How to establish your company in the destination country
In the current context of globalization, the business internationalization It has become a necessity for many companies seeking to grow, remain competitive, and overcome the limitations of their home markets.
The opening of borders has led to a interconnected global market, where both businesses and consumers benefit from new opportunities… but also face greater challenges.
From an academic and professional perspective, internationalization is not only perceived as a strategic option, but as a way to deal with economic crises local, ensuring the survival and development of companies through their presence in various markets.
However, for this process to be truly effective, it must be supported by a clear approach to business competitiveness.
Here lies one of the main mistakes: many organizations try to internationalize quickly, with poorly defined objectives and limited resources, leading to incoherent or unsustainable strategies.
In this article we will address what it really means establish a company in a new international market and how this phase represents the true point of arrival of the internationalization process.
First, we will briefly review what internationalization consists of and what the different options are. entry strategies that can be adopted, always depending on the available budget, which should guide the choice of realistic and sustainable objectives.
What is business internationalization?
La business internationalization It is the process by which a company develops the capabilities necessary to operate in foreign markets, that is, in environments other than their usual geographical area.
This process covers a wide variety of international activities, such as:
- La export and import of goods or services.
- La transfer of technology and knowledge.
- La foreign direct investment, whether through subsidiaries, branches or strategic alliances.
It's important to note that these actions don't have the same level of commitment or impact on a company's international standing.
Each of them represents a distinct phase on the path to full internationalization, and together they configure a gradual evolution that allows the company to consolidate itself as a truly international player.
Phases of the business internationalization process
The path to internationalization does not happen immediately.
It is a progressive process that can be divided into different phases, depending on the degree of commitment, investment and knowledge that the company is acquiring regarding international markets:
Phase I: Sporadic exports
At this initial stage, the company makes occasional exports thanks to the intervention of external agents or contacts.
There is no defined strategy or planned investment.
The company's attitude is passive when faced with the opportunity to enter a new market, and it tends to act reactively.
Phase II: Active search for partners and clients
The company begins to actively explore new markets, participating in international fairs, sector events, trade agendas or business meetings.
A learning process about the international environment begins, and relationships are established with local importers and distributors, which allows exports to become more regular.
Although investment remains limited, there is now a clearer commitment to foreign markets.
Phase III: Consolidation in international markets
At this stage, the company consolidates its presence in foreign markets in which it already operates.
Internationalization becomes part of its business strategy, with a significant impact on its turnover and long-term growth prospects.
To do this, you will need:
- Perform commercial prospecting trips.
- Have a foreign trade department (internal or outsourced).
- Count on specialized legal advice in international operations.
- Design and implement a international business and marketing plan.
Phase IV: Physical implementation in the destination country
This stage marks a firmer and more lasting investment, by opening branches, subsidiaries or permanent establishments in the target countries.
The international presence is institutionalized and strengthened with its own personnel, local structures, and a long-term commitment to the market.
Phase V: Creation of a production center
The last phase represents the highest degree of internationalization.
The company establishes a production center in the destination country, adapting its structure and operations to the local environment.
At this point, the organization acts as a national economic actor, fully integrated into the country's productive fabric.
Strategies for entering international markets
There are various strategies that allow companies to access foreign markets, each with different characteristics, advantages and limitations.
The choice of one or the other will depend on the specific company objectives, its business model and, above all, the available resources to invest in the process.
At RRYP Global, we always start from these key elements when designing a internationalization plan tailored to each company, avoiding generic solutions and ensuring a coherent strategy.
Below, we analyze one of the most common ways to enter international markets:
Export: an accessible way to start expansion
La direct export from the country of origin It is one of the most common—and recommended—ways to begin the internationalization process, especially for companies that want to explore new markets without taking excessive risks.
Traditionally, export has been linked to the physical logistics of products, but in recent years it has gained prominence digital sales through online channels, both in the B2B (business to business) and B2C (business to consumer) sectors.
La Information online It allows you to give international visibility to the product, communicate its value proposition in a controlled manner, and adjust the strategy based on market response.
There are two main approaches to online sales in foreign markets:
A. Own website to internationalize a company
Have a own website with an international focus gives full control over the catalog, brand and communication.
However, this option entails certain strategic responsibilities:
- Keep content up to date.
- Optimize the website for search engines (International SEO).
- Adapt to the legal and fiscal frameworks of each destination country.
- Offer payment and logistics options appropriate to the target market.
This strategy is especially effective when you want to build a strong and differentiated brand globally
B. Use of online sales platforms
A practical and quickly implemented alternative is sell through established marketplaces, such as Amazon, Alibaba, eBay, among others.
These platforms:
- They allow access to a large international customer base.
- They simplify payment management, shipping, and customer service.
- They offer tools to measure product performance.
Of course, it is important to consider that they apply commissions on sales, and that the visibility of the product will depend in part on the algorithm and competition on the platform.
Establishing a presence in the target country: a solid strategy for accessing international markets
One of the most committed - and strategically stable - ways to access a foreign market is the direct implementation in the destination country.
This modality is directly linked to the international investment flows, that is, to the relationship between a non-resident investment company and a participating and resident entity in the target market.
The form of implementation will depend on the degree of control that the parent company wishes to exercise, as well as the level of operational independence that is intended to be granted to the new entity.
The main options are detailed below:
International implementation modalities
Office
An branch office It is an extension of the parent company in the destination country.
Although it may carry out commercial activities, It does not have legal or financial autonomy own, and maintains corporate identity from the matrix.
It is usually subject to the tax and accounting regulations of the host country, but its decisions depend directly on the main headquarters.
An branch It is an independent legal entity in the destination country, although wholly or majority owned by the parent company.
Unlike the branch, the subsidiary can act with commercial and financial autonomy, and in many cases adapts its brand image to the characteristics of the local market.
Joint Venture
La joint venture o a joint venture It consists of the creation of a new company in the destination country, participated by two or more companies, which may be national or foreign.
This modality implies a symmetrical collaboration among partners, sharing strategic decisions, risks and benefits.
Insertion modalities in the destination country
In addition to the level of control or autonomy, another way to classify international implementation strategies is by looking at the insertion method used to access the market.
In this sense, three major modalities can be distinguished, each with different operational and strategic implications:
Creation of a new company (Greenfield)
The modality known as greenfield implementation It consists of the creation of a new company in the destination country, which may or may not adopt the commercial name of the parent company.
This option involves a direct expansion of productive capacity and often requires a significant investment.
Acquisition of an existing company
Another alternative is to enter the market through purchase of a local company, already operational, which may be in difficulty or looking for strategic partners.
This modality does not imply an immediate increase in productive capacity, but allows a faster entry, especially in markets with high barriers to access.
Participation through commercial agreements or licenses
The third modality consists of a indirect insertion of foreign capital, through collaboration agreements with local companies.
This formula can be articulated through licenses, distribution contracts, franchise agreements or other forms of business cooperation, where the international company transfers rights in exchange for economic benefits without being directly involved in local management.
RRYP Global, lawyers specializing in internationalization plans.
