The Effect of Globalization on Small Businesses
(406 Words)
The journey of large companies into globalization is well documented in the daily business news, however the opening of the world has a great effect on small businesses as well. It is important for small businesses to take advantage of all of the opportunities that globalization can provide.
Opens up new customers
Through globalization, small businesses have an entirely new customer base. For instance, many sell through the Internet to customers all over the world. They can offer products that may not be readily available in other countries. Even a one man business selling items on ebay out of a living room can take advantage of globalization. They may greatly increase sales because of the sheer number of people, which they can now reach.
In addition, with the reach of advertising on the Internet, small businesses do not need to create expensive marketing campaigns in each individual country. They can raise their profitability. Also, as they create a higher volume of sales, they can enjoy greater economies of scale in production.
New ideas emerge
One positive effect of globalization is the sharing of ideas across the globe. New ideas come in products, innovations, business models and all other aspects of business. Small businesses can learn about these new ideas and utilize them in their own products. This may include a fashion trend, a type of product or a new form of management.
New sources of raw materials for products
Globalization has provided many different avenues for companies to acquire raw materials or wholesale products, which they can sell at a retail level. With globalization, small businesses can choose from many more wholesalers for products to utilize in their businesses.
In addition to purchasing products or materials from overseas, small businesses may also outsource whole functions to these countries. A lot of small businesses do not have the means to create in house departments for all of their functions such as computer software, marketing, etc. They may outsource these functions to other countries for reasonable prices.
Negative impacts
Globalization is not all good for small businesses. Competitors may get cheap work and labor from other countries and be able to offer products at cheaper prices. This may make it more difficult for small businesses to compete.
Globalization influences small businesses in a variety of ways. It is important for them to constantly evaluate opportunities so that they can optimize their potential in the market.
Resources:
http://www.usatoday.com/money/smallbusiness/columnist/strauss/2004-05-17-globalization_x.htm
http://www.going-global.com/articles/globalization_of-the-small_enterprise.htm