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NEXT STOP:
MAKING SMES
INTERNATIONAL
T
JOAN E. RICART
Professor of Strategic ternationalization there are other reasons of a more
Management, denotes big busi- proactive nature for incorporating
IESE Business School
ness carried out on internationalization into the com-
a global scale, but petitive strategy of the company. For
even the smallest example, taking advantage of the
JAUME LLOPIS
Senior Lecturer of
companies can in- development and growth of other
Strategic Management, ternationalize suc- markets, moving certain activities
IESE Business School
cessfully with limited resources if in the value chain to more competi-
they play their cards right and find tive regions, be they costs (delocal-
partners who can take them places ization of production to countries
Taking a proactive approach they couldnt reach on their own. with lower manufacturing and labor
to internationalization costs) or in capacity (externalizing
WHY INTERNATIONALIZE? various processes from client ser-
makes companies more When a company decides to vices to call centers or research and
robust and potentially more l internationalize, its usually
motivated by the possibility (or ne-
innovation), exploiting economies
of scale and reach, or simply to gain
successful, with a far greater
cessity) of increasing sales, diversi- knowledge: about other clients and
client base and more scope fying its operations (and associated markets, the capacity of competi-
to expand. risks), getting closer to its clients, tors at a global level in a particular
reducing costs (labor production industry or sector and even the cul-
or supply), compensating for the tural diversity typical of teams in
decline or saturation of the home global companies.
market. This last argument, to gain knowl-
Although they are perfectly valid, edge, rarely appears in the list of
what all of these arguments have in reasons why a business goes inter-
common is that they are reactive, national. And yet it is of crucial im-
that is to say, internationalization is portance because those companies
seen as the solution or the answer to that dont work in international
a fact or a set of circumstances that markets become less competitive
is changing the normal course of and more vulnerable. For this rea-
business. These may include the de- son, its imperative for companies
terioration of the margin, a market to work abroad and to be exposed to
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that is stagnant or isnt growing or a the need for excellence that interna-
INTERNATIONALIZATION
client who wants services and prod- tional competition brings.
2
Everyone must be clear
about the companys 3
strategy, where the Look at what human
competitive advantage
and other resources
lies, what the business
are needed to
model is and what its
internationalize.
strong and weak
points are.
5
4 Answer the key
questions: what
Take a close look at the motive activities are we
for internationalization. going to internationalize
Ensure that it fits the overall and why, what markets
business strategy. do we plan to enter
and with what strategy?
6 7
Analyze the Draw up an action plan that identifies
organizations starting the starting point, the desired objective
point: what do we and the resources that can be mobilized
hope to achieve through to this end.
internationalization?
What resources do we
need to succeed? What
talent and resources do
we have to begin the
process?
9
8 Identify a series
Anticipate obstacles of milestones and
and how to overcome them. set up risk control
and supervision
mechanisms to
measure progress.
1o
Get started, better
today than tomorrow.
And dont forget to
ask for help when you
need it.
OFFSET
l ing value by taking advantage
of the opportunities presented by
the advantages of specialized pro-
duction on a global scale.
semi-globalization that all are cov-
DIFFICULT ered by one of the three generic FROM THEORY TO PRACTICE
strategies outlined by Prof. Pan- Any business that wants to break
CIRCUMSTANCES kaj Ghemawat, (Redefining Global
Strategy, 2007), a leading expert on
l into new markets must begin by
asking itself if it can produce solid
globalization, within the conceptual answers to three big questions:
framework of the Triple A: 1. What markets to enter?
Adaptation: adjusting to the lo- 2. With what strategy?
cal frameworks. The adaptation 3. With what type of structure?
strategy consists of increasing in- The answers to these key ques-
come and market share by tailoring tions, along with the companys re-
products and services to the local sources and capacity, will define its
context and the key is to arrive at the international strategy. And while it
correct adaptation of the business is essential to dedicate time to each
model and the product and service of these issues, they can be rolled
offered to the target market. up into one question, the answer
Aggregation: overcoming diffe- to which affects everything: What
rences.Taking advantage of econo- competitive advantage are we try-
mies of scale through the creation of ing to gain?