Tips before exporting
SMEs that decide to internationalize and export have a lot to gain from globalization. However, according to the Inter-American Investment Corporation (ICC), there are some issues that each businessman should evaluate before deciding to enter the international market.
As a result of the globalization of the economy one can find supermarket aisles filled with products from different regions of the world. This also entails the opening of new market opportunities for companies that decide to export. Can small and medium enterprises (SMEs) benefit from this process? Or is the international market too big for SMEs?
The Inter-American Investment Corporation (IIC) explains that SMEs can obtain great benefits if they decide to internationalize their activities. However, SMEs must be careful before undergoing this process.
What must an SME consider before exporting?
The IIC advises businessmen to be very selective and to perform a rigorous analysis of the possible scenarios and factors at play. A good method for addressing this task is to perform a “potential exporter test.” SMEs must find their comparative advantages and study the company’s resources and capacity in all fields. It must also assess the risks and discover advantages, failures and errors requiring leverage and correction in order to minimize any conflict in the process. In other words, SMEs must be prepared for any obstacle that may arise in the internationalization process.
What does the internal decision process require?
According to ICC, upon considering the possibility of exporting, businessmen in charge of an SME must be patient and wait for the appropriate time to address this new challenge. ICC also advises pursuing a long-term vision for the company and to approach the process with flexibility and capacity to adapt.
A company’s internationalization requires involving resources and time in addition to correcting and improving its processes, final products, services and methods. Finally, ICC advises businessmen on the importance of having the capacity to make firm decisions. For example to ask themselves: does my company have the minimum critical mass to face the process of conquering new outside markets?
What issues should be considered and studied?
Within the framework of the internal decision-making process it is important for businessmen in charge of SMEs to reflect upon and study certain issues before deciding if they have what it takes to address internationalization.
In the first place, they must analyze if the company has competitive capacity (this includes matters relating to brand, design, productive capacity, organization type, human resources, marketing and management experience and capacity.)
In second place, they must assess and compare the available resources against the resources required for exporting. They must also consider both the management and the staff’s motivation, since their involvement in the process is crucial. Businessmen must also analyze if the have the proper organization structure and the costs that would be incurred in the event of having to make adjustments. They will have to consider target market access conditions and how to enter these markets.
Finally, SMEs must make a general analysis of the hurdles and obstacles that may arise.