Strategic Expansion Made Simple: gigCMO's Guide to Scaling Your Business in North American Cities
"City-to-city is characterised by the city itself. These places are not easily defined as a subset of their own country. They're what I would call a global city - they play a role in the economics of another country." ~ Richard Burge
Expanding your business into a new country market can sound like an exciting proposition, but how do you select the city market best for your business? With a multitude of possibilities available around the world, it might be challenging to choose the best city for your international business expansion.
Before making any decisions, conducting comprehensive market research is imperative. This involves understanding the potential demand for your products or services in different cities. Consider factors like local preferences, cultural nuances, and economic conditions to identify cities with the highest growth potential for your offerings. If you are in life science, Click the button here to see our profile for xxx and Vienna, and subscribe to our newsletter for more City profiles.
Why Cities Exist and How They Have Formed
Cities have formed over millennia, and the history of cities is actually integral to the story of humanity. Opinions vary on which ancient settlements are truly cities. Paul Bairoch takes up this argument in his book Cities and Economic Development, stating that agricultural activity appears to be necessary before actual cities can form. However, according to Vere Gordon Childe, to qualify as a city, it must have a sufficient surplus of raw materials to support trade and a somewhat big population.
Some cities have only been in existence for a few years. Yes! Even today, new cities are being founded! Others have been around for tens, hundreds, or thousands of years. Archaeologists believe the first cities were created between 8,000 and 10,000 years ago. Mesopotamia appeared to be the first city to exist, which included Eridu, Uruk, and Ur. It is part of the Fertile Crescent, commonly known as the "Cradle of Civilisation" because of the number of innovations that developed from the early communities in this region, which are among the earliest known human civilisations on this planet.
Cities are centres of economic opportunity. They provide access to diverse employment options, trade networks, markets, and specialised services. Even businesses from rural areas move to the city to take advantage of opportunities to make greater profits. As the country's standard of living goes up, there is more demand for the kinds of goods that are made and sold in cities. And for a long time, these pull factors were what made cities rise.
Cities embody cultural diversity. They attract people from varying backgrounds, leading to a rich tapestry of ideas, traditions, and lifestyles. This diversity fosters a vibrant cultural scene and encourages the exchange of knowledge and artistic expressions. The coalescence of these economic and cultural influences has historically been instrumental in the formation of cities. As civilisations developed, settlements evolved from simple clusters of dwellings to organised urban centres with distinct economic, social, and cultural characteristics.
Geography plays a significant role in the formation of cities. Access to transportation routes, such as rivers, coasts, or crossroads, has historically facilitated trade and communication, making these areas favourable for urban development. Additionally, natural resources and fertile land have attracted settlements that later developed into cities.
Technological advancements have further influenced the growth of cities. The development of efficient transportation systems, like railways and highways, has expanded the reach of urban areas. Modern communication technologies have connected people across distances, allowing for remote work and global interactions.
One of the main reasons for the rise of the cities was the Industrial Revolution, which began in Great Britain toward the middle of the eighteenth century and then spread to the US and other parts of Europe. The rise of factories and manufacturing industries attracted rural populations to urban areas in search of employment. This influx of people led to rapid urbanisation, often resulting in overcrowded and unsanitary living conditions. However, it also laid the foundation for modern urban infrastructure and technological progress.
What is a Global City?
A global city, also known as a power city, is a term used to describe a major urban centre that holds significant influence and connectivity on a global level.
The Global Cities Index (GCI) evaluates how globally involved cities are in four areas: Economic, Environmental, Innovation and Transport. On the other hand, the Global Cities Outlook (GCO) looks at those who are making the conditions for becoming big global players in the future. This analysis looks at four areas: personal well-being, economics, innovation, and governance. Each of these is a key factor in a city's ability to attract talented people, grow the economy, make it more competitive, and keep things stable and secure.
Top 5 global cities in North America according to the Schroders Global Cities Index
San Francisco, United States
San Francisco is renowned for its technological innovation and startup culture. It's home to Silicon Valley, one of the world's leading technology hubs. Apple, Google, Adobe, eBay, and many other big tech companies have set up their offices in Silicon Valley, where they continued business success. San Francisco's commitment to environmental sustainability and innovation, coupled with its efficient transportation infrastructure, contributes to its global significance.
Score 10.00/10 (Rank 1)
Boston, United States
Boston is a hub of education and research, home to prestigious universities like MIT and Harvard. The city has a rich history dating back to the American Revolution, and its intellectual and cultural contributions have made it a significant global player. Boston's strong emphasis on education and research, along with its advanced transportation systems, contribute to its global city status.
Score 9.88/10 (Rank 2)
New York, United States
New York City is known as "The Big Apple.". One of the world's most iconic cities, it's a cultural melting pot and a financial powerhouse. With Wall Street as its financial center, New York leads in business activity, information exchange, cultural experience, and political involvement. The United Nations headquarters is located in NYC, emphasising its role in global diplomacy.
Score 9.79/10 (Rank 4)
Toronto, Canada (Ranked 6)
Toronto is the largest city in Canada and a dynamic Global City in North America. It's known for its cultural diversity, economic strength, and high quality of life. Toronto's economy spans various industries, including finance, technology, film, and telecommunications. The city's welcoming atmosphere and its commitment to inclusivity have led to a steady influx of global talent. As a result, Toronto has become a crucial player in the international arena and has earned its place on the Global Cities Index.
