Can you guess what is common about some of the most popular globally recognized brands like Netflix, Amazon, eBay, etc.?
These brands have developed excellent marketing strategies, including all the global factors influencing international business. However, the secret to these brands’ immense international success is their adaptive approach to localization.
If international expansion is on your priority list, you must know about the factors to consider in international business. Here is a comprehensive guide to help you identify these factors to ease your international business operations.
Major Factors to Consider in International Business
Various factors drive international business activities. Here are some of the major factors that businesses much focus on when entering a foreign market:
The economic factors affecting the international business environment include target market size, the cost involved, currency and exchange rate, inflation, etc. All these economic factors directly influence the profitability of international businesses. Therefore, entrepreneurs should analyze these factors extensively before starting with international trade operations.
Social and cultural restrictions play a huge role in the growth of an international business. For example, most businesses try to avoid countries like Libya, Uganda, Afghanistan, etc., for lack of social and political stability. Hence, conducting thorough research on the social environment of a country is also very important.
Each country has its legal framework. For international businesses, it is mandatory to be well-versed with these legal norms. The most essential legislative frameworks to start a business include – labor laws, consumer laws, data security laws, etc.
Respecting the cultural beliefs of the host country’s customers is a must. Your potential customers can be very sensitive toward these beliefs. Therefore, for an international brand trying to make a mark in a new market, knowing and respecting these beliefs is required.
Geographic factors are a key part of international businesses. For example, factors like logistics, supply chain needs, skills, etc., depending on geographical aspects. Hence, geographical research can help international businesses set-up their initial operations seamlessly.
5 Factors Influencing International Business in 2022
Expanding a business internationally has its share of challenges. While successful international expansions can lead to exponential growth, an unsuccessful attempt at international trade can result in a negative brand image.
Tons of businesses are trying to make it big in international markets. Unfortunately, only a few of these businesses survive the cutthroat competition in the global markets.
Hence to manage international business operations successfully, entrepreneurs should look out for the following factors:
1. Build a localized brand image
It takes time and patience to build a presence in an international market. Engaging the customers of a new market is not easy. Initially, businesses should focus on building credibility to win the trust of host country customers. Localization plates are key in achieving potential customers’ trust in a new market.
With localization, businesses can experience the following:
- A stronger brand image and recognition in the new market so the prospects can reach out to you without facing any challenges.
- Get familiar with the host country’s local language to ensure strong customer interaction. Localization can allow you to develop your sales pitch and content in the prospects’ familiar language.
- Localization opens the door to a strategic partnership with local businesses. This can help you to gain a competitive edge in a new and uncertain global market.
Here are a few tips for developing a localized brand image:
- Learn to speak the native language of the host country. It will help attract prospects and scale your business to a new destination.
- Be adaptive to the host country’s culture. For example, ensure that your brand positioning initiatives, like content, ad campaigns, etc., are not disrespectful toward the host country’s culture.
- Perform in-depth research about your target audiences. Prepare a confident brand voice that addresses all prospect groups’ needs and pain points.
2. Be well-versed with the legislative norms of the host country
One of the major factors to consider in international business is legislative norms. Therefore, your product should be market-ready and a critical aspect of that is to comply with the regulations and legislation.
Entrepreneurs operating in a new country must focus on the following aspects:
- Becoming familiar with the frequent legislative changes of the host country. Some legislative changes intend to simplify international trade, while others can complicate it. In both cases, founders should make sure that they stay compliant.
- A great international business strategy is to hire staff in the host country. However, businesses should comply with the host country’s labor laws to seamlessly complete this hiring processremain compliant with the host country’s labor laws to complete this hiring process seamlessly.
- Entrepreneurs should also be aware of the breaches specific to the country. These breaches can not only invite penalties worth multi-million dollars but can also affect your brand’s reputation in the host country.
- Host countries often prefer international brands to adapt to their accounting and tax formats. Hence, a clear idea of accounting and tax requirements can simplify financial reporting for businesses.
3. Train your employees to interact with international customers
The prospects of the international market can have different needs and preferences as compared to the customers of the home country. Since your team will directly interact with international customers, it is mandatory to train them accordingly.
This could mean:
- Arrange cultural training for the employees to help them identify the culture gap and the possible actions to address it.
- Develop a new approach toward crafting the sales pitch for the prospects. These could mean using certain keywords and area-specific pain points to make the sales pitch more relatable.
- Create an exceptional onboarding experience for customers. For example, if your onboarding team is from the home country, address timezone differences to ensure that customers can have a convenient experience.
- Entrepreneurs can also build an effective learning management system where employee training can be conducted and monitored anywhere. That way, you can use a single dashboard to track employees’ progress, irrespective of location.
- For any training, ensure clear learning objectives for the employees. These objectives will help them understand what to expect from the training and how they can implement it in their job roles.
4. Develop a successful digital control system
A digital control system can streamline all organizational processes in a single platform. As a result, you can aggregate the compliance status of all countries of operations in one place. This can include payroll, accounting, and legal entity status.
A digital control system simplifies the management of different portfolio entities and operations across various countries.
When it comes to international business, it is difficult to ensure that a single tool will be effective everywhere due to language and accessibility barriers. Additionally, moving a system across different nations can be expensive for early-stage startups.
A digital control system can be a game-changer for international businesses. It works as an intermediary among different business units of an organization in different countries to control compliance requirements.
That way, businesses can easily monitor all their jurisdictions under a single platform.
5. Partner with local brands
Struggling with the local challenges of the host country? First, you need local knowledge and expertise to fix it.
One of the proven strategies for international expansion is partnerships with local brands. Strategic alliances with local brands can help businesses seamlessly navigate cultural obstructions and regulations.
Some of the tried and tested techniques to partner and maintain long-term relationships with local brands include:
- Research the target market and identify potential partners. Focus on quality over quantity and connect with local brands operating in the same niche as you. Make the most of Google search, LinkedIn search, and other available resources to recognize suitable partners.
- Once you shortlist a group of potential partners, make the first move. Call them or book a meeting to discuss the scope of the alliance, expectations, processes, etc. Make sure that both parties are on the same page.
- Establish practical goals. Especially, setting revenue goals is very important to clarify the proportion of each partner. Set a minimum revenue goal that must be achieved to continue the partnership in the long run.
- Develop and present a business plan that includes strategy, lead generation plan, opportunities, and other factors relative to the international market. It will help you and your partner identify the next steps easily.
- Finally, add owners for each activity within the business plan. This will ensure less confusion, and each team member is busy with their respective responsibilities.
Ace International Business Operations with Multiplier
One of the biggest factors to consider in international business is – payroll. Hiring skilled employees in a foreign land is challenging, let alone setting up a global payroll in foreign currency.
So, how can international businesses manage global payroll operations efficiently?
Enter a SaaS-based platform called – Multiplier.
Multiplier can help international businesses to:
- Simplify multi-currency payroll systems
- Pay freelancers and independent contractors effectively
- Stay compliant with all necessary legislations and tax laws
- Manage expenses and reimbursements with a simple click
Want to explore further? Book a demo today!