Many Finnish SMEs have a good market position in their existing markets and the customers appreciate their products, but these companies are still reluctant to go international. The reasons are many. It may be missing courage, not understanding the opportunities and requirements of new markets, not having the necessary expertise in-house or missing funding or resources. There are, however, means to overcome all these obstacles. A company is not alone, when figuring out the challenges of internationalisation - there are a number of sources available that can give advice and assistance.
Internationalisation assistance needed?
Systematic internationalisation can be divided into four phases, each of which requires different skill sets:
- Strategy: Why and in what way internationalisation serves company growth and other objectives
- Direction and capabilities: Requirements and prioritisation of target markets, as well as identification and development of required own competences
- Research and plans: Deeper investigation of target markets, creation of market entry plans
- Implementation of market entry: Starting and developing operations in selected new markets
In most cases, the steps are not taken in a serial manner, i.e. it is often necessary to return to the previous steps and iterate on the basis of the latest findings. It is therefore important that an internationally expanding company itself stays at the rider's bench whole time - enabled either through permanent staff or a temporary help closely integrated with the company's objectives.
Digitalisation has brought an enormous amount of different kinds of information within reach of a company going international, but here we focus on four sources that can provide advice and help for the Finnish SME:
- Finnish public sector agencies
- Internationalisation consultants
- Target country public agencies
- Target country local consultants
The role of the advisers at the various stages of the company internationalisation is assessed in the table below: the more pluses the cell house, the bigger the typical contribution in internationalisation activities. The estimate is based on the needs of the Finnish SME, but also startups and major companies can at least partially use this reasoning. This paper does not focus on the importance of external finance as an important potential enabler of internationalisation. Therefore, public sector financial aid for internationalisation is not reflected in the assessments of the table.
Finnish public sector internationalisation agencies
Internationalisation services of the Finnish public sector are centralised under Team Finland brand. A company can get help by contacting a regional contact person in Finland or a Team Finland coordinator in a target country. The network consists of 73 teams around the world and of 15 local teams in Finland. Individual services are produced by different units working for internationalisation, such as Finpro, Tekes, Finnvera, Finnfund, Finnpartnership, cultural and scientific institutes, MEK, ELY centres, the Finnish-Russian Chamber of Commerce and the Finnish-Swedish Chamber of Commerce. Services include, inter alia:
- Business idea coaching: Finpro offers companies expertise in international business and its challenges. Service provides feedback on company's strengths, weaknesses, opportunities and threats, as well as support for internationalisation issues. Free Of Charge.
- Internationalisation test: With Yritys-Suomi service of TEM, a company can assess and analyse its internationalisation capabilities. Free Of Charge.
- Business opportunities: Concrete business opportunities throughout the world identified by the experts of Finpro. Free Of Charge.
- Team Finland Future Watch: Reports on changes in the international markets, brought by Tekes. Free Of Charge.
- Networking with business and public actors: Finpro will advise how to obtain information about target markets and helps to network with public target market actors and Finnish companies already present in these markets. Free Of Charge.
- Export trade financing expertise: The objective of the Finnvera programme is to improve financing competences required by export activities. A basic programme is Free of Charge, Charges Are Applicable for extra sessions arranged by Finnvera training partners.
- Shipping handbook: FinPro's document, contains information from 190 countries on free trade agreements, import restrictions, required documentation and legalisation of documents, special certificates, product packaging and labelling, provisions laying down special conditions governing sending of samples as well as other goods. Charges Are Applicable.
- Advice to enter Russian market: Finnish-Russian Chamber of Commerce provides useful advice and concrete assistance to Russian business operations, at all stages of the planning. Charges Are Applicable.
- Advice to enter Swedish market: Finnish-Swedish Chamber of Commerce can advise on all matters relating operating in the Swedish markets, as well as consult companies to start exporting to Sweden. Advice is Free Of Charge, in consulting Charges Are Applicable.
