What To Consider When Conducting Business Abroad

By Brooke Faulkner

As the world becomes more connected, many businesses are dreaming of expanding into other global markets. In fact, 54 percent of US companies already have some foreign market involvement, according to statistics from Rutgers University, and a whopping 80 percent of business executives agree that U.S. companies should expand internationally for long-term business growth. Increased digitization may make foreign expansion seem like a piece of cake, but in actuality, many factors contribute to realizing success as a truly global business. Here are three things to consider when conducting business abroad:

Invest in Workforce Diversity and Hiring

The HR component of a business is often looked at as a follow-up measure after the integral team has established a presence in a new market. However, when doing business abroad, it is vital that HR and hiring processes are a part of the globalization vision from the very beginning. Since it’s critical to find the right balance between international structures and local processes, senior leadership must give due importance to HR systems and hiring processes.

Global success is a product of culturally knowledgeable leadership and management teams. Thus, diversity of board makeup is very important. In fact, “83 percent of executives believe that diversity has enhanced brand reach and reputation.” Diverse leaders and employees are integral when expanding overseas — not only to connect with local consumers, but also to understand local rules, regulations, and traditions. For example, the board of directors at MasterCard include executives from the United Kingdom, India, the United States, Mexico, Belgium, and Hong Kong. It is often more prudent to use talent from overseas to lead teams working within a specific region. 

That being said, businesses must be aware of the visa, work permit, taxes, and social security procedures required for individuals to live and work in another country. To be globally efficient, a company must have a Global Mobility Team that is agile and adaptive.

Have a great Global Mobility Team

Consider the example of London-based Diageo, a premium beverages company with offices in 80 countries and a presence in about 180 markets. Diageo has created the appropriate Global Mobility Team for different markets by using a customized shared services model. This model provides consistent service to employees and can easily be adapted to adhere to local market requirements. The company’s two centers in Europe and North America serve as virtual hubs,  providing faster service to employees in terms of processing paperwork, legal requirements and more, wherever they are.

Within Europe, crossing borders seem easy but cross-border workers might trigger immigration, tax and social security risks for the company. It is therefore vital to work with service providers who monitor all cross-border activity. 

International Marketing Campaigns

Marketing campaigns change drastically when doing business abroad. It’s not enough to simply transpose a campaign used at home to another country. When taking a brand overseas, one must remember that what works for one set of people might not necessarily work for another.

Consider this Procter & Gamble example of doing business in Japan: When the company started selling Pampers in Japan, it used the image of a stork delivering a baby on its packaging. This image worked wonders in the U.S., but not so much in Japan. The company later found that the Japanese market was quite confused by this imagery, as stories of storks bringing babies aren’t part of Japanese folklore. Rather, the Japanese stories center around giant floating peaches bringing babies to parents. Had Procter & Gamble chosen culturally relevant imagery for their campaign, they would probably have had more success in Japan. Thus, it’s very important to know one’s audience, and thoroughly research culture and traditions prior to executing an international marketing campaign.

Check the Risks of Technology

The role of technology cannot be ignored when it comes to globalization. For one, technological advancements allow for rapid, real-time communications enabling customers to purchase products made anywhere around the globe. This, in turn, allows for pricing and quality information to be available to customers at the click of a button, resulting in very informed buyers with high expectations. Keeping the impact of technology in mind, business leaders must understand that they will lose pricing power — especially the power to set different prices in different global markets.

Secondly, it is technology that makes virtual hubs like Diageo’s possible. Two of the many benefits of digitization, especially relevant to doing business abroad, is the ability for employees to work remotely and the capability for global collaboration. So in case of a work emergency, where it isn’t possible to quickly hire local help or relocate an entire team to another country for a short-term assignment, cross-continental telecommuting makes for a viable solution. 

It can also help with retaining workers. Employees are more likely to stay at a job that allows them to live their best life. Better retention rates mean decreasing knowledge drain and less money spent on new employees.

However, this ease of access as gained through technological developments does come with its set of risks. Borderless workforces might be convenient, but the constant online communication and exchange of data put the company and/or customer information at risk of being stolen or hacked into. In fact, a new report by IDG Connect and Cibecs has highlighted that 50 percent of companies have “suffered data loss during the last 12 months.”

With this in mind, Ontrack recommends endpoint-focused data protection and data recovery investment as something all firms with a remote workforce or online capabilities should invest in. recovery budgets, with regularly-updated plans in place to restore lost data in the event of a mishap. Whether it’s simply selling products and services online or safeguarding sensitive internal data, effective data management and security is an absolute must for doing business abroad.

While expanding a business internationally may yield high profits and return on investment, the challenges in going global must not be overlooked. Therefore, it is vital for management to be well-versed with the multiple factors that come into play when conducting business abroad. A strong partner in the process is vital. For an early exploration of Global Mobility sign up to Angie Weinberger’s free upgrade of the “Global Mobility Workbook” (v3) here.

Brooke Faulkner is a writer in the Pacific Northwest who has conducted business all over the world. You can find more of her writing on Twitter via @faulknercreek