Internationalisation of Small Medium Enterprises (SMEs)

Table of contents:

1. Introduction

2. Background

3. Research aims & objectives and research questions

4. Literature Review
4.1 Motivation to internationalisation
4.2 Problems of SMEs when they operate Abroad
4.3 Solution of Some Barriers

5. Research Methodology

6. Ethical Issue

7. Research limitations

8. Time Plan

Bibliography

RESEARCH TOPIC: Internationalisation of Small Medium Enterprises (SMEs)

1. Introduction

Internationalisation is such a fascination, by which states and companies are dealing business and going up against in contest between them on a worldwide level. Globalization, which is the formation to bring products or services in marketplace, subsidizes to the global economic growth and improvement of countries worldwide.

2. Background

In present world, internationalization impacts all the business firms large and small. Progressively, small and medium sized enterprises (SMEs) which are ascertained as containing of firms employing less than 250 employees, with firms having less than 50 employees being concerned as small and firms having 50-249 employees being concerned as medium in size (Lloyd R and Sear,2007,p11), are forced to play a role in international business markets. This globalisation is able to take many forms, such as exporting products and services, foreign investment in both way directly or indirectly, licensing, authorising completely, importing with exporting being the mode of internationalization for small and medium enterprises. According to the thesis topic ‘Internationalization of SMEs,’ the dissertation will discuss on the trading abroad or exporting of SMEs. The variation in business surroundings which brings up to the enhanced flow of information from global business markets, making the price less of the worldwide travelling and exchanging information and ideas, can creates new opportunities and new expectation in the economy for small and medium firms to globalise. On the other side of the coin, that may also challenge domestic firms with the involvement of contrasting in the international competition. That is how; small and medium firms come up against the situation of global contest though exporting can lead to increase productivity through the economic scale. Regardless of the motives, globalisation provides firms with opportunities to improve productivity and increase their chances of survival.

As it can be said that doing internationalise may be important and useful for business companies in order to expand and exist in the further future, it cannot precisely confirm of the firm’s survival. The risks of loosing opportunities or chances and costs or values affected in the format will be a very vital considerable factor. Smaller firms find that very hard to recover or overcome these opposite situations and challenges. Moreover, these small firms certainly often suffer from their limited capacity and resources. The modern technology which is with the very developed useful software and hardware has been able to improve in the number of small and medium business firms to globalise themselves in to global competition market. Modern technology is indeed such a magic that is able to help even any single business owner to expand his business all over the world. So that it is very vital for small and medium enterprises to spread over into the global competition.

As long as it can be seen that there are not too much researches about internationalisation of small and medium firms in comparison to the internationalization of multi-national companies. As because, according to the OECD report (2000), about 25% of manufacturing small and medium firms in OECD countries are active. These small and medium enterprises contribute between 25% and 35% of global manufacturing exports. In general, internationally active small and medium business firms experience lot more quicker growth than completely domestic firms (OECD, 2000). The internationalization of small and medium firms is a number of times restricted by some restrictions. This is the reason why, the dissertation will keep focusing on the motivation for small and medium business enterprises to internationalize, the problems approach for SMEs when they act on foreign countries and at the end focus attention on some solutions relate to these problems. My dissertation would like to look for to bring into existence the greater awareness about the internationalization of SMEs and make some recommendations on the possible advanced steps could be taken by managing directors and business proprietors when they try to get involved or involved into the global business market.

3. Research aims & objectives and research questions

Every research has got particular aims and objectives, so that every research has research questions in order to find out the right answers to obtain the objectives and aims. Therefore the basic aim of my dissertation is to signify and establish the obstacles to trade globally for the small & medium enterprises and point out any lesson and solution for the business organisations which are involved in the exportation the products and service. In addition, the dissertation will be able represent and provide the readers and learners with the various matters which motive the small & medium business organisations to export the products and services. I would like represent the research questions and research objectives by the following chart.

The dissertation will explore the research question such as:

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4. Literature Review

The range of the literature review is to experiment the inspiration for small & medium enterprises to perform in global business market, which varied with categories of business organisations, recognised as proactive organisation and reactive organisation. In order to do reference to the matters that represented to these inspirations. Then a centre of attraction will be raised on the complicated and bad situation of small & medium enterprises, when they take step to globalise. Last but not the least; the literature review will focus on the solution to these complicated, disputed and bad situations, setting up what they are and how they could help small and medium enterprises to transform these various constraints.

4.1 Motivation to internationalization

The internationalisation with these matters such as global trade, which create many resources and jobs for living not only in home but also outside of homeland, is one of the most significant reasons why the British Government may cast about to stimulate spiritually lot more small and medium business firms to trade outside of the home country. “Most of the firms do not view the internationalization as a goal in and of itself; it is often pursued as a solution to a problem” (Gerald I, 2007, p228). The globalisation factors remark to all those matters triggering the choice of the small and the medium businesses to come out with and improve global immobility and movements. These aims can be put in a class in connection to the business organisation’s internal or external environment. However, according to Harrison (2000) the inspiration can also be categorised in function of the types of firms, such as reactive and proactive firms. Reactive firms which get in touch with new hopes rather than having difficulties or risk. The matters that are provided to the reactive organisation to globalise are as: decline of profit margins, high competition (Lloyd -Reason and Sear, 2007, p25), risk diversification. Proactive firm “is always initiating and creating new products to stay ahead of rivals” (Harrison et al, 2000, p21). The catalyst that donated to the farseeing or proactive firm to globalise are aspire to increase, introduction of new legislation (Lloyd-Reason and Sear, 2007), aristocratic market confidential news of the business, technology for exclusive goods created, the services and global business market favourable circumstances. This is the way the decision to take initiative steps for globalisation can be authorised by a various kind of motives, which can be internal- proactive, internal-reactive, external-proactive and external-reactive to the organisation’s environment and atmosphere. The table below is used as a basis for further explanation:

Table of stimuli to the globalisation:

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