For many business owners, expanding business internationally can be an ultimate goal. It opens the door to fruitful new markets, a diverse new talent pool and, of course, increased revenue potential. However, the road to international growth is rarely smooth.
From navigating unfamiliar regulations to managing culturally diverse teams, it’s not unusual for businesses to encounter global expansion challenges – even throughout the most promising of expansion plans.
In this article, we’ll explore some of the obstacles that you might come across when expanding business globally. Whether you’re planning your first international move or looking to refine an existing global strategy, we’ll help you expand with confidence and clarity.
Common global expansion challenges
So, what are the common global expansion challenges that a business may face?
Cultural differences
Each country has its own unique culture, or blend of cultures. Within these cultures sit social norms, holidays, customs and traditions. When working with partners, suppliers or managing teams in different countries, you’ll potentially find that things are done a little differently.
For instance, take the hours in a typical workday. In the UK, we typically work a 9 am – 5 pm day. Spain, however, often work 9 am – 1.30 pm and 4.30 pm to 8 pm, with a break in the middle of the workday.
In China, they celebrate the Chinese New Year at the end of January, and this can last for more than two weeks. The public holiday typically results in seven days off work for employees. Not accounting for this when expanding business internationally into China could quickly cause issues for your business.
Language barriers
Obviously, language barriers come into play when expanding business internationally. In fact, language barriers hinder effective communication in 74% of global ventures. This is not only true when it comes to communicating with native speakers, but also when it comes to marketing materials and messaging, legal paperwork and everything in between.
It’s a wise idea to hire an interpreter or have at least one employee on the ground who speaks the native language and understands your business offering to handle this side of things. After all, you can’t be expected to become bilingual alongside launching your business overseas! Clients can be more at ease when they know that they can contact and liaise with someone in the same country who can speak their language.
Regulatory & legal complexities
This is arguably one of the largest and most complex challenges that can cause major headaches for business owners. Navigating the complex web of foreign regulations and legal requirements is no small feat. Each country has its own rules, and failing to comply can result in fines, reputational damage, or even being banned from operating in that market. Not to mention, overlooking or misunderstanding regulatory and legal complexities can delay your market entry.
Let’s talk about employment laws, for example. These look different in every country and cover work hours, minimum wage, workplace safety standards, termination protocols and mandatory benefits. It’s important not to simply replicate your home-country policies when managing teams internationally. In doing so, you risk non-compliance. Make sure your employee contracts are localised to reflect the country that you’re working within.
Something else to consider is tax structures. Tax structures are not universal. They vary in rates, filing processes and liability triggers. It’s wise to partner with cross-border tax specialists to help you navigate this and ensure you understand how these impact your bottom line.
Certain industries may also require local licenses, certifications or government approvals to operate legally. You may also encounter import/export regulations such as tariffs, customs procedures and trade restrictions. All this can impact your supply chain and pricing strategy.
Understanding new markets & customers
When expanding business globally, research is key. Without this, it’s going to be tricky to navigate these new markets. What is the need for your product or service offering in this market? What pricing model should you adopt for this market? Who are your competitors? Surveys, focus groups, data analytics and local knowledge can all help arm you with valuable insights to answer these questions confidently.
Just as you did when you launched your business in the UK, understanding the preferences and behaviours of your target audience is crucial. Don’t assume that because your product or service offering is the same, your customer in this new market will be too! They may have different preferences and cultural customs.
Logistical and operational hurdles
Even with a strong market opportunity and a compliant business structure, many companies stumble over the day-to-day logistics of operating internationally. These operational challenges are often underestimated and can affect everything from customer satisfaction to cost efficiency. In the worst cases, they can damage your brand reputation and erode profitability. It involves careful planning for logistics to be a success rather than a costly barrier.
Be aware of supply chain disruptions. Longer lead times, custom delays and differing import/export rules can really slow down your ability to deliver products or services reliably. Conduct a detailed supply chain analysis for each target market to prepare for this.
