Bright Business Consulting LLP

Monday, May 21, 2018

Enterprise Internationalization

It is common to talk about "Enterprise Internationalization" and in the last decade it is essential to discuss this topic, whose meaning is completely determined by multiple levels and elements. Politicians, local administrators, academics, big and small companies' businessmen share opinions regarding the process of internationalization and often present different or contrasting opinions; they often cross the parallel topic of "Globalization", which many people tend to include in the process of "Enterprise Internationalization". The common point of all the opinions is the opportunity for the enterprise to face a big new place, external to its own one.

The company becomes international itself as soon as an external level or factor engages with the company's activities; this however, does not classifies the enterprise as global.

The two main reasons which induce the company to realize an internationalization process are simple:

  1. Increase the income as much as possible
  2. Reduce the costs to the outmost without affecting the efficiency.

But what does it mean concretely to internationalize the company?

  • INTERNATIONALIZE THE COMPANY: it means to cross the national business borders getting some advantages. The company willing to internationalize should carry on such process with a project, preferably structured by a reliable information system. In order to internationalize, the enterprise has then to invest resources (time, money, employees, etc.)in order to limit the risks; during the process it is essential for the company to be supported by professionals offering "Warranty and Assistance" , who could contribute to and/or lead both the project and the process itself (in the totality of the project and process or just partially). Professionals have to provide qualified assistance for the development of the different duties, either administrative or custom or else; also, they have to provide specific assistance in terms of international contracts, finance administration or else.

The process of "Enterprise Internationalization" can develop on three levels:

  1. PRODUCTIVE: if, for example, the company decides to open a new branch in a foreign country.
  2. COMMERCIAL: if the company decides to open up the trade of services and goods to foreign markets
  3. FINANCIAL: if the company decides to internationalize the financial management of its holdings regardless of internationalization at a productive and/or commercial level.

At the same time, the process of "Enterprise Internationalization" accomplishes when those levels above meet the following main factors:

  • DECENTRALIZE: that is, relocate some functions, powers and/or else from the central branch to the peripheral branches. An example of decentralization is when a central Government gives up some roles and assigns them to the Federal Governments (f.e. Brazil); there could be other examples of this in USA, China, UK and Italy, where the government entrusts roles and powers to entities inside the country, regions and/ or Communes.
  • DELOCALIZE: that is, move the company or its branches, from the country where it was established to one or several other countries, probably decentralizing some of the roles and/or powers. An example or delocalization process is the FCA project, where FIAT - established in Turin, Italy - delocalized first the productive unity in Serbia, Brazil, USA and then decentralized roles and functions between Holland, Luxembourg and England.
  • COMMERCIALIZE: that is, a company which has not yet decentralized or delocalized and is still established and resident in a "Country", sells its products and/or services in other "Countries"' markets. The export activity, seen as an independent factor, is considerably weak and fragile in the process of "Internationalization".
  • LOCALIZE: that is, the preparation, in a generic meaning, for a specific market, and thus the addition of typical features to products and services, which allows to employ them in specific markets or so-called local environments. An example of localization is McDonald, which makes hamburgers using the local resources of the place of settlement in order to satisfy at best the taste of local costumers.

It is always a necessity for the companies to limit the initial investment, even if it is often not possible in such a process, but it is important that the company is diligent in evaluating the existence and consistency of specific bans, the resource finding and in taking particular opportunities of access to credit or to a potential partner. All that is in order to allow a project and the relative process of "Enterprise Internationalization " to become operative.

In order to have more prospective of allocation, it is necessary with every counterpart - either institutional or private - to submit a "Business Plan" where the following are described: a financial profile, attended margins of contribution, competitive identifiable advantages and an adequate organogram; all those have to represent the project in a clear and credible way. The "Business Plan" has to be adequately formalized in order to become a support for the enterprises in the process of internationalization. Whoever is the counterpart, either institutional or private, the time of approval of the "Business Plan" have to be taken into consideration: it is, unfortunately often long because of the evaluation procedure are normally quite muddled.

