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Five main steps to analyse the opportunities of our business in a new target country

1. Demographic Analysis and Dimensioning of our Market in the new Target Country

This preliminary analysis gives us a general overview about the numbers of our potential clients in the country and shows how we could reach them.

This first analysis can be distinguished between B2C and B2B approach depending on the business core that we follow. Thus, if we focus on a B2C business, a demographic analysis allows us to evaluate the numbers of inhabitants of a specific territory, its density, the workforce, and the incomes groups. If we focus on a B2B business, a demographic analysis shows us our potential clients their location and density according to our corresponding sector of interest.

After the demographic analysis, the dimensioning of our market is represented by the evaluation of the niche of our clients which we would like to reach. Thus, the dimensioning represents a second filter to identify our commercial strategy in the selected target country.

2. Analysis of the Needs of our Market

As soon as we identify the particular segments of our potential clients, we would need to discover and evaluate all their needs. This study will allow us then to understand the motivations behind the choices of our clients. The awareness of these needs and motivations will help us to diversify our proposal and to define new drivers for the demand of our clients.

3. Analysis of the Competitors present in our Target Country

The object is to assess all the competitors which are already working in the target country to define our added values. Thus, we would need to gather a lot of information to compare their activities analysing advantages and disadvantages they have in the market where we would like to develop a new business. This comparison should include all the main and relevant factors which are driving our sector - i.e. prices, quality, ancillary services, selling approaches, purchase/financing arrangements, etc.

4. Analysis of the barriers to start developing a new business in our Target Country

Before to start a new business abroad we should carefully evaluate all the barriers and obstacles we could face working there. This will allow us to avoid unpleasant surprises and problems unplanned being more effective towards our goals. So we should try to answer to these following questions: Why should we think that we will have success starting a new business in this target country? What would be the main obstacles we would face in this target country? Among the various potential obstacles we should consider: the value of our brand in the target country, the legal frame and any specific regulation related to our sector, taxes, custom duties, inflation, the culture and the mindset of the local people, access to the distribution channels, structural costs, transport, access to funds or loans and the banking system, etc.

5. Legal Frame of the Target Country

It would be relevant to know the legal frame of our target country because it can represent opportunities or difficulties for our new business. Indeed, in case the local regulations constitute an obstacle to our sector we should carefully evaluate the real chance we have to develop a new business in this country. Contrary, in case the local regulations constitute an opportunity for us we would be able to exploit them.

The positive trends of industrial and manufacturing sectors in Bulgaria

For years, the economy of Bulgaria has undergone a lasting restructuring process whereby some industries are growing rapidly and are increasing their share in the economy, while others are shrinking and reducing their burdens. Industry is among the growing branches of the Bulgarian economy, which has developed at a good pace since 2000 and increases its gross benefit, excluding the crisis period (2009-2010). Its share in the economy has also risen since the millennium - from 21% in gross value added in 2000, the industry in 2017 already accounts for a 24% share.

In addition to industrial goods, Bulgaria's economy also produces more and more services, which also often remain unnoticed. The ICT sector, the outsourcing of business services and the financial sector are among the increasingly important sectors of the economy, if we judge from their contribution to it. The ICT sector already has a share of 5.5% in gross value added (compared with 3.2% in 2000), outsourcing - 6,1%, and Finance and Insurance - 7.5%. At the same time, the sector that has been "losing ground" most visible in the local economy for the past 17 years is agriculture - despite the huge subsidies for it under the Common Agricultural Policy and national supplementary payments. In public services (administration, health, education, etc.) and real estate there is also a drop in shares, but much less.

In addition, here is what goods are being produced more and more in Bulgaria. The industry's most prominent developments since 2000 include metal products, electrical equipment, furniture, rubber and plastics, car parts, machinery, equipment and weapons, computer and communication equipment, wheels, paper and board.

In the above-mentioned processes, the increase of production from the beginning of 2000 to January 2018 is far above the average for the manufacturing industry and in some cases it reaches 3-4 times (see the information below). The reason for expansion is usually high competition in the foreign markets and significant export output, which is also confirmed by export data.

