Key for success is knowledge about the market(s) in which enterprises intend to be
active. Market size, growth, potential consumption, competitive situation, size and
structure of business relevant costs, structure and profile of competitors and potential
customers are important to know, but not always easy to get.
Governmental related success factors
Companies not very well versed in international trade are facing new and different
challenges, i.e. international contract law, tariff- and non-tariff based trade obstacles,
anti dumping customs tariffs, special legal rules and regulations like DTT (double
taxation treaty), accounting rules, and so on.
Socio-cultural related success factors
Socio-cultural differences between home and guest country conceal many risks. in
particular by selecting PR campaigns and marketing strategy, oral and written communication
with customers and suppliers and the public. Misconceptions surface very quickly
when not taking into account language and lingo throughout the new country, behavioral
attitudes and management style.
Enterprise related success factors
Keys for success are strategic resources like capital, international experience and
depth of information. Even when owning or buying externally all these resources it
is important to bring in its own share, because cooperation with special advisory
bodies or agencies can help but also create new risks of dependency.
is the resource information, it is not the easiest to collect sufficient data in
new markets. Either they are hidden in the most unlikely places, or they are very
complex to interpret or they are simply not available. Since Western management processes
are based upon qualified data, very often easy to get data are preferred than none
to make a decision.
Product/brand related success factors
It seems to be a basic truth that success depends on quality and specification of
the product. Less clear seems to be the fact, that these characteristics are very
different from country to country, from market to market.
To be clear
about: With very few exceptions, products are not interchangeable between markets.
A sound analysis of necessary modifications is needed to test the acceptance rate
and modifications. Also not to forget the legal side, home country specifications
like DIN are not the same as guest country spec’s like former GOST.
Strategy related success factors
„Green field“ or „brown field“, which way to go, a question that cannot be
answered per se. Enterprises with deficits in strategic resources should eye the
cooperation possibility. However, this reduces independency and the fate of the partner
can become the own. Information could flow uncontrolled, conflicts could hinder growth,
and market position can weaken. It is mandatory to enter a joint venture prudent
and slow by defining objectives, fields of activities structure of management and
enterprise, potential exit strategy very carefully.
Why ? Potential Reasons for going International
The world is a village, there is no protected home market anymore, consequently,
to safeguard the future enterprises, small or big, must eye international markets.
Sooner or later, they will also face the truth, that pure export will not be sufficient
anymore, closeness to customers will force the drive abroad.
forces for going international:
State impediments through trade barriers
Shipping costs, just in time delivery
Problems with sales agents, licensees, after sales service
Intellectual property and patents security
Raw material and semi-finished goods supply
Activities of competitors, suppliers or customers abroad (and their success)
Local developments like market saturations, increasing competitive pressure
Risk distribution, decreasing of seasonal dependencies
More effective use of own resources
Access to foreign knowledge and methods
Necessity to expand abroad when home market is saturated
Increasing sustainable market presence
Easing market entry through joint venturing
Getting market entry knowledge
How ? Types of internationalization
1. Trade (Export, Import of raw materials and goods, tolling)
2. Direct Investments
Sales, Production, Research & Development
Foreign assembly lines (import of parts, modules, ckd-production)
Complete production abroad incl. local sourcing
Research, Development and Production abroad (complete value adding abroad)
3. Strategic alliances abroad (cooperation with synergetic partners)