Business leaders must develop resilient and agile internationalization strategies to future proof their operations in a rapidly changing world of growing geopolitical tension.

Reassessing and reinforcing critical relationships with key suppliers and customers become vital for companies to be able to scale successfully in competitive global markets.  

A core challenge for leaders across almost all industry sectors is how to execute a global growth strategy that recognises and responds to critical differences in their strengths and capabilities across geographies. 

CEOs must consider whether their current global footprints of manufacturing bases, service operations, supply chain partners and channels to market are sufficiently robust and flexible to respond to both threats and opportunities linked to changing international trade patterns. 

Strategic thinking on these topics matters whether a business is currently trading mainly within regional boundaries or already has a wider global presence.  

Building a presence in other markets is one of the best hedges against the shifting tectonic plates created by current geopolitical changes on a scale not seen for decades.

Opening doors to new markets can have a major impact on the bottom line which is why ambitious leaders need to reconsider future commercial realities such as cost-of-production, cost-of-sales and consumer behaviour.

A survey published by the World Economic Forum found more than 90% of business leaders are prioritising regionalization. What this and similar studies highlight is that companies need to find ways of moving closer to their customers, adopting the strategic approach that best suits their commercial objectives.

This trend towards “nearshoring” can be seen across the world and has already delivered significant benefits for countries recognised as investment-friendly locations with good infrastructure and a skilled labour pool, with IT skills being a major attraction.

Within Europe, Poland has built a strong reputation for software development and IT outsourcing that has made it the top nearshoring choice among European companies sourcing suppliers or relocating operations, according to Statista.

Latin America has also benefited significantly. At the World Economic Forum annual meeting in Davos in January, the president of the Inter-American Development Bank cited further opportunities in services and critical minerals, as well as the region’s reliable supply chains in areas such as healthcare and semiconductors.

Recently, companies in the United States have started building manufacturing capacity at home and we are likely to see a steady flow of large multinationals following this path and relocating production to serve the US market.

The next wave of internationalization will not just be about multi-billion-dollar corporates expanding. We speak daily to a wide range of mid-market companies that are also exploring their options.

At Santander, it is our mission to help these companies achieve their ambitions and it is fascinating to see the many different ways in which CEOs have gone about marshalling their human and financial resources to find the most effective ways of spreading their wings.

While no two businesses are the same, there are some winning strategies that have proven over time to be essential to success.

First, and most vital, is to have complete clarity about what developing an international presence is intended to achieve. I was speaking to a client recently who has four different activities, three of which are international, yet he could explain to me in 15 minutes exactly what he wants to do abroad and how each business is contributing to the overall plan.

Second, the most successful multinationals really need to understand the countries in which they operate. They must know how to fit into the business culture and be aware of the bigger political and economic factors at play.

When making these judgments, CEOs must accept that uncertainty is an inescapable factor in the internationalization equation. The new reality is that assessing the risks is more difficult than it was ten years ago – but even more important.

The markets we operate in are countries that have attracted a lot of investment over the years and we can share our insight about them with our clients. We have strong links with local authorities and the professionals like accountants, consultants and lawyers that help companies understand what is required to expand internationally.

Assessing the risks of investing in a country inevitably leads to the consideration of alternative entry strategies. Renting offices, hiring a workforce and committing to local capital expenditure are all major financial undertakings, especially for mid-sized companies.

Many organizations put small business development teams on the ground to seek out an anchor client that guarantees the initial revenue that financially underpins a wider expansion.

Whichever route is chosen, success ultimately comes down to the ability to exploit a competitive advantage created through innovation in their home countries. The businesses that successfully achieve this never look back.