October 10, 2022
The incremental geographic market expansion strategy of older/established multinational enterprises (MNEs) is not tenable for SMEs in the 21st century. Why? Considering the rapid and frightening pace of changes in the global competitiveness landscape wrought by speedy technological advancements, globalization, converging global consumer tastes and preferences, the “new economy paradox” (higher/better quality, affordable/lower prices, frequent/faster innovation) to mention only four. SMEs must, therefore, quickly globalize by venturing into international markets where their products/services are needed to 1) enhance their global competitiveness, 2) hike global sales and profits, 3) exercise a strategic offensive move that ties global competitors’ hands to their home markets and thus forestall their overseas expansion ambition, to mention only three drivers of internationalization.
How can SMEs rapidly globalize and derive a significant portion of their sales in international markets? One option is to selectively tweak “a not-so-new” paradigm in foreign market entry modes embodied in the born global (BG), and born-again global (BAG) internationalization process. The BG concept is not new but has long existed in certain Nordic countries and nations with relatively small domestic markets (ala Australia, New Zealand, Singapore).
Skipping the traditional/classical/incremental internationalization process is a high-risk adventure. However, an aspiring BG or BAG entity leader and talented management team endowed with tangible and intangible resources, organizational capabilities, and a successful international business experience can enable the organization (especially technology-focused firms) to globalize its operations quickly.
Below is a “comprehensive” list of country and business risk analysis that must be performed before embarking on foreign market entry, foreign market operation, foreign market investment, and foreign market exit.
Fundamental of Country & Business Risk Analysis
1. Main variables that impact country risk
The internationalization process/pathway for SMEs in the new-normal endemic coronavirus global business environment.
First, as the saying goes, “plan/prepare for the worst hope for best”. Tenarries MCG thinks that the SARS-CoV-2 pandemic will likely morph into an endemic humanity must learn to live with. Of course, if it miraculously goes away, that would be a much welcome relief. In a previews blog, TMCG argued that globalization is not reversible. While the verdict on the phenomenon’s future is open to debate, TMCG believes that deglobalization (reverse globalization) is unlikely in the short-to-intermediate frameworks. However, globality in the intermediate to long-run frameworks is a more likely end-state of globalization. Consequently, a future-centric thinking 21st-century internationalization process may be the plausible optimal internationalization strategy.
The incremental geographic market expansion strategy of older/established multinational enterprises (MNEs) is not tenable for SMEs in the 21st century. Why? Considering the rapid and frightening pace of changes in the global competitiveness landscape wrought by speedy technological advancements, globalization, converging global consumer tastes and preferences, the “new economy paradox” (higher/better quality, affordable/lower prices, frequent/faster innovation) to mention only four. SMEs must, therefore, quickly globalize by venturing into international markets where their products/services are needed to 1) enhance their global competitiveness, 2) hike global sales and profits, 3) exercise a strategic offensive move that ties global competitors’ hands to their home markets and thus forestall their overseas expansion ambition, to mention only three drivers of internationalization.
How can SMEs rapidly globalize and derive a significant portion of their sales in international markets? One option is to selectively tweak “a not-so-new” paradigm in foreign market entry modes embodied in the born global (BG), and born-again global (BAG) internationalization process. The BG concept is not new but has long existed in certain Nordic countries and nations with relatively small domestic markets (ala Australia, New Zealand, Singapore).
Skipping the traditional/classical/incremental internationalization process is a high-risk adventure. However, an aspiring BG or BAG entity leader and talented management team endowed with tangible and intangible resources, organizational capabilities, and a successful international business experience can enable the organization (especially technology-focused firms) to globalize its operations quickly.
Below is a “comprehensive” list of country and business risk analysis that must be performed before embarking on foreign market entry, foreign market operation, foreign market investment, and foreign market exit.
Fundamental of Country & Business Risk Analysis
1. Main variables that impact country risk
- Political
- Economic
- Financial
- Legal
- Social
- Cultural
- Geographic
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