Internationalization of SMEs exemplified for software companies

Seminar paper from the year 2017 in the subject Business economics - Operations Research, grade: 1,7, University of applied sciences, Cologne, language: English, abstract: The process of globalization has changed our world in a number of ways. From companies’ perspectives new production and sales markets have arisen beyond local borders and their numbers continue to grow. The motives and goals of internationalization of SME are, in general, very similar to those of bigger companies. The most important factors are additional market opportunities and thus a higher sales potential of products that are already established on the home market.The internationalization of companies entails opportunities but also risks. Several key factors must be considered and specific requirements fulfilled. The prerequisites and also the demands of SMEs differ considerably from bigger companies. A company’s business success in a foreign market depends significantly on the capability of finding a suitable and attractive market for one’s own product and service offers. After identifying the target market, the form of market entrance needs to be chosen. The typical forms are the export, licensing/franchising, branch establishment, subsidiary establishment and the joint venture. Regarding the software industry, the internationalization strategy depends highly on the degree of standardization. On this case the need of international customization must also be taken into account. This assignment is an introduction into the first steps and the specific challenges of SMEs in the course of internationalization. Short definitions of the terms of internationalization and SMEs, an overview of the companies’ motives and goals, and specific characteristics related to this topic are given. Subsequently, the different options and decision-making processes are presented and specifically exemplified for software providing companies.