The three-step process: A new approach to internationalization in service companies

This paper analyses the experience of Banco Santander in internationalising its retail banking activities. The experience of Banco Santander shows that the internationalisation process in this sector can be done through three steps. The first one is to develop capabilities in the home market. The second step is to create options for leveraging capabilities in new international markets, either through investments in a minor player or through strategic alliances with established local companies. At this step, market selection is based on proximity and geographic focus. Finally, the third step consists on a quick international roll-out followed by implementation of integrated capabilities, through acquisitions or majority investments, in a leading local competitor.