International expansion is a critical component that organizations must consider when evaluating their overall grown strategy
International expansion is a critical component that organizations must consider when evaluating their overall grown strategy. It is an opportunity for organizations to increase their topline while contributing to the bottom line (Wolkoff, 2012). While building and expanding a business locally can be difficult in and of itself, organizations seeking to expand abroad face a whole different set of challenges, including language and cultural barriers, governmental and regulatory barriers and access to resources and materials. However, these issues can be easily overcome by research and analysis of market demand and competition. Specifically, organizations looking to expand internationally should gather data on economic trends, political stability, regulatory requirements, access to resources, laws, and language and cultural differences (Kauffman Entrepreneurs, 2011).
Language and cultural barriers can pose a huge threat to organizations expanding internationally, because the inability to communicate effectively can hinder the process. Many times, organizations expanding abroad fail to learn the language and cultural differences of other countries. For example, while it is customary for Americans to touch each other in a friendly manner, i.e. on the arm, or hug one another, it is considered offensive in China and the Middle East (Hoeller, 2015). Also, while smiling in a business setting is widely accepted by Americans, it is considered unprofessional in Russia (Maltby, 2010). When considering marketing and simple communication, language barriers can create chaos if the concept does not translate well. For example, the work “scheme” in the UK simply means “plan”, whereas in the US, it has a more negative connotation. While these cultural insensitivities may seem subtle, they can have a significant impact on successful expansion. It is vital for organizations to do their due diligence and research the language and cultural difference prior to any international business dealings. Organizations should also consider hiring a liaison from the potential counterpart’s culture. This person will act as a “guide” to coach as needed and interject if necessary (Staff, 2018). These strategies can be the difference of a positive or negative business transaction.
Governmental and regulatory barriers are a major concern when planning international expansion. One country’s legal system may not support certain types of business establishments that another country’s legal system supports. Government restrictions and limitations should be considered when determining whether the cost of market penetration is worth the potential benefits (Sherman, 2007). Successful business in a foreign market is possible if the organizations is flexible enough to conform to local laws and regulations. Organizations should research several aspects regarding legal and regulatory barriers, including employment laws, treaties, import and export laws, corporate organization practices, and customs laws, prior to international expansion (Abner, 2015). Organization should also seek professional legal council to ensure complete understanding of the laws and regulations of the potential foreign market.
Underdeveloped countries simply do not have the same access to materials and resources that more developed countries have. When considering international expansion, organizations will need to consider what changes and restructuring will be needed to accommodate the resource challenge without jeopardizing the core business structure (Sherman, 2007). For example, if said organization operates in the produce industry, it may consider expanding to a country that is not affected by climate and weather factors. The organization is responsible for researching the ease of access to raw materials and resources prior to any business dealings.
Each of these issues can relate directly to the healthcare industry. While Baylor Scott and White is not a global organization, healthcare is a global industry, and it is vital that these barriers are dealt with proactively as opposed to reactively. Language and cultural barriers could cause misunderstandings and misdiagnoses. Legal and regulatory barriers could hinder different medical practices from country to country, i.e. legal battles regarding life support. Poor access to resources and materials could hinder medical care. Proper research and support will make a world of difference in international expansion.