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Company Financing , Start- up & Internationalization. Lesson May 28th 2013 - Università degli Studi di Torino Alberto Iodice e-mail Today’s AGENDA/1 st part. Profit & Loss Statement and Balance Sheet Corporate Finance area in a company

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company financing start up internationalization

Company Financing, Start- up & Internationalization

Lesson May 28th 2013 - Università degli Studi di Torino

Alberto Iodice


today s agenda 1 st part
Today’s AGENDA/1st part
  • Profit & Loss Statement and Balance Sheet
  • Corporate Finance area in a company
  • Financing options: Equity financing & Debt financing
  • Auto-financing sources
  • Sources of external financing
  • Best capital Structure
profit loss statement
Profit & Loss Statement

P&L statement summarizes the revenues, costs, and expenses incurred during a specific period of time, usually a year. These records provide information that shows the ability of a company to generate profit.

balance sheet what communicates
Balance Sheet- what communicates?





Financing Sources

How is the money invested??

Where the money comes from??

balance sheet sample
Balance Sheet sample

Balance Sheet Statement summarizes company's assets, liabilities and shareholders' equity at a specific point in time. These three segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.

concept of opportunity cost
Concept of opportunity cost
  • Also equity capital costs!
  • Opportunity cost: value of the next-highest-valued alternative use of that resource.
  • Cost of Equity: question “what rate of return will Investors require to invest in your company?”

Cost of Equity = Bond Yield + Additional Risk premium

Base interest rate plus some extra amount for the risk of investment, equity investments imply more risk than debt investments, equity investors need higher returns

Also retained earnings have cost of opportunity

corporate finance area
Corporate Finance Area

What is the focus??

Research, acquisition, use of financial resources necessary for company’s activities

  • ASSETS show how the money is invested
  • LIABILITIES show where the financial resources necessary for company’s functioning come from
planning for capital needs
Planning for Capital Needs
  • Capital: wealth employed to produce more wealth. It exists in many forms in a typical business including cash, inventory, plant and equipment.
  • Three different types of capital:
    • Fixed Capital: company’s permanent fixed Assets, money “frozen”
    • Working Capital: business’s temporary funds, to support a company normal short term operations= Current Assets- Current Liabilities
    • Growth Capital: when an existing business is expanding or changing its primary direction
sources of financing
Sources of Financing


Internal Financing

Operating Cash flow

Sources of Financing

Equity capital

Private equity

Public shares

External Financing

Debt Capital


Issuing bonds

internal financing auto financing
Internal Financing: Auto-financing
  • expresses firms ability to provide coverage of their financial needs independently with:
    • Retained Earnings
    • Current operations: positive cash flow

Main consequences:

    • Capital Increase not decided by shareholders, shareholders have little control
    • Tax disadvantage associated with lower dividend distribution
    • Shareholders benefit if new investments performance > cost of capital (opportunity cost)
    • Value transfer from shareholders to creditors
    • Sharpen the agency problems between shareholders and management
internal financing asset based financing e asset restructuring
Internal Financing: Asset Based Financing e Asset restructuring
  • Additional liquidity with the sale of specific Assets
    • Strategic View

Main consequences:

    • Expansion of funding opportunities, often at lower costs than the cost of capital
    • Improvement of capital ratios
    • Concentrate resources on core business activities and redefining organizational boundaries in a reductive way
    • Re-engineering operations, improving efficiency, effectiveness and flexibility of management
    • Unlock "hidden” value
    • Defense against hostile takeovers
    • Particularly useful in situations of crisis / recovery
internal financing securitization
Internal Financing: Securitization


Transfer of Assets

  • Definition: financial technique that allows to dispose of asset classes transforming illiquid balance sheet positions in negotiable securities
  • Consequences :
  • Diversification of funding sources
  • Risk diversification
  • Reducing the cost of financing through ABS securities

(Securitization and subprime bubble - USA)

Special Purpose vehicle


Securities on the financial market

internal financing factoring accounts receivable
Internal financing: factoring accounts receivable
  • Instead of carrying credit sales on its own books, sell outright its accounts receivable to a factor.
  • A Factor buys company’s accounts receivable in 2 parts: first payment immediately (50% to 80%), second payment (15% to 18%) when original customer’s pay the invoice.
  • Factoring deals:
    • With recourse: company retains responsibility for customers who fail to pay their accounts
    • Without recourse: if the customers fail to pay, the factor bears the loss

