Among the main challenges for the exporter, however, certainly emerges the process of identifying markets with the greatest potential. How to select priority foreign markets?
The goal is not trivial. In fact, there are many factors to consider, and identifying the key elements is crucial: eThat is why it is necessary to develop an action plan consisting of several steps.
The determinants that cross-directionally guide the decisions of all exporting companies are generally common regardless of the sector of origin. The first step is in fact the business analysis: what its strengths are, what its weaknesses are, its potential, and, more generally, its value proposition. In other words, in this first stage you try to understand how the company differs from its competitors, and why potential buyers should choose its products over that of others.
The second step is the definition of some economic variables: in this it will be possible to understand the export potential of that product in one or more foreign target markets.
In detail, the first indicator in importance is often a country's economic growth: the more dynamic the growth of Gross Domestic Product, the more likely that market is, or is preparing to become, an attractive export destination for one's company. This is the example of the countries of the ASEAN Area (Vietnam, South Korea, Indonesia, above all), or India, i.e., countries with a great rate of economic growth.
A second criterion of choice may be proximity, understood as both logistical distance and cultural distance. In fact, in the former case, when considering countries far away from Italy, one must take into account the Greater economic effort required in terms of transportation, as well as related timelines. For example, if an Italian company exports to China, it will have to consider the cost of a sea freight and related shipping timelines. On the contrary, if an Italian company exports to France and Germany, it will most likely transport by road, with very different costs and timing than in the first case.
In addition, cultural differences in the country of destination must also be considered.e: If, for example, a company engaged in the food & beverage sector, it will need to carefully consider what products and ingredients it sells and uses before engaging in business in the Middle East, given the large presence of citizens who do not consume pork and pork-derived ingredients.
Another element of fundamental importance is then the presence of customs duties, and more generally the legislation of the country of destination. Considering product requirements, required certifications, and any associated costs are necessary steps before undertaking any decision on the final target market.
After evaluating the initial elements presented so far, it is important to sharply skim the potential alternatives. To narrow them down, you can start with a series of operational steps listed below.
Even if you are exporting for the first time, you are still likely to have dealt with customers from other countries. If such experiences were positive, even if occasional, why not use them as a starting point? Then if you already operate abroad and are aiming for expansion, it makes sense to start with nations that are related-economically, politically, historically or culturally-to those in which you already operate.
Or it may be the case that there is an employee in the company who is from a foreign country or has worked abroad: starting from the background of a single person may also be a sensible idea. In any case, it is necessary to try in every way to make the most of the wealth of knowledge available.
It often pays more to invest in markets where competitors are already operating than to desperately search for new areas. In fact, the internationalization choices of other companies were in most cases preceded by analysis and studies. The degree of success of the choices of those who moved first can be a valid criterion in identifying target countries. This criterion is certainly the least scientific: there is nothing, in fact, that guarantees others' success is replicable.
And then not being first also means giving up many advantages at the outset. But, on the other hand, following a rut already marked out is often safer than venturing where no one has ever gone before. In the latter case, the risk of taking a leap of faith is real. If you decide to follow the path of your competitors, it is a good idea to build a thorough idea of others' internationalization strategies, analyzing in depth reasons for success and/or causes of failure.
Another trump card for quickly becoming competitive abroad can be the training offerings. Foreign partners, especially in emerging markets, very much like to be trained in the use of new technologies, and often business abroad (a trade representation, a joint venture, a production agreement, and so on) is “snatched up” by making potential new partners flash the possibility of professional growth by attending courses directly in the company. Nothing better for a small businessman from a foreign country and his technicians and workers than to attend live in the environment of small and medium-sized Italian companies and their production districts.
There are nations brought together in free trade areas, customs unions, common markets regulated by regional agreements. Focusing on groups of countries in such agreements can become cost-effective, especially since it means securing broader access than a single nation.
Producing on a springboard market, that is, strategically located within a broad economic chessboard of fast-growing countries, it can dramatically multiply the number of potential clients. Examples include Vietnam for the ASEAN Area, Chile for Latin America, or the NAFTA Area (Canada, the U.S. and Mexico) or even Mercosur (Argentina, Brazil, Bolivia, Chile, Paraguay and Uruguay).
Pulling the strings of the analysis, this insight firstly allowed the company to come to know, with the help of data, how it was distributing its business energies.
In this context, Octagona provides Italian companies with the Radar of Internationalization, a service aimed at assessing the countries with the greatest potential for a successful internationalization process.
Radar is the compass for Italian companies that want to approach international markets: to sell abroad, one must define WHERE to go and HOW to approach the market. Time and resources cannot be devoted to unsuitable or unprofitable destinations. Through the study of the variables we reported just above, Radar will indeed provide a clear hierarchy of the markets with the greatest potential for the enterprise.
Among the main difficulties SMEs face in dealing with increasing globalization is understanding/evaluating their ability to internationalize. The RADAR OF INTERNATIONALIZATION is configured as a service created to respond to the growing needs of Italian companies in terms of internationalization: this service provides for the preparation of different models, which can be modulated according to the type of company and its needs, in order to assess its capabilities for an internationalization path.
Through the identification of strengths, weaknesses, points of improvement, points of non-compliance and competitive advantages of the client company in the internationalization process and the construction of targeted analysis in terms of market positioning, product and potential counterparts, Octagona is able to provide a detailed framework aimed at the selection of foreign markets in which to direct its activities.
Thanks to the RADAR OF INTERNATIONALIZATION, the client company will be able to understand its own possibilities and peculiarities, with a view to access towards new markets.
Are you interested in learning about the Internationalization Radar in detail? Then you just have to rely on Octagona's experience.. If you really want to develop your business abroad, and build a Quality Export Project, then this is the opportunity you cannot miss. Contact us by clicking below:
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