As companies continue to expand across borders and the global marketplace becomes increasingly more accessible for small and large businesses, 2019 brings ever more opportunities to work internationally. Cultural backgrounds: a key for your international expansion
Multinational and cross-cultural teams are likewise becoming ever more common, meaning businesses can benefit from an increasingly diverse knowledge base and new, insightful approaches to business problems. However, along with the benefits of insight and expertise, global organizations also face potential stumbling blocks when it comes to culture and international business.
While there are several ways to define culture, put simply it is a set of common and accepted norms shared by a society. But in an international business context, what is common and accepted for a professional from one country, could be very different for a colleague from overseas. Recognizing and understanding how culture affects international business can help you to avoid misunderstandings with colleagues and clients from abroad and excel in a globalized business environment.
Some countries have a reputation for frequent business litigation. Make sure you understand the legal market and gather a legal team which will minimize corporate risks. Be sure you follow the government rules in place for operating your industry within the country. Create localized commercial agreements and hire local counsel who is familiar with industry-specific regulations within your target market.
You’ll likely also need to outsource your accounting and tax functions who understand the domestic rules for corporate tax. Establish local banking relationships and understand how foreign currencies could affect your bottom line overall. Make sure you include this information in your final budget and business plan.
Every culture has a different approach to doing business. In order to cultivate lasting relationships with business partners and clients, you need to walk a mile in their shoes and embrace the way they do things.
For instance, the concept of punctuality can be different between cultures in an international business environment. Different ideas of what constitutes being “on time” can often lead to misunderstandings or negative cultural perceptions.
For example, where an American may arrive at a meeting a few minutes early, an Italian or Mexican colleague may arrive several minutes after the scheduled start-time and still be considered “on time”.
Finally, our strongest recommendation is to optimise your international new business team and materials. A strong team and set of materials should include advisors, lawyers, accountants, who understand local laws and financial practices, localised materials, and most importantly, a translation/localisation expert who understands the local culture, and business practices. It is not just about speaking the language, it is also about knowing the culture, how business works, and beliefs around how business is done.
Expanding into unchartered foreign market waters can be lucrative. However, it can become a nightmare. But if you take in mind the aspects discussed, your business can be prepared for the transition into the global marketplace.