Change in Manufacturing Production (January 2018 vs. January 2000),%

Processing industry: 125.7 %

Manufacture of food products: 112.8%

Manufacture of beverages: 10.6%

Manufacture of tobacco products -54.8%

Manufacture of textiles and textile products, except apparel 48.2%

Production of clothing 58.0%

Leather processing, Manufacture of footwear and other articles of leather 8.4%

Manufacture of wood and of products of wood, except furniture 75.1%

Manufacture of paper, paperboard and other paper products 219.2%

Printing and reproduction of recorded media 72.8%

Manufacture of chemical products 65.8%

Manufacture of medical substances and products 18.0%

Manufacture of rubber and plastic products 399.5%

Manufacture of other non - metallic mineral products 139.6%

Manufacture of basic metals 156.0%

Manufacture of fabricated metal products, except

machinery and equipment 370.7%

Manufacture of computer and communication equipment,

electronic and optical products 252.0%

Manufacture of electrical equipment 494.6%

Manufacture of machinery and equipment, general and special 284.8%

Manufacture of motor vehicles, trailers and semi - trailers 385.5%

Manufacture of motor vehicles and not motor vehicles 278.9%

Furniture manufacturing 398.2%

Production not elsewhere classified 349.2%

Machinery and equipment maintenance and installation 88.7%

Consumer durables 513.1%

Products for intermediate consumption 122.2%

Consumer non - durable products 60.6%

Energy products 10.0%

Source: NSI, calendar-adjusted data

The only sector with a decline in production since 2000 has been tobacco products - because of health policies, the rise in prices due to the increase in excise duties, the illegal market and, in general, the shrinking consumption of such products throughout Europe and the developed countries. Among sub-sectors with relatively low performance (i.e. growth below the average for the whole sector) are leather, textiles, shoes, wood, beverages, food, etc. All of them traditionally belong to goods with a relatively low processing rate and relatively low benefit respectively. By contrast, most of the sectors that have grown sharply since 2000 are those adopted for sectors with high benefit, such as machinery, electrical equipment, computer and communication equipment, car components, bicycles, and more. They have increased their share of exports more than double since 2000 - from 11 to nearly 26%.

It is remarkable that all investment goods subsectors increase their share in the country's exports without exception. This restructuring towards commodities with higher benefit occurs at the expense of all other major product groups - energy resources, consumer goods, raw materials and materials. This does not mean that their exports are declining, on the contrary - its growth is relatively slower than that of investment goods. However, it is important to note that in the three groups mentioned above, whose share of total exports shrinks, and there are products that enjoy increasing weight in external sales. For example, in consumer goods, the proportion of food is rising; the same applies to feedstock, which also have a significantly higher share in 2017.

Overall, GDP, industrial output and exports data show the following:

1 / Bulgarian industry has been developing well since 2000 and has increased its weight in the economy, largely due to the expansion of the manufacturing industry;

2) In the manufacturing industry there is a steady trend of restructuring towards a higher share of high added value sub-sectors at the expense of those with a lower processing rate;

3) This restructuring process is mainly dictated by foreign markets and reflects the competitiveness of Bulgarian producers of commodities with relatively high benefit.

Economy of bulgaria

For years, the economy of Bulgaria has undergone a lasting restructuring process whereby some industries are growing rapidly and are increasing their share in the economy, while others are shrinking and reducing their burdens. Among the growing industries is the industry, which has developed at a good pace since 2000 and increases its gross benefit, excluding the crisis period (2009-2010. Its share in the economy has also risen since the millennium – from 21% in gross value added in 2000, the industry in 2017 already accounts for a 24% share.

In addition to industrial goods, Bulgaria’s economy also produces more and more services, which also often remain unnoticed. The ICT sector, the outsourcing of business services and the financial sector are among the increasingly important sectors of the economy, if we judge from their contribution to it. The ICT sector already has a share of 5.5% in gross value added (compared with 3.2% in 2000), outsourcing – 6,1%, and Finance and Insurance – 7.5%. At the same time, the sector that has been “losing ground” most visible in the local economy for the past 17 years is agriculture – despite the huge subsidies for it under the Common Agricultural Policy and national supplementary payments. In public services (administration, health, education, etc.) and real estate there is also a drop in shares, but much less.

In addition, here is what goods are being produced more and more in Bulgaria. The industry’s most prominent developments since 2000 include metal products, electrical equipment, furniture, rubber and plastics, car parts, machinery, equipment and weapons, computer and communication equipment, wheels, paper and board.

