Business Without Borders: The Challenges Of International Expansion - Management In Brief

Jamie Stewart, UK Managing Director – Exact

Introduction

Jamie Stewart, UK managing director of business advisory specialist Exact, explains how businesses can best navigate these challenges to help ensure that global business operations run as smoothly as possible.

In a business landscape characterised by a wave of globalisation, many businesses look to opening offices overseas as the perfect opportunity to grow.

Most projects run by medium to large companies are inevitably becoming far more international in their scope. Managing any business operation is fraught with risk and requires careful co-ordination, close communication and solid leadership.

But international businesses have their own particular set of challenges, which need to be properly understood and dealt with up front.

As companies defy the recession to develop their international business, they are likely to run up against a barrage of challenges from multiple quarters.

They may need to do business under local legislations, in different languages and in different currencies, serving local markets while complying with global company standards.

In addition, they may need to deal with a whole range of location-specific risks, from unstable economies and governments, to security concerns and labour availability.

And then there are the human risks, where working with a new and untested overseas supplier, or new colleagues in a foreign subsidiary, could pose a significant stumbling block to the success of global expansion.

Yet not all challenges faced by companies seeking to expand internationally are so tangible in nature. When negotiating a path through new and unfamiliar markets, cultural considerations can all too often be underestimated or swept under the carpet as an afterthought.

In actual fact, managing the cultural implications of international expansion is a non-negotiable ingredient for its success.

Companies that get to grips with cross-cultural communication are the best placed to use shared information and experience to enhance their competitive position at home and abroad.

They are also far better equipped to deliver their long-term business objectives.

It’s important to appreciate and assimilate the subtle differences in verbal and non-verbal communication across cultures. And language is perhaps the least of the cultural obstacles that international managers can face.

If misconstrued, even barely perceptible nuances of gesture, eye contact, tone and humour have the potential to offend, and can even derail projects if not dealt with swiftly.

Business cultures themselves can also vary widely, with significant deviations among countries on attitudes to challenging authority, resolving conflicts and even working with members of the opposite sex fluctuating significantly between countries.

This is where strong, sensitive and flexible leadership from the management team can be invaluable for keeping things on track.

With multi-cultural businesses fast becoming the rule, rather than the exception, managers are increasingly recognising the value of working with the diversity of a cross-border team to create mutual trust, recognising that the creativity engendered by a multi-cultural team can lead to more rounded decisions, and more effective plus productive performance.

All too often, even rigorous planning and flawless communication can be completely undone by poor business processes that are supported by inadequate technology.

From the outset, companies seeking to expand their international reach are often faced with disparate systems that compound the problem of managing different languages, currencies and data formats. Incompatible tools and structures scattered across multiple locations can also turn global businesses into a knotty maze of information inconsistencies and data discrepancies.

Any business looking to expand globally needs a transparent, up-to-date international overview of the organisation from the headquarters to local and foreign subsidiaries, so that the management team has the visibility required to make quick and appropriate decisions.

Investing in robust business software can help to establish consistent controls across the breadth of the organisation, support key business processes across borders, facilitate collaboration between subsidiaries and help provide a more effective level of service to global customers.

It should also be flexible enough to adapt to a company’s evolving processes and infrastructure as it grows.

The shifting sands of the economy will continue to throw up some uncertainties for organisations over the medium term, but one certainty is that the wave of globalisation sweeping across the world will bring companies under growing pressure to manage their international operations in a more efficient and cost-effective manner.

It is against this increasingly multi-cultural backdrop that judicious investment in a global standardised business software solution can offer substantial benefits in terms of higher data quality, greater efficiency and all-important transparency across international business locations.

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