Global strategies and the small-medium enterprise Vittoria G. Scalera Politecnico di Milano School of Management

…How do you define internationalization? … Have you considered or actually already internationalized your business activities? …Which are the main advantages of the internationalization? …Which are the principal barriers an entrepreneur faces?

SMEs and internationalization (1) ….however the participation of SMEs in international trade and investments remains limited

… Does the framework generally developed for multinational enterprises (MNEs) apply also to SMEs? SMEs and internationalization (2) Limited resource base Limited experience Same global competition World economy and ‘think global strategy ’ Global strategy: Ambition, position, investment and organization

SMEs and internationalization (3) Global expansion -> not all SMEs are good candidates Around 40% are involved in “local” activities by definition i.e. local services, small shops, artisans 5-10% are affected by globalization e.g. Products/services involved by global competition, involved in the global value chain (GVC) of bigger MNEs, innovation needs to be developed globally e.g.High-tech firms, sub-contractors, niche players in luxury

SMEs – MNEs linkage MNEs have created opportunities for SMEs to compete globally Global value chain Local & International ‘Piggybacking’

Barriers to internationalization of SMEs

Global strategy Figure 2.4

Globalization of the value chain

Internationalization: Critical questions 1.Where should I locate my foreign activities? 2.How should I enter a foreign country? 3.When should I internationalize my business activities?

Location

Global strategy and location Benefits of location: Proximity -> customers’ value curve Flexibility -> customization Quick response time ->customers’ demand

Entry strategies and timing

Wrap up Globalization as a strategic leverage for SMEs What should it be done? Define your global strategy Identify your target market(s) Plan how to enter Project the timing … all mixed with a good quantity of good luck and ambition!

Global strategies and the small-medium enterprise Vittoria G. Scalera Politecnico di Milano School of Management THANK YOU!