Internationalization Strategies for Successful Expansion

Smart internationalisation strategies can provide a competitive advantage in times of market volatility. Targeted expansion can increase sales and minimize risks. Therefore, internationalization can significantly contribute to a company’s long-term competitiveness.

This article explains the importance of an international strategy in today’s world, with a focus on the opportunities available to SMEs from the DACH region.

What are internationalization strategies?

Most businesses start by growing in their home country. With growth comes expansion. Internationalization strategies aim to expand business activities to other countries.

For example, a company that previously operated solely in Switzerland can also expand to serve the German and Austrian markets. Expanding internationally may seem like an obvious step for many companies due to geographical, cultural, and linguistic proximity. However, the farther away from the home country a company goes, the more challenging it can become.

Internationalization strategies require setting up local production facilities and organizational structures, tailoring the product range to meet local needs. The addition of laws, taxes, and regulations can make the undertaking even more complex.

What is the difference between globalization and internationalization?

Today, many companies operate internationally, but only a few have a truly global presence. While it may be adequate to serve a few specific countries during the internationalization process, a global strategy aims to target the entire world. This is a challenging task that only large corporations can achieve.

Some examples of this include:

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

There is a distinction between internationalization and globalization. Internationalization is an economic term, whereas globalization encompasses not only the economic activities of companies but also a social phenomenon. The growing interconnectivity of supply chains, communication, and culture is bringing people around the world closer together.

What are the goals of internationalization strategies?

There are several reasons why companies are expanding globally in the modern business world. Accessing new markets can provide various benefits.

Potential for additional growth

At some point, every company reaches a limit in its domestic market. Beyond this point, additional growth becomes difficult. Internationalization is often the easiest way to develop new markets. This allows companies to tap into completely new consumer and target groups, driving further growth.

There may be even greater potential in countries that are still considered growth markets. Although the DACH region is largely saturated, there is ample opportunity for growth in Eastern Europe and Asia. By implementing effective internationalization strategies, it is possible to achieve significant success in a short period of time.

Diversification and risk minimization

In recent years, companies have demonstrated their sensitivity to crises and global supply chain issues. Many production facilities have come to a standstill until they recover, as has been the case for some time with certain products’ demand.

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 in order to avoid a complete collapse in an emergency.

Personnel and cost factors

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

Companies in Eastern Europe and Asia often have access to a large pool of highly skilled specialists, which enables them to ensure fast and cost-effective production. Other countries may not have the same advantages. Companies in Eastern Europe and Asia often have access to a large pool of highly skilled specialists, which enables them to ensure fast and cost-effective production. As a result, outsourcing to Asia is becoming increasingly popular in the process of internationalisation.

What are the challenges?

However, internationalization strategies are not without challenges. In fact, it is often a lengthy learning process before a company can successfully gain a foothold.

The typical pitfalls include:

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

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 master all the challenges in the target country.

Conclusion – International companies often have an advantage

Although there may be initial obstacles to overcome, internationalization strategies are one of the most effective ways to position your company for the future. They offer new growth opportunities in the target country, which can also help to reduce risks and dependencies.

Our experienced interim management team can help you develop and implement a successful internationalisation strategy.

Contact us now to discuss your requirements.