Internationalisation strategy: design and implementation

In previous sections, we have seen how the SME Service Officer can support companies in carrying out an overarching internal and external analysis before designing and implementing its own international strategy, the following section outlines how to implement the final steps.

Set the goals of the Internationalisation Strategy

While the goal of every business is to gain more customers, an SME’s goal should be more specific and should identify the following goals: What are the sales goals for year one, year five, and beyond? What level of customer retention can the SME realistically expect? How much time and money do they expect to spend on the expansion? How long will it take to see a return on investment? It is important to ensure that SME goals are aligned with its product/service and industry: it should set realistic targets with an assumed budget, so that it can use these goals as a benchmark for its own progress.

Knowing and understanding the competitors

To do well in any market, a business needs to understand the local competitors and how they approach the market. Each market has its own mix of competitors and cultures that define how an industry works.

Plan the Marketing strategy

When the markets of interest to the company have been identified, the overall marketing strategy should be planned.  This involves answering the following questions: Is it possible to use the same message in all markets? Does the business need to adapt the message? Will the company maintain the same brand globally?

Focus on a few markets

The business should classify the target markets into three kinds of countries using the Pareto principle (Wikipedia, 2020), and segment them in terms of strategic, complementary and other countries. Different strategies need to be carried out to succeed in all countries with the budget prioritising strategic countries.

Human resources and budget

An appropriate budget as well as key (adequate) and trustworthy people should be assigned. These will consist of professionals who know the company well and have a very high degree of adaptation and willingness to expatriate. This requires a high level of emotional intelligence (empathy, flexibility, communication, adaptation, etc.).

Pilot test

Before developing the entire internationalisation plan, it is recommended to choose a market as close as possible to the one/s in which SMEs have already been successful and do a pilot test first.

Mistakes to avoid

The following mistakes need to be avoided.

Myopia – It is critically important to validate the business model abroad, to evaluate the “distances” between the company and its markets. These include both “Physical distances” referring to the number of intermediaries between the business and its consumers and “Cultural distances” which involves considering that new consumers are members of other cultures and realising that it may be difficult to foresee or impose a specific model of product use.

The flight forward – It is important that the SME realises that a delicate cash / viability situation cannot be resolved by just selling abroad.

Banalisation of the return on investment– Entering a new market requires the company to develop the local brand, its customers, and the distribution system. The return on investment can require more time than in the domestic market.

Improvisation – A reactive attitude to the internationalisation process can result in poorly planned out actions. Sometimes, the SME can be overly controlled by a range of actions that are difficult to change as it may have entered markets following suggestions from agents, contacts, partners, etc.

Insufficient resources – Internationalisation is not an easy and cheap process, and the return on investment is not immediate. The SME has to prepare adequately using the necessary resources to succeed.

Implementing the correct controls

There are three essential types of controls:

1. Visual controls. These include checklists, dash boards, scorecards, budgets, etc. They allow the SME to monitor that the progress is following the foreseen steps and achievements. If that is not the case, they provide an alert and request that the SME takes the appropriate corrective actions and fix the identified problems.
2. Procedural controls. These include different kinds of controls such as having two unrelated parties that internally check the SME’s money flow, a standard review process for all new personnel hired, new standardised sales concessions empowering the sales team. All controls should follow established procedures to provide consistent and secure results.
3. Embedded controls. These are controls that do not require any additional actions to the ones already in place and foreseen by the company management system. These can include standardised contracts, automated data backups, and specifically designed financial controls that work automatically in the background to protect the business from poor decisions or behaviour.