Beyond the American Dream: Why U.S. Businesses Struggle with Global Expansion

By Pamela Ghosal, Director, Brand & Communications, Phrase

In an increasingly interconnected global economy, the pursuit of international market expansion is not just an American dream but a strategic imperative for businesses worldwide. Beyond tapping into new customer pools, entering international markets enables companies to diversify their revenue streams, reduce the risks associated with regional disruptions, and leverage economies of scale within their businesses.

Despite these benefits, however, new research has revealed that many U.S. business leaders feel ill-prepared for the challenges of entering new global territories. Understanding the diversity of business practices and perspectives globally is crucial.

While there are multiple possible reasons why U.S. businesses may struggle with global expansion, the challenges are not insurmountable—and the potential rewards are well worth the investment. Let’s examine what an independent survey, conducted by Censuswide on behalf of Phrase, revealed about U.S. leaders’ global hesitancies and explore strategies for overcoming them.

Global Expansion Challenges, by the Numbers

The survey of 2,000 businesses globally found that in the U.S. a strong majority (73 percent) of business leaders consider identifying and entering new markets to be challenging. Specifically, 74 percent highlighted language barriers as a concern, and more than three-quarters (78 percent) find competition a challenge in their business expansion efforts.

So, why do U.S. business leaders struggle with global expansion? There are multiple reasons to consider.

U.S. Business Challenges to Going Global

Despite the financial benefits and opportunities that entering new international markets offers, many U.S. business leaders might still be averse to taking their businesses global. This could be due to a tendency to focus on short-term results. Global expansion is generally a long-term investment. However, American corporate culture often prioritizes short-term gains to meet shareholder expectations. This can dissuade leaders from making long-term investments in international markets. Their hesitancies could be bolstered by the following:

  • Resource constraints: Even if a venture promises profitability in the long term, U.S. businesses might feel they lack the necessary resources (human, financial, or time) to effectively implement and manage expansion strategies.
  • Sufficient domestic market: The U.S. has one of the largest consumer markets in the world, and businesses may believe that the domestic market offers ample growth opportunities and less competition, making international expansion less urgent.
  • Market saturation: Some U.S. business leaders might view their industries as already too competitive globally and think that localizing their services or products would not provide sufficient returns on investment.

In many cases, U.S. business leaders may consider that the time, effort, and resources needed to expand into international territories could be better spent on strengthening their domestic market presence or exploring other growth avenues. In addition, these notions can be amplified by other historical and psychological factors. For example, the fact that the U.S. is rich in natural resources and human capital can lead to a focus on self-sufficiency rather than global interdependence.

Unraveling the Complexities U.S. Businesses Face in Global Expansion

The simple fact is that the opportunities opened by expanding to international territories—both in terms of new revenue and diversification—far outweigh the challenges for most U.S. businesses. This can reshape the way we approach business, creating vast opportunities for enterprises to scale and penetrate new markets. With this international landscape at our fingertips, the role of a robust translation and localization strategy cannot be overstated. By approaching global expansion with a strong focus on strategic localization, U.S. leaders can overcome the hesitancies that hold them back.

Localization goes beyond mere translation to thoughtfully address the cultural, behavioral, and legal nuances of new markets. Modern localization practices are increasingly sophisticated, leveraging cutting-edge advancements in artificial intelligence, large language models, and advanced machine translation. These technologies, when integrated with automated quality assessment frameworks, significantly diminish the risks commonly linked with expansion. This approach is a simple way to ensure that the localized content is not only linguistically accurate but also culturally resonant and legally compliant, thereby fostering a deeper connection with the target audience and ensuring smoother market entry. Examples of this are outlined below:  

Pilot Testing with Cost-Effective Localization Tools
Investing in cost-effective localization technologies allows businesses to translate and adapt customer-facing content, such as websites, marketing materials, and customer support resources. This initial step into a new market is crucial for several reasons:

  • Risk Mitigation: By localizing key customer touchpoints at a lower cost, businesses can assess market receptivity without significant investment.
  • Feedback Loop: This approach enables companies to gather valuable feedback on product-market fit, cultural nuances, and consumer preferences.
  • Data-Driven Decisions: The insights gained from pilot testing guide more informed decisions about scaling up operations and investments in the new market.
  • Customization Opportunities: Companies can refine their offerings based on localized content response, ensuring a more targeted and effective market entry.

Adaptable Content for Dynamic Market Engagement
Incremental translation and localization of content allow companies to remain agile and responsive to market dynamics. This approach offers several advantages:

  • Flexibility in Strategy: As market feedback is received, companies can quickly adjust their content to better align with local preferences and trends.
  • Balancing Priorities: It enables a balance between long-term global goals and short-term operational needs, ensuring that resource allocation is optimized.
  • Continuous Improvement: Regular updates to localized content keep the business relevant and competitive in rapidly changing markets.

Focused Targeting Through Precise Localization
Precise localization helps businesses target the most promising market segments, enhancing the efficiency and effectiveness of market entry strategies:

  • Market Segment Identification: Businesses can identify and focus on segments with the highest potential for returns, avoiding the scattergun approach of broader market entry.
  • Customized Messaging: Tailored content resonates more with specific demographic or psychographic segments, increasing engagement and conversion rates.
  • Optimized Marketing Spend: Focused targeting reduces wasted marketing efforts and expenditures, directing resources to the most lucrative areas.

Incremental Approach for Sustainable Global Growth
Adopting a staged approach to translation and localization can be particularly beneficial for businesses expanding globally from a domestic focus:

  • Manageable Expansion Steps: Companies can expand at a sustainable pace, mitigating risks associated with rapid, large-scale international growth.
  • Resource Allocation Efficiency: This approach allows for a more efficient allocation of resources, both in terms of finances and human capital.
  • Building on Successes: Successes in early stages can be leveraged and replicated in subsequent phases of expansion.

Cultural Sensitivity in Localization
Localization that accounts for cultural norms, beliefs, and taboos significantly reduces barriers to market entry:

  • Reduced Cultural Friction: Awareness and respect for local customs and taboos foster a positive brand image and customer relationship.
  • Enhanced Market Relevance: Products and services that resonate with local culture are more likely to be accepted and preferred.
  • Overcoming Psychological Barriers: Understanding and addressing local cultural nuances helps overcome the hesitancy often associated with entering unfamiliar markets.
  • Building Trust and Loyalty: Culturally sensitive localization helps in building long-term trust and loyalty among local consumers, crucial for sustainable business growth.

Strong localization programs can help U.S. businesses build trust, deliver enhanced user experiences, ensure regulatory compliance, and tap into a competitive edge when entering new global markets. By integrating cutting-edge translation and localization technology into their global expansion strategies, U.S. businesses can reduce the psychological, operational, and financial barriers they perceive. In conclusion, these strategies collectively provide a comprehensive framework for U.S. businesses to navigate the complexities of global expansion effectively, balancing risk with opportunity, and leveraging localization as a key tool for successful international market entry.