In the current economic situation, the internationalization of companies has become an essential strategic choice to expand your presence and gain a competitive advantage.
The data on exports is in fact known: according to the SACE report, exports of goods in 2023 will grow by 6.8%, exceeding 660 billion euros. Numbers that demonstrate how opening up to new horizons offers a myriad of business opportunities for the growth of peninsula companies on foreign markets.
But to take this path effectively, companies must carefully evaluate the internationalization model that best suits their needs and objectives. In this article, we will explore some of the internationalization models for companies and how they can represent a sure path to success in foreign markets.
What are the internationalization models that have established themselves the most? The most widespread successful strategies, which Octagona recommends to Italian companies thanks to over twenty years of experience in the industry, are four: direct or indirect export, strategic partnerships, technology transfer, foreign direct investment (FDI).
The first is the more immediate one, where a specific international market is understood as development or continuation of the domestic one. The goods to be exported will therefore be, in whole or in part, the same intended for sale in the market of one's own country. International sales operations will be able to take place directly (the company takes direct charge of sales operations) or indirectly (or through the intermediation of agents or distributors).
It is a model that therefore allows companies to test the waters of foreign markets without excessive investment: exports can take place through distributors, sales agents or directly to foreign customers. In other words, it is a first step aimed at understanding the consumer demand of a specific market and their needs.
Cooperate with local partners represents an effective internationalization strategy, as it allows to exploit the knowledge of local professionals in the target market, the existing distribution networks and their cultural know-how. It is therefore a model that can reduce risks and expedite entry into a country, in view of a more stable future presence, since it can count on the expertise and experience of local partners.
Technology transfer consists of a process divided into various phases, through which a company makes its knowledge, technologies, skills or production processes accessible to other entities, companies or users, so that the latter can further develop these elements to create products or services tailored to the target market.
It is therefore a form of collaboration that excludes the creation of a separate legal entity: the transfer actions in fact allow initial access to the target country without significant investments and an initial development of the brand, 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
FDIs involve significant investments to establish one physical presence in a foreign market, such as subsidiaries, production sites or representative offices. As such, these are usually structured and complex operations, particularly suitable for companies that have already achieved important sales and positioning objectives on the target market, perhaps through previous strategic partnerships or continuous exports. Or, for those companies that have consolidated a certain financial strength and want to pursue more aggressive and long-term growth on a global scale.
Do you want to find out how to apply these internationalization models? Then dig deeper success stories on international markets of our customers.
Octagona supported the international growth of numerous Italian companies, adapting the strategies presented previously tailored to specific characteristics and needs of our customers. Although these internationalization models are very different from each other, behind the specific choice there are many common reasons.
First, expanding overseas leads to a greater risk diversification. Numerous events can in fact undermine the security of the domestic market: among these, and especially in this historic moment, we can witness an increase in the cost of raw materials and supplies or high inflation rates that reduce consumer demand. Turning one's attention to international markets, it is instead possible to identify those areas of the world that cyclically suffer a minor impact on the consequences of these phenomena.
In addition to this, internationalizing your business allows you to significantly increase the number of potential customers, leading to revenue and profit growth. Without forgetting the fact of obtaining a deeper and more complete vision of the global economy and its effects in one's reference sector.
If you are interested in really finding out why should you sell abroad? At that time read the article dedicated to all the other advantages of business internationalisation.
Given the various possible internationalization models, it is necessary to remember that there must be a basis for every strategy a careful study for choosing the largest and potentially most profitable market.
This study must determine both the competitor analysis and the investigation into the type and quantity of resources to be employed, to ensure an investment that is consistent with one's business and that at the same time can be applied successfully beyond national borders. Only after this analysis it will be possible to determine how to export and distribute your products, identifying the most suitable channels.
This and other considerations are particularly delicate and conditioned by several factors, and it is advisable to rely on internationalization experts to draw up a business model that is successful in other countries.
If you also want to evaluate the possibility of internationalizing your company, then contact us: we are always available to all those ambitious companies that want to seize every opportunity for growth on an increasingly global market.
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