Tips For Conducting Business Globally

These mistakes may be innocent enough, but can carry substantial, financial repercussions and unintended brand erosion. Understanding cultural differences from both a business POV and a social POV is paramount to succeeding in global waters. If you are new to the challenge of pursuing business in foreign territories please be aware, the American way, is not the only way and in some cases can be shunned.

Example: An American executive who relocated to London for a Branding position was a novice to British culture. He was a bright, head strong, opinionated American who multi-tasked constantly, had a get-it done work ethic and would happily stay up all night to complete a project. However, he was not being received well. He quickly learned from a personal branding, likeability and efficiency perspective, it was incumbent that he rehabbed his professional personality. To fit in, he needed to adjust to the locale if he wanted to be welcomed by his British colleagues. He started with simple measures, lowering his speaking voice by several octaves. He then got in sync with the speed and efficiency of his colleagues. He refrained from making any comments on the British Aristocracy. Lastly, he became much less overtly assertive. He happened to be a quick leaner, therefore his challenges were measurably overcome in a short period and it made a substantial difference. He was still American, but he was no longer the stereotypical, over-the-top, unintentionally offensive American.

This lesson was repeated (although abbreviated) when he conducting branding excursions in Central Eastern Europe, Spain, France, Australia, Germany and other territories. Each country has it's own set of business, cultural and social attributes. It is imperative to develop some cultural sensitivity and personal branding acumen before attempting to launch your brand, sale products, or increase awareness for a brand, product or service in different cultures.

Tips from a PR Expert:

1) Invest in due-diligence. Research the country's cultural history.

2) Research, the company you want to do business with. Understand their past failures and success. What are their goals? What can you offer them?

3) Research the people you will be meeting with. Are they married? Are they single? What was their previous position? How long have they been at that position? This information can serve you well.

4) If you can, determine in advance their perspective on American's.

5) Work hard, but smart. Be careful not to alienate colleagues, or put off superiors.

6) Understand the currency and the exchange rate so you can calculate quickly and efficiently, demonstrating (at some level) your understanding of their global trading system.

7) Research global shipping and customs guidelines for that territory.

8) Become your own Public Relations Consultant and brand yourself as one who is interested and understanding of their social and business culture.

In summary, and most of all, listen, restrain, adjust, assimilate and communicate best practices for that specific international territory. Demonstrating and communicating your understanding and respect for their culture and business methodology is key to success! If they do not connect with you, they will not connect with your brand.

Michele Clayborne is an International Public Relations Consultant with over 15 years of experience and a former Vice President with Fleishman Hillard International Communications. She has lived and worked in London and has conducted branding initiatives all over the world for her clients.

Risks in International Business

Just as there are reasons to get into global markets, and benefits from global markets, there are also risks involved in locating companies in certain countries. Each country may have its potentials; it also has its woes that are associated with doing business with major companies. Some of the rogue countries may have all the natural minerals but the risks involved in doing business in those countries exceed the benefits. Some of the risks in international business are:

(1) Strategic Risk
(2) Operational Risk
(3) Political Risk
(4) Country Risk
(5) Technological Risk
(6) Environmental Risk
(7) Economic Risk
(8) Financial Risk
(9) Terrorism Risk

Strategic Risk: The ability of a firm to make a strategic decision in order to respond to the forces that are a source of risk. These forces also impact the competitiveness of a firm. Porter defines them as: threat of new entrants in the industry, threat of substitute goods and services, intensity of competition within the industry, bargaining power of suppliers, and bargaining power of consumers.

Operational Risk: This is caused by the assets and financial capital that aid in the day-to-day business operations. The breakdown of machineries, supply and demand of the resources and products, shortfall of the goods and services, lack of perfect logistic and inventory will lead to inefficiency of production. By controlling costs, unnecessary waste will be reduced, and the process improvement may enhance the lead-time, reduce variance and contribute to efficiency in globalization.

Political Risk: The political actions and instability may make it difficult for companies to operate efficiently in these countries due to negative publicity and impact created by individuals in the top government. A firm cannot effectively operate to its full capacity in order to maximize profit in such an unstable country's political turbulence. A new and hostile government may replace the friendly one, and hence expropriate foreign assets.