Factors discount from 40% to 2% depending:

    • Customers’ financial strength and credit ratings
    • Reputation of Industry
    • History7track record

Discounted rate without recourse. Higher cost

internal financing factoring accounts receivable1
Internal financing: factoring accounts receivable
  • Factoring of accounts receivable (ST)





Shorten time lag between the date of billing and payment collection


Discount and collection charges


  • It is another bootstrap technique:

by leasing Assets, company is able to use them without locking money in valuable capital for an extended period of time

  • Reduce long term capital requirements by leasing.
    • Equipment
    • Facilities
external financing
External Financing
  • Equity Financing
  • Debt Financing
  • The two categories differ in:
  • return obligation
  • timeframe
  • financiers
  • remuneration for financiers
  • risk for financiers
external financing1
External financing

Equity financing:

  • Issue and placement of own shares

Homogeneity, standardization, indivisibility, autonomy, free transferability

2) Subscribed capital increase

3) Private equity: investment by private individuals or institutions specialized / dynamic sectors

  • venture capital
  • expansion financing
  • acquisition/buyout


private equity
Private Equity
  • Cons of Private Equity:
  • Use of excessive leverage
  • Short terminism
  • Effects of quality and quantity of jobs
external financing in the form of debit
External financing in the form of debit
  • Commercial line of credit, a short term loan with a pre-set limit
    • Elastic to the company needs
    • It is risky form for the bank
    • Cover temporary imbalances/ “liquidity margin”
    • It does not stimulate financial planning
    • Without a pledge

Interest expenses on the used ammount


Commission % applied on an annual basis on the amount granted

external financing in the form of debit1
External financing in the form of debit

Medium- Long term financing (MLT)

Bank loans


Definition: Loan maturity extended . The beneficiary is obliged to pay interest and the gradual return of capital


Definition: similar to mortgage but without requiring to pledge any specific collateral to support the loan in case of default.

  • Syndicated Loans
mortgage secured intermediate and long term loan
MORTGAGE/ Secured Intermediate and long Term Loan

Main features:

  • Pledge on real goods/real estate
  • Normally from 60% to 80% of the value
  • Ability to pay off before the loan by paying penalties
  • Main costs:
    • Interest expenses
    • Credit assessment
    • Expertise charges
    • Insurance costs
    • Notary public costs
    • Flat tax (in Italy)
unsecured loans
Unsecured loans

Main characteristics:

  • collateral is not a necessary condition
  • maximum duration shorter, no more than 5/7 years
  • Inability to pay off the loan earlier
  • Higher interest rates but not technical expertise and legal costs
  • In Italy often guarantees issued by CONFIDI (consortium for Joint Credit guarantees – ConsorzidiGaranziaCollettivaFidi)
  • Importance of CONFIDI per SMI
syndicated loans
Syndicated Loans

Main characteristics:

  • provided by a bank pool
  • Purpose: risk sharing and effort funding; the pool dissolves after completion of the operation.
  • Group of credit Institutions: lenders;borrower. There is a distinction normally between:

the arranger Bank bears the burden of the organization,

the leading bank (that often coincides with the arranger bank), which coordinates after the syndication

the agent bank that takes care of all administrative aspects of the loan after the operation

the participating bank which pays a portion of the loan.

external financing2
External financing

Market Debt

  • Bonds (MLT)
  • Private placements
  • Commercial paper (BT) maturities between 1 and 3 months

Hybrid Forms of Financing:

  • Subordinated loans
  • Convertible bonds
external financing assets based lenders
External Financing: Assets based lenders
  • Asset-based lenders, (which are normally smaller commercial banks, commercial finance companies or specialty lenders) borrow money for pledging otherwise idle Assets as collateral:
  • accounts receivable,
  • inventory (inventory financing),
  • purchased orders,
  • Stocks and bonds (Stock brokerage Houses – margin (maintenance call)

It works especially well for:

  • Manufactures, wholesalers, distributors with significant stocks of inventory and accounts receivable.
    • Even unprofitable companies
    • Finance rapid growth

Lenders: Interested in the quality of Assets used as pledge

High quality pledge: up to 85% advance rate

external financing vendor financing equipment suppliers
External Financing: Vendor Financing & Equipment Suppliers
  • Vendor financing. Companies borrow money from their vendors and suppliers in the form of trade credit
  • Getting vendors to extend credit in the form of delayed payments,
  • short term interest free-loan for the amounts of good purchased
  • Equipment Suppliers: encourage business owners to purchase their equipment by offering for finance the purchase:
  • Modest down payment
  • Balance financed over the life of the equipment
objective of financial management
Objective of Financial Management

