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Home » Articles » Geographic expansion: What you need to know

Geographic expansion: What you need to know

Geographic expansion What you need to know

It’s a big world out there and ripe for economic benefit. Gone are the days when it would take months for merchants to travel via horse and boat to sell their wares to different cultures. The marketplace[1] has gone global. 

Globalization is the name of the game, and we’re all dependent on each other more than ever. This means businesses no longer have to stay within their home countries. 

Geographic expansion is now a business stage that companies can realistically plan for. 

What does geographic expansion mean? 

Geographic expansion is a term used to describe expanding a business’s operations into new geographic markets.

new building
What does geographic expansion mean?

It can be achieved through several different methods, but all of them require some level of investment and risk.

Geographic expansion is one of the most effective ways to grow a business because it allows companies to capitalize on: 

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  • New markets
  • New customers
  • New resources

It also provides companies with an opportunity to diversify their operations so that they are less vulnerable to economic downturns in any one region.

Tips when planning your geographic expansion strategy 

Here are a few things to consider before launching geographic expansion:

Check organizational health 

Before considering geographic expansion, it is essential to be confident that your organization has a culture that supports and encourages innovation, change, and growth. 

If you are not sure about this, it may be wise to conduct a diagnostic assessment to evaluate your organizational health.[2]

You must have a strong team and develop strong processes to support your existing business. 

This is especially true if you’re planning to grow beyond one location as opposed to expanding within the same market.

If your company is already experiencing difficulties, geographic expansion may not be the best strategy. A better idea may be to focus on improving operations in your current location before expanding.

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Categorize your business as global or multinational

An important step in geographic expansion is to decide whether you want to go global or multinational. 

Categorizing your business as global or multinational is a major decision affecting how you approach expansion and the type of resources needed.

Global businesses operate in multiple countries but don’t necessarily have operations in all parts of the world. 

A company might have offices in Asia, Europe, and North America, but if it doesn’t have any offices in South America or Africa, it’s still considered a global business.

A multinational company has operations across multiple regions. These companies usually have regional headquarters and regional offices that oversee operations in each area of the world.

Be informed about the local talent pool

Consider who will join your team when deciding where to expand next geographically. 

If there are no qualified candidates locally who can fill roles such as sales manager or support technician, then it may not be worth opening up a shop there just yet. 

However, there may be plenty of qualified candidates in the area. This could be an opportunity for hiring new employees at lower costs than if they had to relocate from another state or country altogether.

Know the labor laws

Each country has its own labor laws, but there are several commonalities among them. The most important thing to know is whether the country has a minimum wage law and how that applies to non-resident workers. 

You may have to change how you hire employees or pay them depending on where you geographically expand. 

It’s important to know these laws before making any changes so that you don’t violate them and risk getting fined or sued for not following them correctly.

Optimize your website and social media 

If your company has a website, now is the time to make sure it’s optimized for local search results. 

You can do this by using keywords that reflect the area your business serves and including information like hours of operation and directions on how to get there.

Don’t forget about social media! Make sure all your channels include local information so customers can easily find you when looking for businesses nearby. 

Make sure your social media posts target the right audience, so they can easily find your business when they search. 

Challenges of geographic expansion 

Geographic expansion is a massive undertaking, and it naturally comes with challenges that companies will need to deal with. 

bunch of people are sitting
Challenges of geographic expansion

Talent acquisition and onboarding  

One of the most difficult aspects of geographic expansion is finding the right people. You may think finding good talent is hard enough in your home market, but it’s even more difficult when you’re operating internationally. 

If you’re trying to hire people from another country, you must consider language barriers and cultural differences. This can make it difficult to find skilled people willing to relocate.

A good way to address these challenges is by partnering with local staffing agencies or recruiting firms that already have connections. 

These agencies can help you find qualified candidates quickly and efficiently, so you won’t have to spend time searching for them independently.

Extreme competition

In geographic expansion, you’ll compete with other businesses in a new territory or market. This can be difficult if the competition is already established and has established a customer base.

You may need to spend more money on advertising than you would have if there were fewer competitors in that market. 

While some companies can afford to spend large amounts of money on advertising campaigns designed to attract new customers, most cannot. 

Instead, they try to find ways to cut costs while still reaching their target audience. Effective advertisements will convince their audience to buy products or services from their company over other competitors.

Compliance issues and risk

If you’re expanding geographically, you’ll need to consider compliance requirements. For example, registering for VAT in Europe or other taxes in the U.S. or ensuring that your product meets local health and safety standards.

You’ll also have to decide whether or not to comply with local data privacy and protection laws. If your company handles sensitive information, these laws will apply no matter where your customers are located.

An attempt at geographic expansion can increase a company’s status if it succeeds. It can also just as easily ruin a company if it’s not. 

Make sure your company has a solid strategy before launching this risky yet potentially worthwhile mission. 


  1. Marketplace. Tallman, S., Luo, Y. and Buckley, P.J., 2018. Business models in global competition. Global Strategy Journal, 8(4), pp.517-535.
  2. Organizational health. Xenidis, Y. and Theocharous, K., 2014. Organizational health: Definition and assessment. Procedia Engineering, 85, pp.562-570.

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