The Challenge of Business Sustainability for SMEs in a Globalised World



Table of Contents

Introduction2

Discussion2

Globalisation2

Why does the entrepreneur decide to do international business?7

Conclusion15

References16

The Challenge of Business Sustainability for SMEs in a Globalised World

Introduction

Globalization has truly revolutionized the world. Within a century, human kind has achieved what our ancestors have only thought about in a millennium. The world has successfully transited to a place where markets have transformed from a single building to a global market scenario. Such an expansion is facilitated through technological and communication breakthroughs. Air, mail, telephone, and even video conferencing allow an entrepreneur to manage international operations from a remote location in their home country. This paper discusses the various aspects of globalisation, including the challenge of business sustainability for SMEs and entrepreneurs.

Discussion

Globalisation

Globalization is a process of economic, technological, social and cultural transformation and change on a grand (global) scale; which consists of increasing communication and interdependence among countries of the world by unifying its markets, societies and cultures. Globalization is often identified as a dynamic process, mainly produced by societies living under democratic capitalism or liberal democracy and who have opened their doors to the information revolution; thus resulting in a considerable degree of liberalization and democratization in the political culture, legal system and national economic and international relations (Dimitratos & Jones 2010).

The impact of Globalisation

The global trade in goods have statistically increased to over the 29-fold during the year 1950-2007, while the statistically documented production of goods have increased to 8.6-fold only. The amount of direct foreign investment has increased to more than 1,800 billion U.S. dollars during 1970-2007. From 1980 to 2007, the volume of world trade rose from 2.4 to 17.0 trillion U.S. dollars. In 2007, world exports of goods were worth around 13,600 million U.S. dollars and services amounting to about 3,300 billion U.S. dollars.

Influence of emerging markets: Developing countries have relatively low wages at relatively low cost of living and the opportunity to connect to the world economy to achieve rapid economic growth and relative prosperity. On the other hand, market liberalization and alignment for world markets can often be too drastic of a significant structural change; the shadow side of the decline is not internationally competitive industries (Carr & Garcia 2003).

Influence of developing countries: Developing countries are characterized by political instability, lack of legal certainty and insufficient infrastructure. In this way, developing countries are often excluded from the globalization process. Many of these countries have to protect their fragile economic structures and to raise revenue with relatively high tariffs. On the other hand, especially the competitive agricultural products from developing countries are granted limited market access opportunities into developed countries due to high import tariffs or import quotas there only limited market access opportunities. In addition, many developing countries on exports of a commodity are only dependent, so that fluctuations in world market prices can catastrophically affect their economy.

Role of manufacturing companies: Many companies are now producing world-wide and have the option of different labour costs - investment, tax and other conditions ...