Internationalisation Strategies for Small Businesses
Table of Contents
Factors that influence internationalisation
Strategies of internationalisation
Monitoring internationalised operations
A small business is a firm which is small in terms of employees and sales volume, although this is not always the case. A small business in the UK employ between 10-50 people, anything under or over this number makes the classification become void. Globally, small businesses range from a maximum of 15 people under Australian law, to a maximum of 500 people under US law (White, 2011). Small businesses are an ever growing aspect of modern society. They are pivotal in economies worldwide as they employ vast quantities of people and often make up the majority of GDP in some countries. There are just over 4.5 million small businesses in the UK which account for 58.8 per cent of all private sector employment and 48.8 per cent of all private sector turnovers. These figures are vast and thus show how essential small businesses are to the UK economy and the country as a whole. Internationalisation is the shifting of any business operations across international borders. This can be in the form of exports, production, contract manufacturing or even the access of information. Internationalisation is usually a strategy adopted by ready established large businesses although the internationalisation of small businesses is becoming more popular in recent times. In the UK today small businesses are being financially subsidised by the government due to the high levels of employment within this sector. Therefore due to the high number of people employed under the private sector, the promotion of small business is justified. This report will look at the internationalisation strategies that small business can adopt if they want to internationalise and how they would maintain their internationalised status. As well as this it will also look at the drivers for internationalisation, both internal drivers and external.
Factors that influence internationalisation
Small businesses adopt internationalisation strategies for many different reasons. The drivers as to why small businesses internationalise are vast. These drivers also differ from scenario to scenario. An example would be a UK clothing firm who wants to move productions to India may want to establish themselves in the UK before they take the step to internationalise; this may take many years. Whereas a highly technological UK firm, who offer a niche product, may internationalise within a couple of years as the UK markets may be too small for their product. Internationalisation must be a well-thought out process in order for the internationalising firm to be a success. Internal
The internal factors that affect internationalisation strategies and internationalisation decisions are the factors which are within an organisation. The internal drivers of internationalisation are: Proactive
A profit advantage can be achieved through internationalisation by achieving possible cheaper production, higher selling prices and/or the popularity of the given product may increase. Economies of Scale
By internationalising, a firm who grows across international borders and starts selling in more markets may benefit from economies of scale. This is through having a larger consumer market and thus greater sales leading to economies of scale benefits through cheaper supplies. Furthermore, if economies of scale are already saturated in a market, then internationalisation may further open up the benefit of economies of scale. Technology
The availability of technology would be a...
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