What do you perceive when you hear that a company is multinational? Most likely,positive preexisting perception for that company. In the contemporary corporate environment, global status defines the prestige and operational efficiency of a company. Moreover, the widespread global village places the urge on businesses to go international. Otherwise, a business can never realize its full potential. There are a plethora of market opportunities in the global business landscape. The only difference is of successful efforts toward achieving prominence in the international markets.
According to the Washington International Trade Association, the global goods trade stands at $18.4 trillion. Additionally, the world also trades $6 trillion worth of services. It shows the scale of international trade. Therefore, more and more businesses are striving hard to become a shareholder of this vast international trade. The international business space is becoming more convoluted because it mainly deals on global value chains where a single product contains several trade inputs. The global value chain makes up an estimated 70% of total international trade.
International business is undoubtedly not a cakewalk. Rules and regulations, tariffs, and trade restrictions make it more complex than local operations. It has become a science in itself. Expanding business to international territories is just half the work done. Once you have established an overseas business, managing its operations is the real key to success. Therefore, this article highlights four ways businesses can manage overseas operations.
1. Strategic use of Expatriation
Native representation in a foreign business unit is always preferable for the parent company. Expatriation is the process of sending a manager – an expatriate – to the host country’scorporate office. It serves as a significant help to the parent companies in managing business the way they want. These expatriates train and develop the local employees keeping in view the company vision and mission. For instance, it is crucial to have data analysts monitor and analyze market data to expand operations in the new territory. Therefore, foreign managers can build and develop an analytics team to strategically utilize data in alignment with company objectives. Such cross-border collaboration allows the parent company and the host company to continue operations according to the global business vision. Many large-scale multinationals have deployed their in-house workers to international business locations. It helps them keep a better track of overseas operations and maintain coherence with the head office functions.
According to a research report by Finaccord, there are about 87.5 million expatriates in the world. With more businesses going international, the number will further increase over time. An expatriate is an easy and optimal way of ensuring that the same company culture is disseminated across overseas business units. It is an efficient way of increasing the parent company’s footprint among international business offices. Moreover, it also provides a first-hand view of the issues and challenges of overseas business to the headquarters. They can then resolve and respond to the situation in the most efficient way.
2. Frequent Communication is the Key
Communication is indeed essential for managing overseas operations. It is challenging to effectively communicate goals and business plans among employees in the same building. Likewise, the barriers of communicating overseas are entirely another challenge. Large distances pose huge communication gaps between the country of origin and the host business locations. Therefore, the key to effective international business management is frequent communication between headquarters and foreign subsidiaries.
The country of origin must respect all the communication protocols of the host country to ensure effective communication, such as the differences in time zones. It might be their logging off time when you have scheduled a meeting. It will never create impactful communication. It would help if you also respect cultural communication differences. For instance, when dealing with the Japanese, you must avoid saying ‘no.’The Japanese never say ‘no’ even if they mean it. It is considered impolite in their culture. For example, when talking to someone from an Asian country, respect their hierarchy issues.In short, international business management is all about acknowledging cultural communication differences and designing your communication strategy accordingly.
3. Embrace technology to bridge the distance
Technology has reduced the distances of miles with the ease of a single click. It used to take weeks to gather business executives at an international location for a meeting. Now they can interact in minutes over a Zoom meeting. Appropriate technological implementation has become inevitable for efficient global business management. Shared virtual workplaces, sharing technology, and cloud computing have opened new overseas business operations management avenues. Now a local subsidiary can upload data on the cloud server that the headquarter can see and analyze in real-time and respond if needed.
There are technological aids like FotoIN, Box, Sharefile, and Egnyte that provide excellent dashboards for collaborative work. Google docs and other online shared workspace options enable people across the continents to work collectively on projects and manage timelines. The hi-tech video conferencing and meeting setups have reduced communication barriers. Business executives can have meetings in a highly immersive and media-rich environment. It doesn’t only nourish the overall communication exchange but minimizes the cost as well. According to HR Technologist, 78% of corporate organizations prefer video conferencing tools for overseas team meetings. The wake of the COVID-19 pandemic has further increased the use of these tools.
4. Schedule Headquarter Visits
Developing the native company culture is essential for efficient coordination between overseas offices and the headquarters. Therefore, it is necessary to provide real-time interaction to C-level overseas employees with the headquarter. For this, companies can arrange cycle meetings where they can invite business executives from host countries. It will provide two to three instances where employees interact with the native company’s culture.
It also creates a sense of belongingness and ownership toward the company. Many leading multinationals like Unilever, Procter and Gamble, Siemens, and Deloitte conduct annual visits to the company’s headquarters. It is an effective way of conditioning overseas employees toward the larger mission and vision of the company.
The key to managing an international business is acknowledging and respecting cultural differences. Once you have analyzed the host culture, the next step is to adjust operations according to it. Any multinational corporation can utilize the strategies discussed above. They encompass multiple aspects of overseas business management and provide a comprehensive mechanism for approaching overseas issues and resolving them.