International expansion or not. No company can escape the 2035 problem of labor shortages and shrinking markets in Japan [Diagnostic chart available to determine whether you can succeed in International expansion and whether you have the foundation to do so].
release 2022.03.24 update 2024.3.13
Today, well..,
Not how to proceed with international expansion,
You talk about choosing “not to expand internationally.”
Yes, I am aware of the fact that the company does not do any overseas business in order to survive. It is natural for a company to decide not to do international business in order to survive.
I’m very sorry to hear that.
In reality, it seems likely.
Our company will expand internationally, because we have decided to (!) Since
I am interested to see that you have decided not to expand internationally, on the contrary.
(Our CEO is not shaky….)
Few SMEs are ready for International expansion!
Quick question,
Diagnostic chart that allows you to determine whether or not you can compete with international companies and whether or not you have the infrastructure for international expansion.
We have made
I will explain. we would like to look at this together!
Um.
Please see the chart here, as you proceed.
First-time international expansion Diagnostic chart
(We’re maintaining sales, we’re in a niche…)
Hmmm..,
…
The Company is C.
B.
(…？)
We have managed to maintain our business in Covid-19, though,
And the market changes don’t seem to be a tailwind,
You never know when you might lose a market from a competitor,
And there is no room for global expansion,
I guess that’s the honest answer.
(Oh, my gosh…)
(I thought we were in good shape for the rest of our lives, even in Covid-19, where there were no layoffs…)
(Quite a bit, gahn…)
The viewpoint is likely to change depending on one’s position.
Yes.
The diagnostic chart is designed to help you determine if you have the foundation for your first international expansion, or if you don’t,
I will explain in turn, starting with the situation of the company that became “A”.
・The company’s sales are not so good.
・Not planning any new projects, either.
・We are also having somewhat of a hard time training people.
That is situation A.
As to B,
・Although we have not lost any sales thanks to the trust we have earned, existing customers, and current employees,
As the president said,
・The stability may be shaken at any time, depending on the future market and competition,
・We do not know if we will be unable to respond to changes in the external environment,
・Costs and product advantages are becoming subtly weaker than those of firms with international expansion,
This is the situation.
I didn’t think it was that kind of situation.
All companies are more or less in the same boat right now.
Yes, it is.
So what kind of company are C and D?
I think we will be in a huge minority, but here are a few
C is,
・We are trying to make a (tentative) outlook for the near future,
・We have the manpower to do this built into our budget.
・Because it has been successful and has increased its competitiveness in the domestic market,
・For example, although we feel that international expansion into countries such as Thailand and China is within reach, we have no information and have no idea whether or not this business will be equally successful overseas,
This is the situation.
D is,
・And we’re taking this C situation even further.
・The company has been reviewing its business model from time to time in response to changing circumstances so that it can be accepted across both domestic and international borders,
・Maybe something could be developed internationally.
・if it doesn’t work, we have the flexibility to change where and how we expand based on some growth and successful case study.
is the kind of company that.
It seems like a huge hurdle.
Things are very, very expensive.
And in the first place,
Is it really necessary for an ordinary small business to review its business model from time to time?
…
That’s a must.
That’s where you need to be.
(I didn’t think so, but…)
The company falls into categories C and D, but we assume that it is less than 5% of all small businesses.
In other words, they are a significant minority.
(Thank goodness…)
So what should A, B, C, and D each do now?
Let’s look at the results.
Separating international expansion from domestic operations would be inefficient.
Yeah, B’s,
“taking into account the possibility that there may not be a need for it internationally.”
What does that mean?
…
Unfortunately, companies in situation A,
As it is now, international expansion is impossible.
Because international expansion is the same as new business development,
Losing sales and so on,
New business development may be on the way,
This has led to a lack of training and placement of human resources,
The situation must be improved first, and we cannot proceed in this manner.
That improvement, though,
We should not only improve our products so that they can be used domestically, but also “strengthen” them so that they can be used internationally,
Future international expansion will lead to shorter timeframes.
I see.
(From impossible to international expansion – what exactly is the short time frame for international expansion?)
B,
Depending on the future environment surrounding our business, we do not have a clear understanding of what kind of changes the market will require of us.
During the early phases of international expansion, there will be a period of several years when the entire company will be supported solely by sales from the domestic business, since international sales are small.
Nevertheless, the situation in which “unknowns” and “unpredictable” are left untouched in the domestic business is nothing short of risky.
・We will predict what kind of changes will be required, and
・We must urgently examine business models that can withstand such changes.
While defending current sales to the death,
・We need to find a strength (new business model) that does not depend only on that.
So, the priority to expand internationally is low “for now”,
First, we will concentrate on putting the business in front of us on the board.
（If the overseas business is an extension of the current one (where competitiveness is not solid), that is what I mean when I say, “There may be no need for it internationally.
