1. Going International – The Big Challenge Prof. Per Jenster (www.pjenster@gmail.com) Copyright © 2012 Nordic International Management Institute. All rights reserved.

2. The purpose of this presentation is to: Outline Internationalization Challenges for SMEs Discuss road blocks for international success Provide recommendations for SMEs and their governments

3. Copyright © 2012 Nordic International Management Institute. All rights reserved. Keys to Success It all starts at home… Going International

4. Copyright © 2012 Nordic International Management Institute. All rights reserved. Lack of Vision Lack of Strategy Lack of Business Model Our research and field observations identifies, 3 specific challenges for SMEs going international:

5. Copyright © 2012 Nordic International Management Institute. All rights reserved. When SMEs consider internationalization, the first challenge is the realization that a foreign market is very different from their origin! Customer preferences, competition, channels, context is different from back home. Lack of network and internal competencies Stretch of management time and resources … we often find that a new vision for the firm is absent

6. Copyright © 2012 Nordic International Management Institute. All rights reserved. The internationalization attemt is not tested for its strategic logic: Are you: Following your customers? Pursuing Economies of Scale Providing a product/service which is unique and desirable abroad? Going abroad for defensive reasons?

7. Copyright © 2012 Nordic International Management Institute. All rights reserved. Going international – will your business model hold? Internationalization often compromises the economic logic of your domestic business! SMEs often don’t understand that making money abroad, requires a different cost structure and business model – foreign revenue is not just marginal income!

8. Copyright © 2012 Nordic International Management Institute. All rights reserved. One of the biggest road blocks to success internationalization by SMEs is that of Mind Set SMEs are often located in smaller communities Severe shortage of talents, with international experience Few role models and little access to coaching

9. Copyright © 2012 Nordic International Management Institute. All rights reserved. In addition, the financial structure of SMEs do not allow for risk taking New international ventures costs money and time Limited access to risk capital Fragile organization

10. Copyright © 2012 Nordic International Management Institute. All rights reserved. So what should SMEs and their governments do about Internationalization?

11. Copyright © 2012 Nordic International Management Institute. All rights reserved. So what should SMEs and their governments do about Internationalization? Most SMEs should stay at home!!

12. Copyright © 2012 Nordic International Management Institute. All rights reserved. If you want to go abroad, make sure you get some help to: Develop a solid vision for your firm Assess the strategic logic for going abroad Test the economics and your business model.

13. Copyright © 2012 Nordic International Management Institute. All rights reserved. Our research has shown, again and again, that going abroad requires: New Capabilities New Networks New Country 2 New Country 3 New Country 1 Home Country

14. Copyright © 2012 Nordic International Management Institute. All rights reserved. My own company in China is a good example of these forces at work: Nordic City of Living & Learning, Chengdu

15. Copyright © 2012 Nordic International Management Institute. All rights reserved. In summary, Internationalization is not for everyone (despite what government institutions like for you to think) Challenges starts at home, not abroad, It is mostly about developing capabilities and networks!

16. Copyright © 2012 Nordic International Management Institute. All rights reserved.