Score 9.63/10 (Rank 6)
San Jose, United States
San Jose is situated in the heart of Silicon Valley, California, and is often overshadowed by its neighbouring city, San Francisco. However, its significance in the technology sector is immense. As a hub for innovation and entrepreneurship, San Jose is home to numerous tech startups and established companies. Its inclusion in the top Global Cities Index highlights its role as a center for technological breakthroughs, attracting professionals and investments worldwide.
Score 9.61/10 (Rank 7)
Four Challenges to Overcome When Expanding Into A New City
Expanding your business into a new city presents several challenges that require careful consideration and strategic planning. Here are four common challenges you might encounter when expanding into a new city:
1. Market Understanding and Adaptation
Challenge: Each city has its own unique market dynamics, customer preferences, and cultural nuances that might differ from your current location.
Strategy: Conduct thorough market research to understand the local customer base, their needs, and preferences. Tailor your products, services, and marketing strategies to align with the new city's culture and demands.
2. Local Competition
Challenge: New cities often have established businesses that offer similar products or services. Competing with them can be tough, especially as an outsider.
Strategy: Differentiate your business by highlighting your unique value proposition. Offer something that sets you apart, whether it's better quality, unique features, exceptional customer service, or a different pricing strategy. Build strong relationships with local customers through personalised experiences.
3. Brand Awareness and Trust
Challenge: Your brand might not be well-known in the new city, leading to a lack of trust and slower customer adoption.
Strategy: Invest in local marketing and advertising campaigns to build brand awareness in the new city. Leverage social media, local events, and partnerships to gain credibility. Prioritise excellent customer service to earn positive reviews and word-of-mouth referrals, which can boost trust in your brand.
4. Regulatory and Legal Compliance
Challenge: Different cities can have varying regulations, licenses, and permits that you need to navigate.
Strategy: Consult legal experts who are familiar with the specific regulations in the new city. Ensure that you obtain all necessary licenses and permits to operate legally. Staying compliant from the start will prevent costly issues down the line.
How to Develop an International Expansion Strategy?
How to Choose the Right City Location for Business Expansion in North America
1. Trade Accessibility
Access to a large trade network is one of the most significant location advantages for a company that sells physical products. Tariff reductions through trade agreements can make it more cost-effective to enter new markets and make your products cost-competitive with similar solutions.
Canada, the US, and Mexico created the largest free trade region in the world. Canada currently has 15 free trade agreements (FTA) with 51 different countries. These agreements collectively cover 1.5 billion customers globally. The US, EU and China are its top 3 trading partners.
2. Market Proximity
Similar to the concept of trade access, the strategic advantage of customer and market proximity revolves around optimising product distribution. The aim is to minimise transit time while simultaneously maximising the reach to potential customers.
North America is home to numerous large rivers, some of which are used for shipping and others for hydroelectric power generation. The Missouri River, which originates in Montana and runs into the Mississippi River, is the longest river in North America. In terms of commercial traffic, the Mississippi River is widely regarded as the most vital waterway. In terms of tonnage, the Port of South Louisiana, which is located along the Mississippi, is the largest port in the United States.
3. Adjacent Business Communities
One of the key reasons for expanding to a new location is a strong local environment that supports the type of business. What is the business culture in your local area like? What kinds of support organisations, such as accelerators and research supports, are available? These aspects can impact your company's ability to innovate, attract and retain employees, and, ultimately, grow. Businesses should consider the communities surrounding their intended location in addition to having customers nearby and an encouraging local environment.
For instance, the London Chamber of Commerce and Industry (LCCI), the UK capital's largest independent business advocacy. It is a type of business network whose goal is to further the interests of businesses in towns, cities and countries worldwide. In an interview with Richard Burge, he said that LCCI provides opportunities to meet (events) - the idea is to bring people together to find partners, suppliers and clients.
4. Tax, Investment, & Trade Incentives
Many businesses choose a specific country for international expansion because of its low corporate tax rate. However, a foreign business frequently pays regional and local taxes as well. These rates are frequently industry-dependent and can vary greatly between regions.
Some governments provide special economic and free trade zones with distinct benefits. For example, the North American Free Trade Agreement (NAFTA) was created to promote trade between the U.S., Canada, and Mexico. The agreement eliminates tariff and non-tariff barriers to trade and investment between the three countries.
5. Industry Presence
When considering business expansion, it's important to assess the existing industry landscape in the potential city location. If you want to expand your businesses in North America, operating in specialised industries like the life sciences, being located in a city with a strong industry presence can provide insights into collaboration, competition, and growth opportunities.
A city like Boston is renowned for its thriving life sciences ecosystem. With a cluster of prestigious universities, research institutions, and pharmaceutical companies, the city is often called the "BioHub" due to its concentration of biotech and life sciences companies. This ecosystem fosters innovation, collaboration, and access to a talented workforce.
Understand What’s Right for Your Business
The process of selecting the right city location for business expansion holds immense importance, as each business has distinct objectives and requirements. The consequences of choosing an unsuitable location can profoundly impede the growth of your business. Therefore, conducting comprehensive research and formulating a well-thought-out strategy are imperative steps in identifying the perfect location.
It's essential to acknowledge that no two businesses are identical. What may have proved successful for one company might not necessarily align with your specific needs and aspirations. The decision-making process should be grounded in a deep understanding of your business goals, target market, industry ecosystem, and operational demands.
There is much information to consider, and even with the assistance of a relevant Chamber of Commerce, knowing who to speak with, which partnerships to pursue, and how to turn relationships and knowledge into actions may be overwhelming. Taking a business globally requires a specific skill set, and partners like gigCMO are experienced experts who can make that happen.
Considering an expansion? Contact us and speak to gigCMO to take advantage of the global opportunities.