We all hide something. This is something clear after watching or reading Fifty shades of Grey. Without entering in the plot and the relationship between the well-known Miss Steele and Mr. Grey, these characters are going to help us to make a parallelism with the challenges or shades to which a firm faces when it wants to enter an international market. Then, our Anastasia Steele will be an inexperienced firm in foreign markets, with doubts about developing the international process satisfactorily, and our Christian Grey, a dynamic and competitive international market with many things to offer but with many secrets that have to be explored.
Before, during and after starting the internationalization of the firm, it may face to different questions that may be, initially, puzzling and that only with learning and research we are able to know. Which are then, the fifty shades of the international process for a firm? Here our list:
In the beginning
- Similar to personal relationships that start with punctual meetings to go to the cinema or have a coffee, sometimes firms begin their international operations with sporadic exports. In this moment, maybe we do not think in something that is going to last, we are simply trying and checking if it is the right market.
- Little by little, some steps can be given. We may have clearer that we want to develop these operations more seriously. In this moment we need to know what can these countries offer us and what can we offer them.
- Which is our objective? Getting internantional sourcing? Selling our products or services abroad? Both things
- It is also important to analyze the environment in which the firm operates. Which is the political economy of the host country?
- How can affect the firm a variation in the exchange rate?
- Which structural and temporal indicators allow us to see that a country is an objective for us?
- How is the local demand? It is necessary to consider the market size, the purchasing power on it, the life cycle of the product in the country, etc.
- Each country has its own characteristics and we have to keep informed about it objectively. Which are the sources of information that we can use to know the economic and social data of a country?
- Do they have a cost?
- Which are the information sources more valuable for my case?
Comparisons are odious
11.- Having success in the national environment is not enough. As in the personal relations, each international operation is different. Similarly, firms should not take for granted that the national market is equivalent to international markets.
12.- An additional question is if it makes sense the internationalization of the firm. It is necessary to determine the value that our products or services have in other markets.
13.- Sometimes quality standards vary among markets. Which requirements do our products have to follow to be sold in a country?
14.- You cannot improvise. Regularly international operations derived from a globalization process that is given to our firm. Our competitors go to other markets and we may feel the necessity of following those steps. Even in those situations the firm has to develop an international business plan in which the firm could clearly determine the resources and objectives.
15.- Should we ask for advise? This process is very complex. The inexperience in the international markets implies that we need to the help of other agents. There are advisors, consultants, publics organizations, etc., that can give us some keys to develop the correct strategy.
16.- Once we operate in a market, we have to analyze other international markets. This implies reply the analysis and decision processes. The experience and skills gained, however, cannot be considered as the only thing necessary to be successful in those markets as well.
How many things do we have in common?
Sometimes couples are complementary and other times differences cannot be ignored. In the international strategy is also necessary to consider potential differences that may exist between origin and destination and if those differences benefit or difficult us our tasks.
17.- Not all locations are eligible. Does the location have complementary resources or infrastructures that could make successful our product or service there?
18.- Countries differ in their comparative advantages. Does Germany offer the same that USA or Bangladesh?
19.- How can we exploit those comparative advantages and transform them in competitive advangtages?
20.- Is there a cultural difference between origin and destination difficult to overcome?
21.- May the local environment impose us some conditions? A government with some regulations may limit our movements.
How much should we engage?
22.- Which level of resources should we commit? Transactions or direct investment do not imply the same level of implication.
23.- International operations not only imply resources to sell abroad. It may also imply resources for sourcing operations or production in other countries. The question here is, is it interesting to split the value chain globally?
24.- If the answer to the previous question is yes, should activities be replied in each country, or should a destination be an specialist of specific activities?
25.- Once we split the value chain, how do we coordinate the activities?
26.- It is also necessary to design an efficient logistic process that makes sure a proper attention to clients in different locations.
27.- Similarly, we need to analyze available transport means, security in the transportation, etc.
28.- If we are doing international transaction it is also necessary to specify clearly the terms of it. Do you know what the incoterms are?
How can we organize and coordinate ourselves?
A relation implies organization. In personal relations we have to adapt to our new circumstances. In the international arena, it also may imply the restructuration of the organization.
29.- An international firm needs orientate its activities to this new situation. Should we have to reorganize functions such as finance, marketing or logistics?
30.- Training to human resources is critic to a correct valuation of international options.
31.- Human resources may be from several countries with different cultures and ways of working. This requires the implementation of practices that takes into account this situation.
32.-How much autonomy should we give to our subsidiaries¿
33.- How can we combine adaptation needs with the advantages of a global strategy?
Communication, communication and communication
In any relation, communication is the key. To the multinational firm, communication inter and intra firm is crucial.
34.- Internet has eliminate borders. Clients are around the world. How can we manage the data generate that implies using digital tools?
35.- Which online and offline tools do exist and which are the most adequate for my products/services?
36.- The choice of the brand to our products is also important. How to choose a good name? Should anyone buy a Reventon, a Mitsubishi Pajero, a Nissan Moco or a Kia KIA Borrego?
37.- Are we giving an answer to the specific necessities of our international clients?
38.- How is the firm perceived? Is there any aversion to my country of origin?
39.- …Or can I exploit the reputation associated to a country?
40.- Can we establish relations with providers or other institutions? Sometimes there are clusters or areas in which firms of a sector are concentrated that may be interesting.
41.- Should we need finance our project? How can we contact to investors, partners, financing institutions, etc.?
Crisis and conflicts
42.- It is not rare that we have difficulties to negotiate with different agents. It is interesting to know negotiation techniques in order to give solutions quickly to conflicts
43.- Differences may emerge within our employees in the same or different areas of the firm in the countries in which we have presence. We should design mechanisms to solve them without affecting international operations.
44.- What does it happen if there are breach of the contracts or duties between different parts of the business? Do we have to preview amicable settlement of any dispute?
45.- If that is not possible, should we go to an arbitration court or to the court directly? Which is the jurisdiction?
Sometimes firms make foreign direct investment in a country via greenfield. It implies costs and time. Then, in other situations, firms prefer the establishment of a formal partnership via joint ventures. It is also possible to acquire local firms. In these last cases, this implies a kind of junction that may ends in divorce.
46.- Doing an investment with an foreign partner may reduce risks and costs but also a loss of control in the decisions. Partners from different countries may have different aims and ways of achieving them.
47.- International joint ventures may imply a loss of technology. We should be aware of opportunistic behaviors.
48.- International merges imply the integration of firms with different cultures. It is necessary to evaluate the implications of it to determine correctly the viability of the project abroad.
49.- Are complementary the resources of the firms linked? We should take into account costs from duplicities.
Maintaining the illusion
As it happens in the relationships, it is not good to think that things are going to last forever as they are now.
50.- It is not only important to develop an internationalization process in the adjusted to the circumstances at the beginning, but also to revise the conditions. We also need to take into account that internationalization implies a dynamic process that encourages the feedback and the renovation of information, knowledge and capabilities.
MaDI offers answers to all these aspects in order to eliminate these “shades”. Our aim is to unmask our Mr. Grey, that is, explore the secrets that the international market hides in order to develop an international process with success.