- Language Barriers
When engaging in international business, it’s important to consider the languages spoken in the countries to which you’re looking to expand.
Does your product messaging translate well into another language? Consider hiring an interpreter and consulting a native speaker and resident of each country.
It’s also critical to consider the languages spoken by your company’s team members based in international offices. Once again, investing in interpreters can help ensure your business continues to operate smoothly.
- Cultural Differences
Just as each country has its own makeup of languages, each also has its own specific culture or blend of cultures. Culture consists of the holidays, arts, traditions, foods, and social norms followed by a specific group of people. It’s important and enriching to learn about the cultures of countries where you’ll be doing business.
When managing teams in offices abroad, selling products to an international retailer or potential client, or running an overseas production facility, demonstrating that you’ve taken the time to understand their cultures can project the respect and emotional intelligence necessary to conduct business successfully.
One example of a cultural difference between the United States and Spain is the hours of a typical workday. In the United States, working hours are 9 a.m. to 5 p.m., often extending earlier or later. In Spain, however, working hours are typically 9 a.m. to 1:30 p.m. and 4:30 to 8 p.m. The break in the middle of the workday allows for a siesta, which is a rest taken after lunch in many Mediterranean and European countries.
- Managing Global Teams
Another challenge of international business is managing employees who live all over the world. When trying to function as a team, it can be difficult to account for language barriers, cultural differences, time zones, and varying levels of technology access and reliance.
To build and maintain a strong working relationship with your global team, facilitate regular check-ins, preferably using a video conferencing platform so you can interact in real-time.
Research by Gallup shows that employees who have regular check-ins with their managers are three times more likely to be engaged at work than employees who don’t.
When distance divides teams, as it has for many during the coronavirus (COVID-19) pandemic, communication is key to ensuring everyone feels valued and engaged.
- Currency Exchange and Inflation Rates
The value of a dollar in your country won’t always equal the same amount in other countries’ currency, nor will the value of currency consistently be worth the same amount of goods and services.
Familiarize yourself with currency exchange rates between your country and those where you plan to do business. The exchange rate is the relative value between two nation’s currencies. For instance, the current exchange rate from the Canadian dollar to the US dollar is 0.77, meaning one Canadian dollar is equal to 77 cents in US currency. Make it a point to watch exchange rates closely, as they can fluctuate.
It’s also important to monitor inflation rates, which are the rates that general price levels in an economy increase year over year, expressed as a percentage. Inflation rates vary across countries and can impact materials and labor costs, as well as product pricing.
Understanding and closely following these two rates can provide important information about the value of your company’s product in various locations over time.
- Nuances of Foreign Politics, Policy, and Relations
Business doesn’t exist in a vacuum—it’s influenced by politics, policies, laws, and relationships between countries. Because those relationships can be extremely nuanced, it’s important that you closely follow news related to countries where you do business.
The decisions made by political leaders can impact taxes, labor laws, raw material costs, transportation infrastructure, educational systems, and more.
One hypothetical example Reinhardt presents in Global Business is that if the Chinese government decided to subsidize Chinese dairy farms, it would impact dairy farmers in all surrounding countries. This is because, with extra funding, Chinese dairy farms may produce a surplus of dairy products, causing them to expand their markets to neighboring countries.
It’s both exciting and intimidating that the nuances of international politics, policies, and relations can impact your business. Stay informed and make strategic decisions as new information arises.