Change in Manufacturing Production (January 2018 vs. January 2000),%

Processing industry – 125.7 %

Manufacture of food products – 112.8%

Manufacture of beverages – 10.6

Manufacture of tobacco products – 54.8

Manufacture of textiles and textile products, except apparel – 48.2%

Production of clothing – 58.0%

Leather processing, Manufacture of footwear and other articles of leather – 8.4%

Manufacture of wood and of products of wood, except furniture – 75.1%

Manufacture of paper, paperboard and other products of paper and paperboard – 219.2%

Printing and reproduction of recorded media 72.8%

Manufacture of chemical products 65.8%

Manufacture of medical substances and products – 18.0%

Manufacture of rubber and plastic products – 399.5%

Manufacture of other non – metallic mineral products -139.6%

Manufacture of basic metals – 156.0%

Manufacture of fabricated metal products, except machinery and equipment – 370.7%

Manufacture of computer and communication equipment, electronic and optical products – 252.0%

Manufacture of electrical equipment – 494.6%

Manufacture of machinery and equipment, general and special – 284.8%

Manufacture of motor vehicles, trailers and semi – trailers – 385.5%

Manufacture of motor vehicles and not motor vehicles – 278.9%

Furniture manufacturing – 398.2%

Production not elsewhere classified – 349.2%

Machinery and equipment maintenance and installation – 88.7%

Consumer durables – 513.1%

Products for intermediate consumption – 122.2%

Consumer non – durable products – 60.6%

Energy products – 10.0%

Source: NSI, calendar-adjusted data

The only sector with a decline in production since 2000 has been tobacco products – because of health policies, the rise in prices due to the increase in excise duties, the illegal market and, in general, the shrinking consumption of such products throughout Europe and the developed countries. Among sub-sectors with relatively low performance (ie growth below the average for the whole sector) are leather, textiles, shoes, wood, beverages, food, etc. All of them traditionally belong to goods with a relatively low processing rate and relatively low benefit respectively. By contrast, most of the sectors that have grown sharply since 2000 are those adopted for sectors with high benefit, such as machinery, electrical equipment, computer and communication equipment, car components, bicycles, and more.

This restructuring of production to sectors with higher benefit is also seen in foreign trade data, and in particular in exports. It is clear that the big “winner” of the restructuring of the economy, industry and exports is precisely the investment goods that belong to the goods with high benefit. They have increased their share of exports more than double since 2000 – from 11 to nearly 26%. These include machines, appliances and machines, electrical machines, vehicles, parts and other investment goods. It is remarkable that all investment goods subsectors increase their share in the country’s exports without exception. This restructuring towards commodities with higher benefit occurs at the expense of all other major product groups – energy resources, consumer goods, raw materials and materials. This does not mean that their exports are declining, on the contrary – its growth is relatively slower than that of investment goods.

However, it is important to note that in the three groups mentioned above, whose share of total exports shrinks, and there are products that enjoy increasing weight in external sales. For example, in consumer goods, the proportion of food is rising; the same applies to feedstock, which also have a significantly higher share in 2017.

Most Relevant Personal Features for an International Business Manager

1. Commitment and determination

Any process of business development requires time. The timing to develop and consolidate a business in a new country depends a lot on the specific product, the company and the target country, but usually two years are essential to start viewing the first results. Time is necessary to understand the culture and the new business context in order to undertake the right steps to develop and run the business in the new territory. Thus, without commitment and determination there are few chances to get results in international business. The International Business manager should always have a high commitment to lead the process and to involve his/her team, in particular when there are difficulties and the expected results have obstacles to arrive.

2. Initiative and Dynamism

A highly initiative and dynamism are essential features to start anything new. Thus, the will to get new challenges and the ability to solve problems represent the “salt” of business. Right risks and fast decisions are often taken thanks to a good initiative approach. In international contexts can be even more complicated because there are further issues which we must take into account.

3. Curiosity

Curiosity is a crucial feature that a good International Business Manager should have. Curiosity means an open-mind person who is hungry to discover new cultures, new languages, and new economic and social environments. A person able to talk and evaluate various topics in a rational way. A person able to link and compare his or her habits and attitudes constantly and impersonally. Thus, a person able to enjoy staying with other new people in professional and non-professional contexts.

