Internationalization

internationalization and international entrepreneurship among small and medium-sized enterprises (SMEs) has remained a topic of considerable contemporary relevance, principally owing to the observed growth effects of cross-border venturing, and the demonstrated capacity of SMEs to drive economic development at national, regional, and global levels (European Commission, 2007). This realisation was at the heart of the 2007 OECD-APEC study on Removing Barriers to SME Access to International Markets, which provided general findings on the major barriers to SME internationalization as perceived by SMEs and policymakers in OECD and APEC member economies.1 The need to obtain a greater depth of understanding and an updated view of the issues raised by the OECD-APEC study provided a raison d'être for this follow-up project. Other value adding features include the additional focus on motivations for SME internationalization ; the coverage of recently available documentation from economies involved in the OECD enlargement (Chile, Estonia, Israel, Russia, and Slovenia) and enhanced engagement process (Brazil, China, India, Indonesia, and South Africa); and the sub-national and sectoral insights offered on SME internationalization barriers, motivations and support programs.

The specific objectives of OCDE report about SME Internationalisation

                        i. To analyse in-depth the most significant barriers to SME internationalisation identified from the 2007 OECD-APEC sponsored research on this theme, with a view to uncovering new insights into the nature of these top barriers;

                        ii. To review recent work pertaining to factors that drive or motivate the internationalisation of SMEs; and

                        iii. To develop a deeper understanding of the current programs for SME internationalisation, particularly the specific measures aimed at addressing the top barriers identified.

 

To ensure a greater depth of understanding on SME internationalisation barriers, this study focused on the top four barriers identified by the OECD-APEC study as being by far and away the most serious impediments to SME internationalisation (see Table 1). These include 1) Shortage of working capital to finance exports; 2) Identifying foreign business opportunities; 3) Limited information to locate/analyse markets; and 4) Inability to contact potential overseas customers. A fifth barrier, „lack of managerial time, skills and knowledge‟, is additionally examined. The reasoning is threefold: one, this reflects the importance of this barrier in the Member Economy survey (see Table 2); two, the consistently highlighted primacy of managerial factors in previous relevant global surveys; and three, the widely acknowledged importance of skilled human resources in all areas of economic activity, including market innovation.

To provide an updated appreciation of pertinent aspects of SME internationalisation, the report reviewed the post OECD-APEC survey evidence on the top barriers, drivers and support programs across OECD and APEC member economies and other economies involved in the OECD enlargement and enhanced engagement processes. This has yielded important longitudinal insights, thereby indicating that support programs are appropriately focused on the most resilient and enduring of the factors affecting SME internationalisation.

Knowledge is power

According to Kotler, the requirements of many customers have changed as a result of the financial crisis. Former knowledge about customers is no longer valid; customers and their needs have to be re-examined.

"YOU CANNOT NOT COMMUNICATE"

In these times where social media prevail, everything a company says must be true and clear. Many service providers ignore this aspect—and will get stung. For example, the US website airlinemeals.net, replete with thousands of evaluations and photos of in-flight food, has already repudiated a fair number of advertising promises.

"BUILDING MEANINGFUL RELATIONSHIPS"

Based in France, Targobank demonstrates that the crisis can be a learning experience. Its bank consultants are subject to pay cuts if they give customers investment recommendations outside of a risk category previously set by the customer. So how does marketing even remain responsive during times of never-ending turbulence? According to Kotler, having one "script" for bull markets and one for bear markets is no longer sufficient. "Companies often get into trouble if they don't have an early-warning system in place. They see the warning signs but don't counter them." How does one set up an early-warning system?

In Chaotics, Kotler mentions two suitable methods: scenario planning and flexible budgeting. In other words, smart marketing managers create the ability to expect the unexpected. And they have flexible response systems. Take Regal Entertainment, for example, which is the biggest movie theater chain in the US. It continually monitors attendance figures for individual movies—should the figures decline, it immediately stops showing the movie in question. Their reasoning is that an outdated offer will not draw anyone in and will show that a company does not know its customers—and that could result in losing their trust.