GOING GLOBAL: NAVIGATING INTERNATIONALISATION
To survive and thrive in an ultra-competitive business world, companies need to weigh up their options. For many, an attractive course of action is to branch out into international markets to capture a greater market share outside of the country of domicile – a process known as internationalisation.
Across the global economy, internationalisation is being driven by an ever-increasing demand for products and services, the need to diversify markets and reduce risks, a growing appetite for accessing new technologies and resources, and the pursuit of economies of scale and scope.
Moreover, the trend toward internationalisation – which comes under the umbrella of globalisation – can be achieved through an array of entry modes, including exporting, licensing, franchising, joint ventures, strategic alliances and foreign direct investment (FDI).
Testifying to the allure of international markets is HSBC’s 2023 ‘Going Global for Growth’ report, which found that of the UK companies currently focused only on the domestic market, 10 percent indicated ambitions to reach overseas – 2 percent more than in 2022. Of those already trading internationally, 87 percent stated an intention to expand further over the next year, with 33 percent looking to grow significantly – up by 2 percent from last year.
Beyond the UK, the appetite to expand internationally is no less acute. In the US, over 50 percent of the revenue earned by companies in the US S&P 500 Index comes from sources outside of the US – a clear sign that US companies are committed to conducting a large amount of their business internationally.
A significant level of US and UK business is being conducted in India, China and Canada, jurisdictions with improved technological capabilities and infrastructure, growing innovation and an expanding consumer class, offering possibilities unparalleled elsewhere in the world.
Apr-Jun 2024 Issue
Fraser Tennant