If we talk about the advantages and disadvantages of business internationalization, an advantage without a doubt is to leave your comfort zone and face new challenges.
In 1980 the crisis that hit the US was difficult for its economy, and for this reason, many companies saw business internationalization as a light at the end of the tunnel.
We were very focused on the US and it is one of the countries that is going through the worst with COVID-19, so we have to open ourselves to other countries
Although these are different times of crisis because currently, companies have been able to sustain themselves thanks to digitization. And it is this tool that will allow business internationalization to continue to function.
So if you thought that the Coronavirus could be a limit, it is a new opportunity to transform your company. In this article, we explain the advantages and disadvantages of business internationalization.
Advantages and disadvantages of the internationalization of companies
Every process has its own pros and cons embedded in it when starting a business internationalization process. That is why we want you to know the advantages and disadvantages of business internationalization.
Advantages of the internationalization of companies
If you have done an exhaustive study of your organizational SWOT and you consider that your company is ready to start an internationalization process, the advantages are more than the disadvantages.
Below we mention the advantages of internationalizing your company and why starting to distribute your product in different countries is a positive long-term strategy:
A solid company
Any long-term business needs dedication, perseverance and patience. An internationalization process takes time to receive the expected results. You have to learn through:
- Continually observe your target audience and your competitors.
- Be flexible and continually readjust your strategies.
- Change course, if necessary.
Once you manage to overcome these obstacles successfully, you will be able to secure your future as an entrepreneur, in a saturated market.
Among the advantages and disadvantages of the internationalization of companies, we have diversification as a benefit. That your product is able to adapt to different markets and remain attractive is a challenge for small and medium-sized SMEs.
By learning to diversify, you are also flexible with your strategies and the tools you use through digitization. Diversification only yields growth, first you start by focusing on a country or region and then you expand.
If the strategies used in your business internationalization process give good results, the chances that other entrepreneurs want to invest in your business are high.
If you start, for example, with a country and in this country you get investors, you are ready to create the following strategy that will position you in another sector.
Multicultural investor alliances help the growth of the company and also maintain the continuity of your product in this process.
New sources of employment
As you grow as a company or organization, you must create a sales force design, which will therefore require more employees. Your company can be a source of income for other people in times of crisis.
These employees can be from your country of origin and also from the country to which you will begin the internationalization process. Remember that to create better relationships and a more exhaustive analysis of the population you are going to face, it is necessary to have a professional from your industry who is native.
Help from official bodies
If one of the limitations to starting an internationalization process in your company is capital, ICEX and the chamber of commerce provide financing. When evaluating your business model for global export, they make the decision whether your company is sufficiently prepared to take this step.
Even if there are still ideas that are not fully consolidated, the same chamber of commerce will offer you advisory services, meetings and events focused on the internationalization of a country or sector so that you can prepare yourself in a market full of uncertainty.
Resist and adapt to crises
The conquest of new markets creates the strengthening and diversification of income. By having professionals trained to create and employ multicultural marketing strategies, you can quickly adapt to new markets.
And not only this, being in one or more sectors you face less favorable economic situations with greater anticipation.
Disadvantages of the internationalization of companies
It is an undoubted fact that the internationalization process takes time and investment. For this reason, it is important, before taking this step, to have the necessary capital involved in the challenge of internationalizing a product.
It is important to evaluate the costs before starting the process of business internationalization. How long can I sustain this strategy? Do I have the resources over the time that I need?
In addition to this, if as a company you can the flow of distribution of your product and it can be sustainable over time.
Take as a business leader your long-term forecasts and if your company is ready to take this step.
Although digitization has created millions of professionals and entrepreneurs to do business with just a few clicks, language is still a barrier. And not only this but:
How does this new country see the way business is done? As mentioned above, having professionals who are native to the place where you will begin to carry out the internationalization process will help you to fully understand the culture that you will begin to attack.
In addition, this person can act as an intermediary in relation to the language.
Among the advantages and disadvantages of business internationalization, a decisive factor that can be taken as negative is the currency in transactions. Since, for example, the company has some debts that it must cover in the future, the company may suffer risks of loss in these variations.
For this reason, US companies are beginning to internationalize to continue working with the Dollar.
Companies in the process of internationalizing the company can be indirectly affected by Government entities: Changes in policies, regulations and laws that can harm the continuity and growth of the business.
So if you are willing to take this step, you have to take into account that the politics of this country will influence the operation of your company. Although it seems more negative than positive, if your employees are trained to devise effective strategies, they will be able to stand up to any situation of uncertainty.
Tips that will help you in the process of business internationalization
Since we have addressed the advantages and disadvantages of business internationalization, you have a clearer picture of the challenges and setbacks that your company may experience in this transition process.
- Design your business plan: Developing this plan allows you to observe the risks you face in this process. With the help of a professional expert in internationalization design, you will be able to evaluate in depth the profitability of the country and the actions to follow.
- Set realistic goals: Every internationalization process takes years of dedication. So the best thing to not lose the north is that you create short and medium term goals that motivate you.
- Evaluate your team and delegate responsibilities: Do you already know what area each professional who works in your company will cover? Who do you trust the most to take the next step? Develop your sales force design and enhance each area of your company.
- Get to know your investors better: Throughout the article we explain that if your strategies have results, other entrepreneurs will want to invest in your business. At the beginning, it is best not to create shareholders with high profit percentages until you know them well.
- Stay up-to-date with the law: Stay up-to-date with the country’s legislation and double taxation conventions