Financial Balance

The company must be able to :

  • Determine its grossfinancial need
  • Determine its net financial need
  • Optimize its financial structure

Structure of balance sheet

(Coordination Assets-Funding)

Managing cash flow (Coordination inflows- outflows)

Ideal mix of sources (different types of financing)

the ideal financial structure
The ideal financial structure
  • Financial structure is the composition, the "weight" of the individual sources of financing that are liabilities and shareholders‘ equity.
  • In order to obtain the ideal/optimal financial structure, i.e. the best combination of funding sources, it is necessary to connect the opportunities offered by the financial market with the structural and functional characteristics of the enterprise.
  • The determination of the optimal financial structure requires consideration of several variables :
    • The legal form of the company, the sector of activity; company size; the eventual rating;
    • The characteristics of the production cycle; the opportunities offered by international and domestic financial market; the cost and the tax treatment of different forms of financing;
    • The type of financial need.
corporate financing and the business life cycle
Corporate financing and the business life cycle
  • 4 distinct phases impacted on financial decisions
  • Investments increasingly complex;
  • Expansion of the number of lenders;
  • In the growth stage equity/ own funds resources may be insufficient;
  • Market oriented Model and Credit oriented model
tax variable in financing decisions
Tax variable in financing decisions
  • The tax legislation of many countries provides - although with different nuances - that companies can deduct from their income the interests paid to their creditors during the borrowing period.
  • Full or partial deductibility of interest charges
  • Tax advantage of a certain degree of leverage
  • Dividends and retained earnings are

not normally tax deductible

optimal capital structure
Optimal Capital Structure
  • Analysis of the type of financial needs and in particular the relationship between Assets and funding sources.
  • The financial sources must in fact always be "homogeneous" with respect to the types of needs to be covered.

intended to short-term investments

Capital goods

Short-term sources

long-term sources

interdependence between uses and sources
Interdependence between uses and sources



  • Intangible
  • Material
  • Financial



  • Inventories
  • Short-term receivables
  • Current financial assets
  • cash and cash equivalents
  • Accruals and Deferrals


what is the right balance between financing with debt or equity
What is the right balance between financing with debt or equity?
  • Financial Leverage is used to measure the relationship among funding sources. The "calculation of leverage," is according to the following formula :
  • if the leverage assumes the value of 1 means that the company has not made ​​use of third-party capital(no debts);
  • if the leverage assumes values ​​between 1 and 2 means that the equity is greater than the third-party capital;
  • if the leverage assumes values ​​greater than 2 means that the borrowed capital is greater than the equity.
  • Expanding debt - increased risk of insolvency
modigliani miller theorem
Modigliani–Miller Theorem
  • Modigliani–Miller theorem (1958)
  • Assumptions underlying the model :
    • Companies can finance themselves with only two sources: debt capital and equity capital;
    • The financial markets are perfect and without frictions;
    • Businesses and individuals can borrow at the same interest rate;
    • There is no corporate taxation;
    • There are no transaction costs (the use of debt or equity capital does not generate additional costs in the form of commissions, legal fees and so on)
    • There are no bankruptcy costs, direct or indirect;
    • The insiders of the company and outsiders have the same information (no subject has informational advantages);
    • The management operates solely in the interests of shareholders and the latter in turn do not take actions to harm the interests of the creditors.
modigliani miller theorem1
Modigliani–Miller Theorem
  • Under the assumptions the value of a firm is unaffected by how that firm is financed. In a MM world, we should look to completely randomdebt ratios and highly changeable over time.
the weighted average cost of capital wacc
The Weighted Average Cost of Capital (WACC)
  • Calculating the WACC
    • Determine the target amount of each type of capital
    • Determine the weights
    • Determine the cost of each type of capital
    • Calculate the weighted average
spread on the real economy financing companies italy
Spread on the real economy - Financing companies - Italy
  • Interest rates on new loans granted to companies regardless of size, industry membership and so on..
  • Weighted average
  • There are clear signals that are not encouraging …
spread on the real economy financing companies italy1
Spread on the real economy - Financing companies - Italy
  • …. especially on the long run curve


  • cost of refinancing of Italian banks reflects the Italy country risk
  • How do banks refinance
  • Risk: core competitive disadvantage of Italian businesses which adds to the costs of bureaucracy, low productivity, energy costs and increased taxation
why italian banks have higher cost of refinancing
Why Italian Banks have higher cost of refinancing?

