The Reasons Why Small Firms Would Go International

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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,
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