Companies that succeed internationally lean on a strong and well-considered strategy.
During the customers & partners day of Product Managers, Roy Toffoli, professor at UQAM (Montreal), unscrambled for us the different strategies available and the choice criteria for the company.
So, between developing its own sales forces abroad or leaning on partners, what is the strategy to adopt?
Three internationalization strategies
Three strategies are conceivable to develop an activity abroad. These strategies range from the complete internationalization, with the recruitment of local sales forces by the company, to the total externalization, by resorting to representatives or partners.
The export mode
The company externalizes its international activity. For that, it identifies partners that will commercialize its offer in different countries. The partners can be of several types, depending on the type of product: commercial agent, retailer, and integrator.
The intermediary mode
The company signs a local manufacturing contract. Another case: the company supplies the components of a more complete solution marketed by another actor of the country. Another intermediary mode is also the creation of a Joint Venture in collaboration with an actor of the local market.
The hierarchical mode
The extreme case of internationalization, the company creates a subsidiary and recruits local collaborators that will market the product.
The major decision criteria
The choice between these different strategies has nothing to do with chance but is the result of a detailed analysis of the situation of the company, its offer and the external factors linked to the market and the competition. The table below represents keys for understanding. The criteria written down with a +, work in favor of internationalization, while the ones written down with a –, work in favor of the externalization.
The operational implementation of the externalization
Since the externalization decision has been taken, here are some best practices to keep in mind:
- Select your retailers, do not let them select you
- Look for retailers able to develop the market instead of accepting the ones that have several easy contacts.
- Treat your retailers as long term partners
- Be ready to undertake support actions (marketing, management, finances)
- Since the beginning, control the marketing strategy
- Be sure that your retailers provide you feedback on the market and the financial results
- Establish links with national scale retailers, as soon as you can
But, how can you identify efficient partners? Once again, you need to be pragmatic. Here are some tips to search… and find your partners:
- Take part in business trips (one solution is to participate to the studies trip organized by the chamber of commerce).
- Attend to international trade shows (the interest consists in visiting the stalls of your neighbors to form partnerships as well as meeting new potential prospects)
- Contact all the federative organisms of the sector of activity you are targeting.
- Work on the professional directories
- Contact the representative of your country in the targeted country, in particular, the embassy assistant
- Share with your customers in France. They might have an interesting international experience.
The success of a company’s internationalization depends on three steps that have to be perfectly orchestrated:
The success of the internationalization depends a lot on the ability of the company to consider this process on the long term. One preeminent factor lies in the ability on the managing team to comprehend the “international issue”. A company that benefits from a team internationally oriented naturally will develop a greater capacity to internationalize.