The profound changes that are taking place in world economy have resulted,
among other things, in an increased tendency by the small and medium size
enterprises (SMEs) of a country to review and adapt their strategies of
insertion in global economic competition. It implies that they question
the scope and direction of these changes and, especially, how to take
advantage of them.
"The change we are experiencing is colossal. And we are finding
it difficult to understand", pointed out the President of Mondragón
Internacional, one of the largest and most diversified business groups
in Spain, with investments in several countries and international sales
that reached four billion euros in 2012 (http://www.mondragon-corporation.com/).
In fact, Josu Ugarte noted in a recent article published in the newspaper
"El País" in Madrid (see the reference in the Recommended
Reading Section) that "in 10 years we have gone from developing,
buying, producing and selling products in Spain or Europe to having to
sell, buy, produce and innovate here and (for) emerging countries".
He adds that "domestic demand in Spain will not grow, we are becoming
peripheral: industry migrates from north to south and from west to east
and a feeling of fear has invaded us that paralyzes our decisions facing
up countries with a disproportionate ambition caused by their feeling
of hope" (on the emotions of fear, hope and humiliation in international
behavior see Dominique Moisi: "The Geopolitics of Emotion. How cultures
of fear, humiliation and hope are reshaping the world", First Anchor
Book Edition, New York 2010).
There are multiple ways through which the SMEs of a country can project
their ability to produce goods or provide services to other countries.
Three of these ways stand out. All three involve much more than just an
occasional export to boost, for example, a competitive advantage in prices
as a result of exchange rate fluctuations. They are: i. multi-location,
which implies a geographical dispersion of the operations of a business
through direct investments in different countries, leading to fixed assets
and physical operations in several markets simultaneously; ii. integration
into transnational value chains through a stable supply of goods and tasks
for productive processes that are fragmented across multiple countries,
and iii. sustained presence in other markets with the export of goods
and services such as, for example, differentiated goods offered on the
shelves of supermarkets or other sales outlets.
An SME that aims to expand to other markets in any of these ways is supposed
to have been able to develop competitive advantages for its goods or services
that are the result of the incorporation of innovation and technical progress,
the quality of its organization and the strength of its comprehensive
quality image, among other factors. These are advantages that require
time and effort to achieve and which entail a strategic vision that transcends
the short term.
In addition, in order to achieve a presence that is sustained over time
in foreign markets to which it is projected an SME requires: i. the development
of specific skills within the company or, if necessary, within the context
of some form of consortium of companies; ii. competitive intelligence
support resulting from the joint action of public, business and academic
institutions, and iii. human resources specialized in the internationalization
of SMEs and, therefore, specially trained to facilitate the external action
of small scale companies.
In the first place, the main specific skills to be developed within the
context of an SME and, eventually, of its associates, are three: to understand,
to escalate, and to negotiate.
To understand implies the ability to diagnose what other markets require,
their dynamics and how to access and stay in them. This is what is usually
called the competitive intelligence of a company. It entails the ability
to know, understand and perceive the differences of all kinds that may
exist between different markets. Cultural ones are usually the most significant
and, therefore, the most necessary to understand, especially when they
reflect the values, tastes and preferences of consumers. Often they are
differences that can only be fully understood by having lived in other
countries and other cultures. It also implies knowing and identifying
in time the different factors that can have an impact on the continuous
shifts of competitive advantages that a company may have developed. They
are those that determine the difference between being a winner or a loser
in economic competition at a global scale, or in certain local or regional
markets. And it also involves identifying those changes that may have
a greater impact on the map of opportunities generated in the international
environment where a company does business such as, among other current
ones, those that involve the increase in emerging economies of urban consumers
with middle-class incomes and behaviors.
To escalate involves the ability to continuously add intellectual value
to the goods or services that are produced or offered. In particular it
involves climbing up the links of the production and supply chains of
other countries through contributions of increasingly greater added value.
It is the result of the innovation capacity that a company may have, but
also of its ability to understand other markets and their consumer preferences.
To negotiate involves the capacity to influence the production processes
of rules and other conditions that make the functioning of the markets
and, in particular, the trade and investment relations between countries
and regions. They can be internal to a particular country or global, within
the scope of the multilateral trading system, or specific of a regional
space (such as the case of Mercosur or the European Union), or inter-regional
(such as the mega preferential trade agreements that are currently being
negotiated in the framework of the Pacific -the Trans-Pacific Partnership-
or the North Atlantic -the Transatlantic Trade and Investment Partnership-).
It is true that those who adopt policies and rules for a given market
or negotiate international agreements are the respective governments.
