Strategies for Internationalisation within smes

Internationalization Strategies within SMEs

Introduction

Small and Medium Entrepreneurs in any economy encourage ownership of private property , encourage novelty and expand entrepreneurial proficiencies . SMEs are flexible and such flexibility allows them to cope with rapid revolutions in market demands . Further , SMEs in an economy produce a lot of job opportunities , encourage economic activities diversifications , maintain sustainable growth and create a momentous contribution to both overseas marketing and international trade . Therefore SMEs are lively and inventive and they easily become accustomed to altering situations and thus in the process turn out

to be the major engine in the success of both the economy and the society at large (Lovelock , 2006

The concept of internationalization can be traced back in the past two decades and by then SMEs utilized only two strategies i .e . through foreign direct investment and import-export trading practices however several internationalization strategies have emerged in the recent past a development which has augmented the internationalization process by SMEs . Research indicates that the process of internationalization as well as its strategies is risk inherent and therefore SMEs pursuing this process ought to be very careful in to avoid unwarranted failures Further research reveals that most SMEs which has opted to go international has failed terribly in the international markets as a result of the challenges brought about by the concept of globalization which has become the modern form of carrying out business in this 21st century . In other instances the challenges of the ever growing European Union has made it difficult for SMEs to succeed in the foreign markets (Jose , Mikel and Antonio , 1998

Internationalization Process (Zhan and Raymond , 1998 ) notes that internationalization process can be described as a steady chronological and linear increase of actions over a specific period of time . Research indicates that there are three crucial processes of internationalization that SMEs ought to pursue in to attain there objectives . The first process is that the supposition of internationalization supposes that an organization should achieve a basis of competitive advantage in its local marketplace . If such advantage will not be resourcefully utilized by the firm in the home market with no unwarranted transaction expenses then the business may opt to shift to other external markets and attempt to utilize its competitive advantage in such external . The second procedure of internationalization is widely described as Uppsala internationalization replica and it explains a process of augmented dedication to worldwide sales and manufacturing activities of different SMEs . This process illustrates that SMEs undergo certain stages in its attempts to internationalize (Zhan and Raymond , 1998

The third process is referred to as network approach and it centers on the linkages between these SMEs under this process an SME for instance institutes and develops several networks and linkages whereby the process of internationalization rely heavily on the quality of linkages or networks that have been cultivated (Dr . Antal , 2000

Internationalization Strategies of SMEs

The first internationalization strategy by SMEs is that of exporting and it depends on a number of...