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International Business Challenges

HR & Compliance

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Updated on:
March 15, 2024
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Updated on :

March 15, 2024
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International Business Challenges


It's a great big world out there, but when it comes to business, the world seems remarkably small. Every industry is affected by international business, whether your company produces goods and exports them or your employees provide services overseas.

It is essential that your company finds its place in the global business market. What are some challenges of international business? How can I simplify running an international business? What are some ways to manage these challenges?

What is an international business?

According to International Relations EDU, " International business encompasses all commercial activities that take place to promote the transfer of goods, services, resources, people, ideas, and technologies across national boundaries."

Companies can expand to a global level in various ways, including:

  • Providing services to customers or clients in foreign countries
  • Manufacturing domestic goods to export or sell in domestic and international markets
  • Manufacturing goods in another country to import and sell domestically
  • Keeping goods in another country to import or sell in domestic and international markets

Every business wants to save money, which many do by manufacturing goods in countries with lower labor costs or taxes. The sale of products and services in the global market allows companies to reap the benefits of a vastly larger audience and the resulting revenue.

There are, however, various challenges of international business to keep in mind as you plan to expand your company across borders.

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Challenges in international business

Some of the challenges for global business management include the following:

Language obstacles

One of the most common problems of international business relations is the potential language barrier. Not only can this pose issues in international business dealings between companies, but it can also cause significant communication issues within your company if management and team members speak a different language. It is also essential to ensure your company's marketing materials, product packaging, and customer support align with the language your target customers speak.

Recruiting and onboarding international talent

According to Entrepreneur magazine, "Being limited to your local recruitment market is a thing of the past. Hiring internationally aids talent acquisition, saves money, enables you to expand into new consumer markets, and allows for 24/7 customer support. In the future, it will become increasingly difficult for businesses that stay local to retain their competitive advantage."

When expanding internationally, acquiring and hiring skilled talent with the necessary knowledge and experience in the specific country can be one of the most important things your company does. Another of the most common global business issues is creating an HR infrastructure to support recruiting, hiring, onboarding, training, and supporting employees from around the world.

Managing a globally distributed team

One of the more unique issues of international business management is supporting a diverse, globally distributed team. Doing so requires navigating the complexities of various countries' employment regulations, payroll rules, tax laws, mandated benefits, employee entitlements, and technology. Communication, support, and interaction with your globally distributed employees are essential to maintain a cohesive team. At the same time, legal expertise in varying regions is necessary to maintain compliance with employment laws in each country.

Currency exchange and inflation rates

Few countries trade in the same currency. Your company will likely receive payments from several countries in different currencies. Each currency fluctuates daily. It is a top priority to stay abreast of currency exchange and inflation rates.

Payroll challenges

Depending on where your employees live and work, there may be a variety of employment, tax, and payroll laws your company needs to keep in mind while processing payroll. From tax withholding to mandated and voluntary benefits, these differing laws can pose significant challenges to your HR team. Consider outsourcing your global payroll processing to a company like Skuad that specializes in these matters.

Culture differences

Culture, including workplace culture and expectations, can differ depending on the country in which you choose to work. It's essential to be mindful and respectful of each other's differences and to make an effort to understand the various cultures of your employees, colleagues, and customers to improve your relationships and reduce the chance of offending someone.

Foreign policy, geopolitical, and cross-border relations

Politics and foreign relations can significantly impact the international business market. Expanding into the global market requires your company to know the trade policies, tax laws, and financial systems of the country you're working with. This knowledge can help you avoid reputational, financial, or even criminal penalties for failing to heed specific rules and laws.

Supply chain issues

International laws and regulations specific to each country affect a variety of factors throughout the global business, including imports and exports. Understanding these complexities and accounting for any potentially related supply chain issues can be a major challenge. Your supply chain strategy should be tailored to your company and the country or country with which you plan to do business. When developing your strategy, it is important to research trade regulations, current supply chain issues, local material availability, and external influences on the supply chain.