Balance Sheet example of an Italian bank at the end of 2011



funding for banks higher cost in italy than in northern europe
Funding for Banks: higher cost in Italy than in northern Europe
  • Forms the main part of the sources of funds as debt and includes : Current account deposits, savings deposits (deposit accounts); Bonds
  • Current account deposits
    • form of liabilities on demand with monetary function
    • Important in Italy; less in other countries as USA.
  • Savings accounts
    • They are distinguished by maturity or amount
    • In Italy they have become increasingly


    • Bonds
    • Important in Italy; equilibrium


funding from financial institutions higher cost
Funding from Financial Institutions: higher cost
  • Some main items: the interbank debt and the central bank refinancing
  • Interbank Debts
    • the interbank market is an important part of themoney market
    • The banks manage their treasury adjusting interbank surplus and deficit temporary counterpart with other banks
    • However, there are banks that have structural deficits of customer deposits and owe permanently in the interbank market
  • Central bank refinancing : cost between countries unchanged (only case)
    • The banks operate with the central bank to manage liquidity reserves (deposits at the central bank)
    • Refinancing operations are important in regulating the liquidity and influencing the level of interest rates
  • Since loans are the main component of Assets and also represent what identifies the core business of a bank
  • They are the most important source of contribution to net interest income / earnings
  • Even lending to private customers and business will suffer from having a higher cost since the Bank has to make profits
  • For example, if funding costs 4%, Bank to make profits should ask more than 4% for the loans granted to corporates

Takes money from third parties

Lends money to third parties


conclusions 1 part
  • Summary
  • Questions & Answers


today s agenda 2nd part
Today’s AGENDA/2nd part
  • Start-UP Companies
  • Internationalization


start up
  • Definition: A start-up is a company that is for the first time launched on the market or acquired and re-launched through a new start

Elementary components of the strategy for a start-up





business idea
  • Innovation:original, unique or consist in the new

combination of existing factors.

New and breaking

  • Motivation
  • Feasibility : constraints in the market, legislation and

technical & scientific context


Technological Process

Response to the market

Business Organization

aspiring entrepreneur
Aspiring Entrepreneur

Desirable Features:

  • Know-how, danger of knowledge gap
  • Manage more people
  • Collaborate and charisma
  • Patients negotiators
  • Take responsibility, risk and decide
  • Investigate new solutions with curiosity
business plan
Business Plan

1) What produce, deliver and sell? Product system;

2) To whom sell? The market segment

3) How to produce and sell? The company structure

4) What image of itself transmit? Communication policy

5) How to finance the idea? Financing policy

Important: market analysis /SWOT analysis and Porter 5 Forces

Design tools and presentation to various stakeholders:

Elevator pitch:

Idea, background of the project (management experience),

business model (competitive advantage), future perspectives

and financing

Business plan

financing the start up phase
Financing the start-up phase
  • Financial Gap in a start-up: financial requirement against which there is a substantial lack of revenues associated with an increasing use of capital and negative cash flow in the early stages of the business life cycle.
  • 4 components of financial requirement:

1) investments to develop the project

2) structural investments in productive capacity

3) investments in working capital

4) investments for further


corporate financing and the business life cycle1
Corporate financing and the business life cycle
  • 4 distinct phases impacted on financial decisions
  • Investments increasingly complex;
  • Expansion of the number of lenders;
  • In the growth stage equity/ own funds resources may be insufficient;
  • Market oriented Model and Credit oriented model
peculiarities of funding for start ups
Peculiarities of funding for start-ups
  • Financial Hierarchy for start-ups: equity financing comes before debt financing.

Understand why.

- Difficulty in raising debt funding

- Often absence of collateral to offer

- Credit assessments made ​​on the business plan and not on sure data.

