As technology companies seek to develop new streams of revenue, international expansion presents a rich opportunity to go to market with a broader customer base. While global transformation can be very fruitful, it also comes with complex risks and barriers that many companies may not be equipped to identify and navigate. Unfortunately, not understanding or recognizing cultural and business realities within other countries could lead to failure of your global transformation strategy.
Before you build your global transformation and logistics strategy, it’s important to effectively evaluate your target market’s cultural and operational norms. What works domestically may not work globally, which is something best discovered proactively and not after you have already begun international expansion. As you begin expanding services globally, consider these three key aspects of the journey: culture, operations and teamwork.
1. Cultural Foundations for Success
With millions of people owning smart devices and interacting across borders on social platforms, it’s easy to assume that our cultures are not so different from one another. But from professional meeting etiquette to workday routines, the way people interact in different parts of the globe can vary tremendously. A simple Google search for “international business culture” returns hundreds of cultural norms and nuances. Reading about appropriate business behavior is a great way to start researching, but there is no substitute for personal experience and willingness to learn about other cultures.
The best way to learn is by listening and observing. Few things can sabotage an opportunity faster than a cultural misstep, no matter how innocent. Here are just a few cultural differences that may seem innocuous in one culture, but in other cultures, could be viewed as offensive:
- Sitting down at a meeting in the wrong place or at the wrong time
- Attempting to negotiate before sharing pleasantries, or being so forward as to share pleasantries instead of just getting down to business
- Asking for the opinion of someone when their superior is in the room
- Insisting on an early morning meeting
- Refusing an invitation to lunch or cocktails after work hours
- Assuming that a nod of the head means “yes” or “no”
Before you have an opportunity to visit in person, your best option may be to ask for advice and counsel from a local resource, which may be the international staff of a trusted partner. They can tell you how to approach a situation beforehand and how to remedy any potential misunderstandings. Some cultures highly value respect for hierarchy, seniority and group decision making. For example, in some cultures, the most senior person in a meeting may not speak at first or at all. If you’re from a more extroverted culture, it’s important to allow people time to think before they respond to a question. Just because they’re quiet doesn’t mean they’re not engaged. Often, the decision won’t be made in that room at that time, so you have to accommodate their decision-making process.
Cultural missteps may not be as critical as they were at one time but showing respect can only accelerate a business relationship. Learning a few words of greeting in a potential customer’s language can also have a significant impact on your relationship, as some cultures highly value the effort involved in learning common phrases in their language. The effort may even be prized more than the expertise as a sign of equality and respect.
2. Operational Flexibility
When considering international expansion for your business, you should be open to adopting local practices and processes. Even if local ways of doing business may at first seem inefficient compared to what you’re accustomed to, you should fully explore ways to adapt your operations and those of your business partners to align with local practices and customs in the countries you’re entering.
Understanding your internal processes and how they may be impacted as your business moves into new countries and markets should be a big part of your global transformation strategy. For example, you will want to understand the following:
- How do orders come into a company?
- How and when do orders proceed through sales, procurement, shipping and invoicing?
- How are currencies, taxes and customs handled?
- What are the standard service-level agreements and what is the process for correcting mistakes?
- What are the local laws governing marketing, labor, conflict minerals and recycling?
- How do IT systems interface?
- Who is your point of contact along the way?
You can’t ask enough questions when it comes to global logistics and processes — it’s often the ones you don’t ask that get you into trouble. Expanding into a new country may require adopting unfamiliar processes and systems as well as ensuring compliance with local value-added taxes, customs regulations and labor laws. Otherwise, you could end up paying fees and penalties until the problems are resolved. Building a relationship with an experienced, knowledgeable global logistics partner can provide guidance and direction to navigate regulatory and legal compliance, greatly fortifying your global transformation strategy.
3. Build Your Global Team
Knowing how to expand your business globally also means knowing how to navigate organizations in a new way. Often, a company undergoing global transformation and expansion doesn’t have the organizational structure and hierarchy needed to govern international decision-making and approvals. Patience, respect and understanding how to work effectively in a matrixed environment — from building cross-border, cross-functional teams to influencing others to get things done efficiently — is critical. Your business still needs to move at a rapid pace, but there will be a learning curve as you expand your global market footprint.
As you enter new markets, consider these local aspects of developing a team:
- Hiring requirements
- Market offerings and pricing
- Sales and business development
- Decision-making processes
Some cultures don’t operate in a matrixed team environment, which tends to be more common in North America and Europe. Instead, they operate under a more hierarchical chain of command, and while decisions may be made with group input, one person may make the ultimate decision. It’s vital that you acknowledge those who have higher status as well as those with technical expertise and make sure they’re involved in key discussions and the process to build relationships. You don’t want to alienate anyone or seem like you’re circumventing the organizational structure by speaking with the wrong person in the organization to solve a problem. Building consensus could require reaching out across the company or across the globe to connect with the most appropriate decision makers in the organization.
The foundation for successful global transformation and expansion is built on the participation of local partners and stakeholders. Therefore, cultural awareness is a critical, often overlooked factor in building the relationships that lead to ongoing growth in new markets.
Partnering for Global Transformation and International Success
When companies expand to new geographies, they find out very quickly they need a support network with local experience and staff in order to navigate local market complexities. For example, some countries require local hiring and partnership practices, and some nations offer incentives to support those mandates. But typically, it’s quite time-consuming and cost-prohibitive to build services capabilities from the ground up. By finding an established and experienced global partner that has access to local programs and an understanding of local regulations, your company could leverage tax incentives, customs rates and other advantages.
To expand your global operations, consider partnering with a global logistics provider that has decades of international experience in standing up robust, scalable and flexible infrastructure in dozens of countries and regions to support rapid go-to-market strategies. When you outsource all or part of your global service operations to a partner, you’ll free up your resources elsewhere so you can focus on what you do best: delivering innovative technology solutions to your customers.
If you could answer the question of how to do business globally in a single word, it would be “respect.” That means being open and accepting of how other cultures operate and finding common ground. Study cultural and operational norms with the same zeal with which you study your competitors. Seek to understand and honor local culture and practices. The result will be a global business solution that leverages the best of what our world has to offer. Becoming adept at entering and navigating new geographies not only broadens your horizons, but also gives you the flexibility to balance the ebbs and flows of business. But be clear-eyed and humble about what you don’t know while being confident about what you do — and utilize an experienced global partner to handle the rest. A world of opportunity awaits.
About the Author
Chris Wright is the vice president of Supply Chain Management Services for Global Lifecycle Management (GLM), a specialized solution business within Tech Data. He is responsible for the growth and success of global third-party logistics and fulfillment solutions tailored to the needs of modern original equipment manufacturers around the world.