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The world is hyper-connected in the 21st Century. Digital technology has made it easier for people to get in touch with each other. One may observe rapid globalization and digitalization in every sector that has taken place in the past few years. Undoubtedly, international expansion is vital for the success and growth of a company. It is natural for every business owner to aspire for global expansion due to its rewarding benefits.
According to research conducted by Wells Fargo, 87 percent of American firms share the same opinion. Entering new markets can help companies reach more consumers resulting in increased sales and profits. It further allows businesses to diversify their assets, access new talent pools, and understand the target culture and consumer behavior. Giants such as Coca-Cola and Pepsi are experts at diversification through global expansion.
While going global has many advantages, an unplanned expansion can end up costing you a huge amount. There are several mistakes a businessperson can make when expanding globally. Fortunately, most of them are easily avoidable. This article lists six common mistakes to avoid when going global.
1. Not getting strategic help
Every country has its own rules and regulations for businesses. It is vital to get expert advice. Doing so will make your expansion project a painless experience. It is worth mentioning that this expert should not be your local advisor. Instead, it is best to get advice from someone who knows what it’s like doing business in your target market.
For example, Australia is a lucrative market with a strong economy. But, like other countries, there are strict legal obligations on doing business over there. Therefore, it is necessary to get Australian resident director services to avoid butting heads with the local authorities. The benefit is twofold. Not only will they give you excellent advice, but they can also reduce the cost of doing business.
2. Not thinking about the cost of doing business
Global expansion is stressful. People mistakenly assume that things work the same in different markets, which is, of course, a huge misconception. Often, the high cost of doing business in foreign markets is the sole reason for failure. Hence, international business owners must abide by the “know before you go” rule.
Besides, companies should do their due diligence before entering another market. They should also research the unique market requirements and the statutory responsibilities. Another expense is the real estate costs. Many business-friendly nations often have high rents on properties with costly premiums. These hidden costs of doing business can sneak up on a company.
3. Not listening to your teams
Now that you have hired the correct people, it is time to let them do their job. Realistically speaking, you cannot micromanage everything. The time difference alone makes this impossible. Therefore, you must rely on your teams to do their best. Your global experts are more attuned to local trends. So, communicate with them. Ask for their valuable input before making any decisions to resolve problems.
4. Not understanding the culture
Every country has its own culture. Similarly, professional etiquette differs in every country. So, even a small gesture can make a deal fall through because the locals might think you rude. Such blunders can end up costing you in the long run. For example, Chinese people expect others to bow to the oldest senior first before moving on to the others. Whereas in the UAE, you must shake hands with the right hand only. It may seem silly to you, but knowing about these characteristics can make a difference.
5. Not hiring the right marketing team
Another common mistake is not hiring marketing experts from the target region. There is a cultural and language gap from one country to the other. For example, Braniff Airlines promoted their leather seats with the slogan “Fly in leather.” While the Spanish translation meant fly naked. Companies can easily make the mistake of making slogans that do not translate well in the local language. Notably, such incidents can ruin your business experience across the borders.
6. Not taking your time
Most failed businesses opt for global expansion to revitalize struggling companies. However, that is akin to beating a dead horse. Not only is it going to be disastrous for your domestic operation, but it can make your business hemorrhage money. Experts call such plans as “going global for the wrong reasons.”
Sadly, many companies consider expanding to foreign markets as getting rich quick opportunities. One should understand that global expansion is a long-term investment, and businesses looking to make easy money should avoid expansion. Therefore, your business should focus on long-term plans to improve profitability.
Doing business in the 21st Century is necessary for survival. Perhaps, one cannot put it off till it is too late. Experts think that firms that fail to prepare for globalization will inevitably shut down. Indeed, international expansion is necessary for business growth. You can also expand your customer base and appeal to a larger market. However, without proper planning and resources, all of this is impossible.
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