Once you have established a successful business in your country, the next step is to expand it globally. The majority of businesses fail at this step because they are not aware of the challenges involved in going global- the 7 biggest challenges to expanding your business internationally. This can prevent them from entering new markets or hinder international expansion efforts.
Here are the 7 main challenges:
1. Different markets = different customers, different competition and different offer than home market
When you go local, you try then to become better by adjusting yourself based on local needs/ tendencies/ habits/ etc., when you want to go global, however, things get more complicated. Much like trying to tweak a car engine while it’s already running (which will cause it to break), going global is a much bigger process, with a clear sequence of steps. You can’t make your engine stronger by just adding some Nitro to the fuel if you want to go faster.
2. Different legal systems = different laws and regulations
As with everything else in globalization, when it comes to legal aspects, there are no “one size fits all” rules. Laws vary from country to country when it comes to categories such as consumer protection, competition law and data privacy laws – so you will have a lot more work on your hand than just finding a lawyer in each country where you wish to enter.
3. Different financial systems = different financing options and sources available locally
Different countries have their own financial system which can pose a significant hurdle for your business. In some places, it is very difficult to find the loans or investors you need, while in others it can be relatively easy. Moreover, prices can vary widely by country and product/ service category.
4. Different competitors = different strategies required
In many cases, going global means entering a market that has a lot of other company’s already established there- companies that were ready to go before you ever considered expanding internationally! This makes the competition even tougher than what you are used to at home. And as if this wasn’t enough, those same competitors might have been around for decades and have long since perfected their own strategies – making your job even harder as you try to enter the fray anew with little or no market share.
5. Different customer needs = different strategies required
The majority of customers tend to behave differently in various countries, so you will need to adapt your product offering and strategy accordingly. Don’t expect success if you are following the same plan in the country a helped you in country B – chances are it WON’T work in country A!
6. Differences between home and international business culture
Globalization is not only about changing your digital strategy but also how you manage your employees on a day-to-day basis. The way they work can vary greatly from one place to another, making it very difficult for employees initially to simply “act like at home.” You might be used to managing with an iron fist but this is probably not the best way to manage employees in places like Asia and Latin America.
7. Different media channels and tools = different ways of reporting and analyzing
One reason why companies fail at global expansion is that they don’t consider that they might need a different reporting system or an additional tool to be more efficient when it comes to working with more countries, languages, and time zones. This can make centralizing your international efforts more difficult than what you are already used to as you try (often unsuccessfully) to adapt current processes for use on a larger scale.
Just because you are familiar with your home country’s market doesn’t mean you are ready to go global – it will be a whole different ball game. You need to take into account all the additional new factors, overcome them, and then scale your business internationally.
The question is not “if” but rather when, where, why, and how will I enter new international markets? There are many more questions that have yet to be answered which can pose huge problems for entrepreneurs if they fail to plan ahead of time.
Being competitive in today’s global economy often means that companies must expand their global presence in order to survive, however, if done incorrectly this expansion can incur huge costs both financially and culturally. There are also possible legal implications for companies who expand overseas.
When thinking about going global, you need to ask yourself whether your business is ready for such a herculean task. If it isn’t, little by little is the only way to do it. You can slowly start entering new markets and test different strategies as you expand – making adjustments along the way where necessary.
Author: Karen Anthony