You are in : Education > Business Schools

Business Strategy

Are you ready to go global?

Tue, 13 Dec 2011 10:35

As local medium-sized companies look towards attaining international business success via entering foreign markets in 2012, South African business leaders are advised to carefully asses their company’s readiness for international expansion before making a final expansion decision.

This is according to Professor Runar Framnes, who recently spoke at the University of Stellenbosch Business School’s (USB) Leader’s Angle and referenced studies conducted by Scandinavian researchers, as well as an award-winning article by Carl Arthur Soberg entitled A Framework for Analysis of Strategy Development in Globalizing Markets.

According to Framnes, the most important consideration for a company looking to expand beyond borders is international corporate culture. He says the readiness for internationalisation of an organisation’s corporate culture is best assessed by examining three key factors: attitude, competence and embodiment.

“It is pertinent that the attitude of top management is accepting of change and that they adopt a positive outlook with regards to risks and multicultural operations.” Furthermore, he explains that successful global companies understand the importance of competencies of information, marketing, language and culture when it comes to managing these across borders.

“Companies that are successful in moving into international markets know how to effectively utilise their parameters by cooperating with customers. They have extensive knowledge on distribution and networking, utilise skilled salesmen and know how to influence the market that they are operating in.”

Framnes explains the third factor, embodiment, as the integration of a culture of internationalisation into all aspects of a company’s activities.

According to Framnes business leaders are better prepared for internationalisation if there is fierce competition in their home market. He refers to MTN, which, as a result of capturing a significant portion of the South African market, was able to successfully internationalise and expand throughout Africa.

He also stresses the importance of sourcing domestic partners in new markets. “As companies enter into business with international customers, it is pertinent that they work at building an alliance to gain a competitive edge. Norway for instance is the world’s second largest shipping nation and major Norwegian banks have for years been represented around the world in places such as Singapore and Shanghai, because the country has followed their shipping customers and maintained strong relationships to avoid losing them to international banks.”

He concludes by saying that when considering the international network and its processes, local business leaders must keep in mind the entire value chain and its purpose, as too often they stop with distribution and customer networks and in effect weaken their country’s international network engagement. “Instead companies must fortify these models as a means to gain insight into consolidation of export markets and in effect strengthen their global position,” concludes Framnes.