Four obstacles to the success in internationalization

Monday, 9 july 2018 | Redacción CEU

When entrepreneurs make the decision to move their adventure abroad, they cannot rely on the simple replication or imitation of what has worked so far in their local market. Internationalization involves more than a change of language or taking into account two or three new variables. If entrepreneurs underestimate the obstacles that they can find in their way, their expedition is more likely to end up with a failure. What difficulties should they take into account when facing an internationalization process? How can they cope with these different obstacles?

 

The more detailed and thorough the preparation of a mission abroad is, the more likely it is to be successful. Although it has not been counted in the following enumeration, this is precisely the first obstacle that entrepreneurs have to overcome when taking the leap abroad: their own stubbornness  and reluctance to accept the magnitude of the challenge. The lack of planning in the internationalization is a mistake which is made more frequently than one might imagine.

It is necessary to dedicate some time to reflect before undertaking an ambitious project like this. This analysis requires taking into account the main obstacles that entrepreneurs may face on their way to face an internationalization process. Only this way will they be able to get to know how to react better to uncertainty and to ensure that they have the tools they need to begin this adventure.

What prevents success in internationalization?

  • The financing limits

The bet of any company on a market abroad requires financing. This is one of the first aspects that  entrepreneurs must consider. It is important for them to be able to distinguish between their ability to finance the activities which are intrinsic to the company, such as commercialization or the marketing plan, and those that are linked to the process of internationalization. The latter will normally need an external financing.

There are different alternatives that can be sought to find this type of specialized financing: private investors, financial entities, public institutions and specific grants and subsidies. Any of these options usually demands a high level of guarantees. Once again, a detailed planning is key in this regard. On the other hand, the debts assumed by the company cannot compromise the viability of the business.

  • The inability to know how to change

When entrepreneurs come to the decision to bet on markets abroad, they must understand that they have a long and demanding learning process ahead of them. Otherwise, their refusal to change might become their biggest obstacle. A process of internationalization implies changes like the  establishment of new centers of power, challenges in communication, the redesign of logistics, efforts in staff training and the adaptation to a different culture.

It is important for these changes to be addressed from a constructive perspective, if this is not the case the company will not be able to open up to the outside world. Impulsiveness, short-term mentality, obstinacy, lack of reaction to indicators and over-confidence on inertia are the main barriers to change.

When companies are not in their comfort zone, they are exposed to a certain level of stress. The small tensions that may arise, should be addressed in a rational and natural way, so that they can help companies grow. A good scheduling will help the team to face the challenge with greater serenity.

 

Four obstacles to the success in internationalization
  •  Underestimating the human capital

Many entrepreneurs decide to take the leap abroad encouraged only by the promise of the great benefits of business internationalization. It is true that this process can offer innumerable advantages, but it also means facing inevitable inconveniences.

If this decision is taken hastily and the company does not have adequate resources like the human capital which is necessary to carry it out, it might be exposed to serious consequences. The first symptom that a project does not offer good guarantees of success is having a staff who does not know a language well, does not have the minimum knowledge of foreign trade techniques, does not understand the taxation of the new market or, in short, does not know what the steps to follow are.

  • How to know new markets

The best way to get information about a new market is to have allies on the ground. Depending on the type of internationalization model chosen, there will be direct collaborators or not. If companies count on their collaboration, it is a perfect opportunity to learn from their experience. Companies can keep their independence in decision-making to the extent that they have agreed upon. However, it is important  for companies to learn how to listen to the opinion of their counterparts, since they know the particularities and the functioning of the new market.

When this help is not available, the study of the new market should be more exhaustive if it is possible. This analysis will have to contemplate geographical, cultural, political and fiscal aspects, data on foreign trade, behavior of the competition, strengths and weaknesses, target definition, market niches and convenience of the project among many other factors. It is also necessary to reflect on the situation of the company itself. The more realistic this analysis is, the easier it will be to identify opportunities and strengths, as well as weaknesses and threats.

Companies can face the adventure of internationalization with greater conviction and confidence when they know the obstacles. If they consider what their brakes are, they may be more effective in reaching their goals.

At The CEU IAM Business School, we have designed an Executive MBA which is focused on providing the necessaries skills and tools to face the current challenges and make successful decisions. Its program focuses on encouraging competencies like the capacity for innovation, entrepreneurship, internationalization, social responsibility and managerial skills.