The internationalization of a company It is a significant strategic step that can offer numerous opportunities for growth and expansion. into new markets.
However, before embarking on this process, it is crucial to evaluate whether the company is truly prepared to face the challenges and take advantage of the opportunities that come with internationalization.
It is true that we live in a totally global world, with a multitude of international institutions that govern international trade and that is in the midst of the Fourth Industrial Revolution (we are totally digital); Therefore, it is more than possible that your brand can cross borders.
Now, it is not a process from today to tomorrow, it takes time, patience, resources for investment and a very good team.
However, before answering whether your company is prepared to internationalize or not, let's start by defining What does the internationalization of a company consist of?, because contrary to what is thought, it is not only to export.
What is business internationalization?
With internationalization we refer to global process that a company that is totally oriented towards foreign markets undergoes (whereas “export” is synonymous with transaction (sale) abroad).
That is, you can sell a raw material in Colombia (being a Spanish company), but if your only priority market It is the national one, you are still far from internationalization. You can see a more detailed explanation in this link.
And why does a company decide to start exporting its products or services?
Well, because exporting is one of the main bases for the internationalization of the brand, and an international company is more competitive.
Advantages of internationalizing a company
Some of the most notable advantages of internationalizing a company are:
- Business diversification.
- Use of economies of scale.
- Improvement of profit margins.
- Expansion of the life cycle of products.
- Contribution to the external development of a country.
- In short, internationalization allows the maximization of expected benefits business
And now you will wonder... But can I internationalize my company? Let's see it:
Market analysis and external demand
Before going international, it is essential to carry out a thorough analysis of the target market.
This involves understanding market trends, customer needs and preferences, as well as evaluating local competition and business regulations.
Is there real demand for the company's products or services in the foreign market? How will the company differentiate itself from its local competitors?
Financial resources and operational capabilities
Internationalization requires a considerable investment of financial resources and a strong operational capacity. Does the company have the necessary funds to expand internationally?
In addition to financial capital, it is crucial to evaluate whether the company has the operational capabilities to handle international expansion, including production, distribution, and customer management capabilities.global supply chain.
Cultural adaptation and language barriers
Cultural adaptation and mastery of local languages are essential aspects for successful internationalization.
Does the company understand the cultural and behavioral differences of the target market? Do you have trained staff who can communicate effectively in the local language and establish strong relationships with international customers, suppliers and partners?
Risk management and regulatory compliance
Internationalization entails various risks, including political, economic, legal and operational risks.
Does the company have a robust risk management plan that identifies and mitigates these potential risks?
Additionally, it is crucial to comply with the business and legal regulations of the destination country, including aspects such as intellectual property, taxation, and labor regulations.
Do you need advice to internationalize your company?
Find the best lawyers specializing in international commercial law.
International sales and marketing strategy
A marketing and sales strategy Effectiveness is essential for internationalization. Has the company developed a marketing plan that adapts to the characteristics and preferences of the target market?
How does the company plan to promote its products or services and attract the attention of international customers?
In summary, The internationalization of a company is a complex process that requires careful planning and evaluation.
So, to start answering these questions you must know where the question stands. So, here I leave you some tools to get to know it: CANVA and SWOT analysis.
CANVA analysis
With CAN GO you can collect in a single sheet of paper your potential customer, value proposition, possible distribution channels, key alliances, cost structure and revenue sources,
CANVA analysis is a tool used in the business field to evaluate different aspects of a project or situation in a visual and structured way.
This analysis is based on four main dimensions: Capabilities, Ambitions, Needs and Values, hence its acronym CANVA.
- Capabilities: This dimension refers to the company's internal skills and resources that can influence the success of the project or situation under analysis. This includes human, technological, financial resources, and any other asset that the company can leverage to achieve its objectives.
- Ambitions: Here the objectives and goals that the company wants to achieve in relation to the project or situation in question are evaluated. It is important to understand the company's aspirations and how these align with the opportunities and challenges of the external environment.
- Needs: This dimension focuses on identifying the specific needs that the company must address to achieve its objectives. They can be internal needs, such as training staff or updating technology, or external needs, such as meeting market demands or meeting regulatory requirements.
- Values: Here the fundamental principles and values that guide the company's decisions and actions are considered. It is important to understand how these values can influence the strategic and operational approach of the project or situation under analysis.
A practical example of CANVA analysis could be the following:
CANVA analysis for a company looking to expand into a new market:
- Capabilities: The company has a solid base of financial and technological resources, as well as a team experienced in managing expansion projects. However, you may lack specific experience in the target market and need additional training in terms of knowledge of the local market and business regulations.
- Ambitions: The company's main objective is to increase its market share and generate sustainable growth in the new market. It aspires to become a relevant player in the sector and establish a solid reputation among local customers.
- Needs: The need to conduct a detailed market analysis to understand local consumer preferences and behaviors is identified, as well as the need to establish strategic alliances with local partners that can facilitate market entry.
- Values: The company is guided by values such as integrity, innovation and corporate social responsibility. It seeks to establish ethical and sustainable business relationships in the new market, maintaining its commitment to quality and excellence in customer service.
This example illustrates how CANVA analysis can provide a comprehensive view of the different aspects that a company must consider when expanding into a new market, helping to identify strengths, areas of improvement and key opportunities for the success of the project.
SWOT analysis
With the SWOT (weaknesses, strengths, threats and opportunities) you can know the internal and external situation What you are facing:
An example of weaknesses could be: lack of specialized personnel.
While a strength would be your client base or the national recognition of your brand.
Once you have your internal analysis You will know where you are weak and what can lead you to full development. of your brand.
If you click on the following link, you will be able to see how to apply the SWOT in the internationalization of your company:
Conclusions on Is my company ready to internationalize?
Before making the decision to expand internationally, it is crucial to analyze all the aspects mentioned above and ensure that the company is truly prepared to face the challenges and take advantage of the opportunities that the global market offers.
LL.M in International Business Law and Law from ISDE and graduated in Law and International Relations from Loyola University. CEO and business internationalization consultant at Reáculoateypunto.
