Company readiness for the implementation of an internationalisation strategy
The internationalisation of SMEs has increased in terms of its importance on global markets. An increasing number of SMEs are interested in selling their products in international markets through exporting. Having a suitable strategy in place will determine their degree of success. Selling abroad can be seen as the first step towards internationalisation but, as previously explained, internationalisation goes far beyond selling products abroad. Significant difficulties emerge when a company wants to engage fully in internationalising the company, for instance when they want to manufacture their products in other markets or if they want to sell their product directly in other markets.
For example, in order to succeed in this second goal, a company will need to implement a stronger export philosophy in the company and identify how to make it easier for buyers to become customers.
In order to overcome the barriers described in section 5.3 above and to be able to internalise the processes necessary to succeed in its internationalisation strategy, the company needs to be prepared in terms of having the appropriate economic, human and marketing resources as well as sufficient time. The process requires perseverance over a significant length of time as introducing products in overseas markets requires a much longer time than in the local market.
An auto evaluation test can be completed to establish if the SME is prepared for this. This involves answering some key questions using a tool such as The seven tudes of international expansion tool (Ettenson, 2020).
Though this test, the SME service officer will measure different company capabilities, such as:
5.4.1 Economic readiness
Once all of this is under control and the company has the internal structure prepared for internationalisation, the company can be confident that it has sufficient knowledge and prepared adequately in economic terms. In general terms, the dynamics are very similar to those of the domestic market, but the distance between buyer and seller can be affected when dealing with businesses (B2B). International businesses have additional risks that need to be taken into account in the signed international trade contracts, which define the obligations of parties. Formal examples of international templates are available on the International Trade Centre website (International Trade Centre, 2010):
Distance, reliability, trustfulness, security and economic capacity are all key factors to be included in the contract when choosing the paysment method (iContainers, 2020).
The SME’s level of preparation for international business will determine the INCOTERMs that will be selected for the transaction. INCOTERMS (Tiba Team, 2020) define parties’ (buyer and seller) obligations, costs and risks associated with the global or international transportation and delivery of goods. These rules are defined by the International Chamber of Commerce (ICC) and accepted by governments, legal authorities, and practitioners worldwide for the interpretation of the most commonly used terms in international trade.
