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SME internationalization: business strategies

SME: the effect of the digital economy

The advent of digital technology led the Italian entrepreneurial environment to a significant grow in the international market, facilitating and encouraging the development of closer relationships between Italian and foreign markets.

The following are the main tools which companies can use in order to become international:

- Web, where it is possibile to find useful commercial information about foreign companies, in order to identify and choose the right business partner to expand their business abroad. In the same way the foreign companies can collect information on the Italian company,  which represents the "potential business partner", through the use of specialised websites where is possibile to request online the company's business profile;

- Hi-tech, using the big data software or new technologies "Internet of Things" you can identify marketand foreign userspreferences, to create a product / service which responds to the needs of the market in which the company decide to invest, and also to plan effective marketing strategies which will enable the company to enter quickly that market. As matter of fact Hi-tech and a good marketing strategy are fundamental to the company expansion, together with a complete and clear picture of the foreign target market.

Internationalization of SME: The importance of the foreign trade

One of the effect for the italian companies involved in the globalisation is the increasing demand for relating with the foreign trade in order to  keep a continued and concrete development.

In addition to this the companies who want to reach the higher segments of the market, today must necessarily make use of strategies that go beyond the mere price competitiveness, but they must rather to offer an increasingly innovative final product, which at the same time preserves the typical style and quality of the "made in Italy" brand. An analytical study of the company(markets to enter, the most important distribution channel, competitors) and strategy definition in relation to the activities to carry on abroad are fundamental key factors to plan and draw up a business plan for an International expansion.

INTERNATIONALIZATION: meaning and actions

Internationalization is the process by which firms invest in foreign markets, in order to gain market shares.

How? By opening new businesses in emerging markets, which have a great potential for economic and business development.

It is good to remind that its meaning is different from "relocation" which, on the contrary, aims to transfer from the original market to emerging markets, which are characterised by the low cost of production, production units with low added value, in order to offer products at competitive prices.

The requirements for a successfull project of internationalise a company business are:

- A good knowledge and right choice of markets and geographic area where to operate commercially;

- An analysis of the presence of foreign direct investment, which indicate the market's ability to attract capital;

- Evaluation of the degree of development of market segment.

INTERNATIONALIZATION OF SME: strategy to enter the foreign market

The possible internationalization strategies for companies are:

- Exports, can be indirect (between the exporting company and the final consumer interposes a distribution company which handles the sale of the product) and direct (the relationship between business and the consumer does not include the influence of intermediaries);

- Licensing strategy provides that a company grants another one the right to produce certain products / services, conform to their own ones, upon the payment of a fee;

- Trade agreements or of another nature  between complementary companies or competitors, as in the case of consortia, intended as a instrument of cooperation between entrepreneurs to realise foreign trade development activities;

- The establishment of subsidiaries abroad, new or through the purchase of units already operating in the market;

- Joint ventures, which implies that the company which decides to internationalise developes a partnership with local business that help to build strong a presence in the market and institutional relations. This business development strategy, for same target countries, represent the only way to access the foreign market. In some markets, as a matter of fact, there are still constraints and industrial policy restrictions that does not faciltate foreign investments.

Before develop your company business abroad it is important to require for advice from an high skilled expert who can follow all processes of internationalization, supporting the company at any stage of the business development, starting from the geopolitical analysis of the foreign country, to the definition of an international marketing strategy, also taking into consideration any risks related to the type of investment chosen.

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