1.1 Introduction: What is internationalization? How to internationalize a business? Which are their advantages?
What is internationalization?
Internationalization is the process by which a company makes purchases and sales in another country (abroad). It is important to set apart the concepts of export and internationalization. The first one consists of selling abroad the products or services developed by the company, while to internationalize consists of implanting our brand in a different market from the original one.
Moreover, exporting only implies selling outside the country while internationalizing entail further complexity. It' s not just about selling to other countries; but also adapting your brand to foreign markets. Cultural issues have to be mixed together in order to be influenced by innovation since it' s a two-way process that benefits people, creations and cultures.
Some reasons of the importance of cultural internationalization are:
- Promote the professional development of artists.
- Give the possibility to discover new innovative techniques in other countries.
- Develop new methods of artistic disciplines based on working with other social and cultural realities.
- Create the opportunity to increase the profits obtained from the sale in other different countries.
- Give access to new ways of financing: European and transnational funds.
- Create new resources to enable the development of creation processes with higher quality thanks to the transversal exchange of knowledge.
- Become a communication platform to advertise new trends in artistic techniques.
- Increase notions of knowledge in order to promote debates on social innovation from a cultural perspective.
- Provide a positive brand image for the rest of the countries.
- Facilitate sharing resources with artists and organizers between countries as the barriers posed by economic difficulties are broken down.
How to internationalize a business?
To understand it better, we will have to go deeper into some basic concepts of economics and market analysis.
On the one hand, we must analyze the strengths and weaknesses both internally and externally. On the other hand, we will have to analyze if the values of the company and the chosen competitive advantage can serve us for any country in which we are going to implement our business.
The first tool we should use to get to know our national and international environment is a SWOT, a strategic planning model that can be used in all types of companies regardless of their size or activity.
To achieve this, the first step to follow is to identify what will be our main objective in the company and distinguish it from the secondary ones. This is essential to form the strategies that will lead us to its achievement.
Once identified, we will develop the two parts (internal and external) that constitute the SWOT:
Regarding the internal analysis we will identify the weaknesses and strengths of the organization. To do this we will have to analyze the different variables that make up our company as they can be:
- Production: products, costs, quality and innovation.
- Marketing: products you love, your image, positioning, market share, advertising…
- Finances: profitability, resources, indebtedness and liquidate liquidity available to the company.
In relation to external analysis, it will help us to identify the threats and opportunities that our business is going to have in a short, medium and long term.
We will analyze all those aspects that influence the company but do not depend directly on it. Considering these aspects, we will have to select one strategy or another for the achievement of objectives.
The areas covered by the external analysis are the market, the sector, the competition and the environment. Also, the market defines the target of the company, the evolution of the demand, the desires that the consumer has and his behaviors at the time of carrying out the purchase action. Thanks to this type of analysis, companies are aware about their current reality and their positioning in the market. In addition, it also increases the knowledge about your own business and the new opportunities that may arise.
How to know your competitive advantage
Once the SWOT analysis has been carried out and all the important parts of the company have been considered, it will be much easier to identify the next tool: Competitive advantage.
This tool is one of the most important aspects of our business since it is going to be those characteristics that differentiate us from the competition and are aspects that are easy to endure over time. Therefore, we should create a list with those characteristics that differentiate us from our competitors and look for an added value with which the customer feels identified. Thanks to this, we will be in a better position in the market and therefore, in the top of mind of the consumer.
The next tool that will help us to get to know better our company and environment will be the PESTEL analysis. This is another tool that can help us get to know the international environment for our internationalization plan.
The PESTEL analysis consists of the description of the context or environment of the company through the examination of various factors:
Which are their advantages?
One of the great advantages of internationalisation is that small and medium sized companies do not disappear, since when they start their activity abroad they become bigger companies, and the companies that internationalise become much more competitive.
Internationalisation means a 50% increase in turnover more than companies that do not internationalise.
It should be borne in mind that in times of recession, brands that have internationalized have more capacity for survival and can even grow because they are more diversified.
The internationalization also allows to consolidate the values of the brand since to carry out this strategy it is necessary to know and to examine very thoroughly the company what allows to develop the values of the decision, the courage, the strength or the growth.
It can be schematized that the advantages of applying the process of internationalization in the company are:
- Medium- and long-term growth
- Increased competitiveness
- Easiness in overcoming times of crisis
- Find new opportunities in potential markets
- Developing brand values
- Greater control of costs
- Government Incentives