Country Risk: The culture or the instability of a country may create risks that may make it difficult for multinational companies to operate safely, effectively, and efficiently. Some of the country risks come from the governments' policies, economic conditions, security factors, and political conditions. Solving one of these problems without all of the problems (aggregate) together will not be enough in mitigating the country risk.

Technological Risk: Lack of security in electronic transactions, the cost of developing new technology, and the fact that these new technology may fail, and when all of these are coupled with the outdated existing technology, the result may create a dangerous effect in doing business in the international arena.

Environmental Risk: Air, water, and environmental pollution may affect the health of the citizens, and lead to public outcry of the citizens. These problems may also lead to damaging the reputation of the companies that do business in that area.

Economic Risk: This comes from the inability of a country to meet its financial obligations. The changing of foreign-investment or/and domestic fiscal or monetary policies. The effect of exchange-rate and interest rate make it difficult to conduct international business.

Financial Risk: This area is affected by the currency exchange rate, government flexibility in allowing the firms to repatriate profits or funds outside the country. The devaluation and inflation will also impact the firm's ability to operate at an efficient capacity and still be stable. Most countries make it difficult for foreign firms to repatriate funds thus forcing these firms to invest its funds at a less optimal level. Sometimes, firms' assets are confiscated and that contributes to financial losses.

Terrorism Risk: These are attacks that may stem from lack of hope; confidence; differences in culture and religious philosophy, and/or merely hate of companies by citizens of host countries. It leads to potential hostile attitudes, sabotage of foreign companies and/or kidnapping of the employers and employees. Such frustrating situations make it difficult to operate in these countries.

Although the benefits in international business exceed the risks, firms should take a risk assessment of each country and to also include intellectual property, red tape and corruption, human resource restrictions, and ownership restrictions in the analysis, in order to consider all risks involved before venturing into any of the countries.

Dr. Sidney Okolo is a professor, consultant, strategist, and Africa expert. He is affiliated to several universities, the Managing Director of International Business Associates, a management consulting firm, and also the CEO of Global Education Support, an education assistance program.

Among other things, he engages in all aspects of learning, knowledge, organization and human change. His focus is on leadership, management, entrepreneurship, profit engineering, human potential, excellence, achievement, business strategy, research and development. Product management, change management, conflict management, athlete management, marketing, business development and operations. He works with clients to adapt to change due to change in factors of production, technology, goods and services. He engages clients in training, retraining, development, skills enhancement, association, behavior modification, ways of thinking, and attitude adjustment. In addition to his work in the United States, his focus is also on developing countries in the continent of Africa, their leadership, culture, economic and market structure, community planning and development, and his created four letter word, "PIES", which stands for: poverty, instability, ethnicity, and sectarianism.

Global Business - Licensing and Franchising

Another approach to international business is licensing. Important point, license agreements entitle one company to produce or market another company's product or to utilize its technology in return for a royalty or fee. Sounds good with our company. Here's an example - a U.S. business might obtain the rights to manufacture and sell a Scandinavian skin lotion in the United States, using the Scandinavian formula and packaging design. The U.S. company would be responsible for promoting and distributing the product, and it would pay the Scandinavian company a percentage of its income from sales in exchange for the products rights.

Licensing deals can also work the other way, with the U.S. company acting as the licenser and the overseas company as the licensee. Another important point, the U.S. firm would avoid the shipping costs, trade barriers, and uncertainties associated with trying to enter other markets, but it would still receive a portion of the revenue from overseas sales. Moreover, licensing agreements are not restricted to international business. A company can also license its products or technology to other companies in its domestic market.

Just going to expand a little on franchising. This technique is getting expensive everyday. Franchising is another was to expand into foreign markets. With a franchise agreement, the franchisee obtains the rights to duplicate a specific product or service (ex. restaurant, photocopy shop, or a video rental store). And the company selling the franchise obtains a royalty fee in exchange. Holiday Inn WorldWide has used this approach to reach customers in over 60 countries. The point is that by franchising the operation, a company can minimize the costs and risks of global expansion and bypass certain trade restrictions.

Remember Success comes when we work together. [http://www.obriangroup.org]