Global Opportunities and International Markets
As global villages become global cities fuelled by increasing communication capabilities, opportunities continue to outweigh the threats of pushing businesses to cater to the world markets. Business chief executives are aware of this phenomenon especially as world leaders prioritize tapping global opportunities in their economic agendas. For one, President Bush went to Mexico as his first state visit as President because Mexico has become America’s second biggest trading partner in recent years.
David Michael, author of a new Boston Consulting Group report entitled “The New Global Challengers, How 100 Top Companies From Rapidly Developing Economies Are Changing The World.” writes, “Until recently, there were only about a dozen or so companies from emerging markets that could be described as being global competitors, today there are hundreds, which is in line with the expectation that by 2050 China and India will be two of the world’s three large superpowers,”” (McCormack, 2006)
Global opportunities can be seen as populations are able to tap into the knowledge economies. With the speed and cost of internet getting faster and lower respectively, businesses are able to reach markets that were difficult to reach before. People are able to work abroad. Businesses can access resources that can better suit business models that are effective and at the same time efficient. The China market for one has been taking economic lime lights for the past ten years that it greatly affected business decisions by global giant. As the usual natural resources dwindle and become threatening to businesses, economies for organic, environment friendly and more creative are being organized. Even the electronics industry has focused on gadgets that change lifestyles more than the television did way back its hay days.
“The discourse about globalization has emerged mainly in the last decade. The term means many different things, and there are many reasons for its emergence as a popular concept. The usage of this term generally implies that a recent change (within the last decade or two) has occurred in technology and in the size of the arena of economic competition. The general idea is that information technology has created a context in which the global market, rather than separate national markets, is the relevant arena for economic competition. It then follows that economic competitiveness needs to be assessed in the global context, rather than in a national or local context. These notions have been used to justify the adoption of new practices by firms and governments all over the world and these developments have altered the political balances among states, firms, unions and other interest groups.” (Chase-Dunn, 1999)
Global opportunities are a phenomenon to contend with by the private sectors, business sectors and most especially by the governments of countries vying to position their economies at the front of the global market challenge. The immensity of the challenge and the diversity of the workplaces will require both government and private sector to work hand in hand to achieve sustainable goals. As for government support, the decision to support global economic activities tapping into global economies will greatly rely on research that explores advantages and disadvantages of allocating government funds to small business enterprises and large companies that have rooted themselves in the local markets. This report outlines the strength and weakness of entrepreneurial attributes of these two types of businesses and how they interact with global markets.
Like any other selection process, the effectiveness of the decision to allocate funds will rely on sturdy criteria. In this case, the types of businesses, predominantly differing in size of employees is analysed according to their entrepreneurial attributes. These attributes must be found internally and externally in a business and its environment.
External factors such as good market forces, maximizing technological tools and strong international alliances help companies achieve their goals to go global. Market forces of the new millennium have added the environmental factor in their matrix. Though profits are bottom lines in business sustainability, more governments are realizing the social responsibility required for businesses to respond better to the public sector’s environmental health. The value of environment remains priceless especially when global businesses have begun to tap into global resources.
“Some valuable things, such as clean air, species diversity, migratory waterfowl, and scenic landscapes are difficult to protect and allocate through the market. Economists call these public goods and common-pool resources. It is difficult or impossible to price or to establish clear property rights over them – and without clear and transferable property rights, the market cannot function well. If markets are to minimize waste and efficiently protect the environment, people must bear the costs of their actions.” (Baden, 1994)
Businesses going global cannot develop without technological tools that increase communication between markets, suppliers and clients. For example, the call center industry has developed in Asia due to the availability of fast internet and clear voice gadgets that enable industries to handle 24 x 7 customer relations, telemarketing and help desk activities. Alliances are of great significance because working across geographic boundaries and cross cultural diversities has inert challenges and hurdles that if faced single handed will surely fail. Businesses have always weighed the strength and weaknesses of employing local and international expertise for their global business. There are times when foreign managers need to learn the language of the country where the main business will be extended. Getting local managers, though could very well navigate for the business in the local venues, they still need extra training to understand the product of service being sold as how it was originally conceived.
Federal Government Funds Allocation
Federal priorities evolve as economic factors evolve. Depending on the prevalent indicators, government abides by plans that are advantageous to the interests of the general public. Allocating funds by the government follows certain market theories because the government must invest on projects that will profit either financially or socially. Needless to say, it is still important for government to look into the short term and long term effects of their investments.
Advantages and Disadvantages in Allocating Funds to SME
The size of SME’s is both an advantage and a disadvantage. SME’s are small emerging enterprises equipped with entrepreneurial spirit that can lead to skills that lead to growth. The advantage of SME’s is essentially its size. Managing a company that is less than one hundred workforce can be more efficient and effective versus orchestrating a large company. And when the mission of the business is geared towards globalization, lean machines are needed because flexibility is imperative when foreign companies start adapting to a new environment.
