13 Reasons to foster an expansion

In einer globalisierten, disruptiven und schnelllebigen Welt mit vielen Unwägbarkeiten und Wettbewerb gibt es viele Gründe, warum man eine Expansion oder Auslagerung einer Produktion oder Dienstleistung in ein anderes Land wagen sollte.

The tense relation and trade war between China and United States, the broken supply chain because of the corona Virus, or the cargo ship accident in the Suez Canal show the need for a diversified portfolio.

The tense relation and trade war between China and United States, the broken supply chain because of the corona Virus, or the cargo ship accident in the Suez Canal show the need for a diversified portfolio.

1. The globalization and the Corona Virus

Many companies have already expanded their business to China and producing their products there. However, when the pandemic appeared and Asia had to shut down the whole production, we all realized that everyone is too dependent on Asia as no one has a diversified portfolio. The same issue when the cargo ship blocked the Suez Canal; hundreds of millions are lost because other ships can not pass the canal.

The pandemic impacted many companies badly and the consequences were disastrous; 

Especially if you are based in a country with high living costs, it is even harder to survive.

If you would have a diversified portfolio and a second manufacturing place, the impact would have never been the same. 

Though, there are many other reasons why you should take into consideration an expansion. We have listed you up what kind of challenges or problems will arise in the future and to demonstrate why an expansion would make sense.

The last years have demonstrated that you must think globally and strategically long term.

1. The globalization and the Corona Virus

Many companies have already expanded their business to China and producing their products there. However, when the pandemic appeared and Asia had to shut down the whole production, we all realized that everyone is too dependent on Asia as no one has a diversified portfolio. The same issue when the cargo ship blocked the Suez Canal; hundreds of millions are lost because other ships can not pass the canal.

The pandemic impacted many companies badly and the consequences were disastrous; 

The last years have demonstrated that you must think globally and strategically long term.

Especially if you are based in a country with high living costs, it is even harder to survive.

If you would have a diversified portfolio and a second manufacturing place, the impact would have never been the same. 

Though, there are many other reasons why you should take into consideration an expansion. We have listed you up what kind of challenges or problems will arise in the future and to demonstrate why an expansion would make sense.

Need Help to diversify your portfolio?

Get in touch with us to analyse your business and to evaluate whether an expansion to make sense or not.

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Need Help to diversify your portfolio?

Get in touch with us to analyse your business and to evaluate whether an expansion to make sense or not.

Contact Us

2. 13 reasons to expand your company

Challenges / Situation Description of the problem Solution

Cash flow hole due to pandemic

The pandemic has torn a hole in the coffers of countless companies because consumption has declined.

Expanding a production abroad can save costs by having cheaper labor force or more efficient supply chain (proximity to the United States)

New sales market in Central and South America

You have a significant, increasing sales potential in the United States and South America

Being closer to your clients and cheaper manufacturing as well as having a 24/7 customer service, it is more efficient and cheaper to produce locally in Mexico

No capital to drive new projects like implement a new product line

Strategic decision: new capital is needed to drive innovation and automation and to produce “simple processes” abroad

Outsource simple production / processes In-house focus on strategically important skills

Outsource simple production / processes In-house focus on strategically important skills

You need the current workforce to drive innovation, digitization and automation and would like to outsource strategically less important processes / production abroad under your leadership

Assembling time and costs can be saved by outsourcing an expensive production process to an external company that can do it at a cheaper cost.

High costs for basic, cheap products, Too expensive staff to develop / produce product / service here

Due to the globalization and increasing competition, economically seenit does not make sense to produce certain products or provide service in your country as cost drivers in workforce, rent or infrastructure is too high and not competitive. You are facing increasing raw material and labor costs. Therefore, the profit margin on its manufactured goods is steadily decreasing as costs increase.

You must expand certain services or production abroad to survive. You can expand/outsource part of its production process, e.g., the manufacturing and installing certain parts abroad.

Increasing competition

Due to emerging globalization and technologies, there is increased competition; therefore, prices have to be reduced and efficiency increased in order to remain competitive

In order to stay competitive, you have to expand or outsource certain activities to another country and focus only on the core activities in house.

In-house at the limit or capacity for future will not be available

Your company is rapidly growing and accordingly increasing demand. You are looking to expand your product line as you need more space to produce, however it would be too expensive to manufacture locally (or also data entry or customer service support). If you product line in-house, you would need to slow down production on some of its existing products.

You expand or outsource the work to an external local factory to lessen its labor constraint.

Skill shortage / lack talented workforce

In order to stay competitive, you have various innovative projects, however you do not have not qualified employees / lack of know-how to develop the product, thus you are constrained by a limited amount of talented workers.

You expand your company to find new talented people to execute those projects. On the continent of America, over 800 million live there and less bureaucracy with visas.

You are too dependent on China or India

You currently manufacture products exclusively in China and other western countries. So that you are not dependent on one country and the value chain remains stable even in times of Covid, you are looking for a location in Central America to produce.
You only have one supplier of raw materials who is located in Asia, which is why you are dependent on a supplier, especially in times of pandemics, and you cannot process the products, which in turn into lower turnover and profitability

You need a diversified portfolio to have a stable supply (for example broken supply chain due to the corona virus). In addition, you want to produce close to one of the largest market in the world – the United States as well as for the emerging market in South America which have a lot of potential for your products

Expensive handling of customer complaints / returns

Sales markets abroad also automatically generate customer problems and returns, which could cost dearly with overseas shipping and efficiency leaves much to be desired.

Due to the great distance, deliveries can take several weeks. In addition, incorrect deliveries cannot be replaced within days.

24/7 availability / faster responsiveness / language barrier / culture

Due to the different time zones and sales markets, you should be available 24/7 - in the respective languages ​​(English, Spanish, Portuguese), react quickly and adapt to the culture accordingly.


Due to the increasing market share of your company, it is important to have a location in Central America in order to be able to react quickly and to guarantee efficient and cost-effective returns / service / processing

Service Center / Complaint Center in Central America Due to the time difference, you can be reached 24/7 with a location in Central America

Distribution/ Logistics center required

You have various clients to supply with your goods, however you have no logistic / distribution center where you can stock your commodities or receive returns.

Everything is produced in Europe, but you want to have a logistics and service center on site, otherwise it would be too expensive and you would not have any control

Resistance to change of your employees

It is too expensive to produce in Europe and to ship to South and Central America
Employees who have been working for many years within the same company

  • Your change is opportune. Nevertheless…
  • Your workforce refuse to acknowledge the benefits the change will bring along.
  • Resistance to change: your people complain, gossips or keep going as before.
  • Satisfaction, motivation and performance, even of your top employees, are decreasing.

You can expand/outsource part of its production process, e.g., the manufacturing and installing certain parts abroad. Assembling time and costs can be saved by outsourcing an expensive production process to an external company that can do it at a cheaper cost.

Unreliable outsourcing partner

You are already producing in Central America through a third party, but you have no control over the activities, no innovation and no quality problems

With an independent expansion, you will have the full control of the processes, you develop your talent and oversee the quality.