Question

Global expansion is a learning process. Over time, small and medium-sized enterprises (SMEs) can learn from their previous expansion efforts and improve on them. Their experience allows them to reduce the barriers they once faced, ideally becoming multinational enterprises (MNEs) (Barkema, Bell & Pennings, 1996). Very few MNEs are truly successful globally. If the ultimate goal is globalization, firms need to target a corporate business strategy that leads to a broad and deep penetration of foreign markets across the world (Rugman & Verbeke, 2004). According to the Uppsala stage model, firms need to familiarize themselves with national cultures, taking small steps to increase international involvement gradually. Smaller steps allow firms to understand better local habits and preferences, the market structure and ways to approach national consumers (Barkema, Bell & Pennings, 1996). Global expansion only has value as a corporate business strategy to the extent that firms use it as a learning process and implement it in all levels of their organization. A deeper cultural understanding needs to be developed not only high-level managers but all employees (IESE, 2009).   

  

MNEs develop the capacity to reduce barriers through their experience in foreign markets. For example, they could be in a bargaining position with a host government (Barkema, Bell & Pennings, 1996). SMEs do not have the experience or resources to get past these barriers as easily. MNEs may have more exposure to procedural barriers including policy implementation procedures, attitudes of regulating authorities or public officials, or corrupt or discriminatory governments (Filess & Busquets, 2006). The majority of SMEs rate internal capability and access barriers higher than those related to the business environment (Fliess & Busquets, 2006). These barriers can include financial issues, market changes, access restrictions, technological developments, etc. (Neville, 2015). These barriers are ranked higher for non-active exporting firms, while active exporting firms include trade barriers in their concerns. The most prominent trade barriers include unfavorable foreign rules and regulations, high tariff barriers and inadequate property rights protection (Filess & Busquets, 2006). Many domestic regulations also prove to be a barrier. Governments want to protect their home industries and put restrictions on importers if those industries could be driven out of business (mjmfoodie, 2010). SMEs ultimately have limited resources and a lower threshold to take on risk. For some MNEs, they can spread themselves across international markets and reduce their risk profile over their overall business portfolio (Gomez-Mejia & Palich, 1997). They can afford not to execute a perfect global strategy for a specific market and still be okay because of their extensive portfolio. SMEs do not have that luxury, and therefore barriers are much more difficult to overcome.  

OPEN A DISCUSSION ON THIS AND ASK QUESTIONS!

Answer 1

A discussion on any topic would initiate or require us to out in our perspective on the subject of discussion and seek our views and suggestions. Moreover, it also incites us to clarify if we have any queries on the subject. Let us discuss in brief the crux of the two paragraphs, just to give an introduction while in the discussion forum.

                                       Small and Medium Sized Enterprises are the base on the which the industrial sector of a country hovers its industrial decisions. This is because the Multinational Enterprises are to some extent already at a stage where they have their functional sections integrated with the changing markets and have adjusted and accordingly bloomed out of the inter-industry barriers. Small and Medium Sized Industries must be given adequate support from the Government to ensure that these can creep out of the initial industry setup and development hazards and if it has promising signs, the Government can further aid it with the necessary requirement to help it bloom in the future as a developed industry.

                                     Let us now try to figure out some of the questions we must ask :

1. What are the initial hazards that the Small and Medium Sized industries face in the setting up of their industry? How could they be approached and what steps can be taken for making the entry of the new firms more mobilized.
2. What are inter-industry hazards that a newly setup Small and Medium Sized industry faces? Are they only related to the functional barriers or are there some challenges from external forces too? here we focus on the barriers of competition.
3. The Trade regulations are a critical source of the economic development and the maintenance of the economic stability of a nation. Should trade regulations be altered just to make it easier for a new firm to get adjusted? or should the barriers faced by the firms be removed instead of altering the Trade regulations?
4. If the trade regulations are altered, how far an affect would it have on the internal and more importantly the external economic relations of the nation with the other countries.
5. How can the SME’s learn from the development path of the MNE’s?
6. What and how can the SME’s learn from their past failures or from the failures of the other SME’s?