Globalization and its impacts on small businesses – it’s not all bad

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Globalization is a term given to the opening of borders and the increased mutually beneficial relationships between countries so that trade and services may be shared freely. This creates a pretty picture of harmonious alliances after a stronger global economy, and dare we say it, world peace. There are many benefits to increased globalization for the small business owner, however there are also many negatives to consider.

Globalization widens horizons

A positive aspect of increased globalization for a small business is they can often have a greater impact with their product or ‘message’. A paving stone to globalization is the efficient connectivity of businesses and consumers worldwide by communications (internet) and shipping routes (cargo flights). This means that items can be shipped between countries and economies at a reduced cost and in a very short time. This has broken down the borders between countries and as such, consumers are inclined to turn to the internet in their search for the perfect product and whether it comes from Alaska or New Zealand, it makes no difference to them. Suddenly with this phenomenon, a small business not only serves their local market but are also competitors in the international arena.

In keeping with this idea, small businesses have access to foreign clientele with increased globalization. Globalization has not only given massive corporations the opportunity to extend their reach and try to monopolize every market, but it has also given small businesses access to the foreign clientele who place importance on niche products that are manufactured on home soil, outside of sweatshop factories. With increased global awareness, environmental impacts and fair-trade agreements when making purchases, now more than ever, people are on the lookout for quality, reusable products with the X-factor when spending their coin.

We know certain countries produce certain quality items because that is their area of passion, resourcefulness, and expertise, and as such, we no longer need to visit those countries to have access to their impeccable products. They can all be ours, shiny and on our doorstep, with the touch of a button, the disclosure of our magic numbers and the wait of a mere few days.

This certainly has benefits for small businesses in New Zealand. We are known worldwide for many great things, albeit slightly cliché, including superior wool products, quality fruit and milk products and our ability to work Northern Hemisphere night-time hours (for example in the IT industry, essentially providing a 24/7 service while avoiding antisocial working shifts).

Small fish in a big sea

There are also many challenges small business face, the most prominent being competition and price wars. One analogy puts it this way: suddenly small businesses are like small fish in a big sea with other small and large fish. The other smaller species compete for the same food, while the larger fish simply eat the smaller ones to keep themselves going.

Globalization has enabled the expansion of large corporations into countries that might have previously been off their radar. For example, the streets of urban Japan are littered with KFC and McDonald’s. Coca-Cola Sold Here signs can be seen on the mountainous roads near Marrakech. These big companies are able to provide their products at a fraction of the cost meaning that to compete with them, small businesses are forced to lower their prices or face extinction. As aforementioned, one way around this is, rather than to carry on selling a burger for example to compete with McDonalds, is to create and market your own niche product and do it well. There will always be a place for authentic, locally-made sushi in Japan and freshly-squeezed orange juice from local produce in Morocco.

Unfortunately, the only way small businesses can compete on the same scale as larger ones with globalization is to adopt methods of automation and connectivity. It may not be effective anymore for the local vineyard to simply service the same clients they always have, writing out receipts and steering away from anything remotely computerized. Small businesses need to evolve to stay relevant and this includes creating an online presence with the allure of being accessible and being open to automated solutions that will aid manufacture in the long run. The learning curve can seem daunting and expensive, however there are a myriad of benefits to adopting this new way of doing things.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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