Although it may seem like a cliché, the world has become a lot smaller over the past few decades, thanks in great part to humankind entering the Internet Age. Although not a new term in the slightest, globalisation has also seen a rapid rise in recent years thanks to the availability of the internet.
The term “globalisation” has been a hot topic for not just countries around the world, but companies, too. But what is globalisation, and how can it benefit your business? Read on to find out about the benefits of globalisation and how EOR services can help you achieve your company’s globalisation efforts.
What is Globalisation?
Globalisation refers to the process that began in the latter half of the 20th century and involves the increasing global integration of markets, political and social institutions, and cultural practices. In most contexts, this term refers to the process of international economic integration; however, it is also applicable to discussions of social policy and cross-cultural interactions.
In the context of contemporary business, the term "globalisation" refers to the process by which a company or other organisation either begins to function on an international scale or expands the influence that it already possesses to the countries it does business in. Globalisation is not without its detractors, despite the fact that it has a large number of advocates due to the many advantages it brings about.
Globalisation and Business
There are hundreds of companies, both big and small, that are reaping the benefits of globalisation. A lot of these names you may actually be very familiar with.
Big companies like Google, Microsoft and Amazon have utilised this concept, as much to its potential as possible. Globalisation has allowed them to not just expand their economical horizons, but to reach new customers that were otherwise unreachable if they remained in their home markets.
In terms of non-profit organisations, a famous name that you might have heard of, who have been able to access globalisation’s benefits is the World Wildlife Fund. The WWF is one of the few non-profits in the world with a presence in nearly every country.
Why is Globalisation Good for Business?
There are many advantages of globalisation, all of which can benefit your company greatly, whether small or large. From economic benefits to social and technological, here are some of globalisation’s benefits:
Access to New Markets
From expanding a company’s business on a global scale to lowering the barrier of entry into new markets, globalisation can bring a lot to the table. The creation of global brands has been a major factor in the success of many companies and helped them gain access to new markets.
A great example can be seen in the fast-food company McDonald's, which has established its brand in many countries worldwide, and has also managed to expand its influence across those countries. It opened up as McDonald’s Japan in 1971 and over the years has become a strong name in Japan’s food industry despite it not being Japanese in origin.
Multiple Revenue Streams
With the expansion of a company into new markets, another one of the benefits of globalisation is the ability to gain multiple revenue streams. As a business sets up shop across multiple countries, it could be able to benefit from different business models and pricing arrangements across those markets.
This gives the company much more to work with and allows for a much larger revenue ceiling. This, in turn, allows for more investment and growth opportunities that were otherwise unavailable. Companies such as the Spanish fashion brand Zara have been able to open up outlets across different countries which has allowed it to generate revenue from countries like France, Italy and China.
Higher Profits
By accessing new markets and multiple revenue streams, companies that utilise globalisation can also reap one of the best globalisation benefits: enjoying higher profit margins. As companies expand their business around the world, they can enjoy a higher profit margin when compared to their competitors, and especially when taking advantage of the opportunities to lower production costs.
For example, Toyota, which was founded in 1934, holds the distinction of being the first Japanese manufacturer to export cars from Japan. By opening up factories across the globe and selling them at lower prices and with better quality than its Japanese competitors, Toyota has been able to enjoy consistent profits over decades.
Knowledge and Technology Sharing
One of the great advantages of globalisation is the ability for companies to share knowledge and technology across borders. As the world has become connected at a near instantaneous rate, scientific and technological advances made in America could be shared with Japan in a matter of minutes.
It goes without saying that without the idea of globalisation, many countries in the world may not have been able to enjoy amazing technological advancements such as smartphones or even the internet itself! Smartphones, for example, may be a clearly globalised product but each country still enjoys the benefit of their own aesthetic and design influences. From Apple in the US to Huawei in China and Samsung in South Korea, these products were created thanks, in part, to globalisation efforts.
Continuous Innovation
When a business expands across new markets and gains access to knowledge and technology sharing, it also gives rise to continuous innovation. With different cultures, languages and environments comes the need for new innovation strategies to solve many of the world's problems. This means that globalised businesses will experience an increased need to innovate in order to have a competitive advantage and be able to compete within their newly found markets.
As an example, IKEA was founded in Sweden by Ingvar Kamprad in the 1950s, and since then the company has managed to grow its operations and expand into over 50 countries around the world. IKEA has not only discovered a global need for affordable furniture, but also has come up with innovative strategies to produce pieces of furniture that are cheaper than their competitors.
Obtain a Global Talent Pool
In the modern world, we see new innovations coming from all types of different countries and cultures. But, moving across borders can lead to major communications issues due to language barriers and cultural differences. One of the advantages of globalisation efforts will allow a company to gain access to a more international talent pool, which can then help them build global teams that are more experienced and diverse within their respective markets.
Given a more diverse workforce, it is likely that companies will also be able to communicate more easily across borders. This means that culturally diverse teams can have more of an opportunity to collaborate and work together on different projects, leading to increased growth within their respective markets.
Create a Diversified Workforce
By being able to obtain a global talent pool, companies that expand their horizons on an international scale will find a diverse workforce as a globalisation benefit. When a company expands into new markets, it can be beneficial to take advantage of the diverse workforce that these new markets will provide. This, in turn, allows for management to create more balanced and diversified teams which can help them grow their business within a variety of different sectors.
