Warm Up: the reasons for internationalizing the company
It’s time to warm up a bit with internationalization!
The reasons to internationalize
Companies very often, yet erroneously, think that internationalization is a process exclusively reserved to large companies. Companies that can afford large and dedicated organizational structures and big budgets. Actually internationalizing a business means developing and customizing a vision that fully involves the entire structure whether it is a small company with a few workers, a company of 500 employees or an industry-leading corporation. It is vital to develop an international vision for the company and bring it forward with conviction! Let us briefly look at some of the potential reasons for developing an international vision, starting with the simplest reasons to then name others that are perhaps less clear but not less important.
– Selling in other markets. Starting with neighbouring countries provides the advantage of simple logistics. Perhaps focusing on countries with favourable trade relations. Increasing sales in other markets to take advantage of economies of scale by diluting the costs of the life cycle of a product.
– Avoiding or limiting the effect of changes in the domestic market. It may be necessary to find new customers abroad to offset a decrease in the domestic ones. Some markets allow lengthening the marketing period of products that on the domestic market are in the final stage of their life cycle. In some cases it may be profitable to identify new markets with less restrictive laws and regulations that allow an easier sales activity. Many companies are characterized by seasonal sales. Identifying new markets with different sales seasons can help maintain a good level of production and sales for the full year. For companies with products that are technologically obsolescent, it may be a motive to investigate in less technologically developed markets to identify possible interest in these products.
– Access to cheaper facilities. This is only one of the most often cited reason for positioning the company in other markets. Access to lower production costs (e.g. labour costs and raw materials) can be an excellent reason to produce some components abroad and import and assemble them at home. If it is cost-efficient to produce the entire product abroad, it can be considerably profitable to develop a marketing plan to leverage the lower logistics costs in order to reach the company’s target customers. At this point it is important to emphasize the difference in approach between delocalization and internationalization.
These are just a few reasons for internationalization: to boost sales!
But what else can be useful for leading this process to the company? An organization that is open to the global market will also draw strategic benefits because of the interaction with different markets and customers as well as with the competition.
Some of the strategic benefits are:
– Increase the visibility of the company brand
– Increased opportunities for acquiring the latest know-how. The entry into markets that are one step ahead of the technological progress may lead to the acquisition of know-how and keep abreast.
– Competitiveness of the company’s products will increase. For example, the changes to meet the needs of different customers can raise the existing product to a higher level of competitiveness.
– The company’s experience will give impetus to key areas such as Purchasing, Production, Marketing and Sales, Customer Service, Logistics and Cost Control.
In and of themselves, these four aspects lead the company to a higher level of maturity and competitiveness. The experience of global trade creates an invaluable advantage in terms of human resources with more managers who are experienced, motivated and aware. The company that opens to the global market also launches very clear messages to the competitors.
Are you convinced? Shall we start?
In the next chapter we will see how to check the extent to which the company is ready to enter the global market. What to watch for and how to fill possible gaps. Follow us. One training session at a time.
