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The Effect of Globalization on Small Businesses



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Globalization has had a huge impact over the small business industry. Small businesses significantly contribute to a country’s overall economic standing. In the United States for instance, the number of small businesses account for more than half of all business firms situated in the country.

Needless to say, a considerable amount of attention must be given to the small business industry. The effects of globalization over small businesses are wide and diverse – to say the least. Moreover, in the bigger picture, globalization is advantageous for small businesses.

The following are some of the positive effects of globalization over small businesses.

1) Small businesses can now compete in an International scale

With the advent of globalization, small businesses are now able to compete in International markets against even large multinational companies. Small businesses are now better equipped when it comes to competing against big players in the industry.

Prior to globalization, export and import activities are monopolized by large firms. Likewise, these large firms dictate the industry. However, given the onset of globalization, small businesses can now enter the International market especially through the Internet.

Globalization has, more or less, leveled the playing field between small businesses and their gigantic counterparts. Globalization transformed the world into a smaller, more compact place – at least in a business standpoint.

2) Globalization opens opportunities for a wider, more global audience

Before the era of globalization, small businesses are limited in terms of their target market. They do business within the scope of their area or community. Nevertheless, the potentials for growth and expansion are hindered.

Fast forward to 2011, globalization opened the barriers that separate domestic and International markets. Furthermore, globalization created a single, global market for goods and services. Every business firm, regardless of its size, is given an equal opportunity to succeed in such global market.

Small businesses can access different available avenues to reach such global market.

3) Establishment of overseas contacts and business partners

Globalization also enhances the communication and network systems between domestic small businesses to overseas partners, customers and suppliers.

Similarly, the Internet also plays a crucial role in such effective communication and networking system. Small businesses can search for better opportunities through their overseas networks. These opportunities may take the form of cheaper raw materials, outsourcing strategies and other important first-hand industry knowledge.

Small businesses can also take advantage of newer and better technologies introduced by their overseas partners.


References

http://www.buzzle.com/articles/pros-and-cons-of-globalization.html

http://factoidz.com/the-effect-of-globalisation-on-small-business/

http://www.aeaweb.org/annual_mtg_papers/2007/0106_1015_2101.pdf

http://www.themanager.org/strategy/global.htm

http://www.enotes.com/small-business-encyclopedia/globalization


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