The Internationalization of Italian SME
In a time dominated by digitization and the globalization of the economic system, it seems mandatory for companies, especially small and medium-sized ones, to open up to international markets to build a path to growth and new business opportunities.
The management of an SME requires special attention from the entrepreneur. Unlike large companies, revenues are lower and risks are higher; consequently, prudent management is necessary, with a mentality predisposed to innovation and prevention of unforeseen events. As far as this last point is concerned, all insurance companies provide a policy that tends to safeguard the company against all risks: also, Generali offers an insurance solution for these companies.
What is meant by the term internationalization?
As the word itself suggests, the term refers to the development of a business intending to extend its operational boundaries beyond national borders, but not merely the export of its products and services.
In fact, in addition to the sale or production of products abroad, a small or medium-sized enterprise acquires the role of internationality even if it simply opens its own office or branch abroad, or if it takes advantage of supplies from foreign companies or, finally, receives funding from institutions or companies outside Italy.
What are the steps to internationalize an SME?
Behind the decision to seek out new business opportunities abroad, there is a thorough study of the markets, to assess in the best possible way, the compatibility of one’s products with consumer demand in a given country. Macroeconomic analysis is mandatory, starting from suppliers, considering infrastructures, analyzing distribution networks, and finally, mapping competitors.
The following requirements appear to be fundamental to launch such an ambitious project:
– An economic solidity (that allows the financing of the project).
– Excellent production capacity (which can promote production growth).
– Well-defined organization chart (able to support such a drastic change in the company’s prospects).
– Capillary presence in the foreign country of a diversified logistic structure.
What are the risks and advantages of internationalization?
As we have analyzed above, behind such a complex process, there are several risks that SMEs may incur, which could lead to severe problems for the company, such as
– The legislative systems of the host country (often the framework of the norms is distant from the complex of Italian norms also for the requirements that the goods produced in that nation must possess).
– The political situation within the country, the instability of which could lead to problems with commercial policies.
– The sudden fluctuations of the currency (in the case of countries outside the Eurozone).
– The demography of the host country, may lead to a change in communication to adapt products to clients.
At the same time as the risks for the company, we can also analyze the advantages that can result from internationalization:
– A decrease in costs (obviously from the point of view of the entrepreneurs and not the workers).
– Increased brand reputation.
– Diversification of risk.
– Product revaluation (for example, it may happen that a certain product no longer is used by domestic customers but is of interest to the international market).
– In certain sectors, the value of Made in Italy may be a plus.
Today’s competitiveness of the single global market has pushed many companies to seek new profits in the foreign field but, to obtain the desired results, as we have seen, specific requirements and characteristics are necessary that not all SMEs can sustain.