Intelligence for Internationalisation: A novel necessity for businesses

Antonio Bonet, Enrique Fanjul, Carlos Pobre

6 mins - 24 de Mayo de 2023, 07:05

Companies involved in international activities face a much more complex business environment than a few years ago. In addition to the risks and uncertainties in which they had to operate, there are now those arising from the consequences of the invasion of Ukraine, the pandemic, the US-China trade war, or the perverse consequences of climate change. In short, companies face a great deal of uncertainty that has resulted in a new pattern of commercial, geopolitical, and environmental risks, among others, whose importance has grown substantially in the very recent past. 

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The information and analysis that companies have usually used to carry out their international activity, such as market studies, lists of potential importers or partners, potential suppliers, competitors, levels of tariff protection, or technical and regulatory standards, is no longer sufficient. Let us look at a several of simple examples. Should a company that decides to open a new market in a third country, which is not on the EU's ‘black list’, and whose potential for growth and profitability makes it very attractive, undertake the investments involved in opening a new market without considering that its customer in that third country may re-export to Russia and therefore be affected by indirect sanctions from the US government? 

Another example. If a Spanish company wanted to set up a small plant to supply components in an Asian country, the decision would be based on technical and economic circumstances: the cost and qualifications of the workforce, taxation, regulatory environment, access to raw materials, etc. Even if all these objective factors are favourable, the company should consider other issues, which were not usually taken into account in the past, such as the risk of its local facility being affected by catastrophic flooding as a result of climate change.

In other words, in the current global context of growing complexity, companies need new sources, methodologies, and tools to search for and analyse information that will enable them to make optimal decisions that will result in greater competitiveness in international markets with the least possible risk and uncertainty. This is the subject of the Technical Note “Intelligence for Internationalisation” recently published by the Committee for Reflection on Internationalisation of the Exporters and Investors Club. Its authors, Enrique Fanjul and Carlos Pobre, have coined this new concept that includes all the variety of nuances and perspectives that today make up the playing field for companies in the international arena. They point out, for example, that there are a multitude of sources in Spain that provide commercial information, both public, such as those of the Secretary of State for Trade (ICEX, Network of Commercial Offices Abroad, etc.) and the promotion agencies of the Autonomous Communities, and semi-public, such as the Chambers of Commerce, as well as private sources of various kinds. However, there is a lack of a true dedicated intelligence system for internationalisation that takes into account all the relevant aspects for the success of international business in a coordinated manner. This is what they call Intelligence for Internationalisation, in other words intelligence applied specifically to international business activity. It would therefore represent a sort of fusion in the international sphere between competitive intelligence, which is specific to companies, and economic intelligence, which in Spain has usually been reserved exclusively for the activity of government and public bodies. Moreover, it is different from other areas such as cybersecurity or the protection of physical assets.

Large companies already use Intelligence for Internationalisation. They have departments and staff that analyse the risks and opportunities for their international business. But there is an important asymmetry with SMEs which, although they are aware of its importance, do not have sufficient resources to do so fully. It is therefore necessary to provide them with intelligence for their strategic decision-making. 

Here the public sector has an important role to play, in collaboration with the private business world. There is a very heterogeneous set of institutions, sources and methodologies of analysis providing information, some of them of high quality, which complement and reinforce each other. However, the various existing information strategies and plans hardly explicitly address intelligence as a useful and necessary instrument to achieve the objectives of improving internationalisation. This is despite the growing awareness of the great importance of quality information management for strategic business decision-making in foreign markets and the significant steps that have been taken to further adapt internationalisation support programmes and services. 

But there is a lack of more intelligence, such as strategic analysis of how geopolitical challenges and uncertainties may affect companies’ international activity, as well as greater coherence and coordination. The enormous diversity of public institutions that in recent years have been talking about including intelligence in their strategies, programmes and instruments has resulted in a certain disorientation for companies, if not a genuine lack of knowledge of the entire offer available at the different levels: national, regional, local, and multilateral.

It would be advisable for an independent entity with sufficient technical capacity to take charge of this coordination of actions and resources in the area of intelligence for internationalisation. Of course, this should not entail a new burden on the general state budget. It is not a question of creating a new entity, increasing the structure of the Administration, but of entrusting it to an existing entity. However, it would have to be an independent entity, with a sense of State, so that it acts autonomously and independently of any changes that might occur in the political sphere.

This entity, in addition to promoting coordination, complementarity, and synergies between the different public and private sector institutions, whether at state or regional level, should take on other functions. For example, the creation and dissemination of a 'culture of intelligence', which would require the training of civil servants and company managers in this discipline. In addition, the design and maintenance of a communication channel or platform should be created in order to respond to queries and requirements from companies and for them to find incentives to participate freely by exchanging information in a fruitful public-private collaboration. The public sector could also encourage the establishment of strategies and alliances with other intelligence centres for internationalisation in other countries, which would also allow for the monitoring of other countries' activity in this field in order to incorporate best practices in Spain. 

In short, the aim would be to establish a genuine national system of Intelligence for Internationalisation by generating new analyses and disseminating existing high-quality information. This would favour and strengthen the international activity of our companies, especially SMEs, in order to successfully tackle the growing difficulty of foreign markets with a long-term strategic vision.

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