Introduction
Many companies expand their work into the global market to grow their business operations. Effective entry into a global market means a company has identified a gap in the foreign market. Expanding also means more production and profit for the organization.
However, successful entry into the global market comes with many challenges, with some organizations failing after short periods of operation. Businesses also face major concerns that reduce their effectiveness in the global market. Some significant issues they face include language barriers, cultural differences, managing global teams, currency exchange, inflation rates, policies, and political interference.
Common Barriers to Global Market Effectiveness
Entering a global market means a company moves from its regular stations to a new country. These new countries may use a different language than they are used to; therefore, it is essential to consider the languages spoken there before entry into their market to prevent a language barrier. For example, if a business operation moves from the United States to an African country, its marketers and employees may experience this problem. Communicating with their customers would take a lot of work to the point of requiring an interpreter. This may reduce the effectiveness of the interaction or business operation, as both parties may need to help understand each other clearly.
Conducting business in a global market means encountering different cultural practices and beliefs that may hinder the effective running of the business. In most cases, if a company sells products or services that do not comply with the local culture, the possibility of success becomes low. A company must consider the local buyer and their beliefs, making selling to them easier. This is because the culture of the buyer influences some purchases and businesses.
For example, in South Africa, pregnant women are not supposed to eat particular foods while they are pregnant (Chakona & Shackleton, 2019). These foods include meat products, fish, potatoes, fruits, beans, eggs, butternut, and pumpkin. Any food company wishing to go global in South Africa must consider how a particular population does not consume these products. If they do not, the business may only last for a while.
One major global issue companies face is interference from the local government. Most governments try to impose high taxes on foreign investors to increase their revenue, thus making it hard for the investors to operate comfortably. There are also cases where the organization is limited in where and how it should operate.
The decisions made by political leaders can impact taxes, labor laws, raw material costs, and transportation infrastructure. If a company feels threatened by the local government, employees may feel insecure working there, especially in places facing internal wars. This may slow down operations and even cause the closure of the company.
In global marketing, the business may move its operations to a more economically underdeveloped country than its main branch. In most cases, these countries have a lower-value currency, with high inflation rates. This may impact materials and labor costs, as well as product pricing. Moreover, fluctuating exchange rates, such as the depreciation of the local currency, make importing goods more expensive, which could lead to a decreased volume of imports.
Companies that penetrate the global market require employees to move to a new branch or employ someone locally. This may cause issues and reduce the effectiveness of its operation due to management and monitoring. If the employees are unmonitored, there may be production issues. Employees may require an authority figure in the office to boost their operating speed; issues may arise if one is lacking. The managers would need to facilitate regular check-ins, preferably using a video conferencing platform, which might be inconvenient, especially if they are busy or the new market is in a remote area with network connection issues.
Key Adaptations for Embracing Social and Cultural Norms Globally
Many successful companies try to become geocentric organizations by creating a unifying culture for all their employees. Such culture exceeds cultural differences and establishes values and attitudes that make them feel like part of the organization’s family by being comprehensive and compelling for all employees, regardless of their national origins or cultural differences (Plakhotnik, 2017). Creating a geocentric organizational culture involves transforming each employee’s mindset, beliefs, and behaviors so that they can become a world citizen despite having a national identity and learning to think as one.
Organizations can become geocentric by creating a workspace that makes them feel connected, valued, and growing personally and professionally. For example, according to Bahrami (2015), the employees at Nimble Storage gave positive feedback about their work conditions, pay, and benefits. This made the company one of the top places to work and also caused its tremendous growth and development.
Companies should also set social responsibility that frames their behavior towards their customers, other employees, and the community. Setting parameters on how employees behave acts as a guideline on how they should behave. Also, it ensures that they feel a direct and personal responsibility for mistakes they commit individually (Plakhotnik, 2017). Despite coming from diverse backgrounds, if the employees feel appreciated, they will use their specific unique knowledge of the culture and language of their native countries to benefit the business. Their exceptional knowledge and skills put them at an advantage compared to organizations with employees from a particular region.
Organizations can also create technological devices and advancements that help everyone with various jobs in the office. If everyone has access to a machine that makes their work a little bit easier, they will likely continue working in the organization and even feel motivated. Putting these machines in an easily accessible area makes them feel included in the office. Leaders in the office should also have physical interactions with their employees to create a sense of transparency in the workplace. When workers can trust and be free with their seniors, working becomes easier as they feel involved without discrimination.
Additionally, organization leaders can help the company become more geocentric by encouraging employees and allowing them to be creative. For example, according to Bahrami (2015), the leaders at Nimble Storage created an environment that embraced new talent while also getting the most from the company’s original executives, encouraging them. By doing this, company executives create a geocentric environment that makes employees feel valued, appreciated, and free to share their creativity, knowledge, and skills with others. They also feel that professional development opportunities provided by their companies, cross-cultural awareness, and perspective consciousness make them better at what they do, thus growing the business.
Conclusion
In conclusion, organizations must conduct thorough research before expanding their business globally. This will ensure they are prepared for any obstacles they may face during their operation, increasing their chances of operating for an extended period. They should use the advantages available in their local market and try to transfer them to their new branches. Investing in their employees motivates them and pushes them to work harder to achieve the company’s set goals and objectives.
References
Bahrami, H. (2015). Nimble Storage: Scaling talent strategy amidst hyper-growth. The Berkeley-Haas Case Series. University of California, Berkeley. Web.
Chakona, G., & Shackleton, C. (2019). Food taboos and cultural beliefs influence food choice and dietary preferences among pregnant women in the Eastern Cape, South Africa. Nutrients, 11(11), 2668.
Plakhotnik, M. S. (2017). The role of strategic leadership in building the geocentric culture of global corporations. In Encyclopedia of Strategic Leadership and Management (pp. 1769-1780). IGI Global.