Top Problems Faced by Global Businesses

Expanding your business into the global market is an exciting venture, but it is also a complex one.

Expanding your business into the global market is an exciting venture, but it is also a complex one. Understanding the various problems that can arise through the course of your growth makes up a vital step in your preparation process.

For global companies, business problems tend to fall into into one of two categories: cultural intricacies and marketing. Both areas play a considerable role in the successes and failures of an international organisation. Leaders who fail to understand the various customs and legal procedures risk racking up unnecessary costs due to inefficient procedures and operational blunders. Those who neglect to address marketing concerns risk inconsistent messaging and inefficient marketing spend.

Considering the level of capital it takes to invest in global expansion, the stakes are high. While there is no surefire way to completely prepare for the potential obstacles of global business, it is wise to familiarise yourself with some of the most common hurdles and solutions. We’ve pinpointed the top problems faced by global brands in terms of both cultural intricacies and marketing respectively.

Cultural Intricacies
When it comes to penetrating any global market, there are a handful of moving parts, and leaders are responsible for having a relatively firm grasp on all of them. This requires a fair bit of studying on the front-end. Laws, regulations, customs, and logistics procedures vary from country to country and they need to be addressed before immersion. Without a formal understanding of what you will encounter in a market, you are increasing your chances of failure. This also applies to cultural norms. How does business work in a given country? Are there different values? What does this mean for your approach? Let’s take a more in-depth look.

Legal issues: Legal issues are some of the biggest problems leaders face when dealing with their global brands. According to Small Business Chronicle contributor Van Thompson, without proper legal advice, legal complexities can seriously impact an organisation’s finances via fines and penalties.

Ensure that your company is armed with the right international lawyers and work with them to educate yourself on what certain laws mean for your day-to-day business dealings. Having a better individual understanding can help you to make more informed business decisions, and with the backing of skilled lawyers you should be well-protected. Research is the major key to combating legal problems, as most of the information is readily available – it just needs to be accessed.

Cultural Education: Gaining a good understanding of a given market’s cultural preferences or tendencies can be a major roadblock for many leaders. Don’t make the assumption that global businesses run like their American counterparts. Like legal issues, this can largely be addressed by doing diligent research.

Pull up articles on what a typical business meeting looks like in Spain. What is the standard dress code in Iceland? Do your Chinese counterparts expect formal greetings in a meeting? All of this information can help prepare you for your business dealings. The cultural norms vary widely, explained Trade Ready contributor Louei Ali. While some leaders expect punctuality, others regularly show up to meetings 15 minutes late (if at all). Learn the differences to combat a cultural clash.

Logistics: Logistics problems are almost unavoidable when it comes to global business dealings. This involves hiccups with shipping, customs issues, and transportation mistakes. More than anything, this process involves a lot of trial and error, explained Ali. His company eventually became so accustomed to the process that the employees created their own system for shipping documents.

They sent the relevant materials to both the buyers and the clearing agents before the shipment was sent though, waited for document validation via customs, and took action on any changes before the product ever left the warehouse. This allowed for not only time savings, but cost savings as well. Leaders need to find a system that works for them. Take the time to understand how the system works and then make the system work for you to avoid unnecessary spend of resources and capital.

Marketing Globally
Companies have a larger international reach than ever before. It’s for that reason that the global marketing stakes are higher than ever. There can be a lot of trepidation surrounding the introduction of a product into a new market – and rightfully so. Sometimes a top seller in one country is a total failure in another. Branding and messaging often function as the deciding factor between a win and a loss. Here are three common hurdles:

International Coordination: In a survey of senior marketers, Freedman International set out to understand the major problems these professionals face in their global marketing efforts. One of the most cited issues had to do with international coordination. While communication is more advanced than ever, expectations are through the roof.

For global brands, executing a coordinated marketing effort across regions can be a difficult task due to competing priorities. “People tend to be focused on their own regions first and do not always understand the global context,” explained Mintel Group’s Global Director of Marketing Grant Westbrook. Leaders should look to improve internal coordination to ensure optimal campaign consistency. This can include things like roll-out dates, the use of global brand guides, and increased inter-office communication.

Factoring in Cultural Preferences: An ample understanding of culture plays a critical role in effective global branding and marketing. Without it, marketing efforts by businesses can fail to translate or resonate with a given audience. According to Reynolds, a major step toward marketing success in new markets involves a deep understanding of the local consumer’s mindset.

Marketing respondents from the Freedman survey echoed this notion. The alignment of messaging with cultural and social sensitivities is a crucial piece of the global marketing puzzle. Companies must be able to strike a distinct balance with their international efforts. This involves retaining your business’s core values and messaging with a different cultural framework in mind.

Addressing the Competition: In a new market, it is more important than ever to do ample research on your competitors. Many companies miss the boat on this step of the process, but it can provide marketers with considerable information and better position their products for success.

Reynolds suggested identifying major local players from the outset. Jot down media spend trends, emerging product types and content formatting. These little nuggets can not only help you better craft effective global marketing, but can provide you with the opportunity to stand out from the crowd.

Global brands face a mountain of unique challenges. Keeping tabs on the different preferences within different markets is no easy task, but it is critical for success. New international players should keep tabs on the problems mentioned above and work to address them before they even begin.