The Hard-hitting Challenges of Doing Business Overseas Doing business abroad is a lucrative career option, especially when you know that a foreign economy is booming and there is demand for certain type of products and services, that you can provide. But, doing business overseas never came without its obstacles.
One fundamental consideration is the structure of your organization and the location of your teams. For instance, will your company be run from one central headquarters? If so, how will these teams be organized, what autonomy will they have, and how will they coordinate working across time zones?
If not, will you consider hiring local market experts who understand the culture of your target markets, but will work centrally?
Coca-Cola offers one example of effective multinational business structure. The company is organized into continental groups, each overseen by a President.
The central Presidents manage Presidents of smaller, country-based or regional subdivisions. Despite its diverse global presence, the Coca-Cola brand and product is controlled centrally and consistent around the world.
While Coca-Cola is a vast international brand, the structure of your business and the number, nationality, and level of expertise of your team will vary depending on your industry, product, and the size of your business. Foreign laws and regulations Along with getting your company structure in place, gaining a comprehensive understanding of the local laws and regulations governing your target markets is key.
From tax implications through to trading laws, navigating legal requirements is a central function for any successful international business. Eligibility to trade is a significant consideration, as are potential tariffs and the legal costs associated with entering new markets.
Airbnb ran into trouble inwith a crackdown on advertised rental properties falling outside local housing and tourism regulations. For instance, European countries stipulate that a minimum of weeks maternity leave be offered to employees, while on the other hand, there is no such requirement for U.
With the complexity involved in foreign trade and employment laws, investing in knowledgeable and experienced corporate counsel can prove invaluable. Beyond abiding by official laws, engaging in international business often requires following other unwritten cultural guidelines.
This can prove especially challenging in emerging markets with ill-defined regulations or potential corruption. In response, companies doing business in the United States must abide by the Foreign Corrupt Practices Actwhich aims at eliminating bribery and unethical practices in international business.
A good rule of thumb is to beware of engaging in any questionable activities, which might be legal but could have future reputational repercussions. International accounting Of the main legal areas to consider when it comes to doing international business, tax compliance is perhaps the most crucial.
Accounting can present a challenge to multinational businesses who may be liable for corporation tax abroad. Different tax systems, rates, and compliance requirements can make the accounting function of a multinational organization significantly challenging. Accounting strategy is key to maximizing revenue, and the location where your business is registered can impact your tax liability.
Mitigating the risk of multiple layers of taxation makes good business sense for any organization trading abroad. A focus on tax efficiency is often the aim of international accounting efforts.
In the European Union, companies may benefit from the Common Consolidated Corporate Tax Base proposal, whereby companies with operations around the EU can limit tax liability to one corporate center.
Well-known companies with operational headquarters in the Republic of Ireland include Google, Facebook, and Intel. Cost calculation and global pricing strategy Setting the price for your products and services can present challenges when doing business overseas and should be another major consideration of your strategy.
You must consider costs to remain competitive, while still ensuring profit. Researching the prices of direct, local-market competitors can give you a benchmark, however, it remains essential to ensure the math still works in your favor. For instance, the cost of production and shipping, labor, marketing, and distribution, as well as your margin, must be a taken into account for your business to be viable.
Pricing can also come down to how you choose to position your brand — should the cost of your product reflect luxury status? Or will low prices help you to penetrate a new market?The Cultural Challenges of Doing Business Overseas Nancy Kelley University of Phoenix MBA Forces Influencing Business in the 21st Century A.
Lutz February Globalization and overseas business expansion has brought about the need for in-depth understanding of culture differentiation. The Cultural Challenges of Doing Business Overseas EC0/ 8/2/ Dr. Sharghi The Cultural Challenges of Doing Business Overseas This paper will provide an analysis of Steve Kafka’s decision to open and operate a Chicago-style pizza business in the Czech Republic (University of Phoenix, ).
Doing business in China can be lucrative, but frustrating. Cultural misunderstandings arising from miscommunication are one of the biggest challenges which foreign companies face in China. Most businessmen admit to cultural differences being one of the biggest challenges of doing business overseas.
It is very important to learn the cultural differences in international business because what may be acceptable in your country, could be regarded as being offensive in a foreign country.
Summary Managing cross-cultural challenges in the international business management is akin to the "Hygiene" factor of the "Dual-factor Motivation" theory.
However, Chinese business culture is unlike it is anywhere else in the world and to thrive in this market, foreign companies need to have an understanding of the major practical challenges they.