Internationalization is a step that more and more companies choose to take, essentially seeking to reach new audiences interested in their activity. A well-defined internationalization strategy can bring significant benefits to companies, but when deciding to pursue this path, there are always a number of issues to bear in mind, as the risks associated with this option are many, and sometimes with implications that managers are unaware.

Thus, it is essential to study everything that involves this process and to know the obstacles to overcome so that everything unfolds in a peaceful way. The keyword for this to happen is: Research.

And when it comes to research, it's not just taking the computer and reading the first result from Google. Researching requires hard work and the ability to select the right and quality information. There are already several entities specialized in the theme “Internationalization” and that make the work of those who want to do a research on the subject much easier:

  • AICEP (Agency for Investment and Foreign Trade of Portugal), which brings us up to date with the fairs and characteristics of the sector in which our company operates, allowing us to verify the specificities of a particular country and its relationship with Portugal.
  • Euler Hermes, available only in English and French, gives us the economic, political and cultural perspective of the country to be internationalized.

Therefore, before internationalizing, we need to focus on these issues and make sure it is the best option for my business.

The success of the strategy the company intends to implement will depend on the rigor of the research.

 

The 4 Steps to Internationalization:

 

1) Market Entry Mode

There are 4 ways to internationalize your business and each has its advantages and disadvantages:

  1. Export (Direct and Indirect);
  2. Join Ventures (Alliances, Partnerships);
  3. Licensing;
  4. Direct Investment.

The mode of entry into the international market must be aligned with the company's strategy, without forgetting what resources it has.

 

2) Host Country

Culture is one of the main barriers to internationalization. As similar as the country may seem, there are always slight differences that can be a deal breaker. When choosing a country, do intensive research on market functioning, cultural traits and most common forms of trading. This will make it easier to see if the company's products and values ​​fit the lifestyle of the population.

In addition, it is crucial to do a PESTEL analysis in order to understand:

  • Political, Economic, Sociocultural, Technological, Environmental and Legal aspects that the company will face.

 

3) Product Mix

This step is associated with the previous one. After assessing the destination country, you need to understand if the marketing mix needs to be tailored to the needs of the host country's customer. Therefore, there may be a need to change prices compared to competitors, to adapt communication, to choose distribution channels and, finally, to verify the suitability of the product.

 

4) Associated Costs

This is one of the most difficult steps throughout the research process, as it involves several calculations about the costs associated with each hypothesis.

For example, if the input mode you choose is direct export, the costs associated with this option are:

  • Transportation product adaptation (if necessary), patents in the destination country, technical materials, insurance, customs formalities, exchange rate fluctuations, among others.

A laborious but extremely important task, as it prepares us for the reality that we will face. Do not forget to research intensively, only these studies allow you to evaluate all the conditions necessary for your decision.

 

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Sofia Domingues

2020-02-27

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