The figure of the interim manager is often associated with companies facing a crisis. Even today, the need to restructure is still what usually makes senior managers’ thoughts turn to this solution.
This, while opportunities for growth on international markets are surely on the rise for those Italian companies offering added-value products and services.
Companies specializing in providing interim management solutions certainly have a role to play in leading companies along the path to internationalization.
There are several factors that play a part in this rising interest in the role of interim management. We will analyze them here one by one and so bring them to the attention of those companies that are currently seeking to set out on a path towards successful internationalization.
Table of contents
- Internationalization: the competitive environment as a factor for change
- What issues may arise when undertaking a process of internationalization?
- International companies win when they successfully leverage the human factor
Internationalization: the competitive environment as a factor of change
As a result of globalization, many companies working on their domestic market have found themselves in direct competition with foreign companies that have already successfully internationalized .
The first reaction to loss of revenues has often been to boost their sales effort. Their most skilled salespeople get promoted to Sales Manager, in the hope that this will raise the bar for everyone else’s performance. Of course, this kind of measure has a limited impact. A better approach is to change pace and implement their own internationalization plan. This is the only way the company can gain professionalism and improve its chances of growth.
Going international means rethinking the company through changing strategy and so embracing the logic of internationalization. This allows the company not only to grow revenues but also to defend itself better from aggressive competition.
Through internationalization, the company seeks to expand the competitive advantage it has built on the domestic market. The impulse may not always originate from the need to increase sales (typical for smaller companies); it may also spring from the need to fight competitors’ expansion plans.
At a certain point a company will undertake a process of internationalization, probably more as a response to external factors rather than to internal business choices. The sector in which it operates has changed and internationalization thus becomes a mandatory choice.
Interim management can help the company avoid being overwhelmed by a whole series of radical actions and decisions which may put the company at risk. The path to internationalization is long and far from smooth, requiring experience and determination.
What issues may arise when undertaking a process of internationalization?
There are several high-risk factors that can compromise an internationalization initiative, even for companies with the right competencies (sometimes due to lack of scale or resources).
There are four common causes of failure:
- Decisions about whether to replicate the company’s business model in the target country
- Underestimation of hidden costs (raw materials, labor), overshadowed by assumed benefits
- Insufficient control over local human resources and suppliers, misjudgments in identifying partners who will contribute to growth
- Quality of processes put in place not up to the standards of the market they are intended to serve
Risks such as these can be significantly reduced only through adoption of a structured approach with the deployment of specific, cross-disciplinary skills:
- Organization and operations
- Knowledge of the market
- Knowledge of the legal and tax system
- Knowledge of local sources of finance
These are the reasons that persuade companies to choose interim management to take the whole process in hand, to train their people and to see the process through. To sum up, the interim manager makes change happen and manages it.
International companies win when they successfully leverage the human factor
The human factor is what makes the real difference, whatever other factors are involved when breaking into a new market.
Internationalization does not simply mean expanding the sales of a product or a service. It also means being able to make the most of the resources that territory offers.
Raw materials, semi-finished goods, technological know-how, financial opportunities and much more, are all part of a broad view of this opportunity. The process of internationalization is essentially about much more than just transferring a company’s mode of operation from one country to another.
Lack of medium/long-term vision is an obstacle for many companies, whether due to shortage of resources or limited forward-thinking.
In such cases, interim management can be the game-changer in the first steps towards internationalization.
SMEs, as already said, typically pursue internationalization with the aim of increasing sales. Over time, however, it becomes clear that sales must be supported by after-sales services, communication and marketing.
Simply adding on other activities can only result in confusion and inefficiency, which is why the focus from the start has to be on a process of internationalization.
Without the support of a highly skilled, flexible professional there is a high risk of failure.
Nowadays, companies aim at producing and selling goods or services to as many consumers as possible, without geographical limits. Unable to know the entirety of foreign markets, they select the best internationalization strategies available.
At the top of the list of possible solutions comes interim management, the solution providing the best sense of timing. Internationalization often comes with unexpected delays, sudden changes, issues that can have an impact on the process as a whole. Acting with determination is the key to achieving a good plan for growth abroad.
Contract Manager s.r.l.