, successful international expansion reduces the dependency on a single domestic market.

  For example, economic or political instability in one region might be offset by stability or growth in another. Diversified market presence also allows organizations to better navigate global market volatility, with highs in one country balancing lows in another.

• Extended product lifespan. Every product or service follows a general sales lifecycle. While details differ depending on industry, a product generally experiences inception and launch, market maturity, stabilization, and — in most cases — decline and eventual phase-out. An international expansion strategy hits the reset button on that lifecycle.

  Companies can introduce strategic products or services in a new market, in turn creating a new revenue branch.

• Competitive advantage. Establishing a presence in more markets can enhance a company’s competitive position. The faster you can compliantly hire — and manage — teams in a new region, the greater your chances of outpacing competitors.

• Access to specialized talent. While 98% of executives plan to expand their global presence in the next 12 months, finding skilled talent continues to be a key challenge. International expansion provides access to a broader international talent pool, which can bring new skills and perspective to your workforce.

• Increased innovation. Exposure to different markets and diverse cultures can drive innovation by offering new ideas and trends that can be adapted and integrated into existing business models.

• Brand authority. A global presence can also elevate a brand’s profile and perceived value, which may promote recognition worldwide.

• Adaptability. Engaging with different markets can offer insights into varied consumer behaviors and business practices, contributing to a more adaptable and resilient organization.

What are the challenges of developing strategies for international expansion?

The top obstacles to growth fall into three buckets: competition, talent, and the economy. Key challenges include a competitive marketplace, talent shortages, inflation and rising prices, and economic uncertainty.

However, companies must overcome these obstacles because in today’s globalized world, international expansion is more the norm than the exception.

Challenges of international expansion include:

1. Evolving local regulations. One of the biggest hurdles is navigating the complex regulatory environments in different countries. After all, every country has their own unique set of rules related to taxes, labor laws, intellectual property protections, and product standards.

2. Cultural differences. Cultural differences can impact anything from consumer behavior to marketing strategies, which requires businesses to localize their products, services, and branding to meet regional expectations.

3. Operational disruptions. Managing supply chains across borders, dealing with fluctuating exchange rates, and securing reliable local partnerships remain a key hurdle to overcome.

4. Economic instability and political risks. Economic conditions such as trade wars, changes in government policies, or even national election results can dramatically impact business strategy.

Despite these challenges, businesses that successfully navigate these complexities can often diversify risk and tap into new revenue streams.

7 tips for building an international expansion strategy

What specific strategies can business leaders adopt when building a global market expansion strategy? When thinking about expanding into a new market, executives should first consider a few key questions:

• Do you have the right tools and technology to ensure asynchronous ways of working?

• Do you have skilled talent to take innovation to the next level?

• Do you have a strong company culture to enable cross-border collaboration?

Let’s explore how to build a successful international growth strategy:

1. Perform an internal business audit.

You need to know where you stand before you pave a new path forward. An internal business audit provides the foundation for smooth, successful expansion. It’s your metaphorical roadmap, one that addresses every turn, pit stop, and potential speed bump before your business enters new markets.

Your internal business audit should be detail-oriented and comprehensive. Evaluate stakeholders from across your entire organization, from operations to sales to finance to IT. Each of these domains will need to align to help international ventures thrive. Each department’s insights and infrastructure must be reviewed, feasibility tested, and then tweaked to work in the new market.

2. Conduct market research.

Market research is key to building a successful global expansion strategy. Your company needs a clear view of the global marketplace to identify emerging opportunities. Perform the following competitor audits before expanding into new markets:

• Understand local market demand. Are there potential customers in your target market that may need your specific product or service? Take a close look at market trends, economic conditions, and consumer preferences.

  Consider conducting a gap analysis to see if the products or service your business provides is currently underserved in a market. Then, develop a SWOT analysis to get a window into the sales and revenue potential for that region.

• Analyze the competition. Research your key competitors to effectively position your offering. Pay attention to both local and international competitors to better understand their strengths and weaknesses, including product and service value alignment. A strong analysis will help your company navigate cultural nuances to ensure your target audience perceives your business the right way.

