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The business sector has become increasingly competitive and dynamic, motivating many companies to initiate the process of internationalization of companies, which refers to the use or allocation of resources in a strategic way that allows them to take advantage of various opportunities that are arising in foreign markets, therefore, thanks to this process a company develops its capabilities and expands its business outside the borders, allowing to obtain an increase in sales, improvement against the competition, reduction in the risks of the company and therefore, the dissipation of SMEs, for these advantages and given its importance, is that today we have investigated closely everything that involves the process of internalization of companies, to examine and implement it if you plan that your company ventures into foreign territory.
Steps to carry out a company internationalization process
1. Assign an area and a work team
In the first place, an area should be created that is dedicated exclusively to the internationalization process within the company, which should have qualified personnel in the legal area, public relations, international market research and management.
2. SWOT Analysis and Corporate Goal Setting
This multidisciplinary team will have to elaborate an analysis through the SWOT tool, in order to reveal its Strengths, Opportunities, Weaknesses and Threats, so that the company is aware of all the scopes and limitations that this process entails. After appointing the team and performing the SWOT analysis, the next step is to establish the objectives to be achieved, determining clear and attainable goals, as well as the work strategies to be followed to achieve them.
3. Financial evaluation
In order to know for sure the solvency and internal resources of the company, an updated study of the financial situation of the company must be carried out, this will allow you to know administratively if it is capable of taking on a new challenge or not.
4. Risk analysis
There are 4 types of financial risks that a company must carefully consider before initiating an externalization process, as follows:
- Economic risk refers to fluctuations within the economic cycle in the country that are not favorable, as well as the possible consequences on society.
- Country risk, symbolizes the dangers that a country has to develop international marketing, therefore, most companies use as an index the difference between the bonds offered in the United States and the bonds of that country.
- Exchange rate risk, represents the fortuitous losses that could be generated when exchanging with an unstable currency of the country where the company wishes to establish itself, especially in accounts payable in the medium or long term.
- Political situation risk, is a quite unpredictable variable since it will depend on the negative actions that the government of the day executes and this affects the company unfavorably, also directly influences the specific regulations of each country and how they alter the organization.
5. Choosing the new market
After the above evaluation, it is time to choose the market or markets in which the company will be able to operate without suffering major complications, allowing it to meet its objectives in a shorter period of time and yielding better dividends to the company. Therefore, the following alternatives should be taken into account according to the type of country:
- Strategic countries are the clear objective of the entire operation. Most of the main resources are allocated to these countries in order to adapt quickly to their market, whether in language, schedules or services.
- Supplementary countries, depending on the surplus capital, a gradual entry into these countries is established.
- Other countries, the contribution in these countries is done in the background or as a passive export, applying certain conditions of products or prices.
6. Commercial strategy and sales channel
Subsequently, a commercial strategy must be created to be followed in the previously selected country, determining the different sales channels to distribute and market the company’s goods or services.
7. Physical establishment
Following all the previous steps, finally it is necessary to establish physically in the new country, to carry out the internationalization process of the company, however, for this process to be a success, it must be done gradually and following several phases.
Phase 1 – Arrival
We try to minimize the risk involved in adapting to the new market, knowing it in depth in order to develop the product according to its needs.
Phase 2 – Evolution
There is an increase in the volume of operations and more emphasis is given to important activities. During this phase, suppliers are minimized and activities are strengthened.
Phase 3 – Entrenchment
Priority is given to this phase, since the aim is to achieve maximum profitability and control of the different activities carried out, in order to consolidate the greatest number of operations.
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