This paper looks at the small businesses and the process of internationalization of these businesses. It looks at the benefits of internationalizing the small business. It also gives steps towards internationalizing small businesses. The discussed process includes developing a competitive edge, international production and creating networks out there for a small company to go international.
Small Companies and Internationalism
A company can be described as small depending on the country it is based in and the industry in which its operations are carried out. These kinds of companies are normally privately owned corporations, partnerships or sole proprietorships. However in terms of government support and tax policy, a small company can be described as one with less than 15 employees in Australia, less than 50 employees in the European union, and fewer than 500 employees in the U.S.A. These companies can also be classified according to other methods for instance their sales volume, assets base, or net profit. Typical examples include convenience stores (small store that stock a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, tobacco products, and newspapers), small scale manufacturers and so forth.
Internationalism on the other hand is the ability of these small companies to go global to have their presence in more than one country. Small companies can achieve this through several means which include but not limited to international trade, foreign direct investment, franchising, and/or licensing. Despite these linkages to create an international presence the small companies are faced with critical issues of how to create and maintain a competitive advantage in the presence of ever increasing complexity of international trade and business links, brought about by trade liberalization and increasing international competition (Economy Watch, 2010).
With this enormous dynamic competitive environment, small companies have no choice but need to embark on professionalizing their business activities in terms of formulating formal strategic planning procedure, decision making systems, organizational structure, accounting systems information technology systems, clear job description and so forth all this are invaluable conditions if they are to compete effectively within the international market place.
The Internationalization Process
The process of internationalization can be attributed to various theories as Bent Petersen et.al (n.d) identifies three processes of internationalization.
In their first theory of internationalization it is assumed that for the firm to go international, the firm must have developed a source of competitive advantage in its domestic markets. However if this advantage has not been efficiently exploited within the domestic market without undue transaction cost, then it's prudent for the firm to seek to move outside that market and seek to exploit its competitive sources elsewhere.
The other process of internationalization is what has become to be known as the Uppsalainternationalisation model. This model describes in itself a process of dedicated commitment to international production and sales this means that a firm has to undertake a continuous sequential learning process as it moves through the stages
Finally, the network approach focuses on the interrelationships between companies. In other words the company has to establish and nature a good number of relationships and networks, the benefits however depends entirely on the quality of the networks created.
It is important to appreciate that this process cannot be taken in haste, this is because the development and maintaining of new information systems, and new products offerings demands a lot of input, coordination and considerable financial investment.
In order for a small company to be successful in its quest to internationalize its business the human interaction and competence in the international arena actually matters than the technical knowledge or the product matters.
The managers of these companies must have a truly international outlook by seeking worldwide opportunities by cultivating an enthusiasm for exporting their products as this in return will make them understand the global picture of their product. The managers also in the best interest of the company must develop a strategic approach to the development of new markets by focusing mainly on key and resourceful markets at a time; they should resist the temptation to wander about without success. They should capitalize in building on the success and continuously reviewing the progress.
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