The Wall Street Journal recently asked an international expert the question “What is the state of globalization and international business based upon current events?” The rise of populist nationalism in the United States and around the world caused many business leaders and market observes to be concerned about the death of the “borderless world” and the beginning of trade wars based upon tariffs and other protectionist strategies.
The article quoted an expert who provided a different picture of where we stood based upon the most recent statistics available:
“Global connectedness, measured by cross-border flows of trade, capital, information and people, surpassed its 2007 pre-crisis peak during 2014. In 2015, globalization’s post-crisis expansion slowed, but the data indicate that it did not go into reverse. Currently available evidence… suggests that the world was about 8% more connected in 2015 than in 2005.”
If you conduct cross-border business or own multiple foreign corporations or a multinational enterprise what should your strategy look like going forward? How will globalization and international business strategies shape your short and long-term business goals?
An effective international business strategy must adapt, aggregate and leverage arbitrage. Adapting to the unique differences of each local market and tailoring products and services to meet those needs may be more costly than a global-centric product life cycle model. Leveraging economies of scale requires limiting the variations of your central product and service offering while growth demands adaptation to local market drivers.
Aggregate operations across the globe to drive efficiencies and further leverage economies of scale. You will need the power of a strong multi-national regional presence in order to defeat local competitors. However, in markets where your product and service mix is less competitive or profitable than local options, it might be time to reassess and concentrate on more lucrative markets and opportunities. Arbitrage allows an international business to leverage economic and taxation differentials which exist in various national and regional markets. While arbitrage opportunities may be contracting in recent months as prosperity expands into emerging markets, there are still competitive advantages to be gained through the realization of income, the structure of your organization and a more regional approach to global opportunity.
Allen Barron is uniquely positioned to support cross-border and international businesses, and global companies with business interests in California. From California’s water’s edge election to international tax strategies, Allen Barron’s tax attorneys and experts provide sound and timely advice. Our integrated legal, tax, accounting and business advisory services provide economies of scale while increasing the depth and breadth of the perspective we bring to our clients and the challenges and opportunities they face. Where other competitors will turn to 4 or 5 separate resources based upon individual disciplines (and the related expense), Allen Barron’s clients receive advice and counsel based upon a much more informed and inter-related perspective and recommendations founded upon the impact of any decision across all aspects of business, tax, internal systems and accounting, operations, supply chain management and management.
We invite you to open a conversation with Allen Barron and learn how the present state of globalization and international business can be leveraged to your advantage. Contact us or call 866-631-3470 for a free consultation.