Planning to expand your business into a new territory is a big challenge. It proves to be a good option if you have all the resources, adequate funding, time, and managerial expertise.
Many companies have learned newer ways to operate businesses and manage teams worldwide, thanks to the recent pandemic.
A successful overseas business requires strong communication, managerial, and leadership skills and an understanding of cultural nuances.
Recruiting and uniting members from different borders into a team can be increasingly challenging. In this article, we have outlined some practical tips that will help you settle your business abroad.
What Is Meant By International Business?
International business means a business that operates across the country’s borders. All commercial activities, including the production, transfer, or sale of goods, resources, people, technologies, and services between countries, are international businesses. There are multiple ways a business can be global.
- The company produces goods domestically and sells both locally and internationally.
- The company produces goods in a different country but sells domestically.
- The company produces goods in different countries and sells both domestically and internationally.
Businesses prefer overseas manufacturing due to lower labor costs or taxes and large volume production capacity. Organizations sell products and services internationally because of the high potential for a more extensive customer base, new customers, and increased revenue.
What Does It Take To Run A Successful International Business?
It is not as easy to expand your business internationally and expect a positive result simultaneously. Many big giants like Apple, Google, Amazon, and many other global companies have spent years of their efforts to run the successful international businesses we see today.
Have you ever wondered how these companies use their global marketing strategies and explore ways to expand their initial customer bases? This requires several traits and a mindset to help your company accelerate international growth.
At the core level, you must decide on factors such as
- In which countries to operate the business
- The type of market segments to sell to
- Which product offerings to take abroad (along with any local adaptations)
- Ways to sell (distribution, payment method, marketing activities)
Always remember that it’s not only the product or service that will lead the business; instead, it is the employees that play a significant role. International companies must have adaptable, resilient, resourceful, and communicative employees who know when to seize expansion opportunities.
They need insight into international economics to anticipate how global markets affect their businesses. Also, they must understand international marketing to communicate their organization’s value to diverse audiences effectively.
When you plan to expand your business into new territory, make sure you do not blunder. Instead of going as an invader, mark your presence by knowing the region’s local ways of doing business.
Whether it is about taking an organization into new territory or expanding the branches of a business, the best key is to let your organizational and strong business skills come into play with deep industry knowledge and problem-solving skills, to make a successful move.
Many businesses to expand their operations in international markets end up treating different demographics as the same markets, overlooking their vastly different social, economic, and political realities. They set unrealistic expectations, hampering their transition into a successful business.
Challenges In International Business
Today organizations are pushing their efforts to make their business have roots in international markets. Enterprises have more capabilities and resources that allow them to bring their business to gain global recognition. International businesses can get many benefits and opportunities for organizational growth, but it also comes with complex challenges.
|Access to a broader customer base||Strategic choices for international business|
|Access to newer resources (natural resources, skilled labor)||Exchange rate fluctuations-|
|Economies of scale||Cross-cultural communications (language barriers)|
|Government incentives to relocate||New competition, new market|
|Access to regional trading||Adjusting products to local customers|
|Learning about customers in new markets||Managing a long supply chain|
|Increased socio-economic welfare|
Suppose you are willing to break into the global market. In that case, you need to sharpen your knowledge about international business, connect with countries’ business professionals, know foreign policies, get associated with interpreters to overcome language barriers and be prepared to manage today’s nuances.
1. Managing Globally Distributed Teams
Managing teams at the international level is a tough job. The complexities of international businesses, like varying employment laws, payroll laws, compliance, tax laws, labor rights, and varying technology access, increase global team management challenges.
Global managers must understand the diverse culture and be flexible enough to navigate various interpersonal and business interactions.
For this, managers must build and maintain a strong working relationship with the global team and ensure regular check-ins using a video conferencing platform so you can interact in real-time.
2. Language Obstacle
When engaging in international business, you must consider the language of the region where you will expand your business.
While delivering your goods, check whether the product message is communicated well to the foreign audience. Not only that, employees operating in other countries must understand the language of their people.
