Global Expansion

Expanding a Business Internationally: Benefits and Challenges

Kurt GraverBusiness Development

Culture shapes business practices, communication styles, and consumer preferences. Failing to understand and adapt to these cultural nuances can lead to costly misunderstandings, damaged relationships, and, ultimately, the failure of international expansion efforts.

A study by the British Council found that 62% of UK businesses believe that intercultural skills are critical to the success of their international operations [2].

This blog post aims to provide UK entrepreneurs with a comprehensive guide to navigating the cultural labyrinth and achieving successful international business expansion. We will explore the key cultural dimensions to consider, strategies for effective cross-cultural communication, and best practices for building trust and rapport with international partners and customers.

By the end of this post, you will have a deeper understanding of how to bridge cultural gaps and thrive in the global marketplace.

Understanding Cultural Dimensions


Geert Hofstede’s Cultural Dimensions Theory is one of the most widely recognised frameworks for understanding cultural differences. Hofstede identified six key dimensions along which cultures vary:

  1. Power Distance: The extent to which less powerful members of a society accept and expect an unequal distribution of power. The UK scores relatively low on this dimension, valuing equality and flat organisational structures [3].
  2. Individualism vs Collectivism: The degree to which individuals are integrated into groups. The UK is a highly individualistic society, prioritising personal achievement and autonomy over group loyalty [3].
  3. Masculinity vs Femininity: The distribution of emotional roles between genders. The UK is a moderately masculine society, valuing competitiveness and achievement while prioritising quality of life [3].
  4. Uncertainty Avoidance: The extent to which culture members feel threatened by ambiguous or unknown situations. The UK has a low score on this dimension, indicating a greater tolerance for uncertainty and a willingness to take risks [3].
  5. Long-Term vs Short-Term Orientation: The degree to which a society prioritises long-term planning and delayed gratification. The UK falls in the middle of this spectrum, balancing respect for tradition with pragmatism and adaptability [3].
  6. Indulgence vs Restraint: The extent to which members of society allow themselves to enjoy life and have fun. The UK is an indulgent society, placing a high value on leisure time and personal fulfilment [3].

When expanding internationally, it is crucial to understand how the target market’s culture scores along these dimensions and how these scores compare to the UK. For example, a UK company expanding into a high power distance culture like Malaysia may need to adapt its management style and decision-making processes to be more hierarchical and deferential to authority [4].

Effective Cross-Cultural Communication


Effective communication is the foundation of successful international business relationships. However, communication styles and norms vary widely across cultures, and what may be considered polite or professional in one culture can be seen as rude or inappropriate in another.

One key aspect of cross-cultural communication is the concept of high-context vs low-context cultures. In high-context cultures, such as Japan and the Middle East, communication relies heavily on implicit messages, non-verbal cues, and the context in which the communication occurs. In contrast, low-context cultures, like the UK and the US, value direct, explicit communication and rely less on contextual factors [5].

When communicating with partners or customers from high-context cultures, UK entrepreneurs should pay close attention to non-verbal signals, such as body language, facial expressions, and tone of voice. Building personal relationships and establishing trust is also critical in high-context cultures, as business decisions are often based on the strength of these relationships [6].

Another important consideration in cross-cultural communication is the concept of power distance. In high power distance cultures, communication tends to be more formal and hierarchical, with deference shown to those in positions of authority. Communication is more egalitarian and informal in low power distance cultures, like the UK [7].

To navigate these differences, UK entrepreneurs should adapt their communication style to match the expectations of their international counterparts. This may involve using more formal language and titles when communicating with high-power-distance cultures or being more direct and explicit when communicating with those in low-context cultures.

Building Trust and Rapport


Building trust and rapport with international partners and customers is essential for successful international expansion. However, how trust is built and maintained can vary significantly across cultures.

Trust is often based on personal relationships and social networks in collectivistic cultures such as China and Mexico. Business decisions are made based on the strength of these relationships, and it is common for business to be conducted over meals or social events [8]. In contrast, individualistic cultures, like the UK, tend to base trust on competence, reliability, and the ability to deliver results [9].

UK entrepreneurs should invest time in developing personal relationships and demonstrating a long-term commitment to the partnership to build trust with partners and customers from collectivistic cultures. This may involve attending social events, engaging in small talk, and showing an interest in their counterparts’ personal lives [10].

In individualistic cultures, trust is often built through demonstrated competence and reliability. UK entrepreneurs should focus on delivering high-quality products or services, meeting deadlines, and following through on commitments. Clear, transparent communication and a track record of success can go a long way in building trust with partners from individualistic cultures [11].

Understanding and respecting cultural norms and values is another important factor in building trust across cultures. This includes being aware of taboos, such as discussing politics or religion in certain cultures and respecting local customs and traditions [12]. Demonstrating cultural sensitivity and a willingness to learn can help UK entrepreneurs build stronger, more trusting relationships with their international partners.

