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 local vs. global laws and regulations to stay in compliance. 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 look to set up new companies, entities, or chart of accounts to support the expansion. This requires the financial management system to support multiple dimensions, currencies, intercompany transactions, and consolidations. It also requires a strategy to support global governance and standardization to ensure your financial reporting is optimized.
The benefits of globalization
As globalization makes international expansion more feasible for your company, it also offers many benefits that make it worth any complexity you might face.
- Expanded market reach. As the world marketplace continues to expand, goods and services are able to be distributed even faster around the word.
- Competitive advantage. By working to meet the demands of efficient production and competitiveness in the marketplace wherever 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 a greater selection of employees that can be more qualified and diverse.
- Diversification and partnerships. In developing new strategies for products and services, implementing diversification, and expanding for new partnerships allows for your organization’s global expansion by entering new markets and increasing your current value or extending your success.
- Cost reduction. As goods are produced all over the world, specializing in producing those goods enables lower average costs for your products. Shifting your production to lower-cost countries gives your business a competitive edge.
Technology helping with global expansion
Technology is shaping how businesses expand into the foreign markets, especially within developing and emerging markets. Some ways technology can help finance teams with global expansion are to:
- Easily support globalization in finance. The right technology platform will simplify the support of multiple languages, currencies, inter-company transactions, and financial consolidations.
- Ensure adherence to local compliance regulations. Keep track of local and global laws and regulations to stay in compliance with the click of a button.
- Reduce complexity and risk. Competing online in foreign markets or opening 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 like an out-of-the-box solution providing localization and translation can help simplify those processes and provide solutions backed by data.
- Scale 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.
- Governance and standardization. By ensuring transparency and increasing openness between government agencies and its people, your constant transformation to enhancing how your customers are assisted will keep your business ahead of the game.
Edge technology that is transforming globalization
Companies are finding that new technologies are not only helping accelerate their digital transformation, but are also playing a huge part in globalization as well. For example, five new technologies that are dramatically affecting globalization in finance are:
1. Robotic process automation (RPA)
RPA makes it easy to build, deploy, and manage software that mimics human interactions. This software technology creates those defined actions quicker and more consistently, making workflows more streamlined and responsive resulting in more profits, customer engagement, and productivity.
2. Artificial intelligence (AI)
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 and streamline 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
Moving into a digitally interconnected society, IoT will provide the ease and convenience of automated process and changing devices into “smart” decision-making devices, simplifying money transfers. As contactless payments based on IoT will enable faster processing of payments, transparency on global payments will increase and local and international governments will be able to track transactions in multiple currencies and markets easily.
The growth of technology in globalization enables faster, low-cost transactions to facilitate in the accelerated expansion of financial growth for the future.
The future of globalization in finance
While 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 to address 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
With the globalization capabilities within Dynamics 365 Finance, utilizing software that helps businesses manage complex global operations, expand more efficiently, and operate more effectively around the world means a successful business for your team. This comprehensive platform includes built-in localization and regulatory support for 44 countries and regions, with partners worldwide providing additional localization solutions.
By managing your global operations through the support of local compliance regulations, 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.