Before starting internationalisation we must select the market to be targeted. When you decide to adopt an active internationalisation policy, you find that your products are likely to be marketed in a large number of different countries. countries with very different characteristics. On the other hand, you do not have sufficient resources to address several markets simultaneously.

It is therefore necessary to systematising international expansionl by targeting, first and foremost, the markets that are most favourable for your business. business model (+). Before you start the selection process, you should decide on the optimal number of markets to which it is going to go.

It is a strategic decision with two extreme alternatives, concentration and diversification, between which there are several intermediate options.

• CONCENTRATION:

Focus resources on a small number of markets, so that the company can achieve a steady and increasing volume of sales in each market. 

• DIVERSIFICATION:

The growth strategy is based on selling in a larger number of markets, even if this is at the expense of significant market shares in some markets. 

The The advantages of each of these strategies change over time according to the stage of the internationalisation process. the company is in or the stage of the life cycle of the product it markets. Once you have decided on the number of foreign markets in which you should be present, you need to make a commercial research that allows answer the five key questions international trade strategy.

To do this, we can either conduct our own market research or use public studies and statistics. This research will help us to find out which are the most important export requirements and how easy it will be for us to access the selected countries and decide on our destinations.

There is a lot of information on each country, too much, focus on identify macro variables that most affect you in your business and focuses the search for information (+) only on them to avoid dispersion.

Focus only on what affects you!

• PREFERENTIAL AGREEMENTS:

One aspect that will have an impact on the cost of the product are the customs. Depending on the tax rate levied on the goods, the goods may become uncompetitive. Many countries have bilateral agreements that exempt the payment of tariffs.   

• FIND OUT THE DEFAULT RATE OF THE COUNTRY:

It is as important to sell as it is to collect!!!

• CONSIDERS THE LOGISTICAL ASPECTS:

Transport is an essential part of doing international business. It is necessary to consider the key aspects that influence the logistics (+). The selection process The identification of a suitable market for the internationalisation of your company is a task that inevitably requires an in-depth examination of the different factors that come into play and condition this choice.

Globalisation and the phenomenon of economic integration have resulted in the formation of blocs of countries with similar characteristics, which could be considered as one and the same. segment (+) and therefore with the same CANVAS.

The question of what type of market to target or which countries to consider as internationalisation objectives needs a response based on a systematic process that will lead us to the determination of the market that will meet the requirements imposed by the company in its business strategy, and its exit abroad, thus clearing up uncertainties and minimising risks that all internationalisation entails.

Although there are other approaches to international market selection based on intuitive decisions and the emergence of opportunities not initially envisaged, the decision to enter new markets and expand internationally must be based on objective information on medium- to long-term growth expectations.

In order to carry out this selection as a first step, it is necessary to know what is relevant to your businessThe variables that are decisive in making the decision and, as far as possible, quantifiable, so that a comparison can be made between the different potential destinations and a pre-selection can be made of the most suitable ones for the company's objectives. Secondly, it is necessary to prioritise these criteria according to strategic objectives of the company itself.

FOR THIS PURPOSE, WE CAN GROUP THESE CRITERIA INTO TWO TYPES:

• General criteriacommon to any internationalisation process because of their importance in determining the suitability of a market, and
• Particular criteria o sector-specific: type of company and product/service to be marketed.

You should select the alternative with the lowest level of risk and the greatest opportunities for the products/services offered by the alternative. When it comes to making a pre-selection of potential markets, it is necessary to consider the different criteria and factors that will allow sufficient information to be gathered to determine the suitability of internationalisation.

GENERAL CRITERIA

WITHIN THESE CRITERIA WE CAN HIGHLIGHT SUCH RELEVANT FACTORS AS:

Macroeconomic variables

Variables macroeconómicas del país de destino (crecimiento del PIB, población… They give us information on the health of the economy, growth and development of the country. The countries that grow the most will have the greatest need to import and buy products from abroad.

