Unit 6 - Internationalisation of SMEs

Learning Objective

The objective of this unit is to help you develop effective managerial and business leadership skills, which will assist you in dealing with management issues that arise when a firm wishes to expand its activities and do business in foreign markets. The unit will mainly focus on the role of SMEs within the globalised economy and the possible options for going international. Within this context the unit will analyse costs and risks of internationalisation, and how you can develop your strategy accordingly, whilst providing general introductory information on the complex, yet promising, issue of internationalisation for you and your business. It will thus help you gain a better understanding of the current situation and the options open to you. If you are not familiar with internationalisation modes and strategy, the course will serve as a starting point from which you can start building your strategy. If you are already doing business in foreign markets, the course may help you organise your investments and consider options that you may not be aware of.

Estimated Time

It will take you approximately 45 minutes to go through this course, and approximately 45 minutes to consider and build your strategic options with regards to internationalisation, if, of course, you intend to choose this course for your company.

Introduction

In a global economy, currently characterised by increased competition and advances in all fields, owing to rapid technological progress and formulation of new policies, a company that wishes to stay competitive, must consider the option of internationalisation. As borders are being gradually diminished and technological advances eliminate distance, companies can now access easily and freely (due to trade liberalisation) international markets of interest. Hence, the present market condition facilitates international operations, both on a global and, especially on an EU level, due to the rapid expansion of the EU market.

The three major, identified driving forces that have considerably contributed to the globalisation process are:

  1. The liberalisation of capital movements and absence of regulation in financial services.
  2. The further opening of markets to foreign trade and investments, activities that push international competition further.
  3. The role of technology, in the fields of Information and Communications (ICT) in the global economy.1

The aforementioned factors in addition to the increased competition on an international level dictate a more competitive and open approach to the market by SMEs, as they have increasingly become a subject of interest for policy makers and government bodies. Hence, their role must take account of a worldwide business context. Survival with regards to current market conditions requires a well developed internationalisation strategy and, most importantly the respective managerial skills and knowledge, which will lead you towards making optimum decisions. This is exactly why this unit will be of help, as it will provide the general guidelines and information, which will not only aid you in the decision making process but also in the formulation of your company strategy.

 

1 OECD Handbook on Economic Globalisation Indicators, OECD, 2005, p.16.