In today’s competitive business environment, the only way to succeed is to go global. With an ever-increasing number of markets becoming accessible through the Internet, many companies are now taking advantage of this by expanding their international reach.
However, acting globally does not guarantee success on a global scale. This is because a great deal of planning, preparation, and research is necessary before any company can attempt to expand internationally.
Even if your company has no immediate plans of expanding internationally, you need to know what issues you will face if in the future you needed to.
Here are some issues you are likely to face when expanding your business globally.
Tariffs and Import Duties
Tariffs and import duties are taxes that governments impose on imported goods. These taxes are periodically revised to protect local industries from international competition. The amount of tax imposed on an imported product varies from country to country and is based on the type of product being imported from the exporting country.
Tariffs are often used as a means of protecting local industry in a developing country that is growing but not yet able to compete with similar products produced by established industries in developed countries.
To better deal with tariffs and export fees, you should use freight forwarding companies because they take care of all the shipping technicalities on your behalf. These firms can simplify the logistics of international shipping to help you get your products to regions far away without having to pay extra for the trade barriers that can pop up along the way.
International Laws and Regulations
An important thing to understand when expanding globally is that you must comply with every international rule and regulation of trade, as well as all the local laws and regulations in the country where you are doing business.
Make sure that your product or service is not subject to special rules and laws, either local or international. For example, if you are selling an app, you need to find out if there are any special issues related to selling, marketing, and advertising apps in the countries or regions where you want to expand to. You also need to understand how your company’s intellectual property rights will be protected internationally.
If you are selling a physical product, then the health and safety standards of different countries may affect your product design and production process. You may even face hurdles with shipping products internationally, because some countries prohibit certain items from being imported or exported altogether, or require additional paperwork for customs clearance.
Traveling to a foreign country or dealing with an international client can be challenging at times due to cultural differences. Cultural differences can affect the way people think, feel and act towards others. It is not uncommon for people from different cultures to have different perspectives on the same issue. This can lead to misunderstandings, frustration, and ultimately failure of the business if these differences are not addressed properly. Having a clear understanding of these differences and learning how they can affect business relations may help you avoid any misunderstandings that may occur.
If you are expanding globally, your staff is going to consist of people hailing from different nationalities and speak different languages. Even if they all share a common tongue, there will likely be some dialectical differences that can cause confusion and misunderstanding between the workers.
One of the best ways to avoid the language barrier is to use technology to help overcome them. Simple translation apps are available that allow people from different countries to communicate easily, as long as they have a smartphone or a computer handy. The more complicated apps can even convert phrases into another language in real-time, allowing you to have video conferences and chat sessions online with people from across the globe.
Currency Exchange Rates and Inflation
Aside from the language barrier, issues of currency exchange and inflation are two of the largest challenges your business will face when going global. The exchange rate is the value of one country’s currency compared to the value of another’s. When you sell your goods in a country other than where they were manufactured, you will need to convert those earnings into your home currency.
Currency exchange rates can fluctuate frequently, meaning that your profits may be larger or smaller than you anticipated when you priced your products for overseas sale. This is especially true when economic conditions are unstable within foreign countries. Therefore, when calculating prices in other countries, it is important to consider the impact of inflation and exchange rates to ensure that your prices remain profitable.
Time Zone Differences
When converting your site to support multiple currencies and languages, you must also consider the time zone differences around the world. If you do not make an effort to convert your time zones, you are likely to confuse your global customers.
The size of a country’s population is an important factor when determining whether your business should expand into a foreign market. The bigger the population, the more likely you will find customers for your product or service.
Some countries will offer a great opportunity for expansion and others will not. The easiest way for you to determine this is through research. Before doing any business in another country, you should do some research on its population and economic status. Some countries may have huge populations but are very poor, which means that people will not have money to buy your products or services.
Other countries may have smaller populations but have more purchasing power. Finding the right demographic within a country is also an important part of expanding internationally. You need to know what kind of people will want to buy your product or service in that foreign country.
Although the thought of expanding your business to go global may be daunting. The important thing is to acknowledge the issues that you are going to inevitably face and make a plan for dealing with them. This way, you will be able to identify possible problems before they get out of hand, and you will be better prepared for dealing with potential conflicts. This article should have given you some idea as to how to prepare for your move to go global.