What Is a Global Corporation?

Are you successful locally and considering expanding your business to another country? Or, perhaps you’re considering expanding to several other countries. Many CEOs have made the transition successfully. Others have tried and failed. Undoubtedly, the globalization of a business is not a project that every business should do. It’s not a project that every business can do. You might be wondering if this strategy is right for you. The best step you can take is to do your due diligence, before you dive in, and ask for help from the experts, who can explain the pros and cons of globalizing your business.

What Is a Global Corporation?

A global corporation, also known as a global company, is coined from the base term ‘global’, which means all around the world. It makes sense to assume that a global company is a company that does business all over the world. There aren’t many companies in the world that can boast of having a business presence in every major country. Actually, they probably can be numbered on the fingers of both hands. The global company definition, therefore, should be a little more lenient to accommodate this fact, which would enable more companies to call themselves global companies. Really, a global company is any company that operates in at least a country other than the country where it originated. Realistically, expanding to even just one additional country is a lot of work and is therefore a great achievement. If you are operating in one country, selling your products around the world and shipping them to customers in countries in Europe while you’re in the United States, that doesn’t necessarily mean you’re a global company. It takes more than that to earn the name a global company.

To be a global company, you need to introduce not only your products, but also your company to people who live in another country. You need to conduct significant research to figure out which country is your best choice for expansion and how to introduce yourself. Probably, you’ll have to send some of your employees to that country to speak with people face-to-face and to experience that country on a first-hand basis, before you decide whether the country is right for your company. Once you expand to another country and establish yourself successfully, it’s only natural that you will want to try an additional country, and another, and yet another. That is how global companies have started, and now they have a massive list of countries in which they do business.

Examples of Global Corporations

Businesses only begun to be referred to as global fairly recently. The idea of doing business globally and the characteristics of a global corporation aren’t all that new, however. Consider Coca-Cola, which, in 1886, was struggling to get by. By World War II, Coca-Cola was 50 years old and had proudly maintained its price at 5 cents, so as to enable many people to afford the beverage. The company would sell its drink to U.S. soldiers stationed all over the world for 5 cents a bottle, but no more.

Coca-Cola now sells its beverages in more than 200 countries. Not only does the Coca-Cola company sell its popular fizzy drinks such as Coke, Fanta, and Sprite, it also sells some 3,800 other products, including soy-based beverages that have been enriched with vitamins. The Coca-Cola company also sells juices, iced teas, bottled water, and a lot more. One of the reasons why Coca-Cola has seen such monumental success in nearly every country it has established itself is that it never has a standardized view of all countries. Instead, each country is considered on an individual basis. The company will make sure it only provides products that fit with the tastes and culture of the local community. Often, this means that Coca-Cola must create entirely new products to fit a market’s demographics, or it may tweak an existing product so that it will appeal to residents in a specific locality. You may have noticed this. Some Coca-Cola products are available in some countries but not in others; this is because those products were created for that country or were tweaked to suit the preferences of a specific country.

There are other global companies, such as the Hilton and Hyatt Hotels, Adobe, Cisco, 3M, Monsanto, and American Express. These companies range from hospitality companies to tech and manufacturing companies. This shows that many types of global corporations exist. Some aren’t global in a purely physical sense. Consider internet giants Facebook and Google, which have a presence in virtually every country in the world that has an internet connection. Their presence is more virtual than physical, but it’s global.

All contemporary global companies once had been mere startups. Coca-Cola was once a drugstore in Atlanta, Georgia. Google started out as nothing more than a research project undertaken by Larry Page and Sergey Brin. You, too, can become a global company. However, do not rush it. Take it one country at a time.

The Benefits of a Global Corporation

The United States Small Business Administration points out that only 4 percent of global consumers reside in the U.S. This means that you stand to benefit, in terms of sales revenue, by expanding globally. There are also lots of other benefits to globalizing your corporation:

You can increase your customer base
When you expand your business into another country, your customer base expands along with it. The market in the United States could be full of products just like yours. You may find, however, that this is not the case in another country. That could present an expansion opportunity for your company. What’s familiar to your consumers in the U.S. could be fresh to consumers in another country.

You can reduce your operating costs
If the manufacturing or labor costs are lower in another country, expanding to that country enables you to save on your operating costs. This can improve your bottom line. In fact, reducing operating costs are a key reason why many global companies expand.

You don’t need to be bogged down by seasonality
If you sell a seasonal product that experiences fluctuating sales at different times of the year, then you can expand to countries that have seasons opposite to those in your base country, enabling you to have high sales figures all year.

You can boost the growth rate of your company
If your company has been growing rapidly in your locale, chances are that this growth may eventually stall, because of market saturation. In that instance, you can expand to another country so you can maintain rapid growth.

You can create new jobs
Expanding into another country involves a lot, such as hiring representatives and employees of your company in the new country, as well as setting up offices and various facilities, and so on. You’re likely to employ locals and, in the process, you will create new job opportunities in the country where you are expanding. This helps boost the local economy and it also gives your company a good reputation.