12 Apr

Opportunities and Threats of Digital Transformation

IVC team | Business Development

The world moves at a fast pace and we have to keep restlessly catching up. Companies like Hyperloop using technology to create new transportation opportunities in order to efficiently connect cities...Digital transformation is here to stay! and will have a huge impact on your business.

Digital Transformation

Companies like Uber using different application delivery programs can function with just a handful of employees and access the portfolio of other global players.

This transportation example shows the high the impact of digital transformation and the subsequent internationalization. Industries such as public transportation, airlines or car sales and mobility industry, where millions of employees are confronted with complete new global competitors and companies are going to lose a lot of power and money if they do not take part on that revolutionary transformation process. Surely the big players in the industry have been trying trying to influence the digital future for years, and to set up the new standards, like BMW or Audi with the autonomous driving concept or Samsung and Google with a coherent language of the Internet of things (IoT).

The opportunities for growth and expansion

Generally the potential options that IoT bring about would simplify the international expansion and growth of businesses all around the world, but confront them also with complete new challenges. The connected systems require new rules which the companies should adapt to.  Digital transformation offers the possibility to sustain national brands on the international market. Now let´s focus on the opportunities and threads identified. 

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Internationalization impacts on all industries. Offering products and solutions abroad provide companies with the possibility to react on local needs, for example like “Fanta” testing with watermelon taste in Spain and Portugal or for instance like  Louis Vuitton by selling their products in a usual shopping mall in Hong Kong and not typically in Europe at specific luxury streets. Furthermore companies can benefit from different economies of scale effects in terms of costs, logistics and knowledge: For example, by increasing the production volume it is possible to reduce the overall costs. But the most attractive advantage is to increase the turnover. In Europe there are currently about 743 million people, effectively that means just about 10% of the world population. That means that in theory companies who are even acting only in Europe (which also means that they already work internationally) got a lot of turnover potential.

The threats..

However the possible increase of turnover is confronted with a potential thread. If these companies do not consider an internationalization of their business regarding digital transformation they could lose a lot of market share in their business. Regarding to a future analysis of Roland Berger consulting in Germany, Europe has the possibility to increase the turnover about 1.25 trillion euros but could also lose 605 billion of their gross value added. Additionally digital transformation will change the market depending on offer worldwide by verticals. Therefore European countries will be confronted with complete new competitors regarding origin and technology.

Certainly there is still time to influence those radical changes positively. Companies should encourage their digital competence and impugn and check their current competitive advantage to reduce their threads. If companies realize that they have a lack of knowledge and experience about digital possibilities it is highly recommended to get into contact with experts all around the world to prepare your future business and benefit of the internationalization process.

Digital transformation is here to stay and will have a huge impact on your business. It is your decision to develop new standards or adapt those of your potential competitors.


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