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SMEs : how to gain market share abroad

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INTERNATIONAL STRATEGY, PARTNERSHIPS AND TECHNOLOGY TRANSFER… SO MANY MEANS AN SME CAN USE TO GAIN MARKET SHARE INTERNATIONALLY.
NONETHELESS, BETWEEN 30% AND 70% OF JOINT VENTURE PARTNERSHIPS FAIL, WARNS JULIEN WARLOUZÉ, FOUNDING DIRECTOR OF JWA STRATEGY, A CONSULTING FIRM SPECIALIZED IN INTERNATIONAL STRATEGY.

INTERNATIONAL TECHNOLOGY TRANSFER, A GROWTH ACCELERATOR

During the Berlin Air Show on April 26th, 2018, Airbus and Audi announced the creation of a joint entity to develop a new mobility service, that combines both aerial and automotive transportation. While this type of international strategic partnership was empirically the private turf of large companies in key sectors of the industry (defense, aeronautics, transport, energy), more and more SMEs with high technological potential are inquisitive about international technology transfers as a mean of conquering foreign markets.

For SMEs wishing to develop, targeting new foreign markets embodies the No.1 driver of sustained growth. With the shortening of product life cycles and the emergence of new players with significant economic and industrial potential, technology transfer allows SMEs to conquer international markets quickly, while remaining domestically competitive, and gaining the confidence of local industrials.

Indeed, with the emergence of these new mastodons (BRICS), French companies are facing a fierce competition based on lower prices. As these new powers show enormous growth potential, French companies no longer hesitate to mention technology transfers during negotiations to beat the competition.

These transfers consist in transmitting to a foreign industrial partner certain data and knowledge (know-how, selling skills, production competencies, etc.) in order to produce and sell this product internationally. While many perceive this as an act undermining the French know-how, SMEs now see these transfers as a new way to infiltrate foreign markets. These companies with high technological potential no longer uniquely see technology transfers as cost reduction tool, but also include them in international contracts as real trading instruments.

NO TRANSFER WITHOUT STRATEGY

Among internationalization methods, strategic partnerships stand as a fast and cost-effective option for companies wanting to export. However, it requires the definition of a solid international strategy to ensure better control of the partnership over time, while mitigating the risks associated with intellectual property sharing.
Between counterfeiting, failure of one of the two partners, strategic disagreement, brand management issues related to the choice of a crooked partner … It is estimated that between 30% and 70% of joint venture partnerships fail.

Therefore, following the sale of 36 Rafale aircrafts to India, SMEs like Ametra want to seize this opening window to India to export in turn. The CEO of this aeronautical subcontractor notes that even if the creation of a joint venture marks a “big strategic leap”, technology transfer is necessary since “if we [Ametra] do not make these deals, the Indians will” “(Les Echos, April 16, 2018). Hence, not only is it essential to set the business strategic objectives, but each decision must be taken in light of the technologies that are being handed over, the competencies required to train the other party and most importantly the choice of the local partner. Too often named a “lawyers’ affair” by business leaders, technology transfer is nonetheless a tool that should be deployed to foster growth strategy.

In short, with emerging countries that weigh more than 40% of global GDP, French SMEs have the potential to conquer an advantageous position on these markets where technological expertise is a powerful negociation tool, if, however, it is used in alignment with an international strategy defined upstream.

Article published on www.usinenouvelle.com on June 9th, 2018

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