Internationalisation of companies: How to make your business global

What is internationalisation?

Essentially, internationalisation means expanding your activities beyond the borders of your home market and operating in several countries. However, this involves a lot of work: you have to adapt your offer, establish new structures and change processes so you can sell your product or service internationally. That's the case, if...

...you want to offer the products in your online shop throughout Europe in the future.

...you want to set up several branches of your company in different countries.

Internationalisation is therefore about the strategy a company uses to tap into foreign markets. Ideally, this goes hand in hand with localisation. This involves adapting your offer to a local market instead of simply ‘translating’ it.

What forms of internationalisation exist?

You have various options when it comes to internationalising your business:

• Export: You sell your offer abroad – you do not necessarily need additional employees or locations to do so.
• Licences/Franchising: You grant licences so others can use your business concept. However, those who use this licence are not legally dependent on you, but run their own companies.
• Joint Venture: You set up a separate, independent business abroad together with a company based there.
• Branch: You set up a new branch or production facility abroad. It is part of your overall company.
• Subsidiary: You set up a new company abroad. It operates independently but is owned by the parent company.

The further down the list a point appears, the more complex and risky internationalisation and control become.

Why is it worth internationalising your business?

If you have been operating in a country for a long time, the potential of your business will eventually be exhausted. If you want to continue to attract new customers, you will have to poach potential customers from your competitors – which is time-consuming and expensive. Internationalisation can help here. This allows you to tap into new markets, grow faster and spread your risk. If sales decline in one market, you can compensate for these losses elsewhere.

Internationalisation also helps to save money. Depending on where you set up a subsidiary, for example, you will incur different costs. In some cases, you will also have better access to skilled workers in the relevant fields.

Of course, social, legal and political considerations also play a role in deciding which countries you want to operate in. Whether it's favourable tax conditions, competitive advantages or liberal economic policies, there are many different incentives for internationalisation.

What challenges does internationalisation bring?

Just export your existing offer to other countries and hope for the best? Then your internationalisation has little chance of success. If you want to tap into foreign markets, you have to adapt to new circumstances.

Technical challenges

Companies often underestimate the differences between various markets and the effort involved in internationalisation. Important points to consider are:

• Taxes
• Labour law
• Environmental and social standards
• Different currencies
• Customs and export regulations
• Language barriers

In addition, a lack of infrastructure or excessive bureaucracy can create additional obstacles.

Cultural challenges

Different countries mean different customs, different attitudes towards work and leisure, and different expectations. These can be a source of conflict. Nevertheless, you need to ensure a consistent corporate culture across all locations while taking cultural differences into account. The standards of your home country should not be the benchmark when it comes to internationalising your business. The same values must be lived differently in different environments.

This also includes working together across locations. Regularly exchange knowledge and experience so everyone can benefit from each other's expertise. Also draw on the know-how of people who are familiar with your target market.

Risk Management

No matter where you operate, your business risks travel with you. With Professional Indemnity Insurance through exali, you are covered worldwide. Because you decide where you want to work.

What impact does digitalisation have?

Thanks to advancing digitalisation, companies are now able to implement their internationalisation plans much more easily. What used to require large investments can now be achieved from a single location in many different countries. Location-independent working allows teams to communicate across borders and drive projects forward.