Overcome Size Related Challenges Commerce Essay


As saw previously, many reasons can explain why SME are going and selling abroad. Now, it will be central to describe the preeminence of founders and managers. A SME can be defined as an entity with a strong link between the founder and the company itself. Therefore the position of the founder and his aptitudes towards risks will hinge on lots of decisions which will shape the company. Some Scandinavian studies detail that successes in selling abroad are rather based on internal factors such as a good management or behavior of founder than on economic advantages. Moreover, it is really significant to point out the fact that the founder needs to have a vision to direct his firm's strategy. A second paragraph would connect the founder's aptitude and his vision toward the internationalization process.

Behaviors of managers

It is generally acknowledged in some studies that the behavior of the founder will determine if the firm will export or not: "le dirigeant de la PME exerce une influence directe et souvent sans partage aussi bien sur la decision d'internationalisation que sur sa mise en oeuvre" Allali 2002.

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A great number of SME is counted and lots of studies try to define a trend and classes in order to classify SME but as a result, theorists explain that each SME was different. That is why there are so many diverse behaviors that lead to different way of internationalization. Some typologies are more precised like the Czinkota 's (1982) or Joyal's (1996) typologies. Actually, they offer a typology with 8 classes of behaviors but the 3 classes, which will be presented below are the most classic.

-the indifferent manager; it means they do not care of international perspective at the moment but a trigger either from an internal component such as an employee willing or from an external component such as the interest of several foreign customers would motivate them to sell abroad.

-the negative manager; these one are not open minded concerning the topic of international activities. They do not want to develop their business abroad even if it would mean an increase of revenues, there is a psychological barrier that prevents these founders to export.

-the positive manager; the last kind of managers agrees to sell abroad. They are not waiting a foreign customer's order on their national market. They will analyze on which market they will go and then launch their product abroad.

The manager's behavior could be influenced by several factors.

The first one is the cultural environment in which the founder evolves. It will affect the founder's personality. For example, a business founder coming from America will take more risks easily than a Japanese business man. Some founders would sell abroad simultaneously, contrary to others who will sell abroad in different countries step by step. These are different approaches to plan activities: sequential or synchronic. These different approaches could affect the founder. For example, one can imagine a business man who has a sequential personality. He will first set up his business and his activity in his national country, make sure it is safe before trying to sell abroad. On the other hand, the synchronic guy would launch his product onto several markets directly.

The type of industry is the second factor which can alter the behavior of a business man. In fact, working in a competitive industry would force some companies to sell abroad in order to survive. Besides, the industry could be completely different between two countries. Too many legal constraints to export would lead business man to not go abroad. Porter explains that the behaviors of managers are influenced by the power of the customers but also by suppliers' power.

The last one is the firm itself. Could the firm be strong enough to support national and international activities? Has the firm enough resources to succeed in? Does the firm get the right skills to sell abroad? The firm' strategy will influence the behavior of managers. If it is not planned in a short view, why will the manager change the strategy? The internationalization is a long term process, so managers must consider all dangers before selling abroad.

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Factors will influence dissimilarly the behavior of the business man. As a matter of fact, the indifferent founder will be not affected strongly by these causes. As it is mentioned above, he is not looking for selling abroad if there is no order from foreign customers. The two other aptitudes are more interesting. In fact, they react more to these factors. The rejecting aptitude will react negatively. The factors will illustrate the point that internationalization is a "heavy burden". For them, there is no necessity to become international. They will go abroad only if they are threatened on their national market. Unlike the refusing one, the positive founder's aptitude would be in agreement with factors. These factors will strengthen the fancy of selling in new markets.

The positive founder towards internationalization has two positions.

The first one is a proactive position. It means that the manager is really interested in selling abroad. According to Johnston and Czinkota (1982), there are seven motivations which guide business man to new markets:

-exclusive information: knowledge of customers' needs, of the market

-entrepreneurial impulse: vision, motivation, desire, strategy

-unique product or service: unavailable for your competitors

-marketing advantage: differentiated marketing towards competitors

-revenues advantages: return on investment higher on an international level than on the domestic market

-technologic advantage: technological advance against your competitors

-unique network: the business man has a distribution network to sell products faster than competitors.

Concerning the reactive position, it means that the business man wants to internationalize his firm but hesitates on the way to drive it. He reacts positively to an external factor (Brooks & Rosson, 1984) and that is why he will export. For example declining domestic sales or a competitive pressure can force manager to internationalize his firm. According to Suzman and Wortzel (1984), 17% of companies never make market research before exporting for the first time; they just take into account the spontaneity of foreign customers' orders.

