Export Knowhow

Which business model is suitable for abroad?

For SMEs interested in exports, the question arises as to what conditions must be created in foreign markets so that these advantages can be exploited to the same extent abroad. The key question: Do you want to work with international customers from Switzerland or do you need local partners and a local foothold?

A group of people discussing business models

Many Swiss SMEs develop and manufacture their own products and services. In most cases, the company's own sales and project teams are responsible for the direct acquisition and support of customers in Switzerland. Customer orders often lead to individual production. Direct market development is a good basis for market proximity and customer-relevant innovation and enables flexibility and speed when it comes to adapting the product range to market requirements. But does the export model also work for foreign markets?

The basic question with regard to international business: An export or an internationalization model?

  • Model Export: A Swiss SME acquires international customers itself (direct export) or transfers marketing activities to a local distribution partner (indirect export). The contractual partner for the SME in Switzerland is the end customer or the distribution partner. Goods are delivered and invoiced from Switzerland. It has no branches abroad.
  • Internationalization model: The Swiss SME approaches foreign markets with a strategic focus and with direct investments. Some of the value creation activities are transferred to the target market, above all sales and marketing, customer service and logistics. It may be advisable to establish a subsidiary. The contractual partner for end customers abroad is the SME’s overseas entity.

Currently, one third of the SMEs active abroad choose indirect export via distribution partners. This is particularly true for exporters of capital goods (37%). For service providers, indirect export is somewhat less frequent (25 %) – here it is often necessary for the company itself to address end customers personally.

The following factors speak for the direct export model:

  • The expertise required for the provision of services is difficult to transfer to partners.
  • The key skills are strongly tied to individuals in Switzerland.
  • The logistical costs for shipping abroad are within reasonable limits as regards the sales value.
  • There is no significant need for customer service after the purchase or it is possible digitally
  • The company has moderate expectations for its international business. 

The following factors speak for the internationalization model:

  • The company's products and services are rather complex and require explanation.
  • The sales cycle covers a long period of time; a local relationship must be established with the customer at the same time.
  • Complex market systems go hand in hand with different stakeholder groups.
  • Customers expect the business partner to be close to the market and have a local presence.
  • The intensity of local competition in the market is high and requires constant market observation and proximity.
  • There is a great need for customer services after the local purchase.
  • A legal separation of the activities in the foreign market from the parent company is desired.
  • Business development abroad is of strategic relevance and linked to higher expectations.

Initial recommendations for action

  • Sketch the entire path of the customer's interaction abroad with your company – from the moment the customer has a need for the product or service up to the time of after-sales service (customer journey). Create the same image for customers who buy from competitors abroad.
  • Record which moments are decisive for your customers and influence whether and with whom the purchase is made (moments of truth). Identify your competitors’ service gaps and define where your company can score with strengths in the process, because this is precisely your goal.

  • You derive the requirements based on your goal: What organizational, process-related and performance-related prerequisites must your company create in order to meet the customer's standard expectations in the target market and for the company to distinguish itself beyond that?

The next step is to identify the appropriate sales model. Read More about it here

“Export Compact” handbook

You will find concrete and in-depth help, as well as useful tips and practical links, in our “Export Compact” handbook. Based on recognized scientific findings and the many years of practical experience of Switzerland Global Enterprise's country consultants, the handbook offers Swiss and Lichtenstein companies their first tangible assistance on the path to international business planning.

Download the complete «Export COMPACT» guide here!

 

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