Going International
– The Big Challenge
Prof. Per Jenster
(www.pjenster@gmail.com)
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
Copyright © 2012 Nordic International Management Institute. All rights reserved.
Going
International
It all starts at
home…
Copyright © 2012 Nordic International Management Institute. All rights reserved.
Keys to
Success
Our research and field observations
identifies, 3 specific challenges for
SMEs going international:
Lack of
Vision
Lack of
Strategy
Lack of
Business
Model
Copyright © 2012 Nordic International Management Institute. All rights reserved.
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
Copyright © 2012 Nordic International Management Institute. All rights reserved.
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?
Copyright © 2012 Nordic International Management Institute. All rights reserved.
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!
Copyright © 2012 Nordic International Management Institute. All rights reserved.
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
Copyright © 2012 Nordic International Management Institute. All rights reserved.
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
Copyright © 2012 Nordic International Management Institute. All rights reserved.
So what should SMEs and
their governments do about
Internationalization?
Copyright © 2012 Nordic International Management Institute. All rights reserved.
So what should SMEs and their governments
do about Internationalization?
Most SMEs should stay at home!!
Copyright © 2012 Nordic International Management Institute. All rights reserved.
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.
Copyright © 2012 Nordic International Management Institute. All rights reserved.
New Networks
Our research has shown, again and
again, that going abroad requires:
New Country 3
New Country 2
New Country 1
Home Country
New Capabilities
Copyright © 2012 Nordic International Management Institute. All rights reserved.
My own company in China is a good
example of these forces at work:
Nordic City of Living & Learning, Chengdu
Copyright © 2012 Nordic International Management Institute. All rights reserved.
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!
Copyright © 2012 Nordic International Management Institute. All rights reserved.
Copyright © 2012 Nordic International Management Institute. All rights reserved.