internationalitation of sme's

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The Internationalization of Firms and Export Consortia

Carlos López Cerdán Ripoll UNIDO International Expert

October, 2013 Belize

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CONTENT

1.  Internationalization means 2.  The internationalization of companies 3.  Export Consortium as an instrument of

internationalization 4.  Cases of Export Consortia at a glance

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INTERNATIONALIZATION CONCEPT

Internationalization means. Internationalization is a "cultural process" by which companies develop capabilities to do business in different countries, using local resources, both material and human.

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Why process?. Why cultural? u Process: Because normally develops through successive stages

of advancement. ü Some businesses internationalized born. ü Not only is selling abroad (export). Also distributing, purchasing,

manufacturing ü  etc..

u Cultural: The word "culture" is used in the context of the directive function is primarily to get people to address organizational goals. To perform this function, the executives not only need to know how to address them, but also the motivations of those who must do.. ü The motivations of clients and executives are rooted in cultural

processes: (religious, sociological and climate. Quite different depending on the area of the globe).

INTERNATIONALIZATION CONCEPT

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INTERNACIONALIZATION CONCEPT It is an active process: Directed and driven.

u  Desire for growth. u  Economies of scale, etc..

But it is also passive: Globalization invades us.

u  Global trade liberalization progresses. ü Competitors pressure us. ü Logistics progress. ü Communications are cheaper, etc...

u  Training and culture progresses. ü Languages, travel, etc.. ü Extensive training University. ü Cultural exchanges, etc..

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2.- INTERNATIONALIZATION PROCESS

National Market Consolidation

Local Activity

Sporadic Export

Consolidated Export

Commertial Subsidiaries Abroad

Productive Subsidiaries Abroad

Global Activity

Someone Buys From Abroad

Commertial Representatives Abroad

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MODIFIED UPPSALA THEORY


Global OperationsProduction plants abroad

Commercial branches abroadSearch trade representatives

Exports consolidatedExports sporadic

Someone buys abroadConsolidation in the domestic market

Domestic Company

Global Company

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BRIEF

Ø  Internationalization process is:

•  Progressive: By steps and non-uniform.

•  Where an error in the process of moving takes years of stagnation.

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ADVANCE KEY FACTORS

Ø  Early stages: the delegation ability. u  The psychic distance. u  The cross cultural motivations.

§  Executives. §  Customers. §  Suppliers.

Ø  Advanced stages: Strategic Planning. u  The nature of strategic decisions. u  Depletion of business models. u  The ability to influence the future.

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INTERNATIONALIZATION PROCESS

National Market Consolidation

Local Activity

Sporadic Export

Consolidated Export

Commertial Subsidiaries Abroad

Productive Subsidiaries Abroad

Global Activity

Someone Buys From Abroad

Commertial Representatives Abroad AN UNSTOPPABLE PROCESS¡¡¡

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3.- WHY INTERNATIONALIZE

Ø  Very small local market.

Ø  Some companies born with exporting vocation.

Ø  Market risk diversification.

Ø  Etc.

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CHALLENGES FOR INTERNATIONALIZATION

Large companies internationalize themselves, however sometimes deplete their business models, or make mistakes and get stuck in one of steps of the process ... SME’s do not have the skills and abilities to begin the process alone because they face transaction costs and learning and need help…

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DIFFICULTIES OF SME’s FOR EXPORT

NECESSARY CONDITIONS: •  All the necessary equipment; •  Production capacity and working capital; •  Technology to meet quality specifications; •  Compliance with technical standards, environmental and legislative; •  Export infrastructure; •  Knowledge to do market research; •  Effective marketing techniques; •  Communication skills and negotiation; •  Administrative capacity and administrative facilities; •  Knowledge of export incentives.

FOREING MARKETS

SME’s

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MODIFIED UPPSALA THEORY


Global OperationsProduction plants abroad

Commercial branches abroadSearch trade representatives

Exports consolidatedExports sporadic

Someone buys abroadConsolidation in the domestic market

Domestic Company

Global Company

Export Consortium

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WHAT IS AN EXPORT CONSORTIUM?

Ø  An Export Consortium is a voluntary alliance of companies with the aim of promoting goods and services of its members abroad and facilitating the export of their products through joint actions.

Ø  An Export Consortium can be considered as a machine for export promotion offering specialized services to its members.

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EXPORT CONSORTIUM GRAPHIC MODEL

Firm A Firm B Firm C Firm D Firm E

FOREING MARKETS

EXPORT CONSORTIUM

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EXPORT CONSORTIUM GRAPHIC MODEL CASE OF AGRICULTURAL & LIVESTOCK SECTOR

Producer Association Cooperative Producers

Network Producer

Association Firm

FOREING MARKETS

EXPORT CONSORTIUM 510 Agricultural Producers

300 Producers

80 Producers

30 Producers

100 Producers

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Executive Director

(Manager)

Board of Auditors

Board of Directors

General Meeting

President

Firm A Firm B Firm C Firm D Firm E

designates

EXPORT CONSORTIUM GRAPHIC MODEL

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EXPORT CONSORTIA DOES AND DONT’S

DONT’S •  In an Export Consortium

companies do not merge;

•  It is not a cooperative. Although both can be considered a type of association;

•  Not a Guild or Association;

•  Not a Club where members exchange ideas to export.

