Global Marketplace

Exploring the Global Marketplace : Pros and Cons

The global marketplace may seem like an immensely complicated entity, but it isn’t! While operating in the global arena is vastly different from the local one, it opens up opportunities that wouldn’t otherwise exist. Despite its risks, the rewards more than makeup for it. Unfortunately, many companies fail to understand that tackling the global marketplace is a long-term endeavor that bears fruit in time. In today’s economy, companies that fail to go global often perish under intense competition. This is because before you attempt to conquer the global marketplace, you must first understand it.

Exploring the global marketplace is a challenging task, so it is essential to determine what the global marketplace is and how you can take advantage of it. You strategically analyze where to expand closely. Additionally, you must formulate a market entry strategy.

So, what is the global marketplace? We will begin by defining it, and subsequently examine the pros and cons of global expansion. Consequently, we will provide a few tips on how to expand globally.

What is the Global Marketplace?

The global marketplace allows companies and organizations to conduct operations regardless of distance. Think of it as all the potential customers for your product or service. When participating in the global marketplace, location is not a barrier.

Global marketplaces are rarely singular. Usually, it is the sum of all the markets for your product. However, there is indeed a singular global marketplace in rare cases, such as the shipping industry.

The global marketplace does not just relate to customers, either. For example, a clothing company may source its raw materials from India, have factories in Vietnam, and retail in the UK. This company is also a part of the global marketplace.

Similarly, companies with offices in different countries are also tapping into the global marketplace. The accounting firm Deloitte and Barclays bank are excellent examples.

Understanding Global Markets

Global markets are never consistent. They are constantly changing due to political factors, social factors, or competitive strategies. Therefore, whenever your competitors notice an opportunity in the global marketplace, they will try to capitalize on it as soon as possible. It is extremely important to immediately act on the opportunities that you see in the global marketplace.

While global markets are constantly changing, the underlying principles usually remain consistent. As such, there are key factors that organizations must be aware of when expanding globally.

Regardless of where your business may be expanding, it is possible to understand the global marketplace. Knowing what to analyze and how to go about globalization can give your organization a considerable advantage and make the internalization process more efficient.

Global Marketplaces and Business Centers

Business centers are the backbone of global marketplaces. You may be selling a product or a service across the country, but you will almost certainly be operating through a business center. As a result, business centers can link your global ambitions and your localized strategy.

A business center is a key place in a country or a region through which most of the business is conducted. For example, there may be several business centers in a large country such as the United States. However, this isn’t true for most countries. For example, London is the largest city in the UK and it can easily be considered the country’s key business center.

Sometimes, a business center may not only unlock access to a certain area but an entire region. The best example of this is Hong Kong. The vast majority of conglomerates have an office in Hong Kong because it can be used to reach mainland China, Vietnam, Taiwan, Indonesia, and Malaysia.

Types of Business Centers

Different business centers may be known for other things. If we take the example of the US, New York City is considered the country’s financial hub. Almost all financial companies exist in or around Manhattan. On the other hand, Silicon Valley is known for its tech companies and start-up culture.

Knowing the primary purpose of a business center is crucial before setting up your base of operations. Remember that your business center will be imperative for setting partnerships, hiring, and procedures. Operating out of an incompatible business center can seriously hinder your global expansion.

Imagine you are a European semiconductor company. When expanding into Asia, Taiwan would be an ideal business center. For example, Hong Kong would not be as suitable because some of the largest foundries and chip makers are in Taiwan. This would make it easier for your company to begin running. Conversely, a financial services company would prefer Hong Kong.

Why You Should Enter the Global Marketplace

Companies usually enter the global marketplace to reach more potential customers, expand their business, and increase profits. There are three significant strategies companies use to achieve efficient globalization: 

·   Increasing the customer base for products or services.

·   Finding a cheaper way to source raw materials.

·   Utilizing cheap labor.

Usually, large companies are formed in developed economies, such as the US (or more recently parts of China), before expanding overseas. However, this is not always true. Sometimes, companies formed in underdeveloped countries manage to make a product that they can export globally. For example, Paytm, the Indian digital payments platform has recently expanded into Canada and Japan.

There are many benefits of expanding globally. Let’s look at some of the major ones:


In many cases, expansion to other regions is the only way for a company to meet its growth targets. A great example of this is the software solutions space. Once a company has tapped into the target market in its home country, there are two options. First, it can offer new products and solutions. Then, if that failed, it can offer its existing portfolio to a new market.

When expanding, the most critical question to ask yourself is where you should expand to. The nature of your business should help you come up with the answer. A firm producing commodities may want to target developed countries because it can undercut competitors more easily. However, a tech company may want to focus on emerging economies where competition is low.


Expanding globally reduces your exposure to a singular market. This became more apparent than ever during COVID-19. Certain countries managed to recover earlier from the pandemic than others, such as New Zealand and China. As such, normal business activity was able to resume earlier, ensuring that companies operating in those countries had a great advantage over those that were not.

Furthermore, global expansion reduces your risk to political factors. For example, Saudi Arabia banned VoIP in 2013. This meant that companies such as WhatsApp and Skype were unable to operate in the country. However, as WhatsApp and Skype are in the global marketplace, they were able to manage their risk and subdue losses. Although the Saudi Arabian government lifted the ban in 2017, the example still stands.