3. Cultural Variations
The different counties worldwide, sometimes other regions within these countries, have a unique cultures. Understanding the different cultures your employees and clients follow enhances management and increase cross-cultural business relationships. Eventually, this reduces the complexities of international business and makes your processes highly effective.
4. New Market Competition
When companies work on similar products and services, their businesses face aggressive competition. If you want to step into a new market, you need to do a market search regarding the companies already providing the products and services in that segment. The challenges of expanding globally also call for differentiating factors in your products and services so that they gain a competitive edge in the market.
It’s a profitable business idea to venture into unique products & services to create your market while developing reputable business relationships with local vendors, shipping agencies, suppliers, and logistics to strengthen your supply chain.
5. Talent Acquisition
For an international expansion, Recruiting and hiring talented employees becomes essential. Competent and motivated staff with the required knowledge base and industry experience of the specific region are assets to the organization. If your business lacks experienced employees who can act as an anchor for that location, your international expansion can face challenges.
6. Inflation Rates And Currency Value Differences
International business transactions involve managing various forms of currency, exchange, and inflation rates.
For managing an international business, you must consider the exchange rate of the country you are operating. The same thing that costs you $1000 in your country will not cost the same in other countries. Therefore, it is essential to note the currency value.
Also, you must check inflation rates, the rate at which prices increase over time, resulting in a decline in the purchase price. Inflation rates differ between countries and can impact materials, labor costs, and product pricing.
Understanding and monitoring these two rates can provide helpful information about the value of your company’s product in various locations over time.
Practical Tips For Managing An International Business
Operating a business internationally is not a small feat. Engaging with employees thousands of miles away takes resources, time, and effort. However, with strategic planning and implementation, it can be done successfully. Below are some practical tips to help you manage a company abroad.
1. Be Ready To Venture Into An Unknown Market.
International business expansion is a learning process that demands flexibility, adaptability, and agility. New experiences, developments, and initiatives must be taken during the process with speed and confidence to achieve success.
Despite all the planning and paperwork, some things sometimes go wrong. When doing business globally, be aware of the potential pitfalls, and take necessary measures accordingly.
With a new and unknown market, you must be flexible and always ready to bring creative solutions when plan A does not work. This includes having backup plans or alternate contacts if things do not go according to plan. With this mindset, you can be on your path to a successful international business deal.
2. Conduct A Comprehensive Research
Suppose you want to take your business across geographical boundaries. In that case, you should start by conducting detailed research on the market potential, target customers, country trade policies, growth statistics, and the ease of operating the business. Diving deep into the country’s working policies and regulations helps better understand international business challenges.
New markets and cultural sensitivities are genuinely complex. It is far more productive to use the research data rather than relying on your gut feeling. Try to gather lots of data and then go forward with the hard facts. If you have the facility to collect data using domestic resources, use them. If not, take help from a reliable source and analyze empirical data before you jump.
Expanding your business internationally is indeed a risk. Still, you can manage that risk with solid knowledge backed by facts.
3. Take Professional Help.
When operating your products in a foreign country, it’s best to take professional assistance who can guide you about other countries’ cultures and business practices. This will help you navigate the complicated cultural sensitivity and understand how to serve your business in the most efficient way possible.
4. Bridge The Distance With Technology.
Fast-growing internet access and ease of technology have opened up many international business opportunities for ventures of all sizes. Technology enables companies to think big, expand internationally, and compete with global enterprises.
While managing an international team, personal connection is essential, and this gap can be covered with technology.
For task allotment, you can use a shared spreadsheet that entails tasks and timelines to be updated by employees or managers.
You can also avail of task deadline options in your workplace or cloud storage solutions.
5. Hire Managers For Each Region.
Managing an international business is not a one-person job. It’s essential to have a team of regional leaders to oversee business in multiple jurisdictions.
These leaders will be responsible for managing daily operations, staffing, setting performance objectives, and evaluating employees’ performance. They also convey messages from senior management to the staff in their region, just like a supervisor for each location.
