Going global can be a great way to expand your business, but it’s not without challenges. We will discuss six of the most common operational issues companies face when expanding abroad so you can better prepare for your global expansion.

1. Money

Having money is always a common challenge when expanding internationally. Businesses need to have enough capital to invest in new facilities, hire staff, and market their products or services in new countries. They also need to be aware of the exchange rate and its impact on their costs.

  • Budgeting: Businesses’ budgeting strategies need to account for the costs associated with expansion, such as setting up new facilities, hiring staff, and marketing. They also need to consider the impact of exchange rates on their budget.
  • Financing: Many businesses need to finance their expansion through loans or equity investment. Financing can be difficult, especially if the company is not yet profitable.
  • Income (pricing an item): Different countries have different income levels, affecting what people are willing to pay for products and services. Businesses need to research prices in each market they plan to enter and ensure competitive prices.

2. Technology

Many businesses rely on technology to operate, which can be challenging when expanding internationally. Different countries have different infrastructure and connectivity, impacting a business’s ability to communicate with customers or suppliers or even run its operations smoothly.

  • Website design and development: Another challenge when expanding internationally is ensuring that your website is accessible in other countries. It means making sure it is designed for different languages and cultures and can be accessed from different devices and browsers. Another aspect to consider is website is visible in search engines in other countries. With 92% of the market, Google reigns supreme in the world. This isn’t true, however, in each country. In China, for example, Baidu has 65% of the search market share.
  • SEO: Ensuring your SEO adjusts for these local search engines is critical to success. If the country you’re planning on entering has a different language, you may decide to create two different versions of your ecommerce site. These two pages could compete on search engines, so you should think about using Hreflang Tags in your code. A Hreflang tag tells Google which language your website uses on a specific page. When people search in that language, they will see your website. Businesses need to research the best way to optimise their website for each market they plan to enter.
  • Integrations: Many businesses use integrations to automate their operations. Businesses need to consider how these integrations will work in different countries when expanding internationally. They may need to find new integrations or adapt existing ones to work in different countries.
  • Data security and privacy: Businesses need to be aware of data security and privacy laws when expanding internationally. These laws can vary from country to country, and technological advances and directions could rapidly change. An example was, in 2018, the EU established General Data Protection Regulation (GDPR), ensuring digital data privacy. In 2020, New Zealand implemented the Privacy Act, which requires “agencies” about businesses to appoint a designated privacy officer to ensure that data gathering by a firm adheres to privacy regulations.
  • Payment systems: Businesses need to research the payment systems in each country they plan to enter. They need to ensure that their current payment system will work or find a new one. They also need to be aware of any fees associated with using a particular payment system.

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3. Communication

When expanding internationally, businesses need to be aware of cultural differences in communication. They need to ensure that their message is clear and appropriate for each market. This can be a challenge if your business is unwilling to adapt your policies, products or culture to fit into the new country.

  • Cultural differences: The impact of culture on international marketing is often underestimated. Different cultures have different values, beliefs and behaviours. Businesses need to be aware of these differences when expanding internationally. According to our research, cultural differences are one of the most common reasons international companies fail. (report)
  • Language Barrier: Another communication challenge businesses face when expanding internationally is the language barrier. It is important to decide whether your business would like to use translation services or hire employees who speak the local language.

4. Supply-chain management

Businesses need to be aware of what expanding internationally will have on their supply chain. They need to ensure that they can still meet customer demand and that their suppliers can still deliver goods and services promptly.

  • Shipping: More often than not, shipping is the last thing on businesses’ minds when they decide to go international. Businesses need to be aware of the shipping costs and delivery times associated with expanding internationally. There may be additional fees associated with sending packages internationally. Ensuring you have the proper documentation for specific products, for example, may save you money and reduce delays in the delivery process. Read more about lowering delays for international shipping.
  • Regulatory compliance: When expanding into new markets, businesses need to comply with all local regulations. This can be a daunting task, as each country has its own unique laws and regulations.
  • Exchange rate: The value of a currency can fluctuate, impacting the cost of goods and services. Businesses need to be aware of these factors when expanding internationally.
  • Politics: Shortages, sanctions and trade wars can all impact businesses expanding internationally. Because of this, international tax agreements can change, and these changes can influence the pricing of sending your items overseas. Businesses need to be aware of the political situation in each country they’re expanding to and how it might affect their business. For example, the US-China trade war has led to disruptions in the supply chain for many businesses.

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5. Management

  • Hiring: When expanding internationally, businesses need to consider how they will staff their new operations. They may need to hire local employees or send employees from their home country. This can be a challenge if your business does not have the resources to conduct an international search for candidates. The worldwide pandemic has also impacted employee expectations, which must be considered.
  • Organisation: Businesses need to be aware of the different legal and regulatory requirements in each country they expand. They need to ensure that their business is structured appropriately and compliant with all local laws.

6. Marketing

One of the first challenges businesses face when expanding internationally is finding the right markets to enter. Many factors to consider when choosing which needs to grow, such as economic stability, infrastructure, political risk, and consumer demand. It can be challenging to assess all of these factors and decide which markets are the best for your business.

  • Market research: Before expanding internationally, businesses need to conduct market research. It will help you to understand the local market and consumer demand. It is also essential to research the competition in each market. Obtaining information can be a challenge if your business does not have the resources to conduct extensive market research, such as time or money.
  • Transcreation: Transcreation is the process of adapting content to a specific market. This can be a challenge for businesses when expanding internationally, as they need to ensure that their content is relevant and appealing to the local market.
  • Localisation: Localisation is the process of adapting products or services to meet the needs of a specific market. Ensure that the products or services are relevant and appealing to the local market. A good example is Red Bull, which has always successfully marketed itself locally. Their strategy is to globalise their brand but to localise their events. For instance, they have created events for people who do extreme sports or love art, depending on the target city.

Overall issues for international businesses right now 2022:

Some factors to consider when starting a business in another country are labour market adjustments, potential travel restrictions and regulations that have altered, and the pandemic’s effect on an increasing amount of digital fraud.

Conclusion

Businesses need to be aware of a few key things when expanding internationally. They need to consider their payment options, communication strategies, cultural differences, language barriers and supply-chain management. Additionally, they need to be mindful of the potential impact of politics on their business and plan accordingly. Finally, they should think about how they will staff their new international operations. Businesses can set themselves up for success when expanding internationally by being aware of these challenges.

Do you have a business that is thinking about expanding internationally? Are you looking for ways to set your business up for success? Contact us