In an increasingly competitive economic environment, it is critical for companies with the technical and financial resources to expand their operations beyond their local market. This sometimes-complex procedure has numerous benefits.
What Is the Point of Trying an International Adventure?
Companies export or settle down in an identified country to expand and diversify their activity and increase their turnover, to be closer to their customers or partners, to integrate skills and technologies, or to produce locally. This objective can be defined as soon as the company is created, or when it has reached sufficient maturity and experience in the local market to cross borders.
The export of goods and services is a source of wealth for a country (jobs, increased income, etc.). It is also a clearly identified growth lever for companies which, by diversifying their markets, are led to be more competitive, innovative, and adapt. They show more resistance to economic shocks.
When and How to Go Global?
Internationalization is a strategy that takes time to develop. A strategic business plan must therefore include a detailed budget for the internationalization action plan. The international part must be integrated into the first business plan for a startup. The right time for an existing business is when its economic maturity and financial stability allow it to support the necessary investment on its own.
There are many methods of internationalization depending on the situation of the company:
- Exports: this is the lightest form of internationalization. The products are manufactured in the country of origin and transported and then sold abroad, directly, or through an intermediary.
- Subsidiaries abroad: this is a heavier and more risky mode of internationalization because it involves the creation of production or marketing companies, controlled by the headquarters.
- The multinational company: this is present in several countries through subsidiaries benefiting from a certain autonomy. Each subsidiary standardizes what can be standardized in its offer (product, packaging, distribution, and advertising) and adapts according to local specificities.
- The transnational company: this also adapts the offer, but above all, it optimizes the location of its activities according to the strengths of each country. Access to natural resources, tax incentives, or exchange rate risks are also considered by the head office, which coordinates and integrates the activities of its subsidiaries.
However, internationalization is not without risks and should be reserved for companies that have taken the time to prepare.
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