Week 2: Pillars of International Success

Question 1

Definition of SME

Answer 1

A non-subsidiary, independent firm which employs fewer than 250 employees

Question 2

Micro SME

Answer 2

Less than 11 employees

Question 3

Small SME

Answer 3

Between 11 and 49 employees

Question 4

Large SME

Answer 4

More than 50 employees

Question 5

What are the public ecosystems supporting internationalising SMEs?

Answer 5

Government ministries (MFAT, Ministry of Small Business, Ministry of Export Growth), NZ Export Credit Office, NZTE

Question 6

What are some private organisations supporting internationalising SMEs?

Answer 6

Export NZ, Wellington Chamber of Commerce, NZ International Business Forum

Question 7

Turnover rate

Answer 7

Number of SMEs who internationalise are going to profit

Question 8

What are the internal drivers of success for SMEs?

Answer 8

Workforce skills, ICT and digitalisation, business networks and managerial acumen

Question 9

How does ICT and digitisation help SMEs succeed?

Answer 9

Leveraging digital platforms helps SMEs to become international. SMEs are getting into technology and technologically integrated into their business models. Even if you are not built on ICT, you can compete on it

Question 10

How do business networks help SMEs succeed?

Answer 10

Social capital: who you know and how well you are connected. A lot of the successful internationalised SMEs have a lot of strong connections. This is an important part of the SME ecosystem.

Question 11

How does managerial acumen help SMEs succeed?

Answer 11

SME internationalisation is fundamental to managerial ability, expertise, knowledge, mindset, and managerial talent

Question 12

What are the external drivers of success for SMEs?

Answer 12

Conducive business environment, clusters and incubators

Question 13

How does a conducive business environment help SMEs succeed?

Answer 13

A conducive business environment is either supportive for the firm directly or it cooperates (it doesn’t get in the way). This comes with environmental munificence (being extremely generous). It comes with lots of opportunities the organisation can cease. The notion of opportunity. The conducive business environment manifests in the regulatory framework, access to financing, and market conditions.

Question 14

How do clusters and incubators help an SME to succeed?

Answer 14

Clusters and incubators can either morph on their own or can create mutually reinforcing opportunities for each other. Clusters can happen naturally in industrial organisations. Incubators sometimes require direct policy-maker support.

Question 15

What do a conducive business environment, clusters, and incubators encourage?

Answer 15

Prudent risk raking and entrepreneurial experimentation.

Question 16

Define internationalisation

Answer 16

The process in which the firms gradually increase their international involvement

Question 17

Define exporting

Answer 17

Selling products/services via direct and/or indirect methods to overseas markets using the firm’s production facilities in its home country.

Question 18

Why is exporting important for SME internationalisation?

Answer 18

Because SMEs are small, they are limited because of size and restrictions. SMEs usually end up exporting rather than using other entry methods. This is because exporting has the least costs and investments out of all methods.

Question 19

Define international entrepreneurship

Answer 19

A combination of innovative, proactive and risk-seeking behaviour that crosses national borders and is intended to create value in organisations.

Question 20

What are the six SME internationalisation activities?

Answer 20

Direct exporting, direct importing, investment abroad, being subcontractors to foreign enterprises, having foreign subcontractors, and cooperation with foreign enterprises.

Question 21

What are the four motives for internationalisation?

Answer 21

1. Market seeking motive
2. Knowledge seeking/technology seeking
3. Efficiency seeking motive
4. Resource seeking/strategic asset seeking

Question 22

What is the market seeking motives to make an SME want to internationalise?

Answer 22

Low domestic demand, small or saturated home market, grow market share, target bigger markets, earn better margins and create an opportunity for sustained growth.

Question 23

What are the external drivers of success for INTERNATIONALISING SMEs?

Answer 23

A strong domestic market, logistics infrastructure, trade agreements, targeted support and nation branding.

Question 24

Why do trade agreements help an internationalising SME to succeed?

Answer 24

Trade agreements make trading straight forward and easier to sell their goods in another country by removing trade barriers. The SME can become more competitive and improve their competitiveness.

Question 25

Why does targeted support help an internationalising SME to succeed?

Answer 25

NZTE helps to support SMEs to internationalise. They work with thousands of internationalising SMEs, but concentrate on about 500 which they put into categories. They get given targeted support to what stage they are in

Question 26

Why does nation branding help an internationalising SME to succeed?

Answer 26

An example of nation branding is the clean, green image of NZ. Tie your strategy to this, tie it to your product, and take advantage of this association.

Question 27

What are the internal drivers of success for internationalising SMEs?

Answer 27

Managerial acumen, resource, capabilities and strategies

Question 28

Why are resources an internal driver of success for internationalising SMEs?

Answer 28

SMEs are generally resource poor. We can compensate by doing different things. You may not have the resources, but you can leverage by knowing how to access them, how to create them or knowing how to use them better than anyone else.

Question 29

Why are capabilities an internal driver of success for internationalising SMEs?

Answer 29

Capabilities are about finding ways, procedures and approaches to do things better than anyone else. SMEs are better at this than SMEs. Tacit knowledge of employees and managers.

Question 30

How do export barriers affect internationalising SMEs?

Answer 30

They discourage non-exporters from internationalising. Inhibit the ongoing international expansion of current exporters. Induce de-internationalisation. Dissuade ex-exporters from re-engaging in international markets.

Question 31

Define liability.

Answer 31

A person or things whose presence or behaviour is likely to put one at a disadvantage.

Question 32

Define the liability of foreignness.

Answer 32

All additional costs a firm operating in an overseas market may incur which a local firm would not incur.

Question 33

Define the liability of outsidership.

Answer 33

A firm that does not have a position in a relevant network is an outsider. If a firm attempts to enter a foreign market where it has no relevant network position, it will suffer from LoO.

Question 34

Define the liability of newness.

Answer 34

Young organisations need to learn new roles as social actors, coordinate new roles for employees and deal with problems of mutual socialisation of participants, and because of both their inability to compete effectively with established organisations and their low levels of legitimacy.

Question 35

Define the liability of smallness.

Answer 35

Includes problems with raising capital, meeting a myriad of governmental requirements and competing for labour with large organisations.

Question 36

How can SMES overcome challenges?

Answer 36

Debt factoring and hedging for financial challenges. Build networks and relationships. Capabilities and orientation: developing ways and routines of overcoming challenges, transformative, value-adding ways of overcoming challenges.

Question 37

What are external ways to overcome barriers?

Answer 37

MFAT, NZTE, Export NZ, Sea Cape, NZ Export Credit Office.