But any company operating or aspiring to operate transnationally should
be interested in the effects that the rules and mechanisms that are approved
and negotiated could have on its ability to hold a sustained presence
in other countries or regions. Hence, directly or indirectly it should
aspire to exert influence in the decision-making processes and in the
corresponding negotiations based on the preservation of its own interests.
Secondly, as the three listed capacities may be difficult to achieve
in the case of companies of a smaller relative size and little experience
in foreign markets, they may require of institutional support in terms
of competitive intelligence, and eventually in terms of the possible influences
on decision-making processes within a country or at the table of international
trade negotiations. Public entities may be able to provide such institutional
support, especially those dedicated to the promotion of foreign trade
and investments, business chambers and academic centers specialized in
international relations and, in particular, in specific regions less known
to Argentine SMEs such as, for example, the countries of the Persian Gulf,
Central Eurasia, Asia-Pacific, sub- Saharan Africa and the Maghreb.
Said support would be the more effective the greater its proximity to
the respective company or group of companies. The public-business-academic
synergies in the close environment of a company are a key factor in its
internationalization process. They are most effective when achieved at
the local level where the company is situated (in the case of Argentina,
its province or its city).
Third, an SME seeking to project to the world its ability to produce
goods and provide services that aspire to be competitive with those from
other sources requires human resources specialized in SME internationalization.
They must be, certainly, good specialists in foreign trade transactions.
We are referring to someone who, while belonging to the company or providing
services for it, facilitates the successful management of all the stages
of the foreign trade chain. This involves, among other aspects, exiting
one customs territory and entering another, including among the most relevant,
customs procedures, adjusting to different regulatory frameworks, transportation
and logistics services, financing and, of course, charging what applies.
But increasingly a company, either small or medium-sized, which aims
to have a sustained presence in other markets, for example, with products
that stand out for their quality and also, given the case, for their design
(e.g.: processed foods, clothing, furniture, toys), or services that are
valuable for other countries (in relation to agricultural production,
health or entertainment, among others), will require the provision of
three types of services that can be, moreover, complementary. These are
services that can be provided by specialists within the company or that
can be hired externally. It will become increasingly necessary to train
these specialists with the participation of specialized academic institutions.
These services are, on one hand, the "decoding" of the conditions
to successfully operate in other markets, especially in those belonging
to other regions and, in particular, to other cultures. The "decoder"
is someone who can help understand the conditions of economic competition
in a given region or country. He is precisely a protagonist of the competitive
intelligence of a company. He is able to grasp the deep forces that operate
in certain markets, especially those more recently incorporated -or, particularly,
reincorporated- to global economic competition and with a greater density
of potential urban consumers of middle class income. These are deep forces
that transcend the economic and penetrate deeply into the political, social
and cultural dimensions of a country or region. This involves much more
than the typical -and necessary - market research.
On the other hand, there is the role of what would be the functional
equivalent of a 'general practitioner' in the area of human health. It
is someone who can understand the set of factors that influence the relative
competitiveness of a company -and its products or services- in a particular
country or region of the world and, if necessary, refer the corresponding
SME to specialists in specific issues that impact the chances of competing
successfully, such as consumer tastes and preferences and any other variables
that determine the fate of a business enterprise, especially if it aims
to be sustainable in time.
And finally there is the role of 'Sherpa'. This means someone who is
knowledgeable of the terrain and can guide a company to successfully climb
towards the sought objective, for example the supermarket shelves of the
cities of the major emerging economies and, in particular, the re-emerging
ones, or the places for the entertainment of the young, eager for new
and original things. He is a guide. He is someone who knows how to get
there because he has in-depth knowledge of the culture, the preferences
and idiosyncrasies of those who are valuable targets for an SME that sets
out to conquer the world markets with its goods or services. These may
be people who have worked, studied or lived in other countries, or members
of the multiple Argentine diasporas living abroad, or backpackers who
have developed their perception and perhaps, even more, such as English
travelers of centuries ago, the instinct or the art of observing and detecting
opportunities that are often there but remain unseen by the untrained
The "Sherpa" in foreign trade is, as for someone who seeks
to climb the Himalayas, someone essential. A variant of the "Sherpa"
would be that of "translator". Someone competent in translating
other languages but, above all, able to interpret the differences in values,
cultures and customs in relation to the company that is going international
(Timothy Brook mentions this figure of "translator" in international
trade based on his analysis of the origin of globalization through trade
between Europe, America and Asia in the seventeenth century, in his fascinating
book "Vermeer's Hat. The Seventeenth Century and the Dawn of the
Global World", Bloomsbury Press, New York 2008.)
An SME needs "Sherpas" and "translators" even though
it may not be aware of it. And perhaps in an Argentina with numerous diasporas,
of thousands of travelers, students and backpackers that wander the world,
they are at their fingertips. If they know how to search, they will find