- Advice to enter developing countries for the purpose of projects: Finnpartnership advices on issues related to developing country business activities. Free Of Charge.
These services are able to provide the basic knowledge both for planning internationalisation strategy and for analysing own capabilities, as well as for acquiring basic information on potential new markets. And because the services are, as a rule, free, they should also be used. On the other hand, public sector services provide little help for deeper, company-specific internationalisation activities, such as building a detailed strategy, closing the competence gaps or getting a deep understanding of new market opportunities. This is, of course, caused by the fact that the services provided are largely productised and generic, thus leaving very little time and resources for extensive company-specific assistance.
In addition, the contributions provided by network experts vary in quality and quantity, depending on personal skills, experience and service attitude. For example, I have sometimes been able to make experts of the network as an integral and high value-adding part of the team, sometimes their help equalled results that half an hour of Internet browsing would have given.
In the name of internationalisation consulting, a variety of services are offered: training, compiling of reports for international organisations, research of new markets, starting operations in new market areas, opening up sales channels to certain customer segments, marketing communications, strategy work, etc. Both small and big domestic players as well as international companies with their Finnish offices are present.
According to my experience, the big threat for SME is that a consultant focuses the project on his own areas of strength, not on the ones that would be the most important and useful for the paying company right now. It is, for example, dangerous to let consultant´s considerable target market experience lead to deep market studies, when internationalisation strategy and sufficiency of own competences are still in the making.
Another important consideration is that many times an SME business needs only one versatile and seasoned professional, not a bunch of constantly-changing consultants with very narrow areas of expertise. This ensures that the consultant is a solid part of hiring company operations and the company can really lead the process of internationalisation. Certain nuances, related to the organisation of work, are then manageable: for example, whether it is about consultancy or interim management cooperation, or whether it is the consultant working hands-on in the project or primarily transferring his know how to company employees.
The role of consultants is the largest in the creation of internationalisation strategy, in setting direction and in defining required capabilities, see the table above. Depending on the consultant's background, he can be - in parallel with local contributors - also an important factor in the thorough target market investigation and actual market entry.
Target country public agencies
The agencies that are assisting market entering companies can usually provide useful information about the target country, its market and competitive situation, market entry alternatives and setting up operations in the country. For example, GTAI, German Trade and Invest, offers mainly free services in the following areas:
- Information about Germany, its economy and business life
- Industry information, including market situation and news about recent developments
- Consulting services to create market entry strategies, to make evaluations in the country and to establish operations
- Guidance on the different market entry questions
An internationalising company should definitely check out, how target country public actors are able to assist. For the assessment and prioritisation of target markets, it is possible to get - and in most cases free of charge - important building blocks. Also, good advice on setting up local offices can be obtained. Depending on the country, more customised free advisory services may be available, in which case tailored information, contacts and services can be acquired. It should be noted, however, that willingness of agencies to help depends besides the abilities of individual experts also on the objectives of the market entering company. A big business always gets more personalised service, and planned product development or manufacturing activities always get a warmer reception than mere sales office ones.
Target country local consultants
When it's time to explore your potential target markets in greater depth, to set up a business in a new market or to expand an existing one, local consultants are often utilised. Local specialists, however, are not enough to get the business up and flying; the hiring company must ensure that the basis of internationalisation, including the role of international operations in the company´s growth strategy, initial prioritisation of target countries and trimming of the company for internationalisation, is solidly in place.
The scope of consultants´ work can vary, some examples given below:
The scope of consultants´ work can vary, some examples given below:
- Market research and competitor analysis
- Establishment of a local company
- Identification of potential clients and creation of contacts with them
- Search of distribution channels and partners
- Financial, legal or environmental issues, marketing or HR
Probably the biggest pitfall for Finnish SMEs is the correct identification of local aid. For example, when I was once looking for a local consultant to tighten cooperation with potential customers, the selected person turned out to be the best in finding a suitable office space and in helping us to manoeuvre through local bureaucracies.