Compliance with international regulations

Tax, payroll, and employment laws are essential to understand when expanding your business internationally. Working with multiple countries means dealing with various business regulations, commercial fees, expectations, and tax rates. If you fail to comply with a particular country's laws, this oversight can negatively affect your business growth and cost your company compliance fees, reputational damage, and potential criminal charges. The importance of doing your research and completing all necessary paperwork cannot be overstated.

Competing in a new market

In today's competitive business market, offering a product or service that no other company provides is next to impossible. When dealing domestically, your company likely has its share of competitors; when you expand internationally, the number of companies competing for their share of the same market grows exponentially. From competition grows innovation, and your company must adhere to this principle even more strongly when expanding into the global market. Differentiate your product or service from the crowd to gain a competitive edge. Offer unique products and services. Most importantly, build a reputation for your company by developing solid business relationships with customers and local suppliers, vendors, manufacturers, and shipping companies.

Environmental concerns and sustainability

Climate change affects all of us daily. With global warming and other environmental issues at the forefront of everyone's minds, it is essential that every company, including international businesses, put maximum effort into ongoing sustainability. Your company must strategize and implement the most environmentally friendly, sustainable business practices to ensure your place in the global market.

Brand consistency

As an international brand, you must set your company apart from the competition by way of an easily recognizable brand. This includes your company's logo, work culture, advertising style, language, work culture, product or service offerings, and many other details. Brand consistency is key to obtaining and maintaining customer loyalty, especially in the highly competitive global market.

Strategies to make running an international business simple

Now that we have discussed some of the foremost challenges for international businesses, we will also go over some ways to lessen these challenges.

Perform thorough research

Before or during your company's international expansion process, look into each country where you hope to do business. Research employment laws, work permit requirements, language, currency, customer expectations, culture, market size, availability of labor and resources, and geographical limitations.

Practice cultural sensitivity

Engage your target demographics by creating culture-sensitive advertising materials and other content.

Engage local experts

Seek out the expertise of locals well-versed in their country's laws and regulations relating to labor and employment, payroll, taxes, workplace culture, and other factors that may make or break your company's regional success.

Invest in international employment solutions

International business management and growth are simple when you invest in technological solutions that allow you to use a simple interface to create invoices in various languages and currencies, manage international payroll, and comply with local tax and employment regulations.

Tips for managing international business challenges

Follow these suggestions to help you handle these international business issues.

Communicate effectively

Communication can make the difference between a company's success or failure, but it is even more essential in international business. Considering different time zones, cultures, languages, currencies, laws, and other factors, your company must communicate effectively to maintain positive relationships with international employees, vendors, partners, and customers alike.

Provide state-of-the-art technology

Some countries where you choose to do business may need access to the latest and greatest technology, which could hamper your company's success. Ensure your employees have and use the most advanced communication and technology to perform their best work.

Emphasize company culture

Workplace culture is more important to employees now than ever. To be fulfilled, people need their work to have a higher purpose while maintaining a positive work-life balance. Provide your international employees with positive workplace culture, including engagement and support, and emphasize your company's goals, mission, and purpose.

Ongoing education

A company's employees and management should constantly learn and develop lest their knowledge becomes stagnant, irrelevant, or outdated.

How can Skuad solve challenges faced by international businesses?

While international business expansion can bring various challenges, your company can face this head-on with a combination of knowledge, technology, and guidance. Skuad's global employment and payroll platform provides your company's HR support to expand into the global market. Through a simple, centralized, self-serve dashboard, you can manage and pay your international employees, send invoices in multiple languages and currencies, navigate every step of the employee life cycle, and automate global contractor and employee management.

For more information, request a demo today.

About the author

Catalina Wang is a Human Resource Consultant. She manages recruitment, onboarding, and contract administration staffing for many organizations and remote teams. She’s passionate about efficient HR management and the impact of tech on hiring practices.

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