Internationalization is a process that brings the entire company beyond borders. Not a single product or service, not sporadic and occasional export activities, but a change that involves all company functions and necessarily implies the transformation of the company culture.
For any company, and in particular for an SME, it is certainly a complex decision. However, with proper planning, developed through a well defined and structured path, internationalization can enable the company to grow and be more competitive on foreign markets, with a medium-long term perspective.
But what are the necessary steps to effectively plan a path on foreign markets? Our experience in the field has allowed us to highlight 7 key variables that guide the roadmap for internationalization.
1 – Is the company organisation ready for change?
The organizational structure of a company is an extremely important variable to maintain a competitive advantage over its competitors. Its primary objective is to organise the company according to the objectives set (such as increasing production, guaranteeing the future, growing on foreign markets) by clearly defining the division of tasks, roles and functions.
A good company organization is characterized by a set of people united in the achievement of common objectives thanks to an effective definition of roles and activities to be performed according to individual specializations. It means ensuring that resources are coordinated with each other (processes) so that results (outputs) can be directed towards the company’s objectives. All people within the company must be trained and informed. It is essential that all employees are open-minded and internationalized.
2 – Does the product/service to be exported conform to the needs of the new market?
The goal of the products or services offered by a company is to meet the needs of its target audience. When approaching a foreign market, it is necessary to consider that the target could be significantly different in terms of expectations, tastes and needs to be satisfied. Products and services that have been successful in the domestic market, in fact, may not be suitable and not guarantee the same results in the new market you decided to approach. It is therefore useful to carefully analyze the product or service that you intend to export to verify that it meets the needs and requirements of the new target, or that it has a degree of flexibility that allows adaptation to different countries. In this way it will be possible to make the product/service more attractive and tempting, able to intercept and satisfy the needs of the new target.
3- The importance of an international marketing plan
Marketing is one of the critical variables in a process of internationalization. In order to maximize the chances of success of the international project, it is important to define marketing strategies created and developed ad hoc and consequently able to adapt to individual markets. The marketing strategy defined will identify the reference target for each selected market, defining the best promotional solutions to achieve it. This is combined with product, price and distribution strategies that take into account, in the same way, the specific characteristics of the foreign market of interest. Marketing must also define sales volumes, monitor the competition and the performance of the markets in which it operates. A good international marketing plan is able to consolidate the presence of the product on the foreign market in question and to deal with any negative sales trends.
4- The importance of adapting communication
To strengthen an internationalization project, it is necessary to plan communication actions capable of enhancing the strengths of the product and allowing an increase in brand awareness over time. Many actions can be adopted: from the softest, requiring less investment (such as catalogues and brochures, as well as a multilingual website) to complex, costly and long-term actions (such as offline and online campaigns, from print to TV and social media marketing). All these actions have one thing in common: they must share the same cultural background, i.e. the cultural context in which the your addressee lives. Communication is made of codes: without an adequate system of coding and decoding the message we would not be able to understand each other, let alone between different cultures.
5- Assessing the real export propensity
Export propensity is given by the ratio between the export value and the total added value. The value added, which is given by the value of production minus the value of intermediate costs, measures the growth of the economic system in terms of new goods and services available for final use. In order to undertake a process of internationalization, it is important to identify the company’s current situation regarding foreign markets and its organizational units responsible for them. It is also essential to understand whether the company and its top management is willing to “change”, adapt, and “sacrifice” for the international project.
6- Planning and information management: adopting a data-centric orientation
Information management is the collection and analysis of data from the company’s operational and process areas. In a global context where knowledge is increasingly seen as the key to obtaining a competitive advantage in the market, good information management, the so-called “knowledge management”, becomes a fundamental tool, a necessary corporate cornerstone. All business activities are derived from this information: investments, planning, personnel or purchasing management.
7 – Balance sheet and willingness to invest
Through the reclassification of the company’s financial statements it is possible to verify the evolution over time of the main economic, equity and financial variables of the company, and to have an immediate perception of the relative trends that characterize the company. Another aspect of fundamental importance is the company’s willingness to invest, especially in contexts in which it sets itself business growth objectives.
Are you ready to face a structured path of internationalization?
In order to facilitate the understanding of complex realities such as companies or markets and to facilitate strategic decision making, Roncucci&Partners has developed some effective tools that help SMEs to orient themselves towards foreign markets and to assess their preparedness for an internationalization process. In the same way, our company constantly monitors public and private financing available for specific business growth projects and is able to suggest to its customers targeted and effective financing methods for the purpose.