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The globalization of industry has been increasing in recent years, which means that more people from diverse cultures must be able to work together successfully. Businesses are also venturing into new territories, especially as emerging markets and developing countries become more attractive.
Doing business in another country often requires a different set of protocols, and it can be challenging if your approach is not well planned or you do not have access to the necessary information.
Doing business in another country often requires a different set of protocols, and it can be challenging if your approach is not well planned or you do not have access to the necessary information. Every country or region has specific requirements for doing business, so the following insights will serve merely as basic principles to help you navigate the international business development terrain.
- Perform a market study. First, you must determine if a particular market is right for your product or service. (The alternative is to explore the option of creating a country-specific product or service.) Changes to your pricing or physical features to suit the needs of a market or country could mean the difference between a soft landing and a crash landing.Useful tools for a market study include sourcing information from the web, going through international trade missions, and using international consultants and personal contacts. As you research the new market, focus on key facts such as location, demographics, prospective customer profiles, economic profile, culture, current market trends, and market analysis (i.e., the suitability of your product or service). The list goes on, depending on your interests.
- Assess the culture. Many diplomatic, business, and leadership positions involve a good deal of intercultural awareness and cooperation, which makes understanding each culture a vital ingredient to building a successful international business. In other words, you must know the protocols of polite, respectful behavior in the specific region where you wish to do business. For instance, some countries are hierarchical in authority and place emphasis on that structure, while others are not. Greetings also differ from country to country. Business etiquette is part of global business culture, and knowing how to appropriately behave and interact with others shows respect and professionalism.
- Make it legal and local. International law is very complex in itself, so knowing the local system in your new venture doesn’t necessarily make it easy. You will need to be aware of the local practice, trade, taxes, currency conversion, and contracting processes. But you should also seek legal assistance from a lawyer or consultant who specializes in international business and make sure to follow all of the necessary regulations specific to your industry.
- Build on contacts and partnerships. Building relationships with the right contacts in your target country can be exceedingly impactful to the success of your business. The importance of human influence is often high even when operating in existing markets. Your contacts might be a source of early information for opportunities that might not be accessible to the public. In contrast, much of the information available online might be outdated, incorrect, or not specific to your business.For many businesses, partnerships can be a strategic way of scaling into new markets. Establishing a partnership with an already existing business or person can be a particularly effective approach.
- Establish a business structure. Deciding the business structure you need to adopt in order to enter a new market (and remain sustainable within that market) is just as important as your business idea itself. Your structure will ultimately impact the success of your intended business. As already mentioned, this decision must be carefully weighed with the help of legal advisers or consultants. For example, you might decide to push your product into a new market using distributors or agents who already have a local presence in your target market instead of establishing a new sales center.
Many diplomatic, business, and leadership positions involve a good deal of intercultural awareness and cooperation, which makes understanding each culture a vital ingredient to building a successful international business.
When you decide to take the leap toward business development beyond your home country, do yourself a favor and follow these basic principles.