Understanding the Global Marketplace: Benefits, Risks, & Strategy

What is a global marketplace?

A global marketplace is where people and businesses exchange services, goods, ideas, services, and labor on a global scale, or across borders. By entering a global marketplace, businesses imagine a world that exists without geographic limits.

What are some examples from the global marketplace?

• A tech company based in San Francisco, with hubs in New York City, Paris, Madrid, and Mexico City

• A company receives raw materials from China, sends those materials to a factory in Mexico, but mostly sells their products in South Korea.

• The European Union’s free trade agreement

• The US - Canada - Mexico Free Trade Agreement (USMCA)

• Products might be assembled in Mexico but shipped all over Latin America

• Fast fashion companies like Bershka and Zara that are headquartered in Spain but operate across Latin America and Europe

What are the benefits of a global marketplace?

If a business solely focuses on one country, they might outgrow their market as they scale or grow too reliant on one set of customers. The global marketplace provides access to resources that you can’t find in your own country. Even the Ancient Greeks set aside part of their port cities for trading with other nation-states.

What has the global marketplace allowed?

Diversification

Businesses that enter the global marketplace can establish a presence in both emerging and developing global markets, which means tapping into new resources, including new talent. The results? Hypergrowth, more opportunities for sales, and new career opportunities for workers abroad.

From SMBs and scaling startups to major enterprises, entering the global marketplace can help your global business think beyond one market’s consumers. It also makes it easier to target relevant customers in a different country.

Economic stability

Climate change, political strife, and other factors can impact a country’s economy without notice. By entering the global marketplace, businesses can better position themselves to withstand the waves of economic turbulence, even during a recession.

Hire new employees, regardless of location

The competition for top designers, marketers, engineers, and data scientists has never been more fierce. Every organization is unique and has different needs. By tapping into the global marketplace, you can find people with niche skills abroad. The remote workforce is going more global everyday, which is leading to more opportunities for countries with emerging economies who can now work with US- or European-based companies and small businesses.

Productivity tools like Zoom, Google Meet, Microsoft Teams, and Slack have made it easier than ever for teams across the globe to connect.

Access to raw materials

From metals and iron to lumber, a global marketplace provides access to materials that you might not have access to in your home country. 

More access to capital

Operating in a new market means tapping into new opportunities for financing as well. You might find investors that are willing to raise capital in one market, but not another.

What are the challenges of entering the global marketplace?

To successfully gain a foothold in a new market, you will need to think globally while acting locally, which means working with on-the-ground experts who can help you tailor your business strategy to a new customer base.

Building your team

As small businesses expand abroad, leadership needs to consider how they will build their financial, legal, and operational teams abroad. Some businesses choose to build an in-house team, while others partner with third-party partners that have an established country in the presence.

As you scale, outsourcing certain activities to specialists will be inevitable. If you’re looking to hire employees in a new country without an entity, for example, you might want to consider partnering with Justworks’ global EOR. Otherwise, you run the risk of falling out of compliance, which can lead to heavy fines and expensive litigation.

Understanding your market

What sells in one country might not work in another. For example, at KFC in Colombia, you might be surprised to learn that they sell arepas, and not biscuits.

Tailoring your brand

Your brand and branding might work well in the US and Mexico, but make less sense in Europe. In Europe, portion sizes at fast food restaurants like McDonalds are smaller than in North America.

International payments

Unfortunately, many payment systems, including banks, still struggle to send money efficiently across borders. You will also need to keep in mind that exchange rates change on a daily, sometimes hourly, basis.

Supply chain logistics

Since Covid-19 upended life across the globe, analysts have been bemoaning the supply chain crisis, and for good reason. Even without the pandemic, coordinating shipments across borders is complex, requiring small businesses to navigate international labor laws, including tariffs. But if you can nail down your supply chain logistics, it can lead to cost-effective production and manufacturing on a global scale.

Language barriers

If you’re an English speaker entering a market in Latin America, you will need to have subject matter experts that speak Spanish or (in Brazil) Portuguese. While many skilled workers abroad speak English, you can’t assume that your future customers will as well. And if you’re hiring employees in new countries, you will likely need to write contracts in that country’s official language.

Government regulations

Each government has their own laws regarding taxes, business, and international expansion. Laws are always changing, so businesses need to find a way to keep up with new regulations.

Tax compliance

Doing business in multiple countries means navigating multiple tax law systems. Depending on the situation, you might be required to pay taxes in different countries. Hiring expert accountants in each country where you operate can help you avoid costly mistakes.

Legal challenges

If you’re expanding your business abroad, you will need legal counsel, a network of legal subject matter experts, and IT practices that are compliant with GDPR and other data protection laws.

Developing a global HR unit

For HR, going global without the support of strategic partnerships can be difficult. HR teams will need to manage remote onboarding, compliant payroll, public and private benefits, onboarding, termination, severance, worker classification, and more generally being empathetic to each country’s unique culture.

How do you enter the global marketplace?

I know what you might be thinking: How can a smaller business enter the global marketplace in a more efficient way?

Many people don’t realize that going global doesn’t necessarily mean you need more red tape. In fact, you can keep your global team lean by choosing strategic partners, testing out a market by hiring one or two employees using an EOR service, or even running a low-cost PPC campaign to better understand what your prospective customers are looking for.

How Justworks Can Help 

Justworks’ global EOR is the solution for small businesses looking to easily hire talent in countries where they don’t already have a legal presence. 

Justworks has direct entities in 11 countries, with the ability to hire in 100+ additional countries upon request through our trusted local partners. Partner with us to fearlessly handle HR essentials like payroll, benefits, local compliance, and more. 

Learn more about our EOR services, and get started today!

FAQ

Why does the global marketplace exist? 

The global marketplace exists so that people can have access to goods and services from across the world, improving quality of life while reducing costs.

Why is relevancy so critical?

Relevancy is critical because if you attempt to sell a product or service in a new market or country that is not necessary, you risk sinking thousands–or even millions–of dollars into your expansion.

What affects the global market?

Political events, macroeconomics, climate change, and many other factors can affect the global market. 

What are 3 factors that characterize the global marketplace?

The global marketplace is defined by the almost instantaneous communication between countries, the effective exchange of goods and services across borders, and frictionless money transfers between one currency and another.