Sessie 2 - International Growth Radar - 21 april 2015 - Leo Sleuwaegen en Jan Bormans

Flanders DC Kenniscentrum 21 april 2015 |

INTERNATIONAL GROWTH RADAR

Prof. Leo Sleuwaegen and Sarah Demeulemeester


Ondernemend Vlaanderen

Creatiever maken

Flanders DC - Missie

Creatief Vlaanderen

Ondernemender maken


Most SMEs don’t go international


Exporting SMEs as a per cent of all SMEs

24%

0%

10%

20%

30%

40%

50%

F P IS EL E FI NO UK I NL D B IR S CH A DK L LI Total

Source: EC 2003


External impediments for Belgian and European SMEs

43

22

11

11

8

8

7

6

45

19

13

12

8

5

7

3

0 10 20 30 40 50

Never considered internationalisation

No external impediments

Current regulations and laws

Insufficient capital and financing

Insufficient information

Insufficient advise and support

Cultural and linguistic differences

Other

Belgium

EU

Source: EC 2003


Internal impediments for Belgian and European SMEs

6 |

42

8

22

12

8

5

8

41

17

16

15

11

7

5

0 20 40 60

Never considered internationalisation

Quality or features of the product

No internal impediments

High cost of internationalisation proces

Price of good or service

Insufficient competencies of employees

Other

Belgium

EU

Source: EC 2003


Fast internationalisation for niche players

7 |

Number of years before start of international activities

1.7

9.7

19.5

2.0 3.9

4.9

0

5

10

15

20

25

import export extra-EU export

mass product niche product

Source: Onkelinx, Sleuwaegen (2009)


Number of export destinations

8 |

Number of export markets

29%

41%

18%

6% 6%

0% 0%

14%

21%

36%

7%

21%

0%

10%

20%

30%

40%

50%

1 2-5 6-10 11-25 26-50 >50

mass product niche product

Source: Onkelinx, Sleuwaegen (2009)


Why small firms fail in expanding abroad ?

1. Lack of foreign market information

2. Limited trading knowledge of personnel

3. Inappropriateness of price/quality for the needs of the market

4. Low profit prospects

5. Existence of various financial constraints

6. Prevalence of fierce competition

7. Wrong perception of risks

8. Various legal/institutional constraints

9 |


The case for going international !

10 |


We have to internationalize or

die.

It is too risky to depend on the home market

alone.

Only a few players will

survive…

Eat or be eaten!

Bigger is better!

It is key to have global access to clients.

Our home market is too small…


BENEFITS Adding value?

COSTS Lack of Resources/

Infrastructure Transaction Costs

Risks Political Risks; Economic Risks;

Legal /Commercial Risks; Business model risk

OVERALL ATTRACTIVENESS

Why go international and where?


The International Growth Radar brings it all together !

13 |


G Ghemawat - HBS

NET BENEFITS


Risks

Political risk

Economic risk

Legal/commercial risk

Business model risk Does the business model fit the foreign country?


The business model canvas

The Business Model Canvas (Osterwalder & Pigneur, 2010)


Expansion of an existing product offering to a foreign country

Risk to move to far from the core business

Risk to jeopardize the company business model (Porter 1996, Ghemawat 2007)

Risk of “liability of foreignness”, which puts the firm at a competitive disadvantage vis-à-vis local firms (Zaheer, 1995)


Global Competitiveness Report http://www.weforum.org/reports/global-competitiveness-report-2014-2015

Political and commercial risks per country http://www.delcredereducroire.be/nl/landenrisicos/

CIA World Factbook https://www.cia.gov/library/publications/the-world-factbook/

Website of Worldbank, Heritage Foundation, OECD, Eurostat, … http://www.heritage.org/index/ranking

Interesting links

http://www.weforum.org/reports/global-competitiveness-report-2014-2015









http://www.delcredereducroire.be/nl/landenrisicos/

https://www.cia.gov/library/publications/the-world-factbook/





http://www.heritage.org/index/ranking



Dr. Jan Bormans @jbormans




Rol adviseurs

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Biotech & Co: Genetic testing kits


Biotech & Co.

Why expand internationally? • To substantially raise sales volume to recoup the high (R&D) costs the company incurs in developing new products • To be first-tier suppliers to major clinical research labs in the world and co-create new products with these labs • In both countries: same customer segment (i.e. clinical research laboratories)



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Sessie 2 - International Growth Radar - 21 april 2015 - Leo Sleuwaegen en Jan Bormans