5 challenges when expanding your business Internationally

Expanding your business internationally is certainly challenging but it’s also exciting and can bring great benefits if done using the right process. That is why carrying out correct planning is essential and will help in risk reduction when selecting a market and introducing your business into it. The challenges you may face can begin even before you start marketing your products/services. Below we mention 5 challenges you may face when expanding your operations.

Team and structure

You may have a sales and operations team that supports you in meeting your current needs in the local market, however, you must consider what team will support you in operations abroad. You will need to have thought about and be prepared for the following eventualities before they arise: Who will attend the purchasing orders?

• Plant
• Headquarters
• Local team

Who will do the billings?

• The company’s headquarters
• The local company
• The commercial ally

Cost settings and pricing strategy

The product or service prices that you currently have in your local market may be based on your current costs, but what will be the associated costs in a new market? Making an analysis of the competition, its prices and scope of the product or service will help you to have a frame of reference, and then select the ideal strategy. Exchange fluctuations You must bear in mind that currency fluctuations may affect:

• The price of the product / service
• Local costs
• Return of profits

In volatile nations, such as Argentina, the price of the product or service can be strongly affected by exchange rate volatility, so you will have to constantly monitor this fluctuation. The best way to protect yourself is to be able to pay your suppliers in the local currency, this will also help to avoid the exchange rate fluctuation from affecting you to a great extent. There are other methods such as “forward” contracts where a future exchange price is agreed, which is a risk, not knowing how the exchange rate will be in the future.

Geo-political risks

There are markets where the economic situation is highly interlinked with other countries. Such as with Mexico and Canada, which depend highly on their trade with the United States and therefore, the constant threats by the USA of canceling treaties generate uncertainty. You also might want to see:  5 tips to expand your business in Latin America It is important to consider that the investment you make in the country is long-term, as well as having a good understanding of what the advantages and opportunities are in the country you select, such as:

• Infrastructure
• Economic strength
• Growth predictions

Cultural differences and schedules

Cultural differences, languages and work schedules can complicate the fulfillment of objectives. Keeping the cultures of your collaborators in mind will help you to understand how they work and help you to predict and understand the actions they may take. Researching the culture and work method will help you to avoid going through stressful moments and to maintain effective communication. When working with countries in different time zones it is important to have a flexible schedule when it comes to videoconference meetings. By being flexible with time on your end your collaborator in another country will feel valued and will be more likely to work around your schedule later on.