(In the domestic business, the situation in which “we do not know” what kind of changes will be required by the market in the future and “unpredictable things” are left untouched is a risk…)
However, clear the untouched situation mentioned earlier,
It is not only for domestic use, but also for international use,
If we can find a new strong business model,
As we continue to strengthen our domestic operations, the possibility will arise that we can work together to promote international expansion.
In other words, in the process of building a solid foundation,
・we should not only build a foundation that can be used domestically, but also strengthen it so that it can be used internationally,
・It is important to train and strengthen our human resources, products/services, credibility, and marketing and branding capabilities, not only for the domestic market, but also for the international market.
Specifically, what can you do?
There are many things, for example,
Do not create the website from the Japanese version.
→Do you have a global website?
When developing products, research international intellectual property and regulations before starting work.
→Are you managing your intellectual property?
→Do you know about import/export regulations/standards?
Do not build your marketing and branding from the perspective of the Japanese market, which has the same background and business practices.
→Is your overseas marketing functioning?
→Are you achieving overseas branding?
These include
If the work of strengthening domestic and international expansion is completed as two completely separate tasks, then after strengthening domestic operations, they will have to be remodeled once again to the specifications for international expansion, both in terms of products and internal systems.
All of the skills acquired in the process of strengthening domestic operations (while also considering international expansion) will be very useful in subsequent international expansion. With these abilities, you should be able to get off to a good quick start when you are finally ready for full-scale international expansion.
A “quick start on the way up,” sounds good to me!
So if we work to strengthen our domestic business like that, we will be able to expand internationally sooner or later?
That is correct.
International expansion or not, the 2035 issue is relevant
By the way,
Back to the “no international expansion” choice,
If a company is not expanding internationally, there is no need to strengthen the company internally so that it can be accepted internationally.
If you don’t want to expand internationally, you don’t even need English,
I think we can manage to develop our business as we have in the past.
That’s not really the case.
Have you two ever heard of the “2035 problem”?
(・・・・ What is it?)
(There’s a lot of them, the 2030 problem, the 2045 problem, and then there’s…)
The market will be smaller because the population is decreasing, the medical costs will be even higher because of the super-aging population, etc., right?
Yes.
First of all, as is still the case today, small and medium-sized companies are having a very difficult time securing human resources.
I think you can rest assured that we are here to help you.
(Yes, I know…)
But we have a somewhat thin layer of people in their 30s and 40s, and highly skilled workers personnel are not coming to us.
（I am a non-skilled person.)
That’s right.
In addition to the difficulty in securing human resources,
The market is expected to shrink, and the need for small lots of various products is expected to increase.
Here, the company is in fierce competition with international competitors and is trying to keep up with the latest market conditions,
The “companies that do not have an international presence” do not have specific knowledge of international markets and competitors, and lack the capacity to keep up with the latest market conditions,
Which do you think will be chosen by the market in the future?
Do you think there are many applicants to join the company?
It is a company “with an international presence.”
But, of course, some companies that have not expanded internationally are already considering closing the company in your place.
The choice is not to take over the business and therefore not to make new investments.
Even in that case,
・If the company’s value (competitiveness) is high, there is a way out: sale.
・Without competitiveness, the business may go out of business and be taken out.
In any case, the key word here again is whether or not the company has been strengthened to get there.
That M&A is also not always bought by a Japanese company, is it?
You are right.
(Is it possible for the president to be a foreigner, even in a small or medium-sized company?
Competitiveness and strength that will be necessary for international operations as well as for those without International expansion
For example,
Suppose there is a company A that has decided not to expand internationally, but still maintains market share domestically.
Yes.
Company A’s industry is a closed environment and not highly competitive, as many of its competitors did not have international operations either.
Company A was able to maintain its market share into the 2030s without undergoing tremendous DX or undergoing tremendous reforms.
・・・.
But suppose a certain foreign company realizes the umph of its industry.
For starters, suppose you acquired a competitor under Company A, reformed it, and sold its products with cheaper and more convenient services.
Company A quickly loses sales, but with nothing to do, it remains severely damaged and is unable to recapture sales until the very end.
The acquisition price is far from what we hope for, but we have no other choice.
I don’t want to think about such a future ==!
Hmmm.
After all,
I think the premise of running a company is to keep the company going.
If you are not already planning to sell or close the business,
Even if they choose not to expand internationally,
It can be said that the competitiveness of international companies, the needs of foreign markets, and the Japanese companies (competitors) competing there cannot be “irrelevant to us forever.
I see.
Even if you decide not to expand internationally, you still need to be competitive and strong enough to be comparable to companies that are expanding internationally, as long as you continue to operate as a company.
Yes.
(It’s kind of complicated.)
If this is the case, it would be better to expand overseas so that we can see the competitiveness of international companies, the needs of overseas markets, and the Japanese companies (competitors) competing there from our side,
Isn’t it too soon to talk about it?
You could say that,
It’s not that easy to talk about, that’s what I’m saying.
Whether they expand internationally or not,
A company becomes stronger when it decides not to postpone problems.
We want to hone that strength together.
I’d like to ask you for a favor.
You are really good at relying on people!
