GOING GLOBAL FOR SMALL FIRMS AND ENTREPRENEURERS

NOMAN GHALIB

Why small firms should go global

Easier for small businesses to go global compared to larger ones.

Small businesses can more easily seize opportunities.

Small companies can usually change faster than large companies.

Going global offers a much larger target market to the small business than otherwise.

Exporting is recommended when:

› Sales potential for the target market is high.

› Estimated production costs are lower at home.

› Product adaptability requirements are not needed or are simple.

› Import and export restrictions are favorable

› Raw materials are less costly at home

› Firm has limited financial resources

Contract Manufacturing/ joint venture

Involves providing only management skills; the production facilities are owned by others

With contract marketing, the product can be made in a foreign country for less money and sold in the same country and/or exported to other countries.

A way to increase revenue without investing more money in plant and equipment.

Beneficial when labor relations are difficult or there are problems getting supplies and getting government cooperation

entrepreneurs should ask themselves six questions:

1. Is there a profitable market in which our firm has the potential to be successful over the long run?

2. Do we have and are willing to commit adequate resources of time, people, and capital to global campaign?

3. Are we considering going global for the right reasons?

1. Do we understand the cultural differences, history, economics, value systems, opportunities, and risks

2. Is there a viable exit strategy for our company if conditions change or the new venture is not successful?

3. Can we afford not to go global?

examples

Singapore

The financial and technological hub of Southeast Asia, Singapore has translated its highly advanced economy featuring per-capita income of $59,710 to the third strongest economy in the world. It relies mostly on the exports of electronic and technology products and pharmaceuticals, as well as on a solid financial sector.

13. Australia

This is a country rich with natural resources, like coal, iron ore, gold, uranium and natural gas. Australia is a leading exporter of food and energy products. Its per-capita income is $40,847.