Peculiarity : come into play support tools such as : confidi, business incubators, business angels e venture capitalists

sources of equity financing for start ups
Sources of Equity Financing for start-ups
  • Personal Savings, lenders and investors expect entrepreneurs to put their own money into a business start-up
  • Friends and family Members, often more patient of

external investors, seed capital but:

  • consider the impact of everyone involved
  • Keep the arrangement strictly business
  • Settle the details up front
  • Never accept more than investors can afford to
  • Create a written contract
  • Treat the money as bridge financing
  • Develop a payment schedule that suits both the entrepreneur and lender or investor
  • Have an exit plan
business angels
Business Angels

What are? are informal private investors who follow the young companies with high growth potential; they have entrepreneurial spirit and a good appetite for risk. They invest in business start-ups in exchange for equity takes

Usually: wealthy people, experiences in the field of business management (managers, entrepreneurs, professionals, financiers).

  • Strengthening of the capital of companies
  • Financial, strategic, managerial, marketing consulting activity
  • Club and networks of business angels, ( e.g. IBAN)
business angels1
Business Angels
  • Invest for more than purely economic reasons:

Personal interest & experience - willing to put money long before venture capital firms and institutional investors

  • In USA every year B.A. invest nearly 23 bln $ every year in 50 thousand companies and they are the largest source of external equity for small businesses
  • Normally accept 10% of the proposal received
  • They can tolerate risks many venture capitalist can not tolerate
  • Normally range of investment :from 100 thousand euros to 2 mlneuros
  • Return on investment (20 % to 50%) tends to be lower than those of professional venture capitalists
  • Typically purchase between 15% and 30% ownership
venture capital companies
Venture Capital Companies

What are? The venture capital companies are institutional investors, private, for profit organization that assembles pools of capital and then use: purchase equity positions in young businesses with high growth and high profit potential.

In the US they now represent 7% of all funding for private companies

  • Strengthening of the capital of companies
  • Financial, strategic, managerial, marketing consulting activity
  • Greater focus on profitability
venture capital companies1
Venture Capital Companies

Policies and investment strategies:

  • Investment size and screening:
    • Range of investment: 3 to 10 mlneuros to justify the cost of investigating;
    • invests in less than 1% of the

applications received.

    • Ownership and control:

purchase 20 to 40% of stake

    • Stage of investment:

Early stages of development or growth phase

    • Investment preferences: technology and niche market
corporate venture capital
Corporate Venture Capital
  • Large corporations have gotten into the business of financial small companies
  • 20% of all ventures capital invested comes from corporations
  • Gain other benefits, introduction to important customers and suppliers
business incubators
Business Incubators

What are? Entities of different nature and emanation (profit oriented, non profit, public, universities, belonging to industrial groups), collect business ideas with high potential for economic return, but not yet ready to be funded, and provide for a limited period of time everything that can help them arise.

  • More present sectors: computer science, biotechnology, service sector
  • Share part of the business risk
  • Accelerate the development
confidi for start up
CONFIDI for start-up

What are? Mutual guarantee funds consortia: associating in the form mutual consortia retail, cooperatives and small and medium-sized industrial and services enterprises are intended to guarantee each other in front of banks, limiting credit risk and increasing bargaining power.

  • Roots to the local areas.
  • Financial coverage. Deposit of cash fund and other financial assets by the member companies of the consortia.
  • Intervene in the event of non-payment.
other supports for start ups
Other supports for start-ups
  • Public Entities, European

Structural Funds, Foundations

Example “FondazioneFilarete”, Business accelerator for the development of biotechnology research

presence of start ups in italy
Presence of start-ups in Italy

According to the latest data released by Infocamere, Turin leads the ranking of the provinces with the highest number of start-up companies with high technological value.With few exceptions, Central and Southern Italy are still far away.

Data from Infocamere 03/28/2013

latest research on start ups in italy
Latest research on start-ups in Italy

The economies with high profile technology and innovation that are more resistant to shock in the markets

I-com (Istituto per la Competitività- March 2013) presence of businesses created as start-ups since 1970 : 8 countries, Italy has not good positioning

Result: American market shows a greater incidence of start-ups(17% of total capitalization) followed by German stock exchange(7,3%), Tel Aviv (3,5%), South Corea (2,36%), Shangai (1,70%), Paris(1,27%), Santiago (0,26%) and at the end Milan stock exchange in which just the 0,17% of the total capitalization of the top 150 listed companies consists of successful start-ups.