DOES •  Companies create a strategic

alliance to export retaining their individuality to operate in the domestic market;

•  In the case of a consortium, however, common weaknesses are the core of members joint;

•  Its purpose is to promote exports of their partners;

•  Is Business Network which operates based on joint projects.

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EXPORT CONSORTIA TAXONOMY

PROMOTIONAL CONSORTIA

TYPES Single sector; Multi-sector; Single products; Closely related products; Members from several regions; Targeting one market; Targeting global market

SALES CONSORTIA

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Firm A

Firm B

Firm C

Firm D

Firm E

Firm F

United States Canada Europe Middle

East

PRODUCTION IN EACH COMPANY

PROMOTIONAL EXPORT CONSORTIA

SERVICES PLATAFORM FOR COMPANIES: PROMOTION PROGRAMMING, ETC

PRODUCTS

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•  Service platform for businesses; •  Structure with logistics and sales capacity; •  General manager, commercial and logistics; •  Product showrooms: •  Sales for each business line; •  Vendors by each company; •  Earnings per line per company; •  Firm share the expenses; •  Individual brands can coexist; •  There may be an umbrella brand.

PROMOTIONAL EXPORT CONSORTIA

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Firm A

Firm B

Firm C

Firm D

Firm E

Firm F

Retailers Whole salers Boutiques Private

Labels

PRODUCTS PRODUCTS MARKETING SALES

SALES EXPORT CONSORTIA

PRODUCTION IN EACH COMPANY

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•  Unique collection of products; •  Portfolio of products from the target market; •  A shared private label; •  Forward integrates; •  Closer to customers; •  A company that generates its own profits; •  A company that has a lasting business; •  It is necessary to walk. There is nothing from night to morning.

SALES EXPORT CONSORTIA

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Ø  Risk and cost reduction; §  Reduce promotional cost abroad for the firms; §  Reduce fix export costs; §  Reduce the risk of exporting and of exploring new business

opportunities abroad; Ø  Access to new markets and major orders;

§  Export diversification and penetration of inaccessible regions or distant §  Better knowledge of the market and lower sales-related risks

Ø  Improved profitability. Improve the profit margins of member firms through a variety of savings, the development of an export strategy and the achievement of stable exports;

Ø  Efficiency gains. By pooling financial and human resources and by sharing information and experiences, members of a consortium can improve and intensify their promotional activities abroad;

Ø  Knowledge accumulation; Ø  Better access to potential funding; Ø  Firms maintain their juridical independence and managerial autonomy.

ADVANTAGES OF EXPORT CONSORTIA

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PROFIT CHAIN

An Export Consortia program generates benefits for the following stakeholders:

n Firms.

n Public actors.

n Private organizations.

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FIRMS

§  Increase in export sales.

§  Increase and diversification of the export supply of firms.

§  Increased promotion and logistics capacity of the exporting companies.

§  Access to a greater number of customers and markets abroad,that it would be impossible to achieve individually by companies.

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PUBLIC ACTORS n  Harnessing the potential exporter, vocation and comparative

and competitive advantages of the region.

n  Increased visibility of the region as an environment in export-oriented growth.

n  Strengthening fiscal fundraising by promoting the mass of exporting companies in the state.

n  Generation and preservation of jobs in the export sector.

n  Differentiation from other regions through the promotion of a culture of local export.

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PRIVATE ORGANIZATIONS §  Strengthening and increasing the export capacity of its members

through a successful model as Export Consortia.

§  Loyalty of the members, in an environment of no compulsion, to give member companies a new scheme to promote competitiveness and Export Consortia.

§  Empowering the affiliation of new firms through the positive effect produced by Export Consortia on its members.

§  Differentiation from other business organizations to include in their portfolio of services a innovative product which does not exist in the market, such as the development of Export Consortia.

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SINTHESIZING

Export Consortia are a promotional machine for the exports of SME’s with export supply and financial constraints to promote their products and services intensively in foreign markets

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Export Consortia are a simple and flexible instrument, adaptable to any development strategy and applicable to different situations and all sectors with export supply.

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CASES OF EXPORT CONSORTIA AT A GLANCE

Peru: 28 Developing Export Consortia in 4 regions benefiting more than 150 companies in 14 sectors, integrated support platform for 30 coordinators, 7 national consultants (tutors) and a National Coordinator. Bases for design of a fund incentive Export Consortia.

Uruguay: 3 Export Consortia operating in 3 industry sectors and 30 SME networks;

enactment of a Law in Support of Export Consortia in 2008). Tunisia: Export Consortia 10 operating and 10 more in development, more than 80

companies as direct beneficiaries in six sectors. Morocco: 17 Export Consortia in 6 regions; Over 100 firms directly in 8 sectors, a financial

fund to support Export Consortia.

