Globalization describes the process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. ” (Globalization, 2010). Nowadays, small business has to compete against multinational companies face to face as globalization becomes an irreversible momentum. In some case, small business have no need to against the large companies because they focus on different scale until the small companies grow up.
However, I agree that small business in IT industries cannot compete against multinational companies when small companies become threats to the lager ones. In this essay, I will explain why small business still exist today and compare their advantages to multinational companies in the sector of financial strengths and productivity advantages. Small business still exists now because they have unique features, especially they focus on the lower market. It is no need for them to compete against the multinational companies Sometimes. Hey sever the specific communities. Such as they are willing to run their small business in some small illegal and remote area where multinational firms do not pay attention to. Enclave, K. (2002) argued that small business have to overcome these rules: “… Information technology (IT) powerless crowd out product development Initiatives… ” It Is clearly that overcoming these sales abstract is difficult but not impossible. Small business has its own advantages because it can use convenient and easy solutions to common business problems.
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However, low price is the most popular strategy for small business to make profits and attract customers’ attention. Small business spends less none on advanced Invention. Comparing Dell Company mentioned by Enclave (2002) that if they want to enlarge their popularity they have prepackaged solutions to meet unique buyer’s need. They set up specific system to solve these problems to keep In touch with their customers. As a result, they have to Invest more money to the stuff. In order to maintain their cost, they have to raise the selling price. That Is the major reason why small business can exist at present.
But after small companies changes into large ones, multinational firms consider those companies as a threat, in order to hold their markets share, which will acquire or knock down small business before they growth. Multinational corporations have financial strength support them to enlarge their market share. As a result, it is relatively easy for them to meet the customers’ need and enhance their reputation. Large companies are willing to spend money on observations about what people really need and want to buy. They invest amount of money In advertising their products.
For example, IBM personal computer business was acquired by Chinese famous personal computer brand Leno, and hen, spend almost one million hired Chinese famous movie star Jingle Xx as their spokeswomen. Not only this, Leno company invest large deal of money to sponsor many activities on television and radio to enhance its popularity. As for small business, they will be asked for achieve their customers’ need and have large fund to broaden kinds of products claimed by Enclave (2002). Preston (2010) cited Bob Evans 1 OFF than what you have. ” It seems hard for small business to follow multinational companies.
Small business have tight budget and less popular than large firms, asking over large companies market stocks is difficult for it. Small companies can still exist because of the scale they were chosen. Sheldon small firms are held in CAB, they chose to serve the limited people instead of making less money because much more large companies in there. Small business avoid compete against large firms directly. Multinationals companies have high productivity benefit from their advanced technology. High technology helps those firms make high profits and also help themselves a lot. The productivity advantage of foreign-owned firms is usually en as reflecting multinationals’ technological advantage visa–visa domestic firms. ” (Marksmen, 2002 cited by Grammar & G??erg, 2007). However, advanced technology plays vital role in processing high productivity. Consumers are more willing to pay more to buy those high quality productions, they believe this goods produced by large companies have quality assurance. Another example to support this argument is by Preston (2010) whose study compares the strategic IT companies in the world.
He shows that IBM as a technology provider, grabbing consumer market by its innovation product named Smarter Planet. Some software companies in small scale sell some cheaper goods to make profit, but these products cannot run well in the long term. Consequently, people always spend a lot to repair them. Then, fewer people will purchase their products because of lacking of guarantee. It leads themselves face the big problem that bankruptcy or acquired by large firms. Grammar (2007) quotes Balk (2001) who stated that different roles in different kinds of economies play various roles for productivity growth.
To conclude, Multinational reparations have financial strength support them to enlarge their market share. For instance, improving popularity through advertisement and getting high productivity because of their advanced technology. In some cases, small business has no need to fight against multinational companies as they are focus on different market. When small business growing up, they would be take into consideration by large companies because those firms will reduce their market share. Whether small business should compete against multinational ones or not depend on what market they focus on.