4. Availability and ability to travel

Any International Business Manager must travel. Depending on the type of company and sector and the expected results, this person should stay at least one week per month abroad in order to develop and consolidate partnerships and relationships. Despite the fact that we are living in a high-tech and virtual world, we are human being and the majority of the businesses are still based on personal networks. In particular for SMEs, which do not have a very high brand reputation, trust and reliability remain the most important elements that any international customer take into account to choose a new supplier. Availability and ability to travel, therefore, are essential features for this international professional profile.

5. Highly Communicative

Communication is a very broad feature which includes the personal ability to listen, to talk, to understand or transfer messages through our body language. A charismatic person is facilitate in this sense because he/she can exploit the ability to involve and convince other people. A high level of communication skill support the International Business Manager to “tell the story” and to transfer the quality and the advantages of his or her products to partners and international clients.

6. Creative and Flexible

New markets can reserve us unknown situations or new challenges which we have never faced. Indeed, business varies depending on cultures, approaches, bureaucracies, habits, etc. For instance, contrary to the Anglo-Saxon culture, Asian people tend not to be direct and, even if they are not interested in cooperating or buying from us, they will never push us back. Creativity and flexibility are fundamental elements to always find new solutions and overcome unexpected situations or contexts.

The future of the European Union in the hands of Romania

The Presidency of the European Council is now in the hands of Romania. For the first time in the history, from January to June 2019, Romania will lead the semester of the European Council trying to limit the consequences of the Brexit process which is foreseen to be concluded in March 2019. The challenge will be even more complicated considering that yesterday the UK Parliament rejects the Brexit May’s agreement developed in the last months with the European Union. Viorica Dancila, the First Minister of Romania declared that the main goal of the Romanian Presidency will be to keep united the European Union. Indeed, Brexit without any agreement could strongly impact our life and economy. If this happens European citizens leaving in UK (and vice-versa), businesses and public authorities would have to act instantaneously to changes as result of leaving the European Union. Thus, the goal of Romania is very important and it will be focus on the results of the upcoming European Parliamentary election which for various experts will be characterized by a key political choice between Sovereignists and Europeanists. Shortly before the election, on the 9th of May – Europe Day – Romania will host also an important European Summit in Sibiu with all the European Leaders to discuss and define a new path for the European Union.

The main priorities of the Romanian Presidency of the EU Council are the following:

“Europe of convergence” – focused on cohesion policy and the competiveness European industrial policy. It aims to stimulate entrepreneurship, digitalization and innovation among European industries.

“A safer Europe” – focused on the new security challenges and supporting new bilateral cooperation initiatives with EU neighbouring countries.

“Europe, as a stronger global actor” – focused on the image and the global role of the EU

“Europe of common values” – focused on the main common values of the EU. It aims to promote and consolidate solidarity, freedom, democracy and respect of human dignity, inside and outside European borders.

Italian trade: Challenges and Opportunities of a “NO DEAL” between UK and European Union

UK is a relevant market for the Italian international trade. Indeed, in 2017 UK was the fifth trade partner of Italy – after Germany, France, USA and Spain – and the second in the surplus ranking for Italy after the USA. According to the report of the Italian Trade Agency (ICE – Istituto Commercio Estero), in 2017 the trade between UK and Italy was 34,5 billion euro compared to 33,7 in 2016 (+2.4%). In particular, the Italian exports amounted to 23.1 billion of euro (+3.2%), while the imports from UK amounted to 11.4 billion euro, 1.3% more compared to 2016. The balance is positive for Italy for 11,7 billion of euro, up 4.5% compared to 2016 (see the list below related to the most relevant items of the Italian-UK trade).

The vote of the British Parliament of the 15^th of January 2019 which rejected the May’s Deal has shown a very delicate moment for the Italian and European markers. A so-called “NO DEAL” between UK and the European Union could create uncertainty and fear among the markets bringing a potential domino-effect where companies could decide instinctively to leave the British market (and vice versa). Indeed, a “NO DEAL” could negatively impact both the multinational corporations – which have chosen to establish their office in London – and the SMEs – which are exporting and importing from the UK market. Thus, in case of a “NO DEAL” there is the possibility to fall back into a scenario in which, at least for a certain period and for specific categories of products, the WTO agreements will rule the trade with the British economy.

