In the current economic climate, the internationalization of companies has become an essential strategic choice to expand its presence and gain a competitive advantage.
In fact, the export figure is well-known: according to the SACE report, goods exports in 2023 will grow by 6.8%, exceeding 660 billion euros. Numbers that show how opening up to new horizons offers a myriad of business opportunities for growth in foreign markets for companies in the Peninsula.
But to embark on this path effectively, companies must carefully consider the internationalization model best suited to their needs and goals. In this article, We will explore some of the internationalization models for companies and how they can be a sure path to success in foreign markets.
What models of internationalization have been most successful? The most popular strategies for success, and which Octagona recommends to Italian companies due to its more than twenty years of experience in the industry, are four: direct or indirect export, strategic partnerships, technology transfer, and foreign direct investment (FDI).
The first is the most immediate, where a specific international market is understood as development or continuation of the domestic one. The goods to be exported will then be, in whole or in part, the same as those intended for sale in the market of one's own country. International sales transactions may take place directly (the company takes direct responsibility for sales operations) or indirectly (i.e., through the intermediation of agents or distributors).
It is therefore a model that enables companies to Testing the waters of foreign markets without excessive investment: exports can be through distributors, sales agents or directly to foreign customers. In other words, it is a first step aimed at understanding consumer demand in a specific market and their needs.
Collaborate with local partners represents an effective internationalization strategy, as it allows one to take advantage of the knowledge of professionals on the ground in the target market, existing distribution networks and their cultural know-how. It is therefore a model that can Reduce risk and expedite entry into a country, with a view to a more stable future presence, as the expertise and experience of local partners can be counted on.
Technology transfer consists of a multi-step process through which a company makes its own knowledge, technologies, skills or production processes accessible to other entities, enterprises or users so that they can further develop these elements To make products or services tailored to the target market.
It is therefore a form of collaboration that Excludes the establishment of a separate legal entity: relocation actions in fact allow initial access to the target country without significant investment and initial brand development, and can serve as a basis for a subsequent phase of direct investment in the target country.
Read the case of technology transfer from Italy to India
FDI involves significant investment to establish a physical presence in a foreign market, such as branches, production sites or representative offices. As such, these are usually structured and complex transactions, particularly suitable for companies that have already achieved significant sales and target market positioning goals, perhaps through previous strategic partnerships or continued exports. Or, for those companies that have established financial strength and want to pursue more aggressive, long-term growth on a global scale.
Do you want to find out how to apply these internationalization models? Then learn more about the success stories in international markets Of our clients.
Octagona Supported the international growth of numerous Italian companies by adapting strategies presented previously tailored to the specific characteristics and needs of our clients. Although these internationalization models are very different from each other, behind the specific choice many common motivations lurk.
First, expanding abroad leads to a greater risk diversification. Numerous events can in fact undermine the security of the domestic market: these include, and especially at this moment in history, rising costs of raw materials and supplies or high inflationary rates that reduce consumer demand. Turning one's attention to international markets, on the other hand, it is possible to identify those areas of the world that are cyclically less impacted about the consequences of such phenomena.
In addition to this, internationalizing your business allows you to significantly increase the number of potential customers, leading to the growth in turnover and profits. Not to mention getting a deeper and more comprehensive view of the global economy and its effects in one's target industry.
If you are interested in really finding out why you should sell abroad? Then read the article dedicated to all the other benefits of business internationalization.
Given the various possible internationalization models, it is necessary to remember that at the basis of any strategy there must be a careful study for choosing the largest and potentially most profitable market.
This study must determine both the competitor analysis and the investigation of the type and amount of resources to be deployed, to ensure an investment that is consistent with one's business and at the same time successfully applied outside national borders. Only as a result of this analysis it will be possible to determine how to export and distribute their products, identifying the most suitable channels.
This and other considerations are particularly delicate and contingent on multiple factors, and it is recommended to rely on internationalization experts to draft a business model that is successful in other nations.
If you too would like to consider internationalizing your company, then contact us: we are always at the disposal of all those ambitious realities that want to seize every opportunity for growth in an increasingly global market.
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