It’s also worth noting that in some markets, transportation networks, warehousing facilities or digital infrastructure may be underdeveloped. This can create delays or increase operational costs. The good news is that most locations will have local logistics experts who understand the regional systems and regulations that you can lean on for support.
Exchange rates can also be volatile and fluctuate regularly, which can have a knock-on effect on profit margins, especially if revenue is generated in one currency and expenses are incurred in another. Hedge against currency risks with financial instruments or pricing strategies.
And lastly, managing stock levels, returns and fulfilment across borders adds an extra layer of complexity – particularly when demand is unpredictable. It’s a good idea to invest in inventory and warehouse management tools that provide real-time visibility across locations.
The benefits of expanding business internationally
Yes, you’re likely to encounter a few global expansion challenges, however, expanding business internationally comes with a whole host of benefits that make taking the plunge worthwhile.
Explore new markets & revenue streams
An obvious one – it expands your horizons. Expanding overseas allows you to tap into new customer bases, increase your sales and generally gives you the opportunity to reach new heights of business. It’s also an opportunity to experiment with product variations and introduce products that may not have been so successful in your home country. Plus, it’s wise not to depend on just one market. This diversification can lead to more sustainable, long-term growth.
Attract global talent
The world is a big place! Just think of all that talent that you’ve not yet tapped into. An individual who could truly turn your business around could be right around the corner. International expansion makes it easier to recruit diverse, skilled talent from around the world. This can strengthen innovation, improve problem-solving and increase cultural competency across your team.
Gain competitive advantage
Get ahead of the game and establish a presence in global markets before your competitors do. Being the first to market often means that you become the dominant player in that region. By expanding into markets that your competitors haven’t touched, you’ll be able to build a strong customer base of loyal customers that will make it difficult for newer competition to enter the market. It opens the door to new innovations, partnerships and trends, enabling faster adaptation and stronger positioning.
Enhanced brand recognition
Expanding – and succeeding – in international markets will only look good for your business. A global footprint goes a very long way in boosting brand credibility and visibility. It sends a message of stability, trustworthiness and reputability – and of global competitiveness!
Customers tend to view internationally active brands as more established and trustworthy. Not only this, but investors and stakeholders often associate international growth with maturity and long-term viability. This increases your appeal to funders, venture capitalists and strategic partners. It also opens up opportunities for international media coverage, awards and partnerships.
International expansion support from The University of Warwick Science Park
Here at The University of Warwick Science Park, we can play a valuable role in supporting businesses with global expansion through a combination of strategic guidance, infrastructure and access to networks. We have plenty of experience helping startups and SMEs navigate the challenges of entering foreign markets.
Our Science Park is part of the University of Warwick ecosystem, boasting links with innovation hubs, trade bodies and research institutions globally. We have connections with global incubators and science parks and links to the Enterprise Europe Network (EEN) and Department for Business and Trade (DBT).
We also offer Business Support in the form of Business Ready and equity funding through Minerva Business Angels, both of which help firms grow and scale effectively – a crucial step before international expansion. These programmes offer growth planning workshops, investment readiness and funding support and one-to-one mentoring with international experience.
Situate your business at our Science Park
If you’re a growing business looking for a UK base for your business to call home, the University of Warwick Science Park could be the perfect place for you. Join our vibrant community of high-growth, internationally minded companies. Our tenants range from UK-based to international companies, offering huge scope for networking opportunities.
Never underestimate the importance of your business’s location. The University of Warwick Science Park is also ideal for those looking to expand internationally. We’re perfectly placed for global transport links and proximity to UK business hubs such as Birmingham and London. Plus, we offer flexible workspace options that are ideal for growing teams and hosting international visitors.
At the University of Warwick Science Park, we’re not just a space for your business to operate. We’re a launchpad for your growth – be that international or domestic. If you are interested in finding out more about locating your business with us, get in touch with our team on 024 7632 3000 or email [email protected].
If you are interested in learning more about our Business Support programmes, register your interest over on our website for the specific programme that you’re interested in, using the contact details provided.
