In a globalized economy such as today’s internationalization, it has become almost an obligation rather than an option. With so many ups and downs in the growth rates of the different countries of the world, market diversification is a highly recommended strategy to guarantee the survival of a company in the medium and long term.
As with a strategic marketing plan, the internationalization plan must take into account the issues that affect the daily operations of the company, and for this reason, we must first trace the context of such activities to establish a point effective and reasonable starting.
And precisely that starting point is the strategic marketing plan that we have prepared for the company and that draws the starting line of the internationalization plan itself. In order not to repeat the same steps, I would like to refer to the article published on this same blog in which I explain how to develop a marketing plan. In this way, I can now focus on the following phases, which are what will define the elements on which the internationalization plan will be based.
Objective. International sales
Well, now that we have a good marketing plan, we are going to focus on one of its objectives: international sales. Precisely a company wants to promote its global sales because it intends to distribute its income among different territories to avoid depending to a high degree in a single country or area. Therefore, reducing risk through diversification will not only help to achieve the brand’s sales objective but will also help us to give an absolute continuity and stability to a company that will depend less and less on fluctuations in different markets.
However, we must take into account the risks that, from a legal and financial point of view, the deployment in a new market entails, which in my opinion is necessary to hire a team of advisers, especially at the local level, that will help us comply with the legal regulations that allow us to operate in the territory without significant shocks.
Finally, another element to overcome must be the potential cultural barrier that may exist between the country of origin of the company and the territory subject to business. Therefore we must know its ins and outs to be able to maintain business relationships with continuity over time.
Selection criteria for target markets
The main decision factor in identifying which regions or areas may be of interest to the company is, in my opinion, that of the leading economic indicators presented by the country or territory under study. Also, and depending on the products and services that the company markets, we must take into account aspects such as political stability or even the infrastructures presented by the country in which we want to deploy our portfolio.
Attending to economic criteria, I usually attend to indicators such as:
- Economic growth analyzed from GDP.
- Purchasing power per capita, measured in terms of income, price evolution and the exchange rate of the country’s currency.
- Volume and evolution | variation of imports.
- Volume and evolution | variation in exports.
Among the selection models that I usually use as a reference to incorporate them into my plan, I would like to highlight Johansson’s. There are other very interesting methods among which those of Cavusgil, Kumar, Root, Brewer, Koch, Bradley, Anderson and Buvik or Rahman stand out but I prefer to focus on the one that, as I say, I usually use in the internationalization projects in which I work. Most of these models follow a process of different phases ranging from 2 to a total of 5. In Johansson’s case, he divides the process into 4 stages:
- Identification of the target countries.
- Selection of the countries on which to act.
- In-depth investigation of these countries.
- Final selection.
Market valuation criteria
Once the target markets are selected, another aspect that we must take into account in our internationalization plan are a series of variables and premises that will define the degree of difficulty that we will have when deploying the products and services of the company in each territory. I am referring to variables such as:
- Geographical distance.
- Cultural affinity.
- Size of the market.
For each of these variables, I usually establish a score from 1 to 5, with 1 being the worst rating and 5 the best rating, a score, in short, that will position each target market concerning our company and our country.
For example, if a target market is Denmark, I will have to rate this country from 1 to 5 concerning the territory of origin of our company and what I will do is evaluate each section according to what I have to adapt or not within my company to be able to operate in the destination country. Continuing with the example, if we consider that the country of origin of the company is Spain, we will value the language with a 1 (they do not speak Spanish, they speak Danish or at most English), with a 4 the geographical distance (we are relatively close), a 4 the cultural affinity (we are countries located in Europe with a similar capitalist system), and a 2 or maybe a 3 the size of the market (it is not very large), but this last aspect is offset by an economic and political situation stable, fruitful and interesting.
This section is essential to have well prepared as we are not going to be the only ones who have thought about internationalizing the company. Therefore we will have to compete with other companies and brands that also want to operate in the same market and for which we will have to draw up a series arguments that allow us to place our company ahead in terms of high added value offer.
We will have to study not only the country of destination, but we will also have to look towards the country of origin of the company to identify singularities and also the countries of the companies with which we are going to compete to precisely find points of debate that allow us to place our offer on a much more competitive level. Be careful, and when I speak of competitive, I am not referring to lower prices but to a better staging of the benefits that the company provides compared to its rivals in the target market.
