Going International The Big Challenge Prof. Per Jenster Copyright 2012 Nordic International Management Institute. All rights

Going International – The Big ChallengeProf. Per Jenster([email protected])

Copyright © 2012 Nordic International Management Institute. All rights reserved.


The purpose of this presentation is to:

• Outline Internationalization Challenges for SMEs• Discuss road blocks for international success• Provide recommendations for SMEs and their

governments


Keys to SuccessIt all starts at

home…

Going

International


Our research and field observations identifies, 3 specific challenges for SMEs going international:


When SMEs consider internationalization, the first challenge is the realization that a foreign market is very different from their origin!

• Customer preferences, competition, channels, context is different from back home.

• Lack of network and internal competencies• Stretch of management time and resources

… we often find that a new vision for the firm is absent


The internationalization attemt is not tested for its strategic logic:

Are you:•Following your customers?•Pursuing Economies of Scale•Providing a product/service which is unique and desirable abroad?•Going abroad for defensive reasons?


Going international – will your business model hold?

Internationalization often compromises the economic logic of your domestic business!

SMEs often don’t understand that making money abroad, requires a different cost structure and business model – foreign revenue is not just marginal income!


One of the biggest road blocks to success internationalization by SMEs is that of Mind Set

• SMEs are often located in smaller communities• Severe shortage of talents, with international

experience• Few role models and little access to coaching


In addition, the financial structure of SMEs do not allow for risk taking

New international ventures costs money and time

Limited access to risk capital

Fragile organization


So what should SMEs and their governments do about

Internationalization?


So what should SMEs and their governments do about Internationalization?

Most SMEs should stay at home!!


If you want to go abroad, make sure you get some help to:

• Develop a solid vision for your firm• Assess the strategic logic for going abroad• Test the economics and your business model.


Our research has shown, again and again, that going abroad requires:

New Capabilities

New

Net

wor

ks

New Country 2

New Country 3

New Country 1

Home Country


My own company in China is a good example of these forces at work:

Nordic City of Living & Learning, Chengdu


In summary,

• Internationalization is not for everyone (despite what government institutions like for you to think)

• Challenges starts at home, not abroad,• It is mostly about developing capabilities and

networks!


Documents

Going International The Big Challenge Prof. Per Jenster Copyright 2012 Nordic International Management Institute. All rights