Among the main challenges for the exporter, however, the process of identifying the markets with the greatest potential certainly emerges. How to select priority foreign markets?
The goal is not trivial. There are in fact many factors to take into consideration and the identification of the key elements is fundamental: eThis is why it is necessary to develop an action plan consisting of several phases.
The decisive elements that orient the decisions of all exporting companies across the board are generally common regardless of the sector of origin. The first step is in fact the company analysis: what are its strengths, what are its weaknesses, its potential and, more generally, its value offering. In other words, in this first phase we try to understand how the company differs from the competition, and why potential buyers should choose its products over those of others.
The second step is that of definition of some economic variables: in this it will be possible to understand the export potential of that product in one or more target foreign markets.
In detail, the first most important indicator is often represented by the economic growth of a country: the more dynamic the growth of the Gross Domestic Product, the more likely it is that that market is, or is preparing to become, an interesting export destination for your company. This is the example of the countries of the ASEAN area (Vietnam, South Korea, Indonesia, above all), or of India, countries that present a high rate of economic growth.
A second choice criterion can be proximity, understood both as logistical distance and cultural distance. In the first case, in fact, if we consider countries very distant from Italy, we must take into account the greater economic effort required in terms of transport, as well as the related timing. For example, if an Italian company exports to China, it will have to consider the cost of maritime transport and the related shipping times. On the contrary, if an Italian company exports to France and Germany, the transport most likely takes place by road, with very different costs and times compared to the first case.
Furthermore, cultural differences in the country of destination must also be consideredand: for example, if a company involved in the food & beverage sector will have to carefully consider which products and ingredients it sells and uses before undertaking commercial action in the Middle East, given the large presence of citizens who do not consume pork and derived ingredients .
Another element of fundamental importance is the presence of customs duties, and more generally the legislation of the country of destination. Considering the product requirements, the required certifications and any related costs are necessary operations before making any decision on the final destination market.
After evaluating the initial elements presented so far, it is important to clearly skim the potential alternatives. To reduce them you can start with a series of operational steps listed below.
Even if you are exporting for the first time, it is likely that you have still dealt with customers from other countries. If these experiences were positive, even if occasional, why not use them as a starting point? If you already operate abroad and are aiming for expansion, it makes sense to start with nations similar - for economic, political, historical or cultural reasons - to those in which you already operate.
Or it may happen that the company has an employee who comes from a foreign country or has worked abroad: even starting from the background of a single person can be a sensible idea. In any case, it is necessary to try in every way to enhance the wealth of knowledge available.
Investing in markets where competitors already operate often pays more than desperately searching for new areas. In fact, the internationalization choices of other companies were in most cases preceded by analyzes and studies. The degree of success of the choices of those who moved first can be a valid criterion in identifying the target countries. This criterion is certainly the least scientific: there is nothing, in fact, that guarantees the success of others is replicable.
And then not being the first also means giving up many advantages from the outset. But, on the other hand, following a path already traced is often safer than venturing where no one has ever gone. In the latter case the risk of taking a leap into the dark is real. If you decide to follow the path of the competition, it is a good idea to build an in-depth idea of other people's internationalization strategies, analyzing in depth reasons for success and/or causes of failure.
Another ace up the sleeve to quickly become competitive abroad can be the training offer. Foreign partners, especially in emerging markets, really like to be trained in the use of new technologies and often the business abroad (a commercial representation, a joint venture, a production agreement, etc.) is "taken away" by flashing potential new partners the possibility of professional growth through attending courses directly in the company. Nothing better for a small entrepreneur from a foreign country and for his technicians and workers than to experience the environment of small and medium-sized Italian companies and their production districts live.
There are nations united in free trade areas, customs unions, common markets regulated by regional agreements. Focusing on groups of countries that adhere to such agreements can become convenient, especially because it means guaranteeing broader access than that of a single nation.
Producing on a springboard market, that is, located in a strategic position within a large economic context of rapidly growing countries, can dramatically multiply the number of potential customers. Examples are Vietnam for the ASEAN Area, Chile for Latin America, or the NAFTA Area (Canada, USA and Mexico) or even Mercosur (Argentina, Brazil, Bolivia, Chile, Paraguay and Uruguay).
Pulling the threads of the analysis, this in-depth study firstly allowed the company to learn, with the help of data, how it was distributing its commercial energies.
In this context, Octagona makes the Internationalization Radar, a service that aims to evaluate the countries with the greatest potential for a successful internationalization process.
The Radar is the compass of Italian companies that want to approach international markets: to sell abroad you need to define WHERE to go and HOW to approach the market. It is not possible to dedicate time and resources to unsuitable or unprofitable destinations. Through the study of the variables that we have reported above, the Radar will in fact provide a clear hierarchy of the markets with the greatest potential for the company.
Among the main difficulties that SMEs encounter in dealing with increasing globalization is understanding/evaluating their ability to internationalize. The INTERNATIONALIZATION RADAR is configured as a service created to respond to the growing needs of Italian companies in terms of internationalization: this service involves the preparation of different models, which can be modulated according to the type of company and its needs, in order to evaluate 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 analyzes in terms of market positioning, product and potential counterparties, Octagona is able to provide a detailed framework aimed at selecting foreign markets in which to direct its activities.
Thanks to the INTERNATIONALIZATION RADAR, the client company will be able to understand its own possibilities and peculiarities, with a view to accessing new markets.
Are you interested in learning more about the Internationalization Radar? At that time all you have to do is 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 can't miss. Contact us by clicking below:
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