There are "Societies" regularly engaged in the activity of "Enterprise Internationalization" which provide services in this field. As we said, a personal research study depending on the specific areas of activity and based on the different financial local legislations and a "Business Plan" are useful to take on a process of "Enterprise Internationalization"; in such case, Bright Business Consulting LLP provides the essential support to reach such goal.

Among the "Emerging Markets" which for the next 20 years will be strengthened actors where to start the process of "Enterprise Internationalization", we have identified the members of BRICS and the Mediterranean countries.

The project "European Excellences Park" represents the more appropriate and useful vehicle and medium to assist the European company and the businessman of every range, interested in acting outside the country of origin and access the international markets. The project accomplishes providing the contact with local Authorities (Embassies, Consulates, Statal and/or Municipal organs, etc.) and the international business partners; managing the procedure process and the bureaucratic and administrative fulfillments if required, and supporting the integration of the client through preparation and suitability in "doing business" in the target market; it is indeed as development, achievement, stabilization and maximization of the target market. These are, in summary, the goals of the project.

Bright Business Consulting LLP is operating mainly in the UK, Brazil, China and United Arab Emirates. Brazil and China are identified by the main international indexes respectively as the fundamental and the more stable "Emerging Markets" and as the main engine of the "Emerging Markets" . Bright Business Consulting LLP is the ideal partner to entrust to research and/or localize markets where to invest or engage the process of "Enterprise Internationalization" through different levels and factors.

Globalization

"Globalization" is not a sudden phenomenon, but the result of a long term process. Such phenomenon have relevantly speed up in the last twenty years, so that it modified the structure of worldwide economy and unfortunately became a term too easy to use. The term is, in some cases, too overworked, so that the value, importance and meaning of it is outraged.

"Globalization" can be explained and also applicable to different fields, but the most applicable of all is the economic field, where the term indicates the world-wide unification of the markets, supported by the technological innovations which pushed the economies of scale towards more uniformed and convergent consumer and production models.

Companies involved in the "Globalization" phenomenon present a better performance and are ready to use relevant economies of scales in terms of production, distribution, marketing, especially for standardized consumer goods or services.

The rule of "Globalization" is very simple: the more a company is globalized and active in a global market, the more is capable of produce, promote, distribute and sell the same good and/or service world-wide, adopting uniform strategies, protocols and procedures; this is different from the multinational company, whose goal is instead to follow the variety of the conditions of the countries in which it already operates or intend to operate; this is because, in order to better afford the scenario it has to: decentralize, delocalize and/or locate (q v "Enterprise Internationalization", noticing that a multinational corporation rarely follows an internationalization process through a ludic commercialization).

During its course, the "globalization" phenomenon has influenced many fields such as: politics, research and economy. In fact, through the evolution of "Globalization", markets, productions, goods, lifestyles and way of thinking could gather together on a world-wide scale.

If we consider the economic and socio-political aspect, the "Globalization" phenomenon is generally identified as a multiform combination of cultural, economic and communication factors, which, on the basis of commercial strategy, result in the world-wide diffusion of activities, services, methods and products.

The "globalization" phenomenon is a multidimensional concept indicating:

  • The progressive abolition of business barriers.
  • The increase of international business amounts.
  • The increasing business integration between Countries.
  • The increasing international circulation of investments.
  • The process of economy bankroll.
  • The process of market and work liberalization.
  • The politics of deregulation, liberalization, privatization.

Some people see the "Globalization" phenomenon as a power able to provide positive effects to both the single company involved in the process and the worldwide economy; in particular, because of the liberalization and the increase of business and financial exchange which could stimulate the investments towards the areas with less capital; it favors thus a general reduction of the economic gap between developed and non-developed Countries.

There are then different opinions, claiming that because of the economic, technological, cultural and political imbalances and differences between Countries and the lack of perfect competition of the traditional models, the result is not equally distributed; they enact, therefore, opposite phenomenons to "Globalization".

A company should therefore plan in retrospect if to enact a process of internationalization or to follow the global phenomenon; in particular, if the company has to face the "Emerging Markets" , it has to define direction and goal as strategic points.

Bright Business Consulting LLP s the ideal partner to entrust for researching and/or identify the direction and the goal to follow.

 

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