The international strategy
The first aspect that we must address in our internationalization process is the search, identification, analysis and selection of the local partner that meets the conditions and requirements that from a formal and business perspective can meet our expectations. A local partner has countless advantages as it allows you to conveniently adapt the communication plan and the critical messages to the local idiosyncrasy.
The process of selecting a local partner, which can lead to the choice of a single agent or several in the case of larger territories or requiring more effort, is complex because it is undoubtedly the image of our initiative in a region that in most cases will associate our values with those of the person or company that represents us.
Another determining factor when choosing the right partner is its ability to understand the differentiating nature that the portfolio of solutions that the company that wishes to enter the new market incorporates. This circumstance makes their experience in the field of marketing similar products and services decisive when it comes to laying the foundations for an understanding that seems vital to transmitting the benefits of our portfolio compared to that of the competition.
Finally, and as I have already mentioned, I am especially interested in the values that you transmit as a person or as a brand to your environment, an aspect that has a very relevant specific weight in our decision.
Sources of information on international markets
In a global economy and a society marked by the rapid implementation and versatility of new technologies, it is almost necessary to use the Internet as the first source of information to obtain the data we need to analyze not only our target market in general but all the actors that intervene in said market. We mainly refer to our competition, our potential partners and allies as well as the specific and statistical information of the population that makes up the natural target of our brand.
As we have previously mentioned, the primary source of information will be the leading economic indicators of the target market since they will provide us with the necessary data on the potential of the territory to do business and, above all, the ability to attract new customers to our offer of services.
How we present the company in the international market
The main cover letter of any company in the current framework is its official website. This gateway reveals all the products and services it provides as well as, through the different publications it can carry out, it shows the level of knowledge and experience accumulated by the professionals who make up the organization concerning the solutions they bring to the market. A whole display that will undoubtedly be of vital importance
The web positioning strategy that we carry out in the company will allow us to target the contents and their publication towards the countries and territories that make up the general objective of the brand, so it is convenient to have a good communication plan for, in line with that of marketing, to be able to offer potential clients an efficient response to questions they may ask regarding the company’s portfolio.
Another method that I usually use and that works very well to make the company known in its target markets is the publication of articles and other content in the press and local specialized media, which gives the brand the power to transmit through a channel very appropriate the level of knowledge and experience that accumulates on the added value that can contribute to solving the needs of its customers.
Finally, we must not forget sponsorship and advertising as a very effective way of reaching the target audience. In this sense, our efforts should focus above all on identifying specific events, magazines and blogs in the sector.
Cooperation with other companies
In an economy, as globalized as the one we live in, collaborating with other projects and companies becomes the first option to link the brand with other initiatives that help to reinforce the idea in the client that we are an exciting and attractive enough option to invest in a product or service that must be associated or identified with a high-quality model.
With this strategy, we not only strengthen and potentially expand the company’s solutions offer, but, following an approach similar to that of selecting our partners, we achieve a position in the territory that contributes to reinforcing the foundations on which our presence is based and, consequently, the image of the company in said territory.
Finally, another aspect that we must take into account when analyzing possible collaborations with other companies is that depending on the market in which it operates, we will be forced to create company associations and other corporate forms to be able to work according to regulations legal force in some of the territories that make up our target markets. Therefore, we must be prepared and open to finding models and structures of collaboration that go beyond the mere provision of services, reaching somewhat more complex models that require a good deal of negotiation and determination.
An internationalization process is not easy, and to carry it out with certain guarantees we must involve not one. Still, several departments within the organization since the collaboration between the Marketing, Sales, Operations, Technology and Quality departments must be absolute. There will be members within each of these departments who work almost exclusively within the Business Development department, in charge of bringing the company’s internationalization strategy to fruition.
The professional profiles that can best fit the requirements of an internationalization plan are above all profiles with knowledge in marketing and sales and operations profiles, being the first ones that we must incorporate with the greatest urgency to satisfy the requirements of the early phases of implementation of the strategic plan. They must be people with a command of languages, with a commercial and strategic vision, capable of carrying out administrative management but above all with skills for the negotiation and presentation of the services that the company markets both to partners and to end customers.
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