Internalization

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Internationalizing a company means going from being national to being international and therefore having relationships with institutions and companies as well as in other markets.

The term internationalize identifies a process, without defining the ways that can be multiple. 

At the end of the internationalization process, the company will be able to both sell on foreign markets and to obtain supplies from it or to be able to carry out a production.

Internationalization generally has two main purposes:

  • lower costs by resorting to foreign suppliers;
  • increase revenues by expanding the geographical area in which to operate.

There are two stages to entering new markets:

  1. in the first phase, it is checked whether there are market opportunities in new geographical areas and whether the company has the necessary capacity to sell abroad;
  2. in the second phase, commercial and business strategies are defined.

It is important that the decision to proceed to internationalize is a reasoned choice and is not the result of a choice dictated by enthusiasm without evaluating the difficulties.

The internationalization process requires a weighted analysis:

  • an internal analysis within the company;
  • an analysis external to the company, relating to the market in which it is intended to operate.

Internal analysis must not make the rather common mistake that a company that produces a product of quality and excellence believes that the product can be sold anywhere. Quality is important, but it is not the only aspect that makes a product successful:

it may cost too much for some markets or not be of interest or conflict with some realities of that market.

The external analysis, however, must evaluate:

  • the legislation on the reference market; 
  • competition and competitiveness on that market; 
  • what is the negotiating power of the main operators (customers and suppliers) on the reference market; 
  • existing customs barriers; market capacity

You should not make the mistake of thinking that the choice to penetrate a foreign market requires large capital investments or to turn to leading companies in market analysis; it is possible to start an export business without major investments.

Another important assessment regarding the decision to start a business abroad is the availability of financial resources to access the reference market by creating a Business Plan, as an indispensable planning tool.