Internationalization – strategies for successful expansion

In times of volatile markets, it can be extremely important to gain an advantage through clever internationalization strategies. Targeted expansion can not only sustainably increase sales, but also efficiently minimize individual risks. Internationalization can therefore make a significant contribution to a company’s long-term competitiveness.

In this article, we explain the objectives of an international strategy and why it is becoming increasingly important in today’s world. There are attractive opportunities for SMEs from the DACH region in particular.

What are internationalization strategies?

Most companies start out with business activities in their home country after their foundation. With increasing success, it is then not uncommon to become active in neighboring countries. This is exactly what internationalization strategies are all about – expanding business activities to other countries.

For example, a company that was previously only active in Switzerland can also serve the German and Austrian markets over time. Due to the geographical, cultural and linguistic proximity, this is an obvious step for many companies. However, the further you move away from your home country (and not just geographically), the more difficult the challenges can be.

This is because an important part of all internationalization strategies is to establish any necessary production facilities and organizational structures locally. In addition, the product range may have to be tailored to local needs. If laws, taxes and regulations are added to this, the undertaking can become very complex.

What is the difference between globalization and internationalization?

Many companies operate internationally these days, but very few of them have a global presence. In the course of internationalization, it is sufficient to serve a few selected countries. A global strategy, on the other hand, is aimed at practically the whole world, which only huge corporations can actually implement.

Some examples of this include:

• Nestlé from Switzerland
• McDonalds from the USA
• Volkswagen from Germany
• IKEA from Sweden
• LVMH from Fran

There is also another difference in the definition: internationalization is an economic term. Globalization, on the other hand, refers not only to the economic activities of companies, but also to a social phenomenon. Thanks to the increasing networking of supply chains, communication and culture, everyone in the world is moving closer together.

Internationalization strategies – for -successful- expansion-interim-management.

What are the goals of internationalization strategies?
Of course, there are some important reasons why companies are increasingly going international in the modern business world. Opening up new markets can bring numerous advantages.

Additional growth potential
At some point, every company reaches a limit in its domestic market beyond which additional growth is hardly possible. Internationalization is then usually the easiest step for additional market development. In one fell swoop, completely new consumers and target groups are tapped into, driving further growth.

There can be even greater potential in countries that are still considered growth markets. While the DACH region in particular is largely saturated, there is plenty of room for growth in Eastern Europe and Asia. With the right internationalization strategies, it is comparatively easy to achieve noticeable success within a short period of time.

Diversification and risk minimization
The past few years have shown how sensitively some companies can react to crises and global supply chain problems. Numerous production facilities came to a standstill until a recovery was achieved. The same was true for a long time with regard to demand for certain products.

Such risks can be efficiently reduced through internationalization. A company is no longer dependent on a single market in terms of production and demand. Instead, risks are spread across several countries through greater diversification to prevent a complete collapse in an emergency.

Personnel and cost factors
However, companies’ internationalization strategies are also increasingly focusing on the personnel and cost aspects. In Switzerland, Germany and Austria, there is an overwhelming shortage of skilled workers, which can be reflected in lower capacities and higher costs.

Other countries, particularly in Eastern Europe and Asia, often do not have such problems. Companies there can draw on a large number of excellently trained specialists to ensure fast and cost-effective production. For this reason, outsourcing to Asia, for example, is becoming increasingly popular in the course of internationalization.

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What are the challenges?
But internationalization strategies do not come without challenges. Quite the opposite – it is often a lengthy learning process before a company can successfully gain a foothold.

The typical pitfalls include the following:

• Differences in the legal situation in the target country
• Linguistic and cultural misunderstandings
• Different time zones and long distances
• Additional organizational effort

The last point in particular is underestimated by many companies, as successful internationalization requires good personnel and a high level of expertise. An experienced interim manager can help you to overcome all the challenges in the target country.

Conclusion – international companies often have it easier
Although there are some initial hurdles to overcome, internationalization strategies are one of the best ways to position your company for the future. New growth prospects arise in the target country, which can also be used to reduce risks and dependencies.

Our competent interim management team will be happy to help you set up and implement a successful internationalization strategy. Contact us now and let us advise you.