Global expansion was once reserved for multinational brands who had the resources needed to overcome the complexities of supporting distinct local markets. However, the internet and the emergence of e-commerce have made globalization a critical strategy for every company—no matter the size or industry.
As business operations continue to expand, coupled with almost instantaneous communications, globalization has changed the way finance executives and their teams approach international expansion.
What is globalization?
Globalization is the increasing integration of economies around the world, including the movement of products, services, technology, and information across borders.
While global expansion has many strategic advantages, such as a broader reach, new suppliers, and more revenue streams, it also introduces significant complexities in managing and complying with local laws and global regulations. You’ll be competing online in foreign markets or opening new offices overseas with intricacies, including different:
- Date formats
- Time zones
- Banking requirements
To succeed, you’ll need the right adaptation strategies to take hold of opportunities provided by effective global operations.
Globalization initiatives often start within your finance department, as accounting teams will create new companies, entities, or chart of accounts to support the expansion. This requires your financial management system to support multiple dimensions, currencies, intercompany transactions, and consolidations. It also requires a strategy for supporting global governance and standardization to ensure your financial reporting is optimized.
Learn how to reduce global financial complexity and risk with Microsoft Dynamics 365 Finance. Get the infographic
The benefits of globalization
Globalization makes international expansion more feasible for your company by offering many benefits that outweigh any complexity you might face, such as:
- Expanded market reach. As the world marketplace continues to expand, goods and services can be distributed around the world more quickly.
- Competitive advantage. By working to meet the demands of efficient production and competitiveness in the marketplace where you’re based, your company gains a greater perceived value and generates more sales.
- Overcome talent shortages. Instead of competing for a small pool of local talent, tap into a global marketplace to reach and recruit from a greater selection of employees that can be more qualified and diverse.
- Diversification and partnerships. Developing new strategies for products and services, implementing diversification, and expanding for new partnerships supports your organization’s global expansion by introducing new markets and increasing your current value or extending your success.
- Cost reduction. As goods are produced all over the world, specializing in the production of specific goods lowers the average costs of your products. Shifting your production to more cost-efficient countries helps give your business a competitive edge.
How technology supports global expansion
Technology shapes how businesses expand into foreign markets, especially within developing and emerging ones. Technology can help finance teams with global expansion by:
- Easily supporting globalization in finance. The right technology platform will simplify the support of multiple languages, currencies, inter-company transactions, and financial consolidations.
- Ensuring adherence to local compliance regulations. Keep track of local and global laws and regulations to stay in compliance with the click of a button.
- Reducing complexity and risk. Competing online in foreign markets or operating in new countries can introduce new risks and complexities to your business. By following financial patterns of international markets and reducing the cost of capital, new technology, such as an out-of-the-box solution providing localization and translation, can help simplify those processes and provide solutions backed by data.
- Scaling faster. Stay ahead of supply chain disruptions, trade deals, and new government policies with low-code extensible tools that support adaptation to changing localization requirements.
- Providing governance and standardization. By ensuring transparency and increasing openness between government agencies and their people, you can keep your business ahead of the game and constantly enhance how your customers are assisted.
The technology transforming globalization
Companies are finding that new technologies are not only helping accelerate their digital transformation—they’re also playing a huge part in globalization as well. New technologies dramatically affecting globalization in finance include:
1. Robotic process automation (RPA)
RPA makes it easy to build, deploy, and manage software that mimics human interactions. This software technology can perform defined actions quicker and more consistently, making workflows more streamlined and responsive resulting in more profits, customer engagement, and productivity.
AI and machine learning, as well as cognitive agents and smart machines, have the potential to completely reshape both foreign and domestic cross-border transactions while streamlining efficiencies. Businesses have the ability to validate financial analytics in a fraction of the time, cutting overall exposure to trading risks.
3. Blockchain technologies
In offering encoded timestamps for a range of payment types, providing a digital log of payments and transfers in near real time will be crucial in the next stage of globalization for the finance industry. It’s also the most prominent application for bitcoin currency, another financial service on the rise.
4. Internet of Things (IoT) for contactless payments
As our society becomes more digitally interconnected, IoT will simplify money transfers by providing the ease and convenience of process automation and the ability to transform basic technology into “smart” decision-making devices. Contactless payments based on IoT will enable faster payment processing and increased transparency on global payments. Plus, local and international governments will be able to easily track transactions in multiple currencies and markets.
The growth of technology in globalization helps accelerate future financial growth by enabling faster and more cost-efficient transactions.
The future of globalization in finance
Although the pandemic impacted globalization and shifted the market landscape, data shows positive results in trade, capital flows, and digital transactions. In fact, those that embraced globalization strategies and digitalization, including driving diversification across domestic and foreign production, showed strong resilience amidst uncertainty.
However, the future of globalization will require business leaders to continue addressing supply chain shortages, along with geopolitical tensions, dynamic global economy shifts, and cross-border investment flows. Adding global-ready financial management software to optimize operations will set you up for success by decreasing risks, simplifying complex globalization in finance challenges, and maximizing your performance across markets.
Preparing your business for globalization with Dynamics 365 Finance
Empower your team to build a successful business with the globalization capabilities of Dynamics 365 Finance—software that helps businesses manage complex global operations, expand more efficiently, and operate more effectively around the world. This comprehensive platform includes built-in localization and regulatory support for 44 countries and regions, plus additional localization solutions provided by partners worldwide.
By managing your global operations within a platform that supports local regulation compliance, multiple currencies, new languages, electronic invoicing, and tax requirements, you’re able to monitor worldwide operations in real time to make thoughtful, data-driven decisions.
Dynamics 365 Finance helps maximize your financial visibility and drive globalization with AI-driven insights, embedded analytics, and global management capabilities.