Most of the companies are facing question of entering foreign markets. When to make final decision about it and how to deal with internationalisation process? Mainly small and medium sized companies, operating in a domestic market for a longer period of time, often see many obstacles, when considering the internationalisation.
Is it possible for these companies to succeed in foreign markets? The answer is yes and no!
In foreign markets can succeed both start-up companies and companies, already operating in domestic market. It is never too late for internationalisation, but it is recommended to start with it as soon as possible. When a company identifies an opportunity in a foreign market, it should react immediately; otherwise it will miss a chance for a company’s growth. A success of the business in foreign markets depends on numerous internal and external factors. Still it is important that the reason for the entry is the quality of the products and services with high added value, strong brand, proactive management of the company etc. and not the fact that the local market is too small.
Besides questions like, what to sell and market in foreign markets, how and who, for a successful internationalisation it is important to have in mind following, in particular:
- Domestic business as a basis for a success in foreign market
A presumption of a success, with existing domestic business concept, with no further adjustments for internationalisation, is one of the most common mistakes in a business internationalization process. This fact is confirmed by several case studies and is known in practice as “headquarters’ mind-set”.
- Limiting target market and understanding the customers
An entry to targeted market is based on realistic estimation of its potential, as well as realistic estimation of the products’ and services’ demand or possible sales restriction in the targeted market, etc.
- Business plan adjustment
Each country has its own cultural characteristics with their local features. For successful business in foreign markets, business plan needs to be adapted to local particularities, specially business model, range of products and services as well as foreign market adjusted marketing strategy. In addition to the setting of clear strategy for achievement of the objectives and defining the target groups, it is necessary to make a realistic estimation of the costs and expected revenues in foreign market. The main reason for this is to be able to obtain a realistic estimation of the opportunities and threats of the business in foreign market. It is very important for the company, for example, to determine as closely as possible the cost of acquiring a new customer in foreign markets, exchange rate in the case of online shopping, the likelihood of repurchase, etc. If the company systematically analyses this information, it can accordingly in time adjust marketing campaigns and take necessary measures.
- Think locally, Act globally
Even in business internationalisation process it is considered that the point is in the details. Though it is true that it is necessary to trust the successful strategy in the domestic market, we cannot overlook local specifics in foreign markets, and they need to be respected. With this are not meant only product descriptions, currencies, value added tax, means of payment, etc., but also price strategy and the popularity of certain brands, which can vary widely from country to country. For example, if buyers in Switzerland prefer to pay with a credit card, and in Germany, the payment based on received invoice is preferred, these customs need to be considered, and should result in adjusted payment conditions for particular market. Internet represents an option and a basis for foreign market entry and it requests local adjustment as well. Many companies operating internationally are mistaken, being of an opinion that having their websites translated into some of the most common foreign languages, is sufficient. For example German language varies in Germany, Austria or Switzerland, and this fact needs to be considered when setting up the websites. Not to forget the design adjustment besides the content adjustment. Despite increased internet commerce, personal approach is still the most important. Each international company is highly recommended to enable to clients possibility to be consulted in local language, even though this service would be possible only by phone, e-mail, etc.
- Do not forget the competitive and local companiesBefore entering foreign market, it is recommended to identify and consider the possibilities for cooperation for example with local companies, joint ventures or purchasing a local company, even a competitive one. Besides identifying the competitive companies in foreign markets, start-up companies or companies with already established contacts and partners in a local market should be considered. The most important with the internationalisation is to find reliable local partners and to expand gradually.