In negative terms, it should also be considered that the UK subsidiaries in Italy have a relevant weight, indeed they assure an annual turnover of about 35 billion euro (equal to 9.5% of the total turnover of multinational companies in Italy) and with 85 thousand employees.

Despite the negative effects, a “NO DEAL” scenario could bring in Italy and the EU countries also interesting opportunities. Indeed, the UK’s exit from the EU could trigger at least partial reallocation of FDIs and attract multinational companies in other EU countries. The effects would be produced in the medium term and their real impact are difficult to be quantify in advance. A 2016 study estimates a decrease of FDI in the United Kingdom by 22% in ten years. This amount would correspond to € 282 billion of foreign capital that could flow into EU countries. The attraction of these foreign investments by individual countries will depend on their structural characteristics. Opportunities to attract investments could also arise for Italy. On the basis of the degree of similarity between the sectorial distributions of incoming FDI – with the important exception of financial services that have a leading role for the UK economy – it emerges that the Italian market could have a good chance, because its sectors with a greater presence of foreign capital (manufacturing, wholesale, telecommunications and IT services) are the same that occupy the first positions in the distribution of FDI in the UK economy.

In 2017 the main items of Italian exports to the UK were: machinery (2.7 billion euros); motor vehicles (€ 1.6 billion); medicines and pharmaceuticals (€ 1.3 billion); clothing (1.2 billion euros); drinks (1 billion euros); components for cars (902 million euro); furniture (€ 902 million); footwear (605 million euros).

On the side of imports from Great Britain, the most relevant items were: motor vehicles (1.9 billion euros); medicines and pharmaceuticals (€ 1.1 billion); machinery (836 million euros); chemical products (501 million euros).

Data source: Elaboration on Istat data (ICE London)

Internationalization

Internationalization has become increasingly relevant for the competitiveness of companies of all sizes. Nowadays, particularly SMEs operating always more in a global market can move quickly to take advantage of international activities, seizing opportunities for not only revenue growth but also the exchange of knowledge and the enhancement of skills.

Internationalization of business is one of the ways a company responds to the impact of globalisation, yet a successful internationalization process respects and emphasizes the distinctiveness of an organisation.

Why should I internationalize my business?

Here are the main reasons why internationalization is a good choice today:

MORE SECURITY – Internationalization grants a true independency from the local market

Your business will be less vulnerable to periodic fluctuations and downturns in the local market. During economic crises, thanks to their capacity to reach foreign markets, many companies keep and also improve their production capacity, employment and financial structure;

MORE PROFITS – Internationalization allows to improve performances

Your business will increase sales and profits. By expanding your activities globally you will likely improve your overall revenue. Nowadays, customers are global and if your company is able to look beyond the borders of your domestic market, you have some real upside potential. Sales in foreign marketplaces can also be performed at a higher price than the one applied for the local economy. Many imported products are paid, indeed, as premium products and foreign brands.

MORE SKILLS – Internationalization enhances productive capacity and management learning

Extending your actions and customer base internationally can help you create new product, learning from other markets and competitors, and get used to work with very demanding and different customers. A company can benefit so much from participating in a diverse and competitive market that its own product design and marketing strategy would improve and benefit from the interaction with other markets needs.

MORE BRAND – internationalization helps to improve a company brand-reputation

Enlarging the activities abroad and working with various partners and new clients can help a company improve its brand reputation. Brand reputation represents all the ideas and emotions that a customer associates with the brand and the customer service experienced during the acquisition of goods or services, whilst using them, and after-sales services provided by the company. Thus, a favourable brand reputation signifies that customers trust a brand and they are more likely to buy its products.

MORE COMPETITIVENESS – Internationalization reduces costs by virtue of enhancing productive efficiency

In many industries internationalization can support companies achieving greater scales of economy, in particular for companies from smaller domestic marketplaces. In other cases, a firm may seek to exploit a unique and differentiating advantage, such as its service model, its brand, or a patented-product.

Challenges

Despite the common understanding of the relevance of internationalization, there are still many internal and external barriers that obstruct the internationalization of many companies, especially SMEs. Among the various issues that any organisation should solve in order to succeed in its international business development process, these are some of the main problems: The business strategy to implement; The potential business-partner to choose; The specific activities to develop (import/export/production/etc.); The country or the region where to focus; The knowledge and skills of the employees; The cross-cultural awareness of the people interacting with the company.

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