Examining small business strategies in the context of globalization?

Analyze the impact of globalization on SMEs

A major study conducted by Sony Suryavanshi and Dr. Vijay Kulkarni was published in the International Journal of Scientific Research in Engineering and Management. It talks about the impact of globalization on small businesses and analyzes how fundamentally it is altering the dynamics of small and medium-sized enterprises.

which is called SMEs, and this research tries to analyze the impact of globalization on SMEs. They also included the opportunities and challenges faced by small and medium-sized enterprises.

Local to global markets

Various approaches exist; one of them is the mixed method approach, along with sovereign data, which is based on stratified random sampling. This reveals that small and medium-sized enterprises are shifting their focus. Where, you may ask? They are majorly going from local to global markets. However, there are obstacles introduced by globalization, such as rapid technology shifts, intense competition, and complex international laws and regulations.

Understanding what globalization

Discussion with understanding what globalization is. Here we are referring to it as a phenomenon of interconnectedness of various countries through numerous aspects such as culture, trade, technology, and much more. It is something that has broken the barriers of tradition in service, capital, information, and the free flow of goods.

The analysis of globalization is phenomenal; it always emphasizes the economic growth that has profound implications for small and medium-sized businesses, which are correlated with globalization. As we are aware, the economy is run by these kinds of businesses, especially in countries that are still considered developing nations.

GDP, along with employment and a diverse population

Why are we underscoring small businesses here, as they are critical for economic growth? Not just mainly economic, but community development and employment generation are also dependent on the phenomenon of small businesses due to their economic contribution in countries like India.

The GDP, along with employment and a diverse population, accounts for more than 45% of manufacturing output and more than 40% of exports. You can understand the situation that small businesses are significant, taking the handloom industry as an example in rural India, which supports more than a million families while preserving culture along with their family.

Small and medium enterprises are also the epitome of innovation. They constantly experiment with new ideas and have the ability to introduce extraordinary startups. In India and countries like those in Africa, numerous startups are emerging that are breaking traditional barriers and providing innovative solutions, such as Zerodha.

Opportunities provided by globalization

Discussing the opportunities provided by globalization to small and medium enterprises includes access to the global market. The international market has opened trade to various countries, and barriers have been removed due to the development of e-commerce platforms. The opportunity for these SMEs is to grow and expand.

Although globalization is not always negative, as it provides opportunities for businesses to hire skilled workers outside their own nation, it is also cost-effective. Raw material outsourcing opportunities allow globalization to flourish, especially for SMEs.

Massive multinational corporations

Talking about the challenges faced by these SMEs, competition is significant as there are massive multinational corporations that become direct competitors to such rising companies. Additionally, there are regulatory complexities.

We have been talking about international trade laws throughout this discussion. Resource-intensive procedures can be a downfall for these countries’ technological dependency, as it is something that is the backbone of these systems. All the technology is fast-moving, which gives them a competitive edge.

Definitely a globalization paradox

There is definitely a globalization paradox where globalization is becoming a path of economic opportunities, but it is also exhibiting inequalities. As we are aware, globalization reduces various kinds of trade costs, opens barriers to international borders, and fosters faster innovation. This raises the question of why income and profit increase while disparities also grow.

Cultural homogenization has become a new phenomenon as we see that it is diluting local identities. There is a global trend of fast food chains impacting traditional practices, and specifically, developing countries fear that they will lose their real identity.

Strategies for SMEs to navigate globalization

What can be the strategies for SMEs to navigate globalization and its phenomena? They have to embrace technology in order to improve their situation in the marketplace. Digital tools definitely enhance their productivity and market reach. They should focus on collaborating with international firms, as resource sharing and innovation can be easier.

Local adaptation and customization to meet local and global needs should be a priority on the policy support list from the government, along with tax benefits for the infrastructure growth of SMEs.

REFERENCE
Porter, M. E. (1998). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press.
Surajwancy, Sony & Kulkarni, Vijay. (2024). A Study on Impact of Globalization on Small Businesses. Volume: 08. 1-17.