Barreras culturales

Establecer una A good working relationship with your customers and suppliers is essential, minimising the risks associated with the process of delivering goods and receiving payment. Consider aspects such as business etiquette, greetings, social customs, relationships, communication style, dress code or tastes and preferences because they may influence the negotiation and implementation of the business.

You can find information about a country's culture at WorldBusinessCulture.com

Legal restrictions para hacer negocios

Find out if there are any limitations in the country that could make it difficult to set up your business.

Your product must have some competitive advantage (+) compared to the same or similar local products. These advantages can come from the product itself, the price or the distribution. Distribution channels (+) in the country of destination that will bring your product closer to consumers more efficiently.

Factores políticos-legales

degree of political intervention in business decisions, social political stability, citizen security, relations with neighbouring countries, alliance policies or trade agreements, legal system, tax and customs policy, market access.

Factores económicos

Crecimiento del PIB, distribución de la renta, presencia de las exportaciones desde tu país, riesgo del país, barreras de acceso para las importaciones, índice de inflación, tipo de interés, tasa de empleo o déficit presupuestario son algunos de los criterios económicos que habrá que analizar para poder realizar una comparativa entre los diferentes países preseleccionados.

Factores sociales y demográficos

Crecimiento de la población, la composición étnica y religiosa, los flujos migratorios, la situación de los residentes extranjeros, permisos de trabajo y residencia, tasa de natalidad, esperanza de vida, nivel de escolarización, asistencia sanitaria.

Factores Culturales

Lengua, raza, religión, costumbres y hábitos.

Factores Geográficos y Geopolíticos

Orografía, distancias, necesidades logísticas, territorio aduanero, países limítrofes, infraestructuras, transportes y comunicaciones.

Criterios Específicos relevantes para el sector

La industria, el tipo de producto/servicio que ofrece tu  empresa o tu propia cultura empresarial.

Factores de consumo del sector

Tipología y evolución del consumo, estudio oferta-demanda, nivel de tecnología.

Factores de consumo del producto/servicio

Potencial del mercado, comportamiento de los consumidores, segmentación, características del producto.

Factores científicos y tecnológicos

Tendencias del sector, sistemas de distribución, medios de comunicación.

Factores medioambientales

Provisión de recursos y materias primas, políticas de reciclaje y conservación del medio natural.

Factores culturales de la empresa

Misión y cultura empresarial, afinidad idiomática, experiencia anterior.

What are the most interesting markets TODAY? 

IT DEPENDS ON YOUR BUSINESS!

The hierarchy of the criteria discussed above depending on your company's objectives will give you the answer to this question. It will therefore be very important to identify your company's strengths and weaknesses (+), your strategic objectives and resources to determine the most interesting markets for your company. 

OF ALL THE ABOVE CRITERIA, THERE ARE FOUR KEY CRITERIA THAT EVERY INTERNATIONALISING COMPANY NEEDS TO KEEP IN MIND DURING THEIR MARKET SELECTION PROCESS:

• The size of the market.
• Volume of its exports.
• The growth rate of the market and the prospects for expansion.
• The price of the product, and the product's competitive advantage in terms of quality, novelty, design or performance.

Therefore, we can determine that the most interesting markets for a company will be defined by the type of product/service offered and, of course, by the type of company, its objectives and its culture. The company's motivation to invest in a particular market is closely related to factors specific to the target country.

Companies tend to locating its direct investments in developed countries when looking for strategic assets or new markets, whereas they will do so in developing countries when their main motivation is the search for labour resources. Select the most suitable alternative with the best chances of commercial success for the external expansion strategy.

To this end, the Harrell and Kiefer model identifies the two main variables that will underpin the final decision based on the comparison of the different shortlisted countries:

• ATTRACTIVE TO THE COUNTRY:

Market size, market growth, seasonality and fluctuations, competition, qualitative and quantitative constraints, and political and economic stability.

• COMPETITIVENESS OF THE COMPANY:

Market share, marketing skills and capacity, product-market fit, market margin, image, technological position, product quality, market support, and quality of distribution and service.

