Acomb Tyres is by definition of the European Commission (2003) a medium enterprise because its turnover is less than 50 million and it employs less than 250 people. To put our study into context we need to understand issues that affect an SME enterprise when it attempts to internationalise. There have been many studies done on challenges of internationalising SMEs. We shall go over these challenges for Acomb Tyres to clearly understand what the issues are and then go on to show how internationalisation can be achieved at a lower risk.
Szabo (2002) of the United Nations Economic Commission for Europe (UNECE) identifies five critical success factors (csf) for SMEs that internationalise. The first factor is managerial skills. The management style and skills required in managing an international entity are different from a national operating entity. It is those SMEs that acquire and apply the right kind of managerial skills that survive. Structured approach to management is very important and this entails a degree of formalisation of management processes. Szabo (2002) observes that SMEs that succeed"have a well-structured management, which concentrates on core activities."
The third factor is to link up with appropriate partners and/or agents in the market. The presence of a local agent or partner is indispensable in navigating the unfamiliar waters of the new market. The ever present threat of bad debts can be ameliorated by linking with a knowledgeable local partner who can screen off suspect customers. Sometimes governments provide incentives to companies that can be accessed by companies who are using a local partner. A local partner can share the risk with the internationalising SME.
The fourth factor is technical ability and knowledge. Foreign markets may have standards that are different from the SME's home market. Equipment may need to be certified to meet specified national standards and in the process the product may have to be modified.
The final factor is the ability to respond quickly and decisively to enter a market. Decisions to enter a market should be made and acted upon on time. Opportunities do not last; only those enterprises that seize opportunities stand to gain.
Acomb Tyres measure well on most of these critical factors. The area that needs attention concerns the issue of management. The company will have to train its managers for international business operations. In fact to strengthen management recruitment of skilled international managers is required. The business planning needs to be more structured than it is now. A clear documented long term strategic plan needs to be compiled to guide all the company's activities.
How does an SME enterprise enter a foreign market Liu and Lu (2004) summarise the popular four stage Uppsala model for internationalisation as:
Stage 1: No regular Export activities
Stage 2: Export by independent Representatives
Stage 3: Establishment of foreign satellite affiliates
Stage 4: Installation of foreign production facilities
This model enables the