15.05.2024

Internationalization - your path to global expansion

Key information:

  • Internationalization is called the process of internationalizing a company's business activities to foreign markets.
  • Properly executed expansion allows us to enter with our product or service on the new markets, which can contribute to gaining new customers, increasing the visibility of our company, and growing and diversifying our revenue source.
  • Motives for internationalization are varied, but there are four basic ones: market, cost, resource and political.
  • During the internationalization process of a company, the strategy that the company will adopt when entering new markets plays a key role.
  • The benefits of internationalization include gaining new customers, increasing revenue and brand recognition, and reducing geographic risk.
  • When a company is planning to expand, it is worth checking whether it qualifies for programs that promote internationalization support from organizations such as the Polish Agency for Enterprise Development (PARP) and the National Center for Research and Development (NCBiR).
  • Enlisting the help of a consulting firm can significantly facilitate the internationalization process by market research i competition analysis. Internationalization is crucial to a company's long-term success and growth, enabling it to dynamically expand its operations, minimize risks and gain competitive advantage.

Details below!

Want to grow your business? Open yourself up to the opportunities presented by internationalization, mitigate geographic risk and ensure the long-term success of your brand by strengthening its position in the international market.

What is the internationalization of a company?

Internationalization is called the process of internationalizing a company's business activities to foreign markets. When done properly, expansion provides an opportunity for growth and allows us to enter new markets with our product or service, which can help us gain new customers, increase the visibility of our company, and grow and diversify our revenue source.

Why do companies choose to internationalize their operations? (Motives for internationalization)

As the economy globalizes, companies are increasingly choosing to expand their current operations beyond the borders of the country in which they started. Motives for internationalization are varied, but there are four basic ones: market, cost, resource and political.

  • Market motives involve gaining new customers and increasing its revenue. For this reason, the company undertakes expansion especially when there are unfavorable economic conditions in the local market.
  • Another motive for internationalization is cost optimization production to increase profits. The company, through expansion, achieves economies of scale (reducing the average cost of production) and gains access to cheaper sources of raw materials, and lower labor costs abroad.
  • The resource motives for internationalization are related to the tangible and intangible resources that a presence in different markets guarantees. For example, a company, by expanding to highly developed countries, gains access to modern technology and a highly skilled workforce.
  • The political motive behind a company's internationalization is to reduce the risks associated with political instability in a region by moving its operations to a country with more stable conditions. The company can reap benefits in a foreign market through lower taxes and more favorable regulations.

Strategy - the key to successful internationalization

Internationalization of a company is a complex and multi-stage process, and to carry it out successfully, a strategy is key. It will allow us to better define what goal the company wants to achieve through internationalization and enable it to gain an advantage over its competitors.

Global strategy

A global internationalization strategy means that a company treats its target market in the same way as its local market. Expansion carried out in this way ignores cultural, social and cultural differences and assumes that they are similar or identical in each market. A company choosing this market entry strategy conducts the same sales and marketing activities What in the domestic market. This strategy is chosen most often when a company makes export development of culturally indifferent products.

Ethnocentric strategy

The ethnocentric growth strategy of internationalization of a company involves direct investment in markets that are culturally similar to the domestic market. In this way, the company avoids the risk of not adapting the product to a particular market. This type of entry strategy is typically used by companies when starting a expansion into foreign markets.

Polycentric strategy

A polycentric internationalization strategy is to enter a market, taking into account its characteristics. A company adopting this entry strategy, in order to have a good understanding of consumer preference in a given market, should conduct a comprehensive market analysis. In addition to direct exports, companies during this type of expansion can take advantage of license sales or joint ventures.

Dual strategy

The dual strategy is an attempt to reconcile polycentric and global strategies. It assumes that the international market is homogeneous, but pays attention to the differentiation of marketing activities into different sales regions. An example of this strategy is to export identical products, using different methods of promotion. This is the most difficult way of expansion.

The above division is just one concept of different strategies. In addition to it, there are many different approaches in the internationalization process. Each of them has its own advantages and applications, so it is worth knowing and understanding the variety of strategies well in order to choose the one that best suits the needs and goals of a particular enterprise.

What benefits can internationalization bring to a company?

Nowadays, the external internationalization of a company has become one of the key aspects in the strategies company development. Companies make the decision to start expansion to achieve the following benefits of internationalization:

  • gaining new customers: By expanding beyond its borders, the company is attracting new groups of consumers whose needs and preferences may differ from its existing customers. This gives the company a chance to increase the scale of its operations and expand its customer base.
  • revenue enhancement: Geographic expansion opens up new sales opportunities, which can increase a company's revenue. At the same time, it reduces the risk of the company becoming dependent on a single source of revenue in the domestic market.
  • risk reduction: Geographic diversification offsets the risk of an economic crisis in the country where a company operates.
  • increase brand recognition: Internationalization can help build brand trust by increasing brand recognition in the global market.

By expanding beyond national borders, a company encounters a number of advantages and difficulties that significantly affect its strategy. The impact of internationalization on a company's business is significant and can change its plans in the long term.

Support for internationalization for enterprises

There are many programs and organizations that offer support in the development of internationalization of enterprises.

The Polish Agency for Enterprise Development (PARP) is one of the institutions supporting innovation and networking of small and medium-sized enterprises (SMEs). It supports the shaping of innovation processes and the development of Polish enterprises. It also promotes Polish exports in European markets.

The National Center for Research and Development (NCBiR) provides financial support to companies conducting internationalization-related research and development activities, fostering enterprise innovation. The agency's support helps increase the degree of innovation of enterprises and enables scientific exchanges.

What's more, the European Union's structural funds and programs offer support that allows companies to enter European markets, resulting in the development of Polish businesses. Under these programs, companies can apply for grants for programs related to the internationalization of the economy.

Over the past years, many Polish companies have benefited from the funds allocated for such programs. In 2022, PLN 50 million was allocated for the "internationalization of SMEs" program. Funding for business expansion could also be obtained from programs such as: "passports to export," "seal of excellence" and "go to brand."

In case a company is planning to globalize its operations, it is worth checking whether it qualifies for some kind of support program, which can significantly facilitate and accelerate the process of expanding into foreign markets.

Benefits and difficulties of internationalization - why use the support of a consulting company?

A company, when deciding to start the expansion process, faces many difficulties of internationalization. Properly carried out expansion requires market research and competition analyses. Conducting this type of analysis on your own can be time-consuming, so it is advisable to enlist the help of a consulting firm whose team will complete the study in an appropriate manner and in a short period of time.

Internationalization - your opportunity for growth

Internationalization is an opportunity for any company that wants to grow rapidly and increase its degree of innovation. It is not only an increase in the number of customers, but also an effective way to increase revenues and gain international relations. Cultural differences, customer preferences and local market peculiarities create unique opportunities, which can lead to export development.

Give yourself a chance to achieve advantages over competitors Through internationalization. Operating in multiple markets minimizes the risk of being bankrupted by adverse economic conditions. Internationalization is the key to long-term success and sustainable growth for your company.

Iwo Gopsz

See other entries

force field analysis
Market analysis

When to choose quantitative rather than qualitative research?

See more
Viral marketing
Marketing

Viral marketing. What is it and how does it work?

See more
industry sector assessment
Competitor analysis

How can scoring sector attractiveness help you choose the right industry?

See more