Before the pandemic, international business mostly took place through personal, physical contact, when people met to arrange a sale or develop a new service. The COVID-19 virus pandemic has changed business greatly. Most international interactions are currently taking place virtually, which is a significant shift.
Virtual bargaining offers financial benefits as well as business challenges. The cost of going to the negotiating site has been kept to a minimum, while promotional materials have been digitized. On the other hand, more challenging social networking of negotiators, difficult communication and a greater possibility of misunderstandings may be limitations of virtual meetings.
Retaining existing customers and accessing new customers through the virtual world
Wanting to understand how the nature of international business changed during the pandemic, Grant Thornton Global interviewed about 5,000 leaders from medium-sized companies in a total of 29 countries in the middle of last year. Questions such as whether key interactions in the sales and service process are now primarily physical or virtual and how this has changed have, become necessary for research. It found that international companies mostly opted for virtual interactions, with 57% relying primarily on virtual international sales and 54% on international services, up 11% from pre-pandemic times.
It is a big change that poses challenges in multiple directions. Many state that in this way they have improved their expansion into the international market and got a better reaction from customers on the other hand. But there were real concerns about the price pressures the virtual world is bringing in, with 30% saying they are focusing more on this segment in the sales process. There were also concerns about virtual access to new customers and retaining existing customers.
Physical contact remains an advantage during business building
A virtual environment can increase opportunities or create barriers for product and service oriented organizations and can make it difficult to demonstrate product quality, especially if it is a physical product. Service-oriented companies can benefit from the ability to provide their services remotely to a wider range of clients. However, selling services largely depends on relationships, so the virtual world is not the first choice when it comes to building relationships.
The virtual world has not reduced traditional barriers to internationalization such as language barriers, time zone problems and currency growth. As building lasting relationships will continue to rely on face-to-face meetings, this is an obstacle for companies that do not have the budget to absorb the additional travel costs.
It is crucial that companies carefully manage their cost base and invest in technology to increase automation and efficiency. Each situation can lead to relationship building and new business opportunities. Grant Thornton experts specialize in mergers and acquisitions and thus contribute significantly to building relationships between the two parties. Contact our local advisor who will support your international ambitions!
Data Source: Grant Thornton Global