Internationalization is a topic of much importance because of its complex nature. In this study, the focus is on the initial challenges that the SMEs have to face when they go international. The literature suggests that, due to the simple structure and comparatively weaker financial base of SMEs, they face many hurdles when entering into a foreign market. The purpose of the thesis is to investigate what challenges a Swedish and a Balangedishi SME are faced with in the initial stage of the internationalization process.

We have used a qualitative method and collected empirical data through interviews. For the analysis, we use a theoretical framework that emphasizes the Uppsala Internationali-zation Model. Our main results show that the SMEs suffer because of the challenges to collect appropriate information and to reduce cultural differences.

With this thesis we hope to contribute with a new understanding of challenges that can help the SME to better cope with challenges in practice when involving in internationalization.