Doing Business Internationally: What Challenges Companies Face When Going Global
Today, although the actual physical size of the earth has remained the same through the ages, the ever-shrinking world seems to have been reduced to a village of interconnected races. This, alongside the promise of opportunities that could essentially save cost while increasing revenue potential, diversifying talent and products as well as improve the brand’s outlook; steady lures several companies into doing business internationally.
The sheer impact of doing business globally on a larger audience blindfolds several business players in the global market. As a result, several of them are unaware of the risks posed by international business issues. These international business issues often border along economic, environmental and political lines. Although doing business internationally poses innumerable opportunities, it is not without its fair share of risks as those experienced by other sectors vulnerable to the play of the market forces. Learn everything about the problems of business globalization – from the smallest details to international problems.
One of the challenges companies face in entering global markets is the manner in which the members of the host communities socialize. All the elements that characterize their social structure from traditions, to arts, foods, holidays, social norms, religion and other lifestyle patterns which constitute the cultural features of the host community could determine the success of a business in the region depending on how the company handles the prevailing differences. These differences extend to create relational or interactional barriers especially stemming from variance in language resulting in communication difficulties.
In overcoming this challenge, international firms entering the global market should be equipped with emotional intelligence and people management to create a balanced, conducive, and inclusive environment for employees. Engaging the service of an employer of record will help you in getting local employees that are experts and well versed with the country’s cultures and customs.
As current global concerns surrounding the unethical practices among suppliers within the chain of supply rise, doing business internationally has become a dilemma for several companies. This is because doing business internationally lengthens the chain of supply of products from their sources overseas to their respective destinations. Thus, making the process more complex and difficult to manage. Consequently, there is a growing increase in forced labor and worker exploitation in the international market.
Although the United Kingdom has made significant attempts at curbing the nefarious activities of suppliers through the Modern Slavery Act passed in October 2015, polls from a research partnership involving the Ethical Trading initiative and the Hult International Business School showed that a significant number of businesses were convinced that their supply chain is plagued by modern slavery.
One of the global business issues companies faces is the problem of retaining talent. This challenge often results from decisions which involve deciding whether to take in a new team with financial implications regarding extra training. It also includes making tough choices around deciding whether or not to send off the company’s best hands to establish the new branches. When entering the global market, it is important for companies to identify the potential manpower requirements and map out clear strategies on how to meet them. It is also important to work with an employment agency like WeHireGlobally that have a reputable record of retaining talents globally.
Tax and Compliance
Companies undergoing international expansion face challenges of globalization in business majorly centered on Taxation in the host country, compliance with the prevailing system of taxation and its implications on the company’s existence.
In order to overcome this challenge, it is considered a worthy investment to engage the services of a knowledgeable counsel with versed experience while steering clear off unwholesome activities. Engaging the service of a reliable global PEO or Employer of record like WeHireGlobally is another way of going around the tax and compliance challenges. With a PEO, companies are free from improper remittance of taxes, improper payroll management, violation and penalties of tax and legal laws, etc.
Trending Regions to Expand
In global business definition, identifying trending or prospective regions to expand the company’s coverage to, is one of the complex challenges of international business. This problem arises from the irrational, self-centered, often ill-advised decision-making processes of entrepreneurs or company managers.
Successful international businesses have a principle of taking decisions on expansion based on evidence from thorough research in line with the company’s priorities and goals and not merely because the proposition of a branch of the company established in a certain region appeals to the manager. WeHireGlobally has helped business owners in identifying and selecting the most trending regions to expand too. In our regional breakdown, we’ve helped in addressing the location, currency, regulations, policies, economic analysis, market structure, etc. of some regions around the world. Among these regions are Brazil, Singapore, Nigeria, Ukraine, Philippines, etc.
Competition between Organizations in New Region
Competition between organizations in a new region is one of the current global business challenges. One of the biggest strategic challenges to competing in the international arena include pricing strategies and the nature of the product. Companies seeking to enter the global market should identify these business problems; their potential competition and map out strategies to penetrating the business environment.
How to Overcome the Challenges of Business Globalization with Global PEO
Many companies are interested in expanding globally in order to effectively and efficiently minimize cost, maximize profit and achieve optimum diversification of talent and product. However, with the challenges of business globalization plaguing the market, companies choose to refrain from it for fear of incurring major losses. To overcome these challenges, companies going global that want to successful exploit the market’s opportunities are advised to employ Global Professional Employer Organization also known as Global PEO. WeHireGlobally is a global PEO with exceptional, fast, secured, and affordable services which companies going global can leverage.
Companies expanding globally need this service since it assists companies in identifying and employing the best stock of qualified hands while sorting out income payments and remuneration. It solves most of the global market dilemma as the most part of it borders on human resource management.
What Challenges Companies Face When Going Global?
Unstable political systems have great implications on the rate of change of government policies which ultimately influence emerging markets in the country. These policies determine taxation, inflation, pricing, currency conversion rates and other laws which manipulate the market.
Current ethical issues in the global market are primarily the existence of the possibility of forced labor and worker exploitation along the chain of supply.
The principal economic issues influencing international business include: taxation, universally acceptable payment methods, tariff and export fees as well as currency rates.
Calculation of cost and identifying global pricing strategy are pricing issues affecting the international market. These can be set by noting the existing local market price of the host country and the company’s choice for brand positioning. That is, whether or not the brand reflects luxury status.