Diana A. Filipescu, PhD. Teacher of Internationals Business and Marketing. Toulouse Business School, Campus Barcelona
Facing the benefits and risks of international markets.
Internationalization is really a necessity for businesses, it is the best way to learn and the best weapon to compete. But it also represents a risk for them, a phenomenon that is very difficult to cope, either because they are not prepared to internationalize or because there is a fear to competitors. Here are ten key points to ensure the success of the internationalization of companies.
- Diagnosis of the internal situation – sometimes businesses are successful at the local level due to certain recognized competitive advantages in their market (eg brand or a product like locally), but does not guarantee international success. Therefore, it is very important that the company undertake a comprehensive internal analysis, and has clear what their strengths and weaknesses are. Some of the key questions that the company must answered are: Where are we now? Can we really do it? Do we have the human and financial resources? Do we have the internal capabilities?
- Participation in international fairs – although organizing a trade fair participation is no easy matter, international trade fairs are an important marketing tool, a large shop window and a means of communication highlighted. The fairs have an advertising face and a sales strategy. An exhibition is a technic for sales support, a presentation privileged means, for a large number of potential customers, in a time period and in a designated area.
- Intensive knowledge of the market – choosing the right market to start international activity involves extensive external analysis, starting by developing a list of target markets. At this point, the company should seek information on the potential demand for its products and services, presence of competitors, bilateral relations among countries, level of economic and trade integration of markets. Once identified potential markets, the company must do a full analysis of each candidate country both at the macro-environment and micro-environment to identify where the business opportunities are really for her. Consequently, we must prioritize the opportunities in these markets, ordering these countries based on the current and future potential and, finally, select the target market where the company is confident it can have growth potential.
- Clear identification and thorough knowledge of the target customer – the company must be certain that the reasons for the success of their products in the domestic market also exist in the target markets. And if not, know enough to target customers to develop products / services to their needs.
- Multilocalization – is very important that the company spread its production process across several markets as this involves reducing the risk internationally and presents the opportunity to meet several markets at once and establish valuable networks.
- Define the appropriate entry mode – is usually a difficult decision for the company as it will directly affect its level of commitment with the target market. The company must define its strategy of entry in accordance with its business model and the characteristics of each country. To Export, agent, partner, or invest to create their own structure?
- Being oriented to market segments – another way to avoid failure is the specialization of the company in certain segments in which they will be competitive, since it is very difficult to attack the whole market.
- Innovate – it is probably one of the key points to achieve success at international level. The company must invest in R & D continuously, take advantage of the knowledge acquired in its home market from its domestic and/or worlwide competitors, and innovate their products and/or manufacturing processes to have a clear source of competitive advantage. It has been shown that this type of benefit helps the company to more easily penetrate international markets and, consequently, it will acquire more international knowledge to use on further improvements, so this is a reciprocal causal relationship between internationalization and the innovation.
- Agreements with distributors – enter a foreign market is a long and difficult process, so it is very important to seek ways to facilitate it. A recommended option is to reach agreements with distributors to become preferred suppliers.
- Price setting – set the right price in the target market is key to ensure the success of sales. The company must be sure that the sale price reflects the perceived value of your product / service, which allows it to be competitive, including duties and taxes, that generates enough margin for her and for the distribution channel, and above all is consistent with its positioning strategy.