When Amazon started in 1994, there were many skeptics of online stores. After all, production companies such as GM and Ford in CNN Money’s Fortune 500 ruled business. What’s more, Amazon barely waited to internationalize online, entering the UK and Germany in 1998. Ten years later, it rose into the top ten Fortune 500, taking 8th place while GM dropped to 10th.
In short, Amazon successfully used an online platform to go global.
But Amazon was an e-commerce venture from the start. Can physical companies successfully open global locations without actually “going” global? Is traveling to the destination necessary, or can companies do everything from afar?
6 Major Factors Influenced by Physical Reassignment and Business Travel
Business Traveler tells us that in 2017 companies spent $45 billion on project-based business travel alone. Cutting down on travel, then, can help businesses relocate considerable funds elsewhere.
But what if a company needs staff overseas for onsite inspections or project works such as installation?
For necessary in-country staff, why not consider outsourcing? American Express suggests this as a go-to cost saver for small businesses. If the same work can be done for less (20–30% less according to classicinformatics) why not?
There are plenty of global projects that include tech teams from India, finance managers from Germany, project managers from the USA, and a final execution team in Japan. The whole group never meets in person, but all the puzzle pieces fit together virtually. It requires discipline and delivery from all ends, but it works. And not once is global travel required.
Increased Productivity and Health
Internationalizing a company online has productivity benefits, too. According to the Harvard Business Review, employees may actually have fewer health problems if they don’t travel. Additionally, business can continue despite weather conditions (or a pandemic) that might interfere with travel, and the dreaded jet lag could be avoided altogether.
Let’s face it, there are some situations where you cannot get the big picture without being on the ground. In a lot of ways, meeting face-to-face simply makes communication easier. Even a simple text can easily be misread. Everyone has their own thought process, sense of logic, and communication style, so when you don’t meet face-to-face, there are fewer opportunities to correct potentially disastrous miscommunications.
Not to mention the durability of relationships over long distances. How many of us are guilty of losing contact with someone when they live far away? Surprisingly, technology isn’t a guaranteed solution to this. For example, even though physical distance doesn’t affect the functionality of social networks, a research paper in Social Networks reveals that Twitter users prefer to connect to those within driving distance.
Brian Uzzi’s study of social structure and competition shows that executives or managers making friends with each other leads to higher exchange of sensitive information. This not only helps companies mutually gain a competitive edge, but also increases cooperativeness between the relevant parties.
Travel management company Trondent Development Corp. reports that 70% of travelers say building business relationships over video is difficult, and 91% say they would prefer to make a deal in person.
Ultimately, the data says shaking someone’s hand and having a meal to discuss a deal creates an edge over online alternatives.
Business travel is a perk. In fact, a study by Booking.com reveals that 30% of people would accept a lower salary if it meant they could do more business travel. Removing this perk might dull a once-glamorous job, or even deter applicants.
Of course, if companies save money by cutting travel, they can always reallocate it elsewhere. Just look at Netflix’s unlimited parental leave policy, Facebook’s free housing for interns, or the infamous Google, which has a long list of enviable employment advantages.
The question remains: can businesses successfully go global without “going” global?
It’s entirely possible to internationalize a company online with our current technology, though it will come with some big compromises along the way. Does this mean companies would be more successful globalizing by going global, even in today’s difficult global climate?
Uber created a shuttle service without owning any vehicles. Airbnb made a lodging business without owning any property. We live in an era of disruption, where turning industries on their heads seems to work…within the right market, and with the right compensation for compromises.
In the case of internationalization, the key factor will be making up for lost human interaction.