SMEs Academy “Export Readiness” Lucia Trenta Chisinau, 11th May 201 7

1. www.east-invest.eu SMEs Academy “Export Readiness” Lucia Trenta Chisinau, 11th May 2017

2. www.east-invest2.eu Defining Export Readiness 1. Companies often embark on an export activity without having a clear idea of what to do, when, where and with whom, but most of all, without knowing IF they are suitable.

3. Defining Export Readiness 2. Finding a starting point for exporting can be difficult for an SME. Preparation is essential for any SME contemplating a new market, whether foreign or domestic. There is no magic formula to determine whether an SME is ready to commence or to expand their exports. A checklist could help if the entrepreneur applies it honestly to his/her own business situation. www.east-invest2.eu

4. Part 1 First steps: a checklist www.east-invest2.eu

5. Checklist 1. Are your prepared to devote additional time, effort and resources that will be required to become a successful exporter? Is your choice to export shared with the whole ownership and management of your company? Are you able to identify unique features and qualities of your product and services that will enable you to exploit foreign market opportunities? Can your products or services be modified to fit foreign market requirements if necessary? www.east-invest2.eu

6. Checklist 2. Has your company got a proven track record and a strong marketing presence in your domestic market? Have you got high quality promotional and marketing material? Have you got sufficient management skills and expertise to develop and serve export markets? If not, could these be acquired? Have you got surplus capacity or the flexibility to expand production quickly if export orders are obtained? Have you got sufficient financial strength and resources to develop foreign markets? www.east-invest2.eu

7. Checklist 3. The answers of the entrepreneur to the above should indicate whether he/she is prepared for the international marketplace or whether he/she needs to devote more time and resources before committing to export. If he/she is unsure about any of the above questions, he/she should seek professional advice before making any further commitment. www.east-invest2.eu

8. Part 2 Passport Check-up www.east-invest2.eu

9. A more in-depth analysis We propose a professional method of analysis able to evaluate the opportunities of international development an SME may have. It is based on 3 dimensions and 1 enabling factor and by examining the combination of these 4 elements, we can determine the export readiness of an SME. We call it “Passport Check-up”. www.east-invest2.eu

10. Passport Check-up Competitive advantages on the domestic market Transferability of competitive advantages to foreign markets Motivation to internationalize Absence of binds www.east-invest2.eu

11. Competitive advantages on the domestic market 1. To start with, we need to define what are the competitive advantages of our SME. Examples of possible competitive advantages include: Lower production costs Significant levels of innovation High standard of customer care Well-known brand Specific competences and know how. www.east-invest2.eu

12. Competitive advantages on the domestic market 2. We then need to point out the distinctive characteristics which may make our SME more attractive to customers and which may differentiate it from competitors and then to focus on points of strength on which we consider we may build the company success beyond its domestic market. www.east-invest2.eu

13. Transferability of competitive advantages to the foreign market Identifying competitive advantages is the starting point of any international development plan for an SME. Anyway, it is also crucial to evaluate whether these advantages are transferable to the foreign markets, by assessing: whether the needs of foreign customers are homogeneous to those of domestic customers; whether the promotional activities done on the domestic markets are transferable to the foreign markets. www.east-invest2.eu

14. Motivation to internationalize 1. Further, we need to evaluate if the SME is sufficiently committed to internationalize by assessing: 1. The real advantages that an investment on the process ofinternationalization can produce for the SME; 2. Whether there is the possibility to achieve possible economies of scale or specific synergies; www.east-invest2.eu

15. Motivation to internationalize 2. Whether the SME has already taken sufficient advantage from its domestic market; How coherent is the decision to internationalize the SME with its overall strategy. www.east-invest2.eu

16. Absence of binds 1. Until now our analysis took into account the potential of internationalization of an SME, on which we could build up a successful strategy, but it is also vital to determine whether there are possible binds to this process. The absence of binds or their little impact can be considered an enabling factor, so that the potential of an SME can be expressed and developed with success. www.east-invest2.eu

17. Absence of binds 2. We need to assess what are the possible binds that could be an obstacle for our SME and if there is a possibility to remove them. They could be: Little and not sufficient production capacity available Lack of financial resources needed for the investment Lack of human resources needed for the implementation ofthe development plan Lack of commercial competences Little propensity to risk on new investments. www.east-invest2.eu

18. Guidelines for international development The joint evaluation of the variables determining the potential for internationalization, in relation to the possible binds, allows us to indicate the best development plan for an SME in a strategic perspective. We identified 6 possible development guidelines and according to the analysis of the answers given, the right development strategy is identified for each SME. www.east-invest2.eu

19. www.east-invest2.eu

20. Internationalization plan 1. The plan for internationalization provides the SME with the selection of potential markets to oversee, the choice of the most suitable mode of entry (i.e. opening a foreign branch, cooperating with a foreign distributor, establishing a joint venture with a local company) and the economic and financial evaluation of the investment. The aim is to direct the international trade action properly both in terms of quantity (increase in turnover) and quality (more attractive or profitable customers or with a higher potential). www.east-invest2.eu

