How Globalization Impacts Small Businesses More Than You Might Think

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Globalization is creeping into our lives at a surprising pace. It’s no longer applicable to think of local businesses as solely local entities, considering just how widely reaching certain effects of political gambits, tariffs and even international competition can turn out to be. Naturally, not all of the side effects of globalization are going to help the average small business owner.

Like many modern byproducts of living in the age we do, these ups and downs are worth studying and understanding to get a better feel for how marketplace shifts and political moves on a global scale can lead to local boons and disruptions.

Globalization Downsides

  • Market floods

One of the most oft-cited fears of the global reach of big business is the difficulty smaller businesses experience when competing with large-scale operations that produce consumer goods. Almost every country has to contend with China’s ability to mass export goods at prices that are nearly impossible to compete with even when shipping and repackaging costs are factored in, which can make keeping local businesses alive a difficult proposition, despite the efforts to offer custom solutions, superior customer service, and in the end, cut down prices.

Certain aspects of the service industry suffer as well, as is the issue with many phone-based consumer support businesses failing to compete with foreign markets, but the idea of better service is often what keeps local shops alive and well.

It’s not exactly feasible to hire a plumber from another country to fix a blocked pipe, but many consumers will deal with sub-par remote services if it means a discount of some kind. Not all are willing to make that sacrifice and focusing on the customer’s experience is one of the few ways to keep focus on local production.

  • Global market chain reactions

Every business feels the sting of large-scale changes through shifts in local customer sentiments, changes in cost of raw materials or simply a shift from local suppliers to distant competitors. Recent examples are fairly varied, but even situations that may not have an obvious economic impact can cause ripples that reach unlikely businesses; The recent EU focus on Brexit, for example, has led to uncertainty and damage in the realm of small UK businesses.

For a move that seems more likely to hit large corporations that deal with cross-country concerns, the looming fear of Brexit has led to a surprising amount of doubt and stunted business maneuvering among entrepreneurs and businesses with smaller handfuls of employees. Different portions of the UK have had varied reactions, with Scottish and Irish businesses showing greater signs of uncertainty.

Meanwhile, the threat of a trade war between the U.S. and competing countries leads to a butterfly effect that ripples through every layer of business from supply to import to manufacturing; Tariffs lead to sudden price fluctuations as was the case with recent American tariffs on Chinese goods. At the same time, it’s impossible to simply close off local borders as the world continues to trend towards globalization.

  • Local competition is now international

In simpler times it was easier for a local business to maintain a strong presence in a community due to the nature of the spread of information and the lack of proliferation of business across certain boundaries. Now that the internet has taken over a chunk of the sector of tangible goods, simply being the only shop in town is no longer a guarantee of future success.

There are certain upsides to this approach which we will discuss shortly, but global entities are tailoring products and services to specific pockets of local markets in ways that can be difficult for a small business owner to effectively counter. It’s no longer simply an issue of cost, but rather how a large corporation with access to proper research, data and manufacturing facilities can blot out a local market.

Globalization Upsides

  • Local turmoil, global stability

While not every business can simply export a product to the far reaches of the world, there is something to be said for investing and working in markets where the downsides of local business no longer lead to a death knell for the individual owner. When local markets suddenly experience a downturn, there’s always a chance overseas markets are operating without notice of those local issues, which can help offset short-term deficiencies.

It may sound unreasonable for small businesses to be expected to perform globally, yet as much as 97 percent of all U.S. exports come from small businesses. To think that the overwhelming majority of a single country’s exports come from a distinction not often thought of as a major corporation is both surprising and promising, globally speaking.

  • Market expansion

Certain businesses need to be able to sell wide. Sometimes it’s as simple as being a big fish in a small pond or as complex as filling a niche that simply cannot operate in a static location for long without going under, but globalization and appropriate efforts to open up lines of trade has led to business networks that simply could not support themselves as recent as a hundred years ago.

For example, the business of dropshipping products globally is both a recent invention and one that could only be made possible through efforts to open the world to freer trade. Businesses focused on selling stock they do not physically possess have little reason to take local deals over long-distance ones, shipping costs aside, as the main benefit of having a physical good available to hand over at a point of sale is completely negated.

Likewise, businesses of various sizes can target international markets with similar tastes to those they already cater to, which simply opens up new streams of potential revenue without the massive undertaking of opening a foreign branch of an existing company.

  • Marketing equalization

In times past, being unable to afford global marketing was both to be expected and a natural limiting factor of the world we lived in. Nowadays there’s little to no excuse as to getting the name of a business out into the open thanks to the internet and the relative ease of marketing that comes with social media and worldwide ad targeting. Even the smallest mom and pop shop can put data collection tools to good use and operate in ways similar to much larger multinational corporations.

If an entrepreneur comes up with a brilliant idea and can market it effectively, it’s no longer a case of the small inventor being confined to the area he can afford to live and market in. There’s suddenly an entire world of possibilities in marketing and sales that seems to have an insatiable thirst for new businesses models.

Regardless of the individual impact globalization has on a local business, it is important to remember that cloistering off from the rest of the world is no longer an option. Pandora’s Box has been opened and the only thing to be gained from isolation is a smaller consumer base, which makes keeping up with global trends and market realities just as important as it has ever been.

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