Identification of the risk factors of the internationalitaion process of SMEs operating in the textile industry

Small and medium sized companies (SMEs) are very important subjects playing the dominant role in most of economics – they are considered as a factor of social stability and of the economic development in the Czech Republic as well as in the whole EU. SMEs share of employment since 2002 is more than 61%, GNP share is about 35% and their import share is continuously increasing, from 2004 it is more than 50%. The paper deals with SMEs operating in the textile industry and is focused on the internationalization process of SMEs. In recent years the Czech companies have to face significant competition coming from Asian countries and therefore the big rivalry in the domestic market leads Czech companies to efforts to succeed in foreign markets. All companies entering foreign market have to face many risks, for small and medium-sized enterprises is even more difficult to deal with these risks because they often have less experience and finance than large companies. Internationalization of the firms is generally defined as the involvement in the international environment. The process of internationalization can be also defined as “the process of increasing involves in international operations” (Welch, Luostarinen; 1988). The process essentially involves the adaption of firm operations like strategy, structure, resources etc., to perfectly fit the international environments. Furthermore, the degree of internationalization can be measured as foreign sales relative to total sales. (Welch, Luostarinen; 1988).The internationalization process is defined in the literature in many ways; there is a countless variety of different approaches and models of internationalization process of companies. Like all processes in the firm also the international process is accompanied by risks. The main aim of this paper is to identify the key risk factors of this process - knowing the risk factors it is possible to propose to SMEs the way how to reduce or eliminate possible risks in their activities on foreign markets. To reveal the key risk ...