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Understanding Global Business Best Practices

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Published in Business Articles

Operating a global business is a completely different ballpark from running a local one. Not only do you have to deal with a much larger client base, but other countries also have a different set of legal requirements and expectations.

For example, some of your products may not be allowed in certain countries. Some may require you to pay a tax in order to import them. The work culture in another nation could also force you to adjust how you do business.

If you want to conduct business overseas, these are some of the best practices you should keep in mind.

Know the Four Global Business Strategies

When doing business in another country, you may need to change how your company operates. There are four global business strategies you may align with depending on how well you integrate with the other country and customize your products accordingly.

Standardization Strategy

A standardization strategy is used by companies that hope to operate without any major changes in their workflow. The assumption is their product can meet the needs of everyone around the world, without variation.

Software companies are one of the few that can offer a universal product. Programs can integrate various language options and functionality for different operating systems. For example, Apple products and their associated apps work the same regardless of what country you’re in.

Transnational Strategy

A transnational strategy has a higher global integration and local responsiveness than other options. Most companies only use this strategy when they face significant pressure from international competitors.

Ford Motor Company uses a transnational strategy in order to add custom elements that meet country laws and to provide unique products for locals.

Export Strategy

An export strategy is the opposite of a transnational strategy. Companies use this when they’re primarily focused on domestic operations but also export some products.

Most smaller companies rely on an export strategy as their first step into international trade, as it lets them learn where their customers are located.

Multidomestic Strategy

A multidomestic strategy customizes products for each country. In this type of strategy, a company will usually rely on country managers to adapt their business to better fit local customs and expectations.

For example, some global fast-food chains offer very different types of food depending on the country. Pizza in India has different topping options than in other countries, such as paneer. Convenience stores in Japan generally offer much more appetizing food than those in the United States.

Perform the Necessary Research

The amount of research you pursue will inform the best kind of strategy for your company.

Is there a market for your product in other countries? If you’ve previously sold your product internationally through the internet, then you should be able to find what countries and cities are your biggest buyers.

Are there a lot of documents and legal obstacles to navigate? Or is the country very welcoming to new businesses?

You can find current demographics and legal issues by reviewing free market research online. Export.gov and The Market Research Library are two notable databases to peruse.

Try a Similar Market First

International business can prove difficult, especially dealing with a completely foreign environment that primarily speaks a different language. There’s a reason why some of the best places to open a business overseas are mostly European countries.

Singapore is one of the few exceptions because they’ve built themselves up as one of the most networked economies in the world.

For your first venture, try a market similar to your own. Find a country that speaks your primary language and has similar business practices to those in the U.S.

Adjust to the Local Norms

If you do pursue business in a more foreign locale, make sure to do research into the local norms and business culture.

For example, the Japanese are most comfortable interacting with someone of equal status. It would thus be considered rude to send a representative to speak with someone when you’re otherwise available.

On a similar note, meetings in Brazil tend to run late. Business travelers are recommended to stay until proceedings are brought to a close so as not to give the impression that it isn’t worth staying for.

Pick a Distributor and Consider Selling Online

The best way to arrange distribution overseas is with a sales representative or distributor. They know all the ways to get through customs and have plenty of contacts. Another way to approach potential customers is at international trade shows or on online marketplaces.

Ecommerce is a great option if you want to target consumers directly at any point in your career. Amazon Global Selling allows you to sell internationally. Much smaller businesses can also make use of e-commerce platforms like Etsy or Shopify.

Learn Tariffs and Import Restrictions

Countries often put restrictions on what can be imported based on the legality of the ingredients and the products, among other reasons. As such, you’ll want to bring your global business into an area that won’t require many inventory changes.

A country’s tariffs may also affect your business. Due to the increased cost of importing and selling goods, you may have to raise the price of your products.

Rely on Finance Experts

It’s alright if you don’t have much experience or knowledge about international trade. When in doubt, reach out to an international trade financing group that will help you deploy the funds you need when you need them.

You can also rely on finance experts to adjust your pricing according to local expectations. One item that’s easily accessible in your country may sell for more in another.

Don’t Let Borders Restrict You

Anyone who wants their business to continue growing past the boundaries of their office building or retail store will have to eventually invest in a global business endeavor. That can be as little a move as starting an online store or as big as opening a new location in another country.

Whatever you go for, remember these best business practices for a better chance of success.

Interesting in learning more about business, politics, and more? Check out our other articles and columns.

 

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