21. Internationalization plan 2. Concerning the target market, the plan would describe whether the SME has: -a favourable balance of power; -highcompetitive advantages (i.e.products with higher perfor- mance, innovation, service quality, unique and advanced technological skills, recognized brand perceived in a distinct way); - a significant competitive ability; - a higher perceived value in terms of innovation, product, service and price when compared to that of competitors. www.east-invest2.eu

22. Internationalization plan 3. Concerning the benefit of a further international development, the plan would suggest whether the target market of the SME proves to be attractive according to its: - competitive intensity; - level of exploitation; - presence/absence of significant barriers to entry;   - expectations of growth over the years. www.east-invest2.eu

23. Internationalization plan 4. Afterwords, specific objectives are identified and actions described. Example 1: Objective: Operate an international expansion. Action 1: Remove binds encountered during the diagnostic phase; Action 2: Select the potential markets to oversee (focusing on the most attractive areas where many potential customers are located and where the competitive dynamics are hardly significant, allowing your company to easily assert its competitive advantages); www.east-invest2.eu

24. Internationalization plan 5. Action 3: Identify the most suitable mode of entry into the foreign markets selected, by establishing contacts with foreign distributors or creating a commercial joint-venture with a local company or opening a foreign commercial branch. Action 4: Carefully evaluate the economic and financial sustainability of the commercial expansion project, verifying the possible access to funding or soft loans. www.east-invest2.eu

25. Internationalization plan 6. Example 2: Objective: Extend the domestic market. Action 1: Select specific segments of domestic market to develop by focusing on the most attractive areas; Action 2: Identify the potential domestic customers; www.east-invest2.eu

26. Internationalization plan 7. Action 3: Develop domestic turnover in particular by: -   understanding the customer needs (product/service); - promoting the communication with customers (relationship); -increasing the comfort in purchasing by the customers (distribution channels); -  understanding the costs that customers are willing to sustain (efficiency and price recovery). www.east-invest2.eu

27. Part 3 Sources of Information & Support www.east-invest2.eu

28. Sources of information & support 1 European Commission Export Helpdesk: http://exporthelp.europa.eu/thdapp/index.htm provides lots of information on requirements (sanitary, environmental, technical…), tariffs, statistics, resources, news and documents to download. Specific portals: http://ec.europa.eu/taxation_customs/index_en.htm http://ec.europa.eu/trade/ www.east-invest2.eu

29. Sources of information & support 2 Eurochambres: http://www.eurochambres.eu Many useful news and events, such as the business forums, many documents to download, such as newsletters and corporate publications and direct links to many projects. www.east-invest2.eu

30. Sources of information & support 3 CBI Centre for the Promotion of Imports from developing countries: https://www.cbi.eu/ CBI is part of the Netherlands Enterprise Agency and commissioned by the Ministry of Foreign Affairs of the Netherlands. https://www.cbi.eu/sites/default/files/study/exporting-to-europe-introduction-manual.pdf A very interesting manual on how to export to Europe. www.east-invest2.eu

31. Sources of information & support 4 European Commission Statistics: Home page: http://ec.europa.eu/eurostat Section dedicated to international trade with many illustrated tables and databases: http://ec.europa.eu/eurostat/web/international-trade/statistics-illustrated www.east-invest2.eu

32. Sources of information & support 5 World Bank: Home page: http://www.doingbusiness.org/ also in Russian Provides in-depth information on how to do business in each single market, world statistics, business regulations and it is particularly dedicated to SMEs. www.east-invest2.eu

33. Sources of information & support 6 The following websites investigate cultural differences and provide valuable tips on business etiquette, customs and protocol for doing business across the world: Executive Planet: http://www.executiveplanet.com/ WorldBiz:http://www.worldbiz.com/index.php World Business Culture:http://www.worldbusinessculture.com/ www.east-invest2.eu

34. Sources of information & support 7 Market Access Database: http://madb.europa.eu/madb/indexPubli.htm The Market Access Database (MADB) gives information to companies exporting from the EU about import conditions in third country markets. www.east-invest2.eu

35. Sources of information & support 8 World Trade Organization: Home page: https://www.wto.org/index.htm Section dedicated to businesses with documents and videos todownload: https://www.wto.org/english/forums_e/business_e/business_e.htm Here you can find the RTAs your home country signed: https://www.wto.org/english/tratop_e/region_e/rta_participation_map_e.htm. www.east-invest2.eu

36. Sources of information & support 9 Other relevant international organisations are: • UNCTAD UN Conference on Trade & Development: www.unctad.org; • OECD Organisation for Economic Cooperation & Development: www.oecd.org; • FAO UN Food & Agriculture Organisation: www.fao.org; www.east-invest2.eu

37. Sources of information & support 10 Other relevant international organisations are: * ITC International Trade Centre: www.intracen.org; * ICTSD Int. Centre for Trade & Sustainable Develop: www.ictsd.org * ILO International Labour Organisation: www.ilo.org; * CEN European Committee for Standardisation: www.cenorm.be www.east-invest2.eu

38. Thank you Lucia Trenta CNA National Association of MSMEs Via Don Minzoni, Jesi Province of Ancona, Italy +39 0731 712164, mobile +39 348 3178563 ltrenta@an.cna.it www.an.cna.it www.east-invest2.eu