The combinations of these variables will determine whether this is an attractive market or not, and which option is the most suitable of all those analysed. Your The first step towards internationalisation may be based on an intuition or an opportunity that arose during a customer relationship, the decision to continue this process and to expand into new markets has to be made on the basis of the systematic analysis described above in terms of your company's strategic criteria and objectives.

SOME INTERESTING MARKETS:

Iberoamérica

There are important markets full of possibilities and with doors open to external investment. One of the markets highlighted for its opportunities is the Latin American market.Spain's natural market of expansion, a third of the world's economic activity takes place in Asia Pacific, to which the Ibero-American region belongs.

Ibero-America is the game board for the next two decades in the world. In the region, the greatest business opportunities are to be found in information and communication technologies, infrastructure and the consumer economy.

Mexico

In Mexico, one of the most powerful Ibero-American regions, the agri-food, automotive, construction, mining and tourism sectors stand out, and have opted to take advantage of the opportunities that the digital world can offer us in the face of the crisis.

Chile

Chile is a very open economy with trade agreements with a large part of the world, no tariffs and an open economy. "very close relationship" with Spain. Despite the fact that exports are mostly based on large companies, the government is developing programmes, such as PYMExporta, to encourage the inclusion of SMEs in this regard. Despite the problems in trading with the Russian market, due to the sanctions imposed against Russia by the European Union, 

China y mercado asiático

Two other examples of strong markets for internationalisation are China and Asia. The Asian market is a market made up of 47 countries that "is accounting for almost 75% of investments with a very strong trend towards westernisation, development of new technologies and taking advantage of globalisation.

Despite being characterised by "tremendous diversity, there is a great lack of knowledge about it. How can I buy from you if I don't know you? Spanish companies have many opportunities in China, such as in the online market, but they face very high costs.

For his part, he drew attention to Spain's lack of knowledge about the Asian country, whereby of the 50,000 Spanish companies that export regularly, only 17% did so to China in 2017.

The Asian country is a role model in sectors such as technologyas the world's number 1 in patents. It could be interesting to open doors in this market thanks to digital development. Dubai, the innovation capital of the world: is the capital of the Middle East and the gateway to Asia, and is noted for its desire to promote technology and innovation for tourism with social purposes through the development of numerous start-ups and projects such as Dubai's Plan 2021 or the Smart Cities that make it the new Silicon Valley.

Customs Union

The Customs Union (Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia) is a scenario of many opportunities for entrepreneurs, as the country is highly regarded. "Santander Trail'.a demo that allows entrepreneurs to test different markets to see what they are up against in these, knowing their possibilities, new suppliers and customers. To reduce the main problem in taking the step towards internationalisation, reducing distrust or lack of knowledge of the market.

INVESTMENT CLIMATE

It is necessary to know the country's situation, the market, its GDP, its regulations and type of government, language, currency, the formation of the country in general, security, economic and financial stability, banking system and above all the advantages or opportunities of investing in that country.

CONSTITUTION OF THE COMPANY

We refer to the introduction, i.e. we can implement in different ways, it is a cost decision, but also a strategic one, which should be studied. We will do so under a company, a branch or permanent establishment, an agent or commercial representation or through a partnership/investment with a company already established in the country.

In either case, the costs of the contract or articles of association, notary, official translations will have to be quantified, registration of trade names and trademarks, patents or intellectual property protection. In international taxation, it is important, first and foremost, to identify the importance of knowing double taxation treaties (+) that Spain has signed, and which countries are classified as tax havens.

RESEARCHING THE COUNTRY

For your internationalisation plans to really work, you will need to spend enough time getting to know the country to which you are going to export or import. It is true that we are in an increasingly global world and many businesses are following this trend, but face-to-face meetings (can be virtual) with potential business partners and customers are still the most solid basis for building better quality and long-lasting relationships. 

These visits will allow you to define the sales potential of your product and to form a clear picture of your target market. During the visit you will also have the opportunity to evaluate the competition and their local and international products. identify other foreign competitors already active in that market. Once you have this local market information, you will be able to make a fully informed decision as to whether your product will be sold as it is in Spain or whether some adaptations to the local culture and legislation are necessary.

