Globalization is not something new. In fact, it has been around for centuries. The very beginning of globalization was when Christopher Columbus began exploring the New World in 1492.
The official definition of globalization is that it is a process that allows organizations and businesses to start international operations or build international influence. It creates an open flow of goods, technology, and information among consumers and countries through different relationships, such as technology, geopolitics, and business to media, culture and travel.
Since the interconnection has been in place for such a long time, globalization’s work is barely noticeable. However, the business world is shrinking since it is already connected. Companies must therefore understand its effect on their businesses’ future. Globalization is here to stay, and companies have to embrace it to hold on to their competitive advantage.
Globalization affects businesses differently. But generally, globalization provides these standard benefits.
- It allows people, organizations, and businesses to access new cultures, exposing them to various art, music, movies, food, fashion, customs, and way of life.
- It helps spread innovation and technology faster. With faster and stronger Internet connection allowing better communication, technological advances and new knowledge are quickly transferred.
- Globalization lowers product costs. Companies can find ways to lower the cost of production while boosting global competition, which provides consumers more product choices while keeping prices down. When prices are lowered, residents of developed and developing countries enjoy a better life without spending too much.
- It raised the standards of living worldwide. The 1990 Millennium Development Goal was to reduce the poverty rate by 50% by 2015, but globalization helped achieve the target in 2010.
- Businesses and organizations can access new markets and new customers, and explore different ways to improve revenues. Globalization offers innovative and flexible ways for companies to grow their businesses in other countries.
- Globalization makes it possible for companies to find new talents with different specializations not available in their home country.
What challenges do companies face when going global?
Although globalization has several benefits to businesses, companies likewise face various challenges when going global. Even if globalization is centuries old and so many companies went global, some companies are still not fully ready to take their businesses to the next step.
It is understandable because the challenges can be daunting, as even top companies also face the same challenges. They need to address these issues so they can successfully transcend the globalization hurdles.
1. Cultural differences
Companies have to know that even with globalization and faster communication, the foreign markets they are entering are culturally different from their home countries and have different standards and preferences. That being said, it is critical to change their business strategies to fit each foreign market.
The language gap should likewise be addressed. Customers from other markets prefer to patronize companies that speak their language.
2. Recruiting international staff
Business leaders say that international recruitment is challenging because it creates unknowns for their HR departments. Physical distances separate them, so they have to make sure they are truly qualified. They have to know the demands of the new markets in terms of salaries and benefits to make offers at par or slightly above the standard.
3. Immigration of employees
Globalization allows companies to have access to a wide range of talents. However, different countries have different immigration laws, and the laws often change, making it difficult for them to secure visas for their foreign-born employees.
4. Tariffs and export fees
Companies that are preparing to sell their products overseas face the challenge of the different rates of tariffs and export fees, which affect their products’ prices. They need to ensure that their prices remain competitive because they are up against local and foreign competitors.
Companies expanding into new markets have to contend with logistics, shipping, exports and imports, as they have to maintain a supply chain that extends beyond national boundaries. It is crucial to have the right shipping partner to ensure that products are not impounded by customs and delivery is always on time.
5. Payroll management
The employment and tax laws in other countries are different. It is a challenge to manage the payroll of overseas employees and remain compliant with existing laws. The difficulty is multiplied by the number of markets the company operates.
Current pressing issues businesses face around the world
The business environment changes rapidly, and businesses have to be on their toes to adapt to new channels for marketing, decide how to invest in and use new technologies, and find ways to operate on the international stage effectively.
1. Uncertain future
It is difficult to predict how businesses will fare today and in the next few years with constant changes. One of the issues that plague businesses today is the uncertain future. You can say that 2020 is a turbulent year, with so many political, environmental, economic, and health issues occurring worldwide.
Market trends and customer trends are likewise difficult to predict as the world slowly adapts to the new normal.
2. Financial management
Financial management is stressful, as the businesses have to shift gears to adopt the changes that are happening – limited travel, social distancing, flexible work hours, reduction of employees, work from home system, and more. Companies have to better manage their finances because as they continue their operation, they have to consider their profit margins, cash flow, financing, cost reduction, etc.
3. Monitoring performance
With the new work set up and schedule, many companies are challenged on how to monitor performance. They have to monitor their business performance so that they can make immediate changes to conform to current needs and demands. Aside from that, they must see how employees perform within the new work setup.
4. Data protection
Data protection continues to be a big issue, and several regulations should be followed, such as the General Data Protection Regulation (GDPR) within the EU. Even in their home country, such as the U.S., business owners have to comply with new data protection regulations, such as the California Consumer Privacy Act (CCPA).
To stay ahead, businesses have to keep on innovating. With the constantly changing consumer demands for newer and better products, companies have to weigh actual consumer demands against production capacity, resources, and competitors’ response.
5. Job automation
Companies have to think about job automation, which is inescapable. Business owners have to think of ways to maintain a balance between the human workforce and automation.
Running a business means that you will continue to face hurdles because businesses should never be stagnant. Each major challenge is divided into several sub-challenges, and the survival and success of your business depend on how fast and accurate you can identify the challenges, understand them, and implement the right solutions.
Major threats to doing business in the online markets
There are many opportunities that businesses can gain from online markets, but the e-commerce environment is not free from risks and threats. Some of these include:
- Customer hijacking with injected ads from competitors
- Non-compliance with privacy laws
- Data security
- Loss of consumer confidence (unavailable products, shipping errors, mishandling of personal data, lack of customer service, etc.)
- Bad customer experiences (slow loading of web pages, too many third party ads, poor or lack of search functions, slow checkout page, site not optimized for mobile devices, etc.)
- Loss of consumer traffic, low conversion rates
We’re here to help get your company ready for the global stage
eTranslation Services understands that businesses have to be fully prepared before they go global. One of the primary concerns is overcoming the language barrier. Our native-speaking translators and subject matter experts can work with you to translate all your required business documents and product information into various target languages. We can help you localize your website so you can appear local. We are here to work beside you as you prepare for global expansion. You can easily reach us by through email via [email protected] or through phone at (800) 882-6058.