Cost Reduction

Easier access to labor and raw materials can reduce your business costs. There are countless examples of this. From clothing giants like Calvin Klein to tech companies like Samsung, the global marketplace has allowed organizations to save billions of dollars a year.

However, you must watch out for the shifting economy when reducing costs. While China was previously a source of cheap labor, it no longer is. Developments in the country have led to an increase in labor costs. As such, companies are now finding cheap labor in countries like Bangladesh. Even China is outsourcing some of its labor to nations such as Nigeria and Kenya.

Enriched and Culturally Diverse Workforce

Operating in the global marketplace allows companies to have access to skilled labor in multiple regions. Millions of people work remotely in the US, which has only increased in the last year. Research suggests that remote work allows companies and employees to save money. This also enables companies to avoid costs such as fuel allowances and makes employees more productive due to the decrease in commuting times.

Remote labor can be found anywhere. As such, it allows companies to save money by hiring in places where labor is cheap. Unskilled labor is not the only advantage of tapping into the global marketplace. Skilled labor can also be hired for an inexpensive price. According to Daxx, the average salary of a software developer in Finland was $49,203 in 2021. This is less than half of what is offered in the US ($110,638). Keep in mind that Finland is a developed country. The savings can be even more significant if the software developer is located in an underdeveloped country.

Lastly, expanding globally also allows companies to expose themselves to different cultures, discovering new best practices for conducting business.

Easier Access to New Opportunities

Having access to the global marketplace allows companies to see opportunities that they otherwise would not. This is especially true for emerging markets as companies can find numerous gaps to fill.

Entering the global markets also encourages further globalization. For example, once a US company expands its operations to France, expanding to the rest of Europe will be become easier. This is because the resources already in place in France could be leveraged to expand to nearby countries.

The Risks of the Global Marketplace

Entering into the global marketplace comes with many risks. Most of the risks are unique to the place that you are expanding to. However, certain areas of risk stay consistent during expansion. Having a partner with prior experience in expansion can be a huge help in this regard. Here are a select few:

Regulation and Legality

The legal framework of each country is different. As such, it may be necessary to refine your operating practices when expanding.

It is extremely important to determine how the accounting and labor laws differ in the country you are expanding to. You may be required to disclose additional information in countries with high regulation and government oversight. Most companies tend to hire local law firms or administrative partners that can assist with the legal aspects of their expansion.

Cultural Risks

Global marketing is a tricky subject. The internet is littered with examples of companies failing to grasp cultural norms adequately. This almost always leads to failure with their marketing campaigns. Companies that have a global audience must also be careful. Decisions made in one market could have a global impact. A cultural advisor can help in this regard.

Making a culturally tone-deaf decision can significantly backfire in terms of PR. For example, Liberty Media faced immense backlash when they signed ARAMCO as sponsors of Formula 1. This was mainly due to Saudi Arabia’s human rights record. As a company that considers equality as a core value, fans were disappointed in the decision.

Investment Costs

Expanding to a new country or region is a costly endeavor. As such, it is essential to make sure that your company can afford the upfront and fixed costs before entering the global marketplace.

It is a good idea to form best and worst-case projections of costs with an experienced consultant to help you consider if you want to commit to expansion. 

Managing in the Global Marketplace

By now, you should be more knowledgeable about the advantages and disadvantages of the global marketplace. Keeping them in mind, it is possible to establish a list of best practices for global marketplace management.

Of course, each company is unique. The decisions that you make will depend on your company’s unique position at the time. However, here are a few points to keep in mind: 

·   Global marketing is vastly different from local marketing. It is important to keep a consistent general message across the markets.  However, adjust it slightly per the local customs, traditions, and culture.

·   When expanding to another country, it is best to hire natives. They will understand the local business landscape much better and will be able to provide valuable insights. These insights will prevent you from making mistakes.

·   Staying on top of data is key. While you can find many economic data online for free, paid insights about the countries you operate in are very beneficial. They can help you decide whether you should invest more, pivot your focus, or even completely divest out of the market.

·   Make sure you have a cohesive strategy. The strategy for each region you operate in will be very different. However, it should all merge into one long-term strategy that allows you to pursue sustainable growth.

·   Find an experienced partner that allows you to outsource administrative activities. Competing in the global marketplace is extremely difficult. It is best to find a partner that specializes in global expansion. A partner that can take care of all the administrative work on the backend would be ideal. This way, you can focus on other important work.

Conclusion: The Right Partnership Can Drive Global Expansion

We discussed the definition of the global marketplace, the pros and cons, and how to manage a globally expanding company correctly. After this, it should be clear that finding a company specializing in entering the global markets is the best strategy to take your business abroad.

Xinergy Global has extensive experience operating in the global marketplace. We can help ensure that your business achieves global expansion in a hassle-free manner. We offer services such as:

·   Market entry strategies

·   Product localization

·   Public relations management

·   Sales and marketing

As a company that has worked across multiple industries with numerous high-profile clients, we use what we have learned to ensure that your expansion is as smooth as possible. Contact us to set up a free 30-minute consultation and inquire about our tailor-made solutions.

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Chandan Singh
1 year ago

We are very grateful to you for this information and we hope that you will continue to give us such information.

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