With a diversified workforce, companies can gain more value from their global team which could also be more cost-effective in the long-run. A diverse workforce, especially in terms of locality, can also provide companies with new business perspectives that were otherwise inaccessible.
How EOR Services Help With Globalisation Efforts
While there are a number of benefits to globalisation, it is not always an easy venture. There are many barriers to opening up a new business in another country that could include financial, logistical and cultural drawbacks. This is where utilising an Employer of Record (EOR) service can come in handy when you start to develop an international expansion strategy.
What is an EOR service? Well, it is a third-party organisation that helps companies with a majority of their HR duties. These tasks include hiring and firing, organising payrolls, managing immigration burdens among other tedious tasks on behalf of the company that hires them. Essentially, an EOR company will take responsibility for all formal employment tasks and will be considered the legal employers of the company’s workers.
Here are a few ways that a great EOR service can help your company fulfill its globalisation efforts:
Your Globalisation Partner
The EOR service opens up the world to your company and allows you to reap the benefits of globalisation. When you engage with the right EOR company, they will work with you as your globalisation partner, to help you become more successful in your venture and thrive on a global scale.
When working with an EOR company, your company can gain access to a reliable team that will help you to reach your desired level of success worldwide. For many organisations, the challenge of globalisation is not just the legality of obtaining talent worldwide, but also facing off against a number of different cultures and languages, making seeking global talents a pain. EOR companies are familiar with local laws and how to hire the right people for your own company, and will sort that out for you.
Manage Risk
EOR services are a direct response to any hiring issues that your company may face when expanding into the global market. Without an EOR company by your side, your company could spend months going through the hiring process and even then may not be able to find the person with the skills and experience you are looking for.
When opening up a new office in another country, it is natural to worry about the risks your company may face. An EOR company will help you manage risks, especially when it comes to human relations, regardless of the size of your company. Everything that falls under the HR umbrella – from hiring and ensuring a legal and compliant payroll, to managing benefits and leave – will be handled by the EOR company so you can focus your resources more on getting amazing things done.
Maximising Opportunities
Expanding your business into international markets has already been shown to have many positive effects, and there are even more possibilities now. But not every attempt is a successful one. Some of the challenges of launching a business abroad are monetary, logistical, and even cultural. That's why it's helpful to hire an EOR company.
With the use of an EOR service your company can enjoy global mobility. This means that the boundary of your own business will no longer be constrained by a singular location and the opportunities of talent, revenue and growth becomes easier to obtain. With an EOR company by your side, the world very much becomes your oyster.
Why Should Employers Use an EOR Company for Globalisation?
The benefits of using an EOR service can help your company to succeed on a global scale. Although successfully utilising the advantages of globalisation can definitely be done in-house, the expertise that an EOR company can provide a company is second to none.
Let's go into a bit more depth on why employers should utilise an EOR company for their globalisation efforts:
Obtain All the Benefits of Globalisation Without the Legal Headache
With an EOR, your company will be able to enjoy the advantages of globalisation with minimal legal hassle. By engaging with an EOR service, your business can expand into a new country without the need of establishing a local subsidiary. This means that you won't have to face any legal headaches as you grow your company on a global scale.
They can help set up a global business structure, protect your intellectual property, organise cultural integration and sort out immigration issues, which will help to ensure that the business runs as smoothly as possible. Your EOR will also protect your company from compliance and liability risks since they will be the ones employing on your behalf.
Gain Full Control Over Your Team
One of the most important differences between EORs and PEOs is that you won’t have to worry about legal or compliance issues when expanding your company into new countries, all while having complete control over who works for your company. Although the hiring and firing process will be handled by both types of companies, working with an EOR company gives you added control, allowing you to hire across borders without the need of setting up a separate entity.
The EOR company won't have any hand in the day-to-day activities of your workers – nothing beyond regular HR functions. If you have a clear sense of what you want from your team, an EOR can legally hire and compliantly payroll the perfect people for your company, regardless of where in the world they may be.
Speed Up Scaling Operations
In order to succeed with a global business, you will have to scale operations and expand into new markets. Without an EOR, companies will have to spend months on end looking into the legality of setting up shop in a completely different market compared to their own as well as get through the process of legally establishing an entity in said market. Utilising an EOR company will remove this need altogether.
This means that your company can get up and running across more markets in nearly no time at all. As such, your company can take advantage of the opportunities that come with gaining more access to the international market much faster thanks to engaging a helpful EOR company.
Gain Extra Resources For Productivity
When you are hunting for potential employees, the use of an EOR company can help you to get them on board more quickly due to their vast experience and knowledge of hiring in a specific country. Hiring the right people is crucial for a global business and should never be underestimated and since you'll have a trusted EOR company by your side, you won't have to spend resources on sorting out any HR issues.
The biggest benefit of engaging with EOR services will open up additional resources to increase the overall productivity of your company. Not just in monetary terms, but since opening a legal entity in a completely new country can take months, engaging with an EOR company will save you lots of time, too.
Conclusion
A major benefit of globalisation is the increased ease with which goods can be traded across borders and between countries. Because of globalisation, businesses can expand into untapped markets and pursue constant innovation, boosting their bottom line in the process.
With the assistance of an EOR firm, globalisation can be even more fruitful for businesses. If you choose an EOR firm as your globalisation partner, your business will have a much simpler time breaking into these new markets and expanding internationally.
