Challenges Companies Face in Entering Global Markets

August 27, 2023
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In today's interconnected world, the phrase "Think globally, act locally" has become more relevant than ever. As the waves of globalisation continue to crash upon the shores of modern economies, tech companies are increasingly feeling the urge to expand into new markets.

A recent study of IT decision-makers globally found that 72% indicated their organisation is planning to expand into new markets, into either a new city (31%), a new country (33%), or a new region entirely (38%). 

Access to a broader consumer base, diversified revenue streams and a chance to establish dominance in developing markets are irresistible. But with these opportunities come substantial global expansion challenges.

From navigating regulatory mazes, decoding cultural nuances and mitigating operational inefficiencies, global marketing challenges are multifaceted. 

This article discusses these aspects and how partnering with an employer of record (EOR) can significantly benefit companies by tackling the risks of expanding a business internationally. 

What Are The Challenges of Global Marketing?

Companies expanding internationally must navigate a sea of complexities, ranging from cultural nuances to regulatory mazes

Here are some things that organisations face when exploring across borders: 

1. Cultural Differences

What resonates with a Western audience may not appeal similarly in India. 

A classic example is McDonald's, a global fast-food chain, which had to adapt its menu to cater to Indian tastes and cultural preferences, introducing items like the Aloo Tikki burger to resonate with vegetarian preferences.

Moreover, the Western emphasis on individualism contrasts starkly with the community-centric values of Asian countries. Thus, marketing campaigns highlighting individual achievements might resonate in the United States, but could require a community or family-focused approach in India to achieve the same impact.

2. Legal and Regulatory Compliance

When companies expand into new markets, they encounter diverse legal and regulatory environments. Each country boasts its own set of rules, regulations and standards. 

For instance, Europe’s general data protection regulation (GDPR) is known to be the world's strongest privacy and security law. The challenge here is not just understanding these laws but ensuring that business practices are compliant, which can be a significant hurdle for companies that should expand internationally.

3. Economic Volatility

The risks of expanding a business internationally also account for the economic volatility in different parts of the world. Economic uncertainty can profoundly influence market entry decisions and profitability. For instance, currency fluctuations can have direct implications on profit margins. If a tech company from the United States were to establish its base in a country with a volatile currency, the earnings could be significantly affected, changing the entire financial calculus of the expansion.

4. Supply Chain Complexities

Managing a global supply chain mandates strategic planning and coordination. Different regions come with their own sets of tariffs, customs duties and regulations, potentially affecting product pricing and availability. 

For instance, Apple and Tesla are seeking lower import duties for their entry into India and are now looking at local manufacturing to circumvent heavy duties.

5. Political Risks

Political landscapes can vary dramatically between countries, presenting another layer of risks for businesses. A change in political leadership, governmental policies, or international relations can impact trade tariffs, regulations and business operations.

The ongoing Russia-Ukraine war is a prime example of how political landscapes affect global businesses. With unprecedented sanctions slammed against Russia, experts predict it will affect the global tech industry. In a separate survey, 41% are still unable to assess the impact on their business. 

6. Language Barriers

While fundamental to effective communication, language can become a significant barrier when resonating with local audiences. 60% of English natives have struggled to communicate with non-native coworkers in writing.

Marketing campaigns need overhauls, not just translations, to communicate the intended message. Customer support, collaborations and partnerships face hiccups if language differences aren't adequately addressed.

7. Understanding Pricing Strategy

Pricing isn't merely about converting currencies. It's about understanding local economic conditions, competitive landscapes and consumer expectations. For instance, software services priced at a premium in the United States might need adjustments for the Indian market, where local competitors might offer similar services at a fraction of the cost. 

A software developer in India can be hired for 1/3rd of the price compared to a US-based developer.

8. Human Resource Management

The intricacies of managing a global team are manifold. Differences in labour laws, cultural work ethics and expectations pose challenges for hiring, training and retention. 

For instance, Western companies expanding to India must consider the importance of festivals like Diwali, a significant cultural festival that influences work schedules and bonuses.

Seek Help of EORs When Entering Global Markets 

Global expansion isn't just about seizing opportunities; it's about navigating all the above challenges while devising a strategic growth plan. This is where the role of an EOR becomes pivotal.

An EOR acts as a bridge for companies that expand into new markets. Instead of grappling with the nuances of each country's employment laws, tax systems, and regulatory environments, EOR handles these complexities, allowing the company to focus on what it does best: innovation and expansion.

For your expansion plans in India, trust Rapid, an experienced, all-integrated platform tailored for US tech companies aiming for global dominance. With its robust framework, Rapid streamlines the entire process of global expansion. 

Its extensive global network ensures companies can tap into top-tier talent without the hassles of understanding local hiring norms or practices. Rapid has its finger on the pulse of ever-evolving global regulations. This ensures that tech companies remain compliant, mitigating risks and potential legal hurdles.

Rapid offers a comprehensive solution for US tech companies eager to make their mark with India’s high-skilled IT talent, transforming the daunting challenge of international expansion into a streamlined, efficient process. 

Click here to learn more about their services. 

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