Many studies and presentations are highlighting and describing to managers and entrepreneurs the list of activities to be carried out to start and successfully develop their path to growth in the international markets. I wrote as well on this subject (Getting ready to export: what to do before you leave).

These studies are very effective not only to prepare the company for its international development but also to invite entrepreneurs to slow down the process while acquiring any missing resource or skill necessary to its achievement, whereas not, in some cases, to make them desist from ‘facing a challenge beyond the company capacities.

However, this article deals with this topic from a different angle: that is, the different degree of importance of the involved competencies in the phases of the internationalization process. This evidence illustrates a recurring situation, valid for most projects addressed to scale internationally, even if specific cases can, on the basis of internal or external factors, change the order of the assumptions.

Let’s start with the framework, reported by the following figure representing the classic development path for the venture, which starts from growing on the domestic market (phase 1) passing to the subsequent development (2.3.4) of its presence on one or more international markets.

The four areas of the graph refer to the “core-competences” necessary to overcome successfully the challenges of business development, identified in:

– Product: It is the offer of the company, in other words, its “value proposition”, meeting certain requirements of the customers, appreciated over “alternative products” for the added value (in terms of performance, quality / price ratio, ease of use, etc.) that is able to provide. “Product” more than a competitive factor, it is the conditio sine qua non. If it has no (relative) value, the entrepreneurial action is relying on too fragile bases to ensure its success. Although, as we will see, the value of the product can change over time, even decreasing its quality without necessarily compromising its progressive success on the market.

– Marketing: These are the set of activities aimed at creating visibility and promoting the company’s offer by highlighting its distinctive features, or by interacting with partners or customers, always with the scope to obtain the market adoption of the offered products or services. The field of these activities is very broad, ranging from advertising to the participation of events, to the creation of a team charged to communicate and interact with customers, and so on. Their mix changes over time upon the evolution of the objectives, which range from disseminating the message (aimed to attract the attention of the clients) to strengthening and consolidating the market position.

– Execution: The Company created and effectively communicated the value proposition and started the first sales: it is now time to know how to meet the clients’ expectations in terms of product delivery and customer assistance. This area is typically less under the attention of the entrepreneur, but vital for the success of the company: a lack of effectiveness and efficiency in managing the processes is able to nullify months of investments spent for the creation and promotion of the offer.

– Accounting: The set of resources that allow the company to effectively manage the relationship with customers, such the customer care policies, or such the establishment of a direct relationship and network with all the external actors of the company such as suppliers, partners, distributors, etc. In this context, cultural factors, the capability to listen, and the anticipation of needs and, in short, the complete client contact management, matter the most.

These four skills are brought by the experience and skills of the members of the organization (entrepreneur, manager, employees but also consultants and advisors), but over time, they are transformed into business know-how, at the time when activities are expressed in processes, becoming resources of the enterprise and part of the organization’s “way of doing business”.

THE IMPORTANCE OF SKILLS IN THE VARIOUS STAGES OF INTERNATIONALIZATION

Now the above-mentioned competencies are common in the economic doctrine, with the awareness of how they are fundamental in guaranteeing a competitive advantage of the company in the long term. The contribution of this article consists in highlighting the different degree of importance that they assume in the various phases of business development. In practice, a different, dynamic, interpretation, of the crucial skills value over the path of the Company growth

Phase 1 – Development in the domestic market

The “Product” is at the base of the commercial activity, therefore of the affirmation of the entrepreneurial proposal itself. This makes this variable always important, in every phase, and in particular, the features of functionality and performance of the product compared to the competitors’, are vital to ensure the growth of the sales after the start-up phase.

“Marketing” and “Execution” are also important, but with a different trend: “Execution” is critical immediately, to ensure the positive introduction of the market, and as the company gains experience in terms of organization and logistics, processes become more routine, allowing the entrepreneur to shift his focus to “Marketing”, which is instead fundamental for the sales development after the acquisition of the first customers.

But the surprise is definitively represented by “Accounting”. On the domestic market, this factor often plays an important role, rather than in the assertion of the product on the market in the medium to long term, at least on the acceleration of its positive market introduction. The entrepreneur knows well the market where he lives, the culture, in general, the expectations of the clientele, and relies on personal relationships and networks created over time. This means that the first to adopt his product is most probably people he knows well thanks to pre-existing relationships. It is obvious that this introduction plays a decisive initial role, but in the medium term, the commercial position can be maintained and expanded only by guaranteeing tangible value to customers.

Phase 2 – Promotion in the international market

Generally, after the start of sales on the domestic market, the company turns its attention to foreign markets. Compared to phase 1, at this stage of development the focus shifts decisively on marketing: all the initiatives aimed at giving visibility to the offer (such as the preparation of ad hoc marketing material, the participation to fairs or events, sending samples, setting up demonstrations and contact actions with aimed partners, distributors, final customers). If “Product” has the same role as the start-up phase (perhaps with some adaptation / customization), the factors “Execution” and “Accounting” do not (yet) generally play a critical factor in the competition.

Phase 3 – Start of supplies and execution of commercial agreements

Execution, execution, execution. The marketing action has produced visibility, buyers and international partners are interested in starting collaboration: the quality of informative interaction, the precision of the various contractual obligations, and the speed of execution, are factors determining the success of the new international trade relations. Thus, managing the supplies and customer expectations is central to the entrepreneurial action, everything else takes second place.

Phase 4 – Relationship management and consolidation of the commercial position

Once the customer has been acquired, and the procedure for supplying and managing orders is standardized, “Accounting” comes back to play a key role, being the relational capabilities able to consolidating the new relationship through communication, fulfillment of requests, and personalization of the proposal. This type of “Accounting” is very similar to that done employed in the domestic market, even if it is more complex. As cultural factors and physical distance impose a stronger ability to listen to customers and investments in travel is involved. A context often pushing the company to outsource this function, at least partially, appointing an agent / area manager on site, and therefore facilitating the execution of this function playing a key role in the long-term commercial success.

CONCLUSIONS

The analysis of the understanding of the relative importance with the various resources and company functions in the commercial development of the company is useful to organize the entrepreneurial activities sequentially and to shift the attention to the most critical function in each phase of the corporate development. The dynamic also provides an idea of how the company can start in its path with deficits on functions that are not immediately critical. In this case, how to pay maximum attention to timing, to ensure the acquisition of the needed resources to deal effectively with the next phase, in time, saving the investments made up to that moment. And in the awareness of how, in any phase of the growth cycle, the various functions always maintain relative importance.