Please keep the questions separate and only cite from materials provided: 1. What do you think an aspiring exporter should know about the export market?
2. The use and benefits of the Internet are not limited to multinationals that are Fortune 500 companies. How can small businesses that are going international benefit from the Internet?
3. What do you think the small business model is?
4. What roles do you think small businesses play in most economies?
5. What impacts do you think small businesses and entrepreneurs have on national economic growth and development? Why should multinationals consider entrepreneurship levels in target countries?
6. What do you think are the major barriers to small business internationalization? How can these barriers be removed?
7. As a small business goes international through incremental stages instead of as a global start-up, what unique benefits does it have? Can you identify any obstacles?
8. What methods do you think a small business manager can use in developing contacts necessary to implement export strategy?
Intercultural Management: Workbook
What an aspiring exporter needs to know about the Export market.
There are some things that an aspiring exporter ought to know. First, the aspiring exporter needs to have an understanding of the export market (Cullen & Parboteeah, 2014). Understanding how the export market operates and the parties involved is essential. Second, the aspiring exporter ought to explore all the available strategies for participation in the export market. The strategies on disposal might be similar to those of larger business participating in the export sector. Such strategies are in the form of license, foreign direct investment or even joint ventures.
The aspiring exporter will have to understand that they are no limitations to apply the existing strategies in the market, there is the need to be creative. According Cullen and Parboteeah (2014), any aspiring exporter should first try to understand the challenges and barriers they are likely to face in the export market. There is a need to have a plan of these barriers and challenges will be overcome. Lastly, identification of the target customers and target regions ought to be considered by the aspiring exporter.
Benefits of the Internet to small businesses
Small businesses have the opportunity of benefiting from the existence of the internet. The benefits are not only limited to the multinationals companies. Small businesses use the internet in marketing, and this provides a low cost and the easiest channel to sell commodities across countries borders. Use of internet in marketing is referred to as e-commerce.
The internet provides a channel that enables the small firms to operate for 24 hours a day. The small firms have a chance to compete favourably with large firms due to the use of the internet. Small firms increase their revenue as they avail their local products to other new countries. Technology in the form of Internet plays a greater role in any small business with aspirations of becoming internationally recognized.
Understanding of small business model
Various scholars have defined the small business model using different words that all have the same meaning. Small business model involves the plan put into operation by any small firm to raise revenue and generate profits for the firm (Cullen & Parboteeah, 2014). The model is essential for the operations of a firm to run smoothly. Each and every small business should have this small business model that acts as a guide to the firm in meeting its core objectives. The model lays out how the small business will expand its operations globally. The small business model comprises of all components of the business. UN defines a small business as a business with less than 500 employees.
Contributions of small businesses to the economies
Small businesses play a greater role in most economies. Small businesses contribute the largest percentage of output in an economy where they are around to thrive such as China where they contributed 60 percent of the output. Small businesses act as sources of employment to many in an economy. The businesses create a lot of job opportunities for the citizens. These businesses help an economy to achieve a favourable balance of payment as they heavily contribute to the exports of a country and lower the import. An economy with a large number of small businesses has a higher capability of sailing through the economic crisis.
Impacts small business and entrepreneurs have on national growth and development
Small business and entrepreneurs have contributed to the national growth and development of most national economies. In a country like China, the economic power is as a result of small businesses and entrepreneur. Small business support economies of many national economies (Cullen & Parboteeah, 2014). The small businesses contribute to the economic output and provide employment to millions of workers. In developed nations of North America, Europe and Japan, small business and entrepreneurs’ constitute more than 98 percent of all business.
In the US, the economy mostly depends on small business and entrepreneurs. In the period of recession, small businesses created more than 60 percent of the new employment in the US.
Major barriers to small business internationalization and the removal of these barriers
Conservative knowledge claims that small businesses face many barriers. Those barriers prevent small businesses from becoming a multinational business. Cullen and Parboteeah (2014) gives size of a business as one of the challenges of small firms. A small business indicates that the business has inadequate workforce’s resources and investments. The inadequate resources and finances delay the small business to carry out international actions. The small business lack sufficient ability to produces the efficient amount of goods and services just as in large companies. The top administrators of small business have no nationwide knowledge. The top managers have a negative attitude towards making the small business to be a multinational business. Small business managers view multinational businesses as a risky undertaking with no returns.
Despite the above-explained barriers when internalizing, small business have entered the international market and performing well. The government has tried to support the small scale businesses. The government has influenced the formation of trade agreements. The agreements include the North American Free Trade Agreement (NAFTA). Trade agreements have reduced resources requirement needed by the small business. Small business have trained the top managers. Training them will change their negative attitude on internalizing.
Unique benefits small businesses have when it goes international through incremental stages instead of as a global start-up, what does it have? Can you identify any obstacles?
Incremental Stage Company follows the stage model that is they take an incremental approach. Incremental stage companies start exporting when they have a strong domestic base. Global Start-up Company occurs when a company starts as a Multinational company. Incremental Stage businesses are said to be less risky as compared to the Global start-up firms. Following the stage model, Incremental stage companies can reduce the exposure of Risk and develop their international expertise gradually. Global start-up companies face more risk because they are critical in the international business environment.
Methods small business manager use in developing contacts necessary to implement export strategy
Managers of Small multinational strategy use same participation strategy just as in the big multinational strategy. Those strategies include licensing, joint ventures, exporting and direct investment (Cullen & Parboteeah, 2014). Small business managers have also come up with strategies to reach foreign customers. However, for large multinational companies, there are no set formulae to find new customers and partners. Other strategies that managers of small business use are Trade shows.
Trade shows is a cheap mechanism to reach potential customers and partners. Small business set displays of their products. In the USA, trade shows are done through websites. The website describes products photos, videos and description.
Catalog expositions are also used to popularise the products of small business in the international market. Catalog exposition is similar to trade shows except that business does not have its products to show. Small business managers also use international advertising agencies and consulting firms. Those firms have offices all over the world.
Cullen, J. B. & Parboteeah, K. P. (2014). Multinational Management: A Strategic Approach
(6th edition).Mason, OH: South-Western, Cengage Learning.