Best Practices for International Expansion


In addition to understanding cultural dimensions, communicating effectively, and building trust, there are several best practices UK entrepreneurs should follow when expanding internationally:

  1. Conducting extensive research on the local culture, business practices, and consumer preferences is essential before entering a new market. This can help identify potential challenges and opportunities and inform strategy development [13].
  2. Adapting products and services to meet the needs and preferences of local markets can increase their appeal and competitiveness. This may involve modifying ingredients, packaging, or marketing messages to resonate with local consumers [14].
  3. Working with local partners, such as distributors, agents, or consultants, can provide valuable insights into the local market and help navigate cultural and regulatory challenges. Choosing partners with a strong track record and reputation can also lend credibility to the expansion effort [15].
  4. Providing cross-cultural training for employees involved in international operations can help them develop the skills and knowledge needed to navigate cultural differences effectively. This may include training on communication styles, business etiquette, and cultural values [16].
  5. Building successful international operations takes time and patience. UK entrepreneurs should adopt a long-term perspective, focusing on building strong relationships and a sustainable presence in the market rather than seeking quick wins or short-term gains [17].

Conclusion


Navigating the cultural labyrinth is critical for UK entrepreneurs seeking to expand their businesses internationally. Businesses can increase their chances of success in foreign markets by understanding key cultural dimensions, communicating effectively across cultures, and building trust and rapport with international partners and customers.

However, cultural adaptation is an ongoing process that requires commitment, flexibility, and a willingness to learn. UK entrepreneurs should approach international expansion with an open mind, respect for cultural differences, and a readiness to adapt their strategies and practices.

By following best practices such as conducting thorough market research, localising products and services, partnering with local experts, investing in cross-cultural training, and adopting a long-term perspective, UK businesses can position themselves for success in the global marketplace.

As the UK continues to forge new trade relationships and expand its global reach in the post-Brexit era, navigating cultural differences will become increasingly important. By embracing diversity and developing strong intercultural skills, UK entrepreneurs can grow their businesses and contribute to a more connected and prosperous global economy.

References

  1. Office for National Statistics. (2020). UK trade in services by partner country experimental data: October to December 2019. https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/uktradeinservicesbypartnercountryexperimentaldata/octobertodecember2019
  2. British Council. (2013). Culture at Work: The value of intercultural skills in the workplace. https://www.britishcouncil.org/sites/default/files/culture-at-work-report-v2.pdf
  3. Hofstede Insights. (n.d.). Country Comparison: United Kingdom. https://www.hofstede-insights.com/country-comparison/the-uk/
  4. Hofstede Insights. (n.d.). Country Comparison: Malaysia. https://www.hofstede-insights.com/country-comparison/malaysia/
  5. Hall, E. T. (1976). Beyond Culture. New York: Doubleday.
  6. Meyer, E. (2014). The Culture Map: Breaking Through the Invisible Boundaries of Global Business. New York: PublicAffairs.
  7. Hofstede, G. (2001). Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations. Thousand Oaks, CA: Sage Publications.
  8. Gesteland, R. R. (2005). Cross-Cultural Business Behavior: Negotiating, Selling, Sourcing and Managing Across Cultures. Copenhagen Business School Press.
  9. Doney, P. M., Cannon, J. P., & Mullen, M. R. (1998). Understanding the influence of national culture on the development of trust. Academy of Management Review, 23(3), 601-620.
  10. Hooker, J. (2008). Cultural differences in business communication. In C. B. Paulston, S. F. Kiesling, & E. S. Rangel (Eds.), Handbook of Intercultural Discourse and Communication (pp. 389-407). Blackwell Publishing.
  11. Dietz, G., Gillespie, N., & Chao, G. T. (2010). Unravelling the complexities of trust and culture. In M. N. K. Saunders, D. Skinner, G. Dietz, N. Gillespie, & R. J. Lewicki (Eds.), Organizational Trust: A Cultural Perspective (pp. 3-41). Cambridge University Press.
  12. Trompenaars, F., & Hampden-Turner, C. (2012). Riding the Waves of Culture: Understanding Diversity in Global Business. London: Nicholas Brealey Publishing.
  13. Johnson, J. P., Lenartowicz, T., & Apud, S. (2006). Cross-cultural competence in international business: Toward a definition and a model. Journal of International Business Studies, 37(4), 525-543.
  14. Czinkota, M. R., & Ronkainen, I. A. (2013). International Marketing. Cengage Learning.
  15. Foley, S., & Fahy, J. (2004). Towards a further understanding of the firm’s market orientation development: A conceptual framework based on the market-sensing capability. Journal of Strategic Marketing, 12(4), 219-230.
  16. Bhawuk, D. P. S., & Brislin, R. W. (2000). Cross‐cultural training: A review. Applied Psychology, 49(1), 162-191.
  17. Peng, M. W. (2013). Global Strategy. Cengage Learning.