2023-08-30 09:17:30
The objectives of the internationalization strategy are fundamentally governed by the objective of boosting the company’s profit either through the expansion of sales or through a strategy whose purpose is to reduce production and distribution costs.
Although it can also translate into improving credibility in the eyes of potential foreign and local investors, brand image or value, and customer loyalty around the world.
If you need to delve deeper into the topic, read this article that explains better what is internationalization before further.
Stages in the internationalization strategy
The transition towards internationalization is full of risks and important changes in the structure of companies, which is why the decision to move towards this internationalization strategy must be based on a thorough analysis that identifies the really important reasons for crossing borders and the development of a successful internationalization tactic. Additionally, the required control provisions must be established so that the actions in the different variables of the marketing mix can be corrected in time.
Stage 1. The decision to export
It is a phase of little planning and a lot of uncertainty since the company begins forays into the foreign market trying to minimize any negative impact that may arise in said operations.
At this point, the company begins its export for the following reasons:
Need to reduce production costs
Excess production capacity. Take advantage of economies of scale in relation to production capacity. Saturation, economic slowdown or drop in demand for different reasons. When the end of the maturity stage of the products is experienced.
Maintain competitiveness against competitors
Due to the success of a local competitor in a foreign market. Appearance of new competitors. Greater competitiveness than international producers in their niches.
Removal of trade barriers and development of world trade
Emergence of new Free trade agreements.Reduction or elimination of tariff barriers or import quotas New business opportunities in emerging economies.
Stage 2. Organization and planning
It is the stage in which the company truly considers whether its capacity allows it to go abroad. Both internal and external analysis begins, the result of which will present an x-ray of the company and its relationship in the current environment. In the same way, the internationalization plan also begins.
In the area of internal analysis, what is of concern for companies is whether the current management staff is prepared for negotiations in internationalization strategies, whether they will be able to obtain the necessary financial resources and whether their product can turn out to be competitive or at least achieve advantages over the competition in the target country.
In the external factor, competitors, possible niches or business opportunities, as well as the evolution of emerging economies, are analyzed in detail.
Companies immersed in this phase usually have little experience in the international arena, so it is necessary to identify and find a collaborator who is capable of providing the necessary support in the introduction of products into the target market.
The export or internationalization department becomes critical in the organizational structure. The need arises to have qualified workers with expertise in different languages; In addition, the company must begin to expand its network of international contacts to accumulate the necessary experience in order to be able to operate in the foreign market.
You can find support for your project through:
Consulting companies, which will help in the internationalization plan by offering their experience through commercial reports that will be crucial in decision making when selecting the market. International logistics companies, which can advise on best practices regarding shipping of goods abroad. Partners in the destination country, who will help in the creation of a commercial network or will have their own. It is the agent of the agents or commission agents, who can even carry the burden of the introduction to the new market as well as the marketing of the product, which allows them to take advantage of their experience in terms of terrain, contacts and clientele.
Stage 3. Prepare the internationalization plan and take action
He internationalization plan It is a complex process, since the company’s purpose is to obtain greater control over the distribution of its product.
All the necessary aspects are taken into account so that the marketing mix is flexible and capable of adapting to the company’s resources and the characteristics of international markets. It is essential to analyze as many variables as possible in order to reduce the risk in the project.
Among the aspects to not neglect and, on the contrary, to take with great caution are those related to the socio-cultural environment (religion, styles of organizing purchases, family structures, language and dialects, aesthetics, idiosyncrasy in general), legal (taxes, laws intellectual property, tariffs), political (type or form of government, stability, country risk), economic (GDP, inflation), technological (internet, media), infrastructure (ports, airports, roads, waterways and maritime routes) , etc.
Decisions about target markets and entry methods are vital, because in this phase the financial resources are greater, since a long-term investment is required, and therefore, the commitment is maximum. You can choose different ways:
Subsidiaries or commercial affiliates
It involves less investment, since only one headquarters and own staff will be necessary. It is a requirement that managers personally go abroad to select new personnel. It is advisable to look for countries where other companies in the same sector have already been established in order to take advantage of the experience. and the existing network of contacts.
Acquisition
Buy local companies to take advantage of the infrastructure already created. It is necessary that these companies share the business philosophy. It is advisable to look for companies dedicated to complementary products to the company’s.
Join venture
Create Joint Venture, together with other sector partners, competitors, and local companies in countries with a good number of restrictions
Stage 4: Consolidation and adaptation
The last step of internationalization is to achieve the adaptation of the product, at least as necessary, in order to continue increasing the process in the learning curve of its manufacturing, but keeping in mind the analyzes in the preparation of the planning phase. the internationalization strategy.
The internationalization strategy is therefore a very complex process that involves each of the parts of the company and others not yet created, therefore the commitment of all staff is necessary, focusing on positive long-term results.
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