You will find below a scheme which explains and sums up the internationalization process toward the different behaviors of managers. As explained before, the starting point to internationalize concerns the managers' behaviors. And after, it results different effects in function of behaviors of managers. Finally either a firm decides to internationalize thanks to a proactive or a reactive decision or it will lead the firm to stay on the domestic market due to a negative perception. Internationalization is an innovative process because it requires a proactive approach, which implies a favorable attitude toward international expansion (Reid, 1981)C:\Users\RICHE MAXIME\Desktop\Cours EM\management of international teams\dossier\behavior map.bmp

SME internationalization towards managers' behaviors

The process of internationalization is a willingness of the manager. The mental process of internationalization could be the following one. First, the manager is aware that there are opportunities on foreign markets. Then, the manager is interested by these opportunities. In fact it will either increase his sales or allow his firm to survive due to a competitive pressure. The manager thinks about selling abroad but he is not really sure. After, there is the step of the intention. It means that the manager takes the decision to sell abroad. And finally the manager adopts completely the process of internationalization and he transforms his firm to be operational and competitive on international markets. To put it in a nutshell, the internationalization's process is the following one:

Different authors detail the process of internationalization. They do not agree on the number of stages to be perfectly internationalized but they all accept the fact that internationalization is a slow process because of a risk-averse attitude and a lack of knowledge of the international environment. The example of the Cavusgil's theory (1980) is taken. He splits the internationalization's process in 5 phases which depicts a gradually increasing commitment to a foreign market:

-Domestic marketing: the firm sells only to the home market

-Pre-export stage: the firm searches for information and evaluates the feasibility of undertaking exporting

-Experimental involvement: the firm starts exporting on a limited basis to some psychologically close country

-Active involvement: exporting to more new countries -direct exporting- increase in sales volume

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-Committed involvement: management constantly makes choices in allocating limited resources between domestic and foreign markets

The first step illustrates the state of the manager who concentrates all firm's resources on the domestic market. He does not care of the international context. Then, between the first and the second step, the manager takes into account the international environment. He becomes aware of the international perspective that is why he begins to research information about foreign markets. After gaining all required information, he will start to export in close foreign countries. The reason to this proximity is that close countries are generally close on a cultural level. It is the first experience abroad, and exporting in close cultural countries for managers who have a lack of knowledge of international selling is easier because there are fewer needs to adapt the product contrary to countries with totally different cultures. If the first experience is a success, the manager will be encouraged and so involved in more and more international activities. He will export further to distant (geographically and also culturally) countries. And finally, the last step is that the company is totally internationalized and the main issue for the manager now is to allocate resources and to balance between domestic and international activities. Does the company concentrate resources on international activities or does the company keep a large part of resources for the national market? Once the company is absolutely internationalized, the manager would normally allocate more resources to international activities because the turnover of the firm will increase thanks to foreign sales.

II- The relation between the vision and the internationalization process

Then it would be significant to explain the importance of the founder's vision. How could we define the notion of "vision"? The vision covers several aspects. A huge number of authors defined this notion. For some of them, the notion "vision" has a negative connotation. This pejorative connotation was used in the past but now it is more linked with a strategic aspect. In point of fact, Harel-Giasson (1995) explained that the notion meant for a long time "hallucination, dream or also fantasy". According to Collins' definition, in a figurative sense, the vision corresponds to "a vivid mental image produced by the imagination". For some authors, the vision can symbolize a negative aspect when the gap is too big between the reality and the future.

But other authors try to explain this notion in a business environment. Bennis and Nanus (1985) define the idea of vision as "a mental image of a future, possible and desired state of the organization". From Filion's point of view, vision is "a planned image of the future, the place we are willing to have thanks to our products and it is also the image of the organization we will need to succeed in".

As you could see, an abundance of meanings can tackle the notion of "vision". But the most important is to understand how it is developed in companies and which impact it has on internationalization process.

The notion of vision requires several functions:

-Human resources motivation

-Definition of goals inside the firm

-Implementation of a control's version

-Influence the change inside the organization

For Gluck (1984), the vision details precisely goals to reach and means to set up in order to obtain expected objectives. But a leader and manager in a same company will not apply the notion in the same way. For instance, Bennis and Nanus demonstrate that "by focusing attention on the vision, the leader operates on the emotional and spiritual resources of an organization, on its values, commitment and aspiration. The manager, by contrast, operates on the physical resources of the organization, on its capital, human skills, raw materials and technology".

On the next page, there is a scheme which links the vision of the manager with the decision to internationalize the firm and all steps which result from the manager's vision. The starting point is logically the vision of the manager. If the vision is fuzzy, it is obvious to say that actions will be improvised. The clearest the vision is, the better the actions could be planned and organized. In this model, the "vision" is an addition of 3 items: the vision of space, the vision of means, and the sharing of the vision. The vision of the space represents the mental image of the manager concerning the future place of his products, services or his company. The vision of means is considered as the mental image of what the manager will need to achieve his goals. Once he clearly defines the "space", he will determine means that will be required to reach future goals. And finally, the sharing of the vision is the last item. In fact, the vision cannot be individual. Without sharing the vision, there will be no involvement of employees and the manager will not lead his teams. He has to share his vision with his employees in order to motivate them. Thanks to the sharing of the vision, employees will be committed in the internationalization's process. One example could illustrate the item of sharing. Steve Jobs' vision was: "a computer for the rest of us". But his vision got clouded and he was ousted from his company. In fact, he did not share his vision with his employees and it led to bad financial results for his company. Employees were working on simple aspects but they did not understand the global issue due to a non-sharing of the vision.

Thanks to a clear vision, the manager and operating employees will define an adapted strategy to internationalize as best as possible. Once managers decide to internationalize the company, either they will have a planned strategy thanks to a clear vision or they will have an improvised behavior and internationalization process will be a learning process. In both cases, the company will be transformed to be operating on international markets. In function of performance, they will decide either to keep on internationalizing the firm with a stronger involvement or if there are negative feedbacks, they will try to change or to adapt the strategy and try again to perform well on international markets.

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The manager's vision and the process of internationalization