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Why Do Companies Decide to Enter a Foreign Market?

If we were to answer this question in one word, it is growth. The whole purpose behind any business is to make maximum profits, isn’t it? If you aren’t getting enough from your home country, it’s time to cross the border. And thanks to the internet, you don’t have to do it literally today – you can sit at home and reach out to any country you want to. All it requires is a good website or software development company and some digital marketing strategies. Let’s discuss why do companies decide to enter a foreign market?

When it comes to getting virtual products and services, organizations have gone so global that you may not even know where your service provider actually resides. You can sit in India and operate a software development company in UK or US. Physical products like petroleum have a wide foreign market due to their limited availability.

How Does Entering a Foreign Market Benefit a Company?

In order to get high profits, two things are very important – lower costs and higher revenues. This is best achieved when you acquire labor and facilities from a developing country and get your revenues from a developed country.

Here’s how this works:

Scope for Higher Demand in Another Country

Depending on the products and services your company provides, you’ll get a different demand in different countries. High-end products and services that involve technology may have a higher demand in developed countries. On the other hand, countries with a high population tend to have a higher demand for shopping products.

Potential of Becoming an International Company

When you have clients from multiple countries, it makes a big difference in your reputation. You may choose to go international after exhausting the market in your home country. Or, you could target international markets right from the beginning. The former is more suitable for physical products & services, while the latter is better suited for virtual products & services.

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Ability to Provide Cheaper Services

When you provide a service to another country, your pricing is according to their market. What may appear costly to you, can be reasonable for them. Suppose, you want to provide e-health services in the UK. All you need to look for is a good software development company in the UK. Now if this company is operating from another country, chances are high that their rates will be extremely reasonable to you. At the same time, their margin will be higher since labor may be way cheaper there.

Tapping a Growing Economy

When you target developing countries for selling your products and services, the potential can be enormous. The population in these countries usually tends to be high. Since the economy is growing, their purchasing power is more likely to be increasing. Thus, demand for various products and services also tends to be high.

Targeting a Developed Country

In developed countries like the USA and UK, the IT and e-commerce sectors are more likely to be flourishing. Since education and standard of living is high in these countries, usage of the internet, smartphones, and gadgets will be higher. A software development company in the UK will make a lot more money than one in an underdeveloped or developing country. This is because every business there needs software or an app to reach out to its audience.

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Reduces Risks

We go by a very simple formula here – the wider the market, the lower is the risk. How so? When you’re dependent on one country for your sales, any kind of political or economic instability will hamper your business. On the other hand, when you have clients in multiple countries, such problems will be less disturbing for you.

Improving Your Own Potential

Competition is tougher in the global market as compared to the domestic market – for obvious reasons. If you are sitting in India and providing software development services in the UK, your competition is with any software development company in the UK. This will be challenging for you in the beginning but will set a higher benchmark, thus making your quality of services way better.

Building a Global Organization

Companies are going virtual in every way today. If you can cater to foreign clients, you can have foreign employees in your organization too. The pandemic has proven even more how you can avail of any service virtually. This can bring your costs down while adding more cultural diversity to your organization structure.

How Will You Go About the Process?

The difficulty level of entering a foreign market differs according to the products and services you deal with. Physical products require transportation, which will increase your costs. On the other hand, virtual products and services are delivered through the internet at no additional cost. Hence, it is much easier to tap a foreign market here.

Today, in order to have a global presence, you need a presence on the internet. Thus, you need to approach a good software development company that can provide you with a website, mobile app or desktop software to serve the purpose. From groceries to appliances, anything can be sold online today.

On the other hand, service-based companies see a lot more innovation in the field. Here are some examples of what kind of software or apps you can develop:

  •         Online education-based software and apps
  •         E-health services
  •         Online software tools for designers in various fields
  •         Customized search engines
  •         Online gaming apps and desktop software
  •         E-commerce solutions
  •         Media-based apps
  •         Online audio and video platforms
  •         Software tools for sharing files
  •         Communication apps
  •         Online payment solutions
  •         Virtual working spaces and platforms
  •         Travel portals

The scope is actually infinite. What we mentioned above is just the tip of the iceberg. With the help of technology, you can come up with any solution for your organization. When you figure out a need at the right time, your potential for tapping the international market can be tremendous.

Author: Shehraz KhanFounder of My Digital Post, and I have a passion for all things digital marketing. I hold an MBA in Marketing from the prestigious University of Pune and have been in the industry for over 6 years now. As a Digital Marketing Manager and Blogger, my expertise lies in SEO, SMO, Google Ads, Facebook Ads, and Content Optimization. I love creating strategies that help businesses to achieve their marketing goals and make an impact in their industry.