Size becomes a disadvantage when the expansion requires deep historical learning and robust experience from the mother company that aims to go global. The aviation industry for example has seen large companies dismantle themselves while new small players enter the picture. However, as the small players exhibit new blood, they cannot compete on a global scale yet thereby giving chances to other large companies from other countries to take advantage of the small window.
An x amount of funds can help more number of SMEs than large organizations. There is strength in diversity because diversity also means more minds and ideas. Ideas and knowledge have been critical in developing information-centered markets. SME’s shooting for global opportunities are taking a shotgun approach that ensures the target exactly realized. If some bullets do not make it, other entrepreneurs will succeed and give back to government the investment allotted.
Advantages and Disadvantages in Allocating Funds to larger organizations
There are basically two kinds of large organizations. There are those that have become large by starting small. There are other organizations that have started big due to large investments from its creators. The advantage of large organizations is the strength in its size. Entering China for example needs collaborations of large companies due to the fact that the market of China is basically big to start with. There are global requirements that need large capacities of workforce, expertise and experience to sustain business. Small enterprises still need to integrate with each other to support these global needs. However, big companies due to their being large will be able to access rapidly the opportunity and answer to market needs with confidence.
Size is at the same time a weakness in penetrating global markets. Strict rules are followed in some overseas markets and large companies will find adjusting to these rules difficult. Going into China, for example, large organizations with corporate cultures historically set need to adjust to cultural differences in order for company procedures to work. Hiring locals for multinational enterprises can be a hard task that takes time, planning and effort. Even the most efficient large company would still go through adaptive changes much longer than small establishments.
Summary and Recommendations
Tapping into technology and e-commerce are accessible ways for organizations and businesses to go global. Whether the company is small or large, the system of setting up e-commerce solutions to reach global markets on the information superhighway is the same. If the federal government has funds for helping out businesses enter global markets, it first has to weigh benefits of the support in the short term and long term.
This paper recommends that federal funds support SMEs in their bid for global markets. Entrepreneurs are risk takers spending about 20% of their capital from their personal savings. Given this, lack of capital is generally a problem with struggling SMEs even if their concepts are strong and sturdy. Not all SMEs are able to apply for bank credits. A low percentage of these entrepreneurs actually are awarded credit. Therefore, government support for SME’s is crucial and important. Since the world is well underway globalization, the endeavour does not have as many blind spots as before. Statistics back up economic researches.
“From 1990 to 1999 annual world foreign direct investment grew from about $200 billion to over $800 billion. Almost 75 percent of these flows consisted of European and American corporations buying and selling each other. Even so, in 1999 $198 billion was associated with developing countries, 500 percent more than in 1990. The globalization process is now well under way, and the engines pulling it along are the 53,000 multinational corporations, whose foreign revenues account for 7 percent of world gross domestic product. (Sullivan, 2002)
As multinationals or large companies pave the way towards tapping global opportunities, its about time that federal government support SMEs that protects the future of the country’s economy. Opportunity beats weaknesses in most starting SMEs due to the nature of their size while batting on goals as big as large companies. Small businesses with small number of employees like Hewlett-Packard who started in their own home garage prove that government’s supporting young, fresh and small scale businesses will turn out promising.
A survey found that “the number of small businesses (0 -19 employees) with a website has increased to 36 per cent from 34 per cent in 2002. Additionally, 16 per cent of small businesses say they will build a website within 12 months. SMEs use their websites to communicate with and promote to customers and suppliers and the majority of businesses (59 per cent) indicated that their web sites contained a link to their catalogue of products and services. The number of SMEs using the Internet to participate in online sites or electronic marketplaces (such as emarkets) increased to 21 per cent from 17 per cent in 2002.? The majority of businesses who used e-commerce found that it helped their commercial effectiveness. In terms of web site effectiveness, most businesses (59 per cent) indicated that their websites increased their business effectiveness providing a competitive advantage over competitors, reducing advertising costs and promoting the company more effectively and contributing to the companies overall positioning.” (Harcourt, 2003)
It is better therefore for government and big companies to help small enterprises as they continue to promise hope for a better economy locally while doing business globally.
Baden, John A. and Time O’Brien. Free-market forces favor public good, not privilege. Seattle Times, March 09, 1994
Chase-Dunn, Christopher. 1999. Globalization: A World-Systems Perspective. Journal of World-Systems Research, Vol V, 2, 1999, 165-185? http://jwsr.ucr.edu/?ISSN 1076-156X
Harcourt, Tim. 2004. Going global by going online. http://www.austrade.gov.au/Going-global-by-going-online/default.aspx
McCormack, Richard. 2006. Emerging Economies Create Global Competitors That Are Challenging Western Leaders In Every Industry http://www.manufacturingnews.com/news/06/0621/art1.html
Sullivan, Jeremiah. 2002. The Future of Corporate Globalization: From the Extended Order to the Global Village, Quorum Books, 2002