Which of the following are considered to be a major hurdle to successful global trade?

Global trade and investment or broadly, globalization, is a common market condition for all countries of the world now. However, it is not free from challenges. To be specific, there are seven major challenges to global trade and investment the world is facing now.

Economic Warfare

Globalization has a tough challenge against polarization and conflicting issues. The world is experiencing increased conflicts, major economic powers are seizing influence, financial sanctions are being used as a weapon, and the Internet is breaking into pieces. Therefore, the international flow of money, information, products and services may slow down.

Geo-politicization

Globalization is a kind of Americanization. The United States is still a dominating economy and the hallmark of the international financial system. Moreover, information age is promoting the democratization of information. It is paving the way for demanding more information and the autocrats now need to care more about public opinion. The developments of developing countries are making them more or less like America.

State Capitalism

The United States was a strong nation in the last quarter of the century. But now, state capitalism in a modern form is gripping many nations. This is creating new segments in the markets and destroying the uniformity expected from globalization. Now, there is nothing predominantly American or about globalization itself.

Lack of Leadership

Globalization will continue rapidly, but the U.S led world order is getting diminished. An inconsistent, war-ridden United States lacks the will and ability to provide global leadership. Moreover, no other country is interested in taking its place. The West is having its own problems, and allies are only interested in hedging their bets. Therefore, there is no clear and definite way for globalization to progress and it is getting distorted.

Power Distribution

China, Russia, Turkey, India, and some other emerging nations are getting powerful enough to dismantle the US led theory of globalization. But they lack synchronization and influence. Their values and interests are not compatible. So, a regionalized world is emerging. Americanization and globalization are neither believed to be one and the same now nor is it preached by these power-seeking nations.

Weaker Underdogs

The regional economic powerhouses are getting more room to operate in today’s world. Russia is intruding in its backyard, Germany is experiencing firm control over Euro zone, and China is rapidly rising in the Asia-Pacific. These major countries are trying to consolidate power without caring for the smaller countries near them. It is a kind of ‘hollowing of the peripherals’ that is accelerating.

Price Fluctuations of Natural Resources

The oil monopoly is deteriorating and many clashes and terrorist incidents are tearing the world apart. In such turmoil, the very essence of globalization is somehow getting blurred. These time-sensitive challenges are being faced by all international and huge global companies. While the problems don’t seem to end soon, the global companies now have the choice to exercise their power in a global scale. They may or may not adapt to the new trend, but their superiority and powers have definitely got a boost due to the predominantly geopolitical crises.

Going global is usually a worthy endeavor, but it does bring with it some challenges. If you are interested in taking your business global, it is crucial you have a plan in place to address some of the main hurdles you will need to overcome to succeed.  We’ve outlined 8 main challenges for companies going global that will help prepare you for global expansion.

1. The Physical Distance

Although you may have the Internet and telephones to communicate overseas, nothing is quite the same as being there in person to talk to your prospects and your distribution partners, not to mention costs related to freight, logistics and shipping. At some point, you will have to figure out the costs involved in doing business “long distance” in the regions where you want to expand.

2. Unfamiliar Cultures

Do you know the most common behaviors in the country you are looking to expand into? What about the way in which people interact with each other in a social setting? Overcoming this cultural challenge is important for taking your business global so that you can assimilate with the people who will become your customers. 

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3. Mastering Marketing

Are you familiar with the buying process in the country that you wish to expand into? Learning the best way to reach your prospective customers is an important element of taking your business global. This will allow you to establish the kind of customer base that is necessary to be successful with globalization in the long term. One key ingredient to successful global marketing is transcreation. Transcreation will allow you to adapt your marketing content to a new foreign market.

4. Organizational Communication

The way team members handling your globalization efforts communicate, report, and track their efforts will have a big impact on how well you can succeed at taking your business into foreign markets. You need to have an effective system and set of protocols in place so that company leadership can keep tabs on what is going on with your international expansion since they will not be there to manage in person.

5. Tariffs and Export Fees

Most countries have some type of tariff or fee that is charged to companies bringing goods into their country. You need to know about these tariffs so you can incorporate them into the financial planning element of your globalization plans. Also remember the legal side of globalization: you may have to pay different kinds of fees depending on the shipping and logistics laws in place in that specific country.

6. Human Resources

When taking your business global, it is important to consider how you will meet the manpower requirements for operating in a foreign country. You may need to hire new team members which will require an additional investment. If you decide to send some of your existing team members to new global markets, you have to account for the roles that they will leave vacant.

7. Choosing the Right Countries

You need to have done enough research to understand where the best place to expand is. If there are several options, analyze the relative benefits and drawbacks of each country to determine which markets are most ideal for globalization.

8. Properly Adapting Documents and Content to the Culture

You have to come up with a way your prospective customers can read and understand your sales materials, instructions, and other documentation that is important for your business. Ideally, you will be able to do more than just translate them; you will have them adapted to the culture so that they are optimally understood and relatable by locals.

Addressing these issues will help you meet the challenges presented by taking your business global and help you extend your company’s reach to new heights. Partnering with a LSC that can not only translate your messages accurately, but also adapt them to target a specific locale is essential for global expansion. 

What is a considered a major hurdles to successful global trade?

What are the four major forces that affect global trade?

Which of the following are considered to be sociocultural forces that affect global trade?

Which of the following is considered to be a benefit of global trade?