This can help you cost simulator by country (+) and this information by country (+).Google "doing business + country name".

MORE TIPS ON:

HOW TO SELECT MARKETS ABROAD?

• LINK (+).

• LINK (+).

• LINK (+).

Choosing the country in which to begin internationalisation is a critical decision for the success of any company seeking to expand abroad.

IN MAKING THIS DECISION, IT IS IMPORTANT TO CONSIDER A NUMBER OF KEY FACTORS, SUCH AS:

1. Market size: Assess the size of the target market in terms of population, purchasing power, economic growth, key industries and competition.
2. Culture and language: Make sure you have a good knowledge of the culture and language of the country you are considering. Understanding local cultural norms and business practices is crucial to establishing successful business relationships.
3. Infrastructure and regulations: Research the country's infrastructure and regulations, including logistics, taxes, trade barriers, legal requirements and quality standards.
4. Political and economic risks: Consider the political and economic risks associated with the country, such as political stability, exchange rate and inflation.
5. Strategic alliances: Consider whether there are local companies or potential partners that can assist in the market entry process, such as suppliers, distributors or business partners.

By assessing these factors and others relevant to your company, you will be able to make an informed decision on the country in which to begin your internationalisation process.

You can also seek advice from international trade experts and study success stories of similar companies that have entered the same market you are considering.

In order to choose the first country a company will target for internationalisation, it is necessary to follow a systematic process that allows the selection of the market that best suits the company's strategic objectives and minimises risks. The first step is to decide on the optimal number of markets to target. Then, potential markets should be researched to gather relevant information and select those that are most favourable to the company's business model.

It is important to focus on the macro variables that most affect the business and avoid dispersion in the search for information. Logistical aspects, such as transport and customs, and the country's default rate, should also be considered.

The general and sector-specific criteria that are relevant to the company should be taken into account, and these criteria should be prioritised according to the company's strategic objectives. The four key criteria that a company should consider are market size, export volume, market growth rate and prospects for expansion, and product price and competitive advantage.

Among the most interesting markets for a company are Latin America, Asia and Dubai. In order to select the most suitable market, the variables of the country's attractiveness and the company's competitiveness must be considered, and a comparison of the pre-selected countries must be made to determine the most suitable option.

In summary, the choice of the first country to internationalise should be a strategic decision based on objective information and the company's objectives, and should take into account the criteria and variables relevant to the business.

How to use Inteligencia Artificial (IA) to choose the country where to start internationalisation?

As a language model, ChatGPT can help you provide information on different countries that may be suitable for your business internationalisation.

HERE ARE SOME STEPS YOU COULD TAKE TO USE CHATGPT TO CHOOSE A COUNTRY:

Formula una pregunta específica

To get started, formulate a specific question you can ask ChatGPT. For example, "Which are the best countries to start an e-commerce business?" or "Which countries offer the best opportunities to grow a technology company?

Initiate a conversation:

Start a conversation with ChatGPT by clicking on the "Chat" or "Chat" button on the platform where you are using the model. Enter the question you asked earlier and wait for ChatGPT to generate a response.

Ask follow-up questions:

If ChatGPT's initial response is not sufficient or you need more details, ask follow-up questions to clarify any doubts or get additional information. For example, if ChatGPT tells you that India is a good country to start an e-commerce business, you could ask: "Why is India a good country to start an e-commerce business?" or "What are the main challenges faced by e-commerce companies in India?

Considera la información proporcionada

As ChatGPT provides you with information about different countries, consider the relevance of the information to your business and your internationalisation goals. Consider factors such as local business culture, infrastructure, taxes and operating costs, among others.

Make an informed decision:

Use the information ChatGPT provides you with to make an informed decision about the country in which you want to start your internationalisation process. Be sure to research any country you are interested in further before making a final decision.

It is important to note that ChatGPT is a language model and can provide general information about different countries, but it should not be the only factor in making important business decisions. It is always advisable to obtain advice and conduct further research before making a decision.