Internationalisation is a critical part of the growth of a small firm. This essay will critically look at the reasons why small firms would want to go international and what the advantages and disadvantages might be. Entrepreneurs are one of the main factors of local economic development and new activities of SME’s help drive the economic growth as well as the firm’s own growth. The barriers have to be considered and overcome, which is why small firms have to analyse the countries they want to expand to very closely both economically, culturally and politically. The theory behind internationalisation Internationalisation is a process a firm goes through when expanding outside the national market. Small firms will want to go through this …show more content…
By going international the business will enter a new market, which is also an effective way to leverage the business for growth. To do so, some measures have to be taken: you need to define the market considering the demographics, location and common interests or need of target customers, perform market analysis by understanding market growth rates and potential barriers to entry. This last factor especially needs to be analysed when the business is seeking to enter an undefined market. Finally, the firm will need to do a self-evaluation before entering new markets by asking themselves whether they have the necessary competences to put in use or if they have the necessary infrastructures (Reid, 1981). Therefore going international also gives more knowledge to the company. The knowledge also regards the competitors in their new overseas market can also provide with invaluable competitive information and know-how. Another reason for small businesses to go international is a desire to take advantage of world niche markets. Value-added niche products are becoming more and more important and popular in world markets, since consumers are generally looking for products that both have an appealing image and better quality. Kenichi Ohmae states that “When people make over $20.000 annual income, consumers purchasing habits,
The internationalisation process of the firm has been a subject, which has been motive of study for a number of
The business internationalise means a company’s production and business activity are not only confined to one country, but also integrate the different countries’ raw material and labour and technologies to
In a time of global commerce, new business ventures can take on many forms. What used to be local or even national companies have become world-wide. International growth of a business can be extremely beneficial but is not without its challenges. Different countries have different peoples and different cultures - different ways of doing business altogether. If a venture is to be successful, these differences must be well understood.
Which is cost difference determines the patterns of international trade. Absolute advantage is trade benefits when each country is at least cost producer of one of the goods being traded. In the 1800s, David Ricardo developed the theory of comparative advantage to measure gains from trades. This theory is based on comparative advantage and it states each nation should specialize in production of those goods for which its relatively more efficient with a lower opportunity cost.
There are various companies which try to reach and set up in the international market. Certain establishments find success while other prove unsuccessful. Some enterprises own the ability to open anywhere, nonetheless there holds circumstances in which need further discussions into their overall strategic plan. Also, lots of challenges and options generated through starting a new business abroad will present itself.
Many companies today want to expand their business to the international business, which can bring cost down and profits up. Taking a business internationally means knowing the rules and regulations of the countries you are entering. There can be many issues with going global which include cultural barriers, diversity issues, multicultural issues, political issues, and economical issues. It is very important to know how important expansion is to the company and what implications will come from going global.
8. Governmental regulation. Companies also may face government barriers and heavy restrictions and regulation if they intend to expand into other countries. Therefore, companies must examine governmental—as well as cultural—obstacles in other countries when developing location strategies.
As discussed in Chapter 21 of our text book, any company that is looking to expand globally must make five key decisions. A firm must decide if: a) they really want to expand to the international market; b) they
If the product is not doing good in the home country, why we should try to go global? May be some boss may think the foreign country will be adopting the product better compare to the home country, and I think this is wrong. The Product is the company’s core.
If the small firm is actively involved in international trade as are most little firms in specific areas in Europe, case in point then worldwide business is an extremely important subject to study particularly if consolidated with cutting edge European dialects. One of the enormous brakes on the advancement of little firms is the way that a large portion of those that could stretch globally neglect to do so in light of the fact that they fail to offer any staff at administration level with the abilities to help them grow abroad.
Measuring a potential business venture has many aspects which the international manager must be aware of in order to convey the correct information back to the decision makers. Being ignorant to any of the aspects can lead to a false representation of the project, and hence an uninformed decision being passed. In order for a business to survive it must grow. For growth to be optimal, management must first be able to identify the most attractive prospective leads. The country as a whole, specifically geography, government, and financial aspects must be looked at in order to yield the best possible picture of the market a company wishes to enter. Concentration should be placed on gathering reliable facts
Companies can decide to go global or to enter international markets for various reasons, and these different objectives at the time of entry that enable the business to produce different strategies and the performance goals, and even forms of market participation.
Explain how the article builds on the seminal work of Oviatt and McDougall in their paper,.
Well known companies like Nike, Microsoft, Sony, Shell Group are just some of the big companies that went global and expanded their trading around the world, they are large businesses that operate internationally in many countries. Development of worldwide integration urges companies to reach out international markets and interact with foreign customers. Businesses focus on fulfilling the demand of the market by its products or services, besides their target is increasing profit, in order achieve these goals they favor to expand their work in a foreign market. Other reasons to internationalize their business may be to become
The importance of small and Micro Enterprises (SMEs) in the economy of any country cannot be overlooked. In fact for nearly 15 years, most researchers dealing with economic planning have highlighted the significance of these enterprises stating that they are a key player in realizing any country’s economic goals. As such, governments as well as other organizations with interest in development are laying plans and strategies to promote the establishment of Small and Micro Enterprises. This is seen as a move to ensure that there is full participation of SMEs in the country’s economy. The Small and Micro Enterprises have been known to contribute to a large extend as a source of innovation, entrepreneurial skills as well as source of employment. For example, statistics in 25countries of the European Union show that 99% of the jobs provided to its citizens come from the micro, small and medium-sized enterprises. Rowe (2008) points out that the British economy relies heavily on the participation of SMEs. On the other hand, 99% of the UK’s economy is composed of small and micro enterprises.