Entering into a foreign market is like discovering new territory for business owners. Foreign countries have different laws, economies, business strategies and currency. Cultural differences can also impede a country’s success. Justin Paul, author of “International Business,” outlines Wal-Mart’s struggle with its expansion into Mexico, citing difficulties with on-time deliveries and poor infrastructure. Though every business should anticipate a huge learning curve, entering a foreign market can be easier with the adoption of a few strategies.
Buying goods and services in a different country requires currency conversion. Because the exchange markets change by the minute, the price of those goods and services can change by the minute as well. However, you can keep the exchange rate stable by hedging. Jeff Madura explains in his book, “International Finance Management,” that companies can enter into what’s called a long-term forward contract or a parallel loan with a financial institution. By keeping the exchange rate consistent, companies can safeguard their money and avoid it from rapidly depreciating due to any bubble. Such long-term forward contracts can last for up to 10 years for credit-worthy customers.
Or avoid paying fees issued by financial institutions by engaging in a long-term contract directly with the vendor. Ask vendors to keep the contract price in your home currency. In this situation, they assume the risk for any currency fluctuation.
Entering into a foreign market requires changing your product to suit that market’s taste and preferences. Though you may know how to issue surveys and offer samples in your base country, the foreign market might have a different protocol. Hire a marketing firm located in the foreign country to conduct all research testing. They will know which stores are best suited for your product, what features the audience values and at what price. Such companies can also help you avoid offending a country with your product. Sak Onkvisit and John J. Shaw mention in their book, “International Marketing: Analysis and Strategy,” how McDonald’s had to alter its menu offerings to accommodate different cultures. In India, for example, beef is removed from dishes due to the country’s religious beliefs.
Operating overseas requires meeting with other executives based in the foreign country. Ensure you make a positive impression by knowing how to conduct business according to the particular culture. Considerations include how much space is afforded between you and the other person when talking, punctuality, issuance of business cards and degree of small talk. One of the best ways to pre-empt these differences is to check the cultural dimensions of the nation outlined in the work of Professor Geert Hofstede. He summarizes the data into readable graphs for international business owners to use when venturing into other countries. For example, Hofstede explains that in the Middle East, a handshake at the end of a discussion indicates that negotiations are just beginning, whereas in Western countries use a handshake to signify the completion of a deal.
- business colleagues preparing for business meeting image by Vladimir Melnik from Fotolia.com