Challenges Of Overseas Business Expansion And How To Overcome Them

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Challenges Of Overseas Business Expansion And How To Overcome Them

Business expansion is a critical attempt by a company to accommodate growth by increasing its human capital, introducing new products and services to the market, acquiring valuable assets, and merging with other businesses in order to generate more profit.

Business expansionis not taken lightly. The board of directors and stakeholders consider crucial factors and weigh the advantages and disadvantages before finalising the decision to expand.

Not all business expansions succeed; some also fail. Some business expansions fall into bankruptcy.

If local business expansion is already crucial,overseas business expansion doubles the struggles. More money is at stake, and managing a business a hundred miles from home is arduous.

Business people need to design an international expansion strategy to help overcomeoverseas business expansion challenges.

The Challenges Of Overseas Business Expansion

Overseas or international business expansionis a process where a local business decides to expand internationally by setting up a legal presence in another country and penetrating an overseas market through a foreign subsidiary.

Here are the challenges of overseas business expansion:

Local regulatory compliance

Compliance issues are the greatest factors and challenges businesses encounter when planning an overseas business expansion.

Each country has unique sets of laws concerning different industries. The laws that apply to your company in Singapore are not in place for your foreign subsidiary abroad. The foreign regulations and policies may be stricter or laxer than in Singapore.

Tax obligations, tariffs, business permits, labour laws, trading standards, and other local rules of the chosen country are the obstacles companies must sort out when deciding on abusiness expansion abroad.

Additionally, companies must have a keen eye on the chosen country’s local and international politics. After all, politics influences these regulations.

Doing rigorous research and calling an expert from the chosen country can help you get better insight into local and international politics. These experts can contribute to designing an international expansionstrategy. They can also help you smoothen up all these obstacles and make sure your company complies with the local laws before executing overseas business expansion.

Market competition

Overseas business expansiongarners both advantages and disadvantages from market competition.

Firstly, the foreign market is a new playing field for businesses to try, especially if your current local market is already saturated with competing products and services.

Secondly, the foreign market offers tons of opportunities more than your current local market.

Lastly, your business does not rely on one market alone. If the local market collapses, you can rely on your foreign market.

A few drawbacks of the foreign market in overseas expansion is competing with local brands. It is not impossible that similar products and services are already available in the foreign market.

It is also a challenge that your new market is more familiar with the local brands and probably prefers them to yours.

Your products may seem too exotic for the foreign market.

Introducing your product as unique and one-of-a-kind already sets your merchandise apart from the other. Also included in the international expansion strategy is creating a product that is related to or at least close to the culture of the foreign country that can attract your foreign consumers to try your item.

Partnering with local businesses and establishments can also help improve the visibility of your products in the new market.

Lastly, rigorous market research is a must inoverseas business expansion.

Talent acquisition and managing global teams


Talent acquisition, onboarding, and managing remain a challenge for companies.

When establishing a company’s headquarters abroad, they can either outsource talent from outsourcing companies or hire people on the ground.

What makes talent acquisition and onboarding difficult is you lack personal connection with the applicants. You cannot determine whether the talent is the best fit for the job. You have to trust and rely on your HR team. You also have to deal with the foreign labour laws duringoverseas business expansion.

Secondly, managing global teams can be extra complicated given the distance, cultural differences, language barrier, time zones, and access to technology advancement.

It is also tricky to ensure that your company culture is practised in your foreign subsidiary.

Connecting with reputable consulting firms and outsourcing companies guarantees your access to talent. These firms and companies can connect you to talented individuals who can be the perfect fit for the job.

Also included in theinternational expansion strategyis consistent open communication with your global team, whether through email or video conferencing. The connection and interaction build trust and a sense of belongingness among your foreign staff.

Cultural differences and etiquette, and language barriers

Each country has its own culture, etiquette, tradition, and customs. Companies must be considerate of these factors when planning overseas expansion for your business.

For example, some countries zealously celebrate religious holidays, such as Christmas and Eid ul-Fitr. Your foreign subsidiary must accommodate this period even if the mother corporation does not observe these holidays. It shows respect, understanding, and openness to the diversity in the company.

Generally, companies from developed countries are more fast-paced and straightforward than developing ones. Mother corporations must learn how to incorporate this work etiquette into their foreign subsidiary.

Lastly, the language barrier is a common challenge for overseas business expansion. There are risks of miscommunications and loss in translation if the barrier has not been lifted.

Some companies include translation software and services in their international expansion strategy to break the language barrier.

Supply Chain

Overseas business expansionis easier for businesses that offer services, but for companies selling various products, the supply chain is a stumbling block.

Companies must have strong and interconnected international logistics, from export to import. International boundaries and dealing with customs are also a challenge, apart from uncontrollable hurdles, such as geographical factors and weather.


Intensive research, close foreign connections and relationships, and a foolproofinternational expansion strategyare the keys to successfuloverseas business expansion.


Scaler8 is committed to helping you foster rapid and stable business growth through overseas business expansion. Visit Scaler8 for more information.