Internationalization: Key Aspects for Global Success
There are some important aspects to consider when a product or a brand is internationalized. If companies do not take them into account, the chances of failing are higher. There are many different considerations due to all the factors that affect the product, such as culture, language, policies, regulations, and economic considerations (Cote, 2020).
Cultural Considerations
Each country has its own culture, including traditions, social norms, food, and holidays. Understanding the culture of the country is essential to show respect and ensure business success.
For example, imagine you’re on vacation in another country. After a long day of exploring, you go out to find dinner, only to discover that the restaurants have already closed because the locals eat at an earlier hour. Frustrated and hungry, you realize that the timing of the business didn’t align with local habits.
In the same way, if you open a food business following the schedule of Northern Europe in a country like Spain, the consumers’ schedules won’t align. In Northern Europe, people eat at noon due to the time zone, the climate, and the latitude, while in Spain, people typically eat around two or three in the afternoon. This example demonstrates why understanding local customs and adjusting accordingly is crucial for success.
When Starbucks entered the Chinese market, it faced the challenge of adapting its coffee offerings to suit local tastes and cultural preferences. Recognizing that coffee was not a traditional beverage in China, Starbucks modified its menu to incorporate local flavors and products more familiar to the Chinese palate. By aligning its offerings with Chinese taste preferences, Starbucks was able to integrate itself more seamlessly into the local culture.
Language Barriers
Our languages have different structures and expressions, so if you want to adapt an advertisement, you must contact a native speaker. This way, they can understand the aim of the ad and transform it into their language, ensuring that the message of the advertisement or marketing campaign conveys what the company intends to communicate.
Politics and Regulations
When a brand is internationalized, it is important to check if the product is already patented in the target market because if it is not, it can lead to legal problems. That is why companies must examine local patents. If the product is patented, companies can try to negotiate a licensing agreement with the patent holder.
Additionally, businesses must follow local regulations on product safety and environmental standards. If they do not, they could face fines. These are some examples of the rules companies must consider when expanding to other countries.
Economic Considerations
It’s important to consider the country’s economy, standard of living, and the purchasing power of consumers when setting prices in international trade. For example, something that costs 1 euro in Spain, like a burger, might have much more value in an Asian country with a lower cost of living. In this case, the price should be adjusted to make the product affordable for local people.
The company should also check the prices of competitors in the local market to decide on the best pricing strategy. Checking the prices helps to see if the profit margin is above or below them, so this way the company can confirm if it is profitable and competitive. Adjusting prices to fit the local market and economic conditions is key to succeeding in international markets.
In this graph, we can observe the purchasing power of various European countries. The purchasing power in Bulgaria is four times lower than in Luxembourg and also falls below the European average. Therefore, prices in Bulgaria cannot be the same as in Luxembourg or Ireland, as consumers would not be able to afford them.
For example, a television priced at 800 euros would be considered unaffordable for most people in Bulgaria. However, in Luxembourg, that price would be seen as low and reasonable for a television.