6. Pay Attention To Cultural Details.
When adopting overseas business practices, you must consider the Social norms, working style, and customs of the regions you are operating. Teams will comprise individuals from various countries, so you must consider their cultural differences.
For example, employees overseas may perceive organizational hierarchy differently, making them more or less inclined to contribute their ideas and opinions during meetings.
Public holidays also differ from country to country, so it’s essential to know how this might impact tasks or projects.
To deal with cultural differences and create a flexible working environment for employees, managers should encourage open and inclusive conversations about business practices and cultural differences. They may also need to make allowances according to the region.
7. Assess A Payment Plan.
When considering a business to get global status, you should consider defining a secured payment method. Ensuring a safe and secure way of receiving and sending money overseas can help build a strong business reputation.
This process will protect you and the other company from potential fraud or scams. Alliance with a trusted money remittance service will make the payment process safe and reliable.
8. Develop Innovative Market Strategies.
If you cannot disrupt the global market, what’s the point of moving in there? You must use a creative playbook to establish a competitive edge for a successful international business. For this, choose your products’ core competencies and differentiators that will drive your success abroad.
Do not assume a steady position in the international market. To succeed in international business, you must strive professionally to be competitive internationally. There is no ideal strategy or working model that helps grow your business globally.
Break down the regions, countries, or communities of most incredible alignment to the service or product offered with the cultural connection of how it will fit a unique need in that locale. From there, a global growth strategy can be drafted and piloted with intent.
In the end, it is sensible to assess the market’s inherent attractiveness, potential competitive position, and country attractiveness.
9. Provide Exceptional Customer Service.
A practical approach for a successful international business is creating a unique customer system. Customers love companies that prioritize their customers when they are having an issue with a particular product or service they bought.
If you have made a sale, do not think your relationship with your customer ends here. There is a step ahead, and that is providing them with excellent customer service.
A satisfying customer means repeated orders and a positive brand reputation. Your customer leaves great impressions when you work on providing a friendly, positive, and helpful environment.
10. Set A Standard Time Zone.
Working around different time zones is one of the most challenging aspects of managing an international business. When you go global, you have employees in other regions with a wide disparity in time zones, making it difficult for you to meet (either virtually or in person) and collaborate.
Sometimes it doesn’t seem very easy to set a meeting time for everyone in the team that is spread over the globe. Therefore, it’s imperative to be aware of these time differences and find a set weekly time to catch up that works for everyone.
11. Step Slowly And
Companies should go small at first to win big in the long term. Start with a minimal but viable product offering and prepare to learn from customer experience and feedback. Sample the product before launching in multiple geographies. From this, you’ll drive strategic, successful country launches rather than widespread launches that may not achieve success scores.
12. Measure Success
During expansion, keeping track of the company’s success and efforts is essential. When you document details, you get a hold of things going on. This will help you analyze the working mechanism and help you eradicate strategies that are causing failure.
When you see that your current operating processes are not working the way they should be, you might use employees’ sense of creativity and innovation to build something new.
Thinking about an international business means you should be ready to face multiple challenges. With the correct information, resource efficiency, strong managerial and business skills, industry knowledge, and technological solutions, they can make the process much easier.
There are simple ways to overcome international business challenges by understanding cultural variations, work permits, language barriers, country’s employment laws, and new market potential. Once you know each complexity and take considerable measures to overcome them, you can be at the forefront of business profits, increasing volume, revenues, brand value, and stable market growth.
Ambitious companies do not hold back within their national borders. Enterprises hoping to take the lead in the global market should have specific knowledge of leadership and management and a firm grasp of their own industries’ unique practices.
- Access to a broader customer base
- Access to newer resources (natural resources, skilled labor)
- Exchange rate fluctuations
- Economies of scale
- Cross-cultural communications (language barriers)
- Government incentives to relocate
- New competition
- Access to regional trading
- Adjusting products to local customers
- Learning about customers in new markets
- Managing a long supply chain