Decretosviluppo 10/20/2012: new measure to facilitate start-ups

  • Definition: process of geographical expansion of economic activities of businesses beyond the national boundaries of the countries they belong to.
  • From the 70s globalization : process of

expansion of the company activities through

which the value chain is managed on a global scale.

why internationalization
Why internationalization?
  • To achieve larger economies of scale by selling to more customers in other countries.
  • Reduce the risk of excessive dependence on one country distributing sales to more than one country / country risk diversification.
  • Replicate the domestic success in new contexts.
  • The development of new markets selected on the base of potential consumers / income level (e.g. Italian textile industries in Romania)
  • Access to local resources : low labor costs, natural resources, technological expertise of Excellence (static relocation)
  • Learning in countries that are a model for the state of technology, or managerial skills (e.g. Japan 80s)
  • To facilitate the coordination of their own

international activities

how to internationalize
How to internationalize:

The entry modes differ in the degree of commitment

Contractual Agreements


Direct Investments



  • More widespread, low level of commitment, action by the firm to send produced goods and services from home country to other countries
  • Three variants:
  • Indirect export
  • Collaborative exports
  • Direct exports
contractual agreements
Contractual Agreements
  • When a direct investment can not be

justified because :

a) Market is too small

b) Country risk too high

c) Government does not allow direct presence

d) The company wants to test the market

Three variants:

1) Manufacturing contract

2) Licensing agreement (patented information & trademarks)

3) Franchising

international joint venture
International Joint- Venture
  • When a firm moves abroad segments of the value chain without incurring the costs and risks alone.

3 main reasons:

1) Joint ventures with local companies may be the only form of entry allowed (transfer knowledge, skills and technologies to the local economy)

2) Complementary resources and skills

3) reduce the risks

Main risk: failure of the agreement

Company B

Company A

Equity Joint Venture

foreign direct investments fdi
Foreign Direct Investments (FDI)
  • When an enterprise wants to retain direct control, complete autonomy, more risk and more financial mobilization also.

It can occur in:

1) Acquisition of an existing business

(e.g. Luxottica)

2) Greenfield investment (foreign subsidiary)

  • managing specific aspects
  • particular human resources
  • norms and standards
choice of markets where
Choice of markets: Where?

Analysis of attractiveness of the international


Choice of the market affected by the following factors:

1) International strategic orientation of the company: willingness to engage in processes of growth / risk-taking.

Initially: countries similar in culture, language, level of economic development / less risk.

Enterprise already present in several markets: focus on interdependencies between new markets and one in which there is already.

2)Characteristics of the market and industry: market potential and integration between markets.

3) Nature of the competitive environment.

difficulties during the internationalization process
Difficulties during the internationalization process
  • Governmental restrictions (e.g Carrefour)
  • Adapting organization to different national contexts
  • Logistical problems (underdeveloped transport infrastructures)
  • Four different types of “liabilities”:
    • Liability of foreignness: different norms, rules, culture, language, religion and politics
    • Liability of expansion: increase in the scale provokes increased transportation, communication and coordination challenges
    • Liability of smallness
    • Liability of newness: lack of experience of foreign transactions
the competitive advantage of nations
The Competitive Advantage of Nations
  • Strategy and structure of the company
  • Rivalry between firms and quality challenges
  • Porter 1990

Firm’s strategy, Structure

And Rivalry



Demand Conditions

  • Dimension
  • Quality
  • Natural
  • Advanced
  • (infrastructure, management e.g.)

Related and supporting industries

  • complementary sectors
  • Supply Systems
entry timing
Entry timing
  • Enter before (first mover) versus enter after the competitors (follower)

Early enters advantages: pioneering, Cost advantage, pre-emption of geographic space, adapting to local markets, differentiation advantages, political advantages

  • Adopt an entrance incremental versus take simultaneous entry
  • Concentration versus diversification

tendence: The born global firm

internationalization not for everyone
Internationalization: not for everyone

Not all businesses are ready to go abroad :

  • Venturing abroad ahead of time can be detrimental to the overall performance of the enterprise, especially for smaller firms for which the margin for error is smaller.

The factors underlying the motivation to go abroad

  • Size of the enterprise
  • Size of the domestic market


case study
Case study:
  • In 1960 Carrefour the first supermarket in France
  • In 1963 new store concept: hypermarket
  • In 1969, first store outside France in Belgium
  • In 1973 Royer law, restricted the introduction of hypermarkets in France
  • Expanding: hypermarket format with local adaptability
  • Where: closest countries and afterwards emerging economies with growing urban middle class
  • International concept:
    • A simple and clear idea: all their shopping under one roof
    • Reinventing to meet demands of local customers (e.g. organic food in France, petrol station in Argentina)
  • Summary
  • Questions & Answers

Contact: E-mail: