Why would a business consider going global?
The main advantages of carrying out business globally:
- Increase in market share leading to the expansion of customers;
- Global business initiating the diversification process to reduce the risk of low demand for specific products;
- Developing brand values overseas provides greater opportunities for domestic and foreign markets.
- Low tax payment levels in various countries as a result of market expansion.
Main disadvantages of conducting business globally:
- Difficulty in predicting the revenues while entering an international trade;
- The necessity to hire extra personnel to launch a business at a global level;
- Failure to meet the cultural needs of host countries in which they promote their products;
- Lack of awareness of legal regulations preventing the companies from sustaining their global development.
What factors affect the consideration for a business location?
The importance of geographic location is enormous as soon as business planning is concerned. In this respect, the following factors should be considered before a decision is made:
- State and city. The choice of country in which a business will be launched is important because it influences legal and tax regulations within an organization. Analysis of the economic situation and demographic is a contributing factor. For instance, if I want to initiate a small business, I will not be concerned with tax regulations because it does not provide any challenges to the revenues. However, in case my organization is a global-scale venture, such as the United Kingdom, France, Ireland, Japan, Belgium, Netherlands, and Denmark are not relevant.
- Potential visitors and customers. Before launching a product, the company should be aware of the local and global trends in consumer demand.
- Cost. Costs on constructing facilities should be further reimbursed by the revenues. Therefore, managers should realize the risk of organizing a venture.
- Convenience. The place of the facility should have a convenient location in terms of hierarchical structure and department location.
- Facility requirements. The facility should be convenient for shipment to effectively deliver products;
- Availability of raw material and utility. The business success depends largely on the appropriate location of raw materials that should also be delivered on time.
- Climate and environmental influence. Production of perishable products is closely associated with climate conditions and environmental factors. In case a business is based on food production, the climate conditions should be taken into consideration. For instance, in case the climate is tropical, there should be specific equipment ensuring the adequate maintenance of products.
- Political influence. Political structure plays an important role in establishing a business in a country. Therefore, the company should align with the standards existing in the country of choice.
- Transport. Transport directly influences the quality of product delivery.
- Availability of the workforce. Employee recruitment is also connected with the location because it identifies strategies and the corporate culture of an organization.