Jordan: 2 Export Consortia and five SMB networks. More than 30 firms directly into 4 sectors.

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Mexico: a)  Jalisco20 Export Consortia, technical platform, benefiting more than 100 companies

in 14 industries, preserving 5,000 jobs. Regional Coordinator. Consortia creative industries.

b)  Zacatecas: 7 Export Consortia in 4 industrial sectors. c)   Distrito Federal: 4 Export Consortia in 4 Industrial Sectors. Costa Rica:

Region Brunca. 3 Export Consortia operating in 3 sectors: agribusiness, fresh produce and tourism; Creation of the basis for the enactment of a Law on Support for Consortia.

Ecuador: 5 Export Consortia.

CASES OF EXPORT CONSORTIA AT A GLANCE

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Mexico: a)  Jalisco20 Export Consortia, technical platform, benefiting more than 100 companies

in 14 industries, preserving 5,000 jobs. Regional Coordinator. Consortia creative industries.

b)  Zacatecas: 7 Export Consortia in 4 industrial sectors. c)   Distrito Federal: 4 Export Consortia in 4 Industrial Sectors.

MEXICAN CASES AT A GLANCE

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AGRIFOOD Hot peppers Export Consortium

120 producers of chilies of the state of Zacatecas, grouped across 9 producers associations.

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The first shipment of 19 tons of chili, mole and corn leaves reach the food wholesale in Los Angeles, California. USA

AGRIFOOD Hot peppers Export Conortium

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Appareil Export Consortium

15 apparel manufacturers knitted and woven clothing’s in Zacatecas, Mexico.

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Costa Rica:

Region Brunca. 3 Export Consortia operating in 3 sectors: agribusiness, fresh produce and tourism; Creation of the basis for the enactment of a Law on Support for Consortia.

COSTA RICA CASES AT A GLANCE

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AGRO-INDUSTRIAL CONSORTIUM

REGION BRUNCA 2013

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The consortium is comprised of seven Tourism Tourist Enterprises Brunca Region. Costa Rica The members of the Consortium are: •  Jardín Botánico Wilson & Estación Biológica Las Cruces ( OET) [email protected]/

www.ots.ac.cr Tel.(506) 27734004 San Vito, Coto Brus. •  Bahía Aventuras [email protected] Uvita, Domical.Costa Rica

•  Rancho La Botija/ Hotel de Montaña (506) 2770-2146 y (506) 8874-0967 [email protected] www.rancholabotija.com La Bonita de Rivas, San Isidro del General, Costa Rica.

•  Asociación de Mujeres Organizadas de Biolley (ASOMOBI) [email protected], Buenos Aires,Puntarenas, Costa Rica.

•  Agro San Miguel Adventures. [email protected] / www.agrosanmigueladventures.com (506) 27714119 Zapotal de San Pedro, Perez Zeledon, San Jose, Costa Rica

•  Camping el Chaman [email protected] 27438160 / 27438161. [email protected] [email protected]. www.campingelchaman.com Parque Nacional Marino Ballena, Sector La Colonia, Uvita, Puntarenas, Uvita, Puntarenas, Costa Rica.

•  Ecoaventuras kuasran. [email protected] Boruca Puntarenas, Costa Rica.

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¡ Over 400 Followers !

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Fresh Products Consortium Región Brunca

2013

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Allied Firms

Unión Zonal

ASOFRUBRUNCA

Distribuidora de Frutas Exóticas •  Federación de Centros Agrícolas

Cantonales

•  AFAPROSUR

•  Frutos y Raíces Tropicales

•  COOPEASSA RL

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LAW PROJECT (MEIC)

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PERUVIAN CASES AT A GLANCE

Perú: 28 Developing Export Consortia in 4 regions benefiting more than 150

companies in 14 sectors, integrated support platform for 30 coordinators, 7 national consultants (tutors) and a National Coordinator. Bases for design of a fund incentive Export Consortia.

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FRÍO AÉREO Caso de Eficacia y Optimización Logística

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URUGUAY CASES AT A GLANCE Uruguay: 3 Consorcios de Exportación operando en 3 sectores industriales y 30 redes de

PyMES; Promulgación en 2007 de una Ley de Apoyo a los Consorcios de Exportación.

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Phyto Uruguay Consortium

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§  Technical Assistance Projects: §  Advice and technical support for design, management and

evaluation of Export Consortia Programs. §  Capacity building and training of promoters of Export Consortia.

(public and private sectors) Encourage development legal and financial incentive systems for the support of Export Consortia.

§  Development Methodologies, Manuals, Training Packages. §  Organization Meeting of Experts to share international best practices in

the field. §  Global Courses & Regional Courses. §  Toolboxes (analysis, management, monitoring and evaluation).

SERVICES OFFERED

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Carlos López Cerdán Ripoll UNIDO International Expert E-mail: [email protected]

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