• Cultural sensitivity. Different countries have unique cultural preferences that often affect the way products are marketed or consumed. Additionally, when building global teams, companies should be aware of varying employee expectations. For example, Japan is known for its strong employee protections, and compensation laws differ from city to city. In India, companies must follow strict anti-discrimination laws during the recruiting process.

3. Stay agile.

When expanding globally, agility is key to staying ahead of market trends and competition. If you are seeing global interest in your goods and services, it may be time to take the leap. Hiring contractors can help you test the waters and gain the flexibility you need to scale quickly. G-P Contractor lets you hire and pay contractors in 180+ countries with greater flexibility and complete confidence.

Forget about misclassification risks; by partnering with an Employer of Record (EOR) like G-P, you can rest assured that all local employment compliance requirements are covered, freeing you to focus on running your business.

4. Grow with a local approach.

It’s essential to adapt your product or service to local preferences, legal requirements, and cultural sensitivities. Here are a few ways companies can develop a strong local presence:

• Customize compliance processes. Are there specific compliance elements that you need to keep in mind for local markets? To meet regulatory requirements, companies may have to:

• Open local bank accounts.

• Register with tax authorities.

• Acquire local commercial certifications.

• Maintain corporate records and filings.

• Initiate trademark or patent reviews.

• Ensure compliant payroll, compensation, and employee benefits.

• Understand and comply with local regulations. Different countries have varying rules regarding product safety, environmental standards, and certifications. Make sure to research and comply with all relevant local laws to avoid delays or fines. From tax laws to employment practices, expanding into international markets involves dealing with varying regulations.

  Non-compliance with local regulations may lead to fines, legal battles, and reputational damage. That’s why it’s critical to understand and comply with these rules before expanding into a new market:

  • Research local taxation and labor laws. Taxation rules, tariffs, and employment laws can vary widely. Luckily, G-P Gia™ can help. Our AI-based HR compliance advisor can offer detailed insights on employment laws, tax regulations, and benefits in over 50 countries and all 50 U.S. states.

  • Align with data protection and privacy laws. Ensure that you comply with data protection regulations, especially if you’re dealing with customer information. The European Union’s General Data Protection Regulation (GDPR) is one example of stringent privacy laws that could affect your business.

  • Partner with an EOR to ensure compliance. Our G-P Suite of global employment products and EOR solutions is backed by the industry’s largest team of HR and legal experts to help mitigate risk and assure compliance each step of the way.

5. Prioritize data-backed decision-making.

Before going global, stakeholders have to outline expansion plans, set up deadlines, funnel resources, and assign clear, quantitative goals to each international expansion stage.

Begin measuring those goals immediately, then undergo continual reviews to evaluate progress across all international expansion strategy processes. Doing so minimizes resource costs and provides data-supported insight to correct any process hiccups, grounding future market decisions.

6. Test your product early.

Testing a product in target foreign markets is a good way to finalize your ultimate expansion goals. A soft-launch lets you road-test the market segmentation conducted during internal business audits, sharpens your value proposition, and takes the temperature of your company’s overall brand perception in that region.

7. Leverage AI tools to streamline growth.

Artificial intelligence (AI) will continue to have far-reaching uses for both employers and employees. It’s no secret that AI is reshaping global employment as we know it. According to G-P’s 2024 World at Work report, 92% of employees are excited about the potential uses for AI. Plus, more and more executives are leveraging new tech solutions to streamline business processes when expanding globally.

With AI-enabled technology like Gia, companies can create compliant policies, offer letters, employee communications and more, all while ensuring that the local compliance context and HR best practices are represented.

Build a best-in-class international expansion strategy with G-P today.

Companies are increasingly turning to Employer of Record (EOR) solutions to develop and execute international expansion strategies. As you grow beyond borders and boundaries, partnering with an Employer of Record (EOR) like G-P can enable global hiring without the stress of entity setup.

With the right approach — and a strong partner like G-P — companies of all sizes can expand globally quickly and compliantly. Tell us where you want to hire, and we’ll take care of the rest.