Answer the below question... APA format. Reference the study guide attached along with other sources. Please in-text cite references.
What impacts do you think small businesses and entrepreneurs have on national economic growth and development? Why should multinationals consider entrepreneurship levels in target countries?
Your response should be at least 75 words in length.
What do you think the small business model is?
Your response should be at least 75 words in length.
What methods do you think a small business manager can use in developing contacts necessary to implement export strategy?
Your response should be at least 75 words in length
The use and benefits of the Internet are not limited to multinationals that are Fortune 500 companies. How can small businesses that are going international benefit from the Internet?
Your response should be at least 75 words in length
What do you think an aspiring exporter should know about the export market?
Your response should be at least 75 words in length.
Chapter 6 Chapter © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7 Small Business and International Entrepreneurship: Overcoming Barriers and Finding Opportunities © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (1 of 2) • Understand the basic definitions of small business and entrepreneurship. • Explain how small businesses can begin as global start-ups or follow the stages of internationalization. • Understand how small businesses can overcome barriers to internationalization. • Identify when a small business or entrepreneurs should consider going international. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (2 of 2) • Describe how small businesses or entrepreneurs can find customers, partners, or distributors aboard. • Understand how new venture wedge strategies can be used in foreign markets. • Explain the factors driving entrepreneurship at an international level. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Is a Small Business? (1 of 2) • “Small” businesses: • Constitute over 98% of businesses in Europe, North America, and Japan • Employ more than 50% of their local populations • Produce nearly 50% of these countries’ GNPs • Create more than 2/3 of new jobs in the US © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Is a Small Business? (2 of 2) • The term “Small” business is variously defined. The small business has: • UN & OECD: less than 500 employees • The popular press: less than 100 employees • US Small Business Administration: - Definition varies by industry - Uses both sales revenue and the number of people © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Internationalization and the Small Business • Two models: • Small business stage model: process of following incremental stages of internationalization • Global start-up or Born-global firm: company that begins as a multinational company © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Small Business Stage Model: Six Stages (1 of 2) • Stage 1: Passive exporting • Firm fills international orders but does not seek export business. Does not realize it has an international market. • Stage 2: Export management • Specifically seeks exports, usually relying on indirect exporting due to resource limitations. Major orientation change for the firm: Exporting is seen as an opportunity. • Stage 3. Export department • Significant resources dedicated to seeking increased sales from exporting. No longer see exporting as a prohibitive risk. Key is to find good local partner for distribution. • © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Small Business Stage Model: Six Stages (2 of 2) • Stage 4: Sales branches • High demand justifies setting up local sales office. Must have resources to transfer manager or hire local managers • Stage 5: Production abroad • Firm moves beyond downstream activities; uses licensing, joint ventures or direct investment. This is a difficult stage because failure may put whole firm at risk. • Stage 6: The transnational • Its small size does not prevent the firm from developing a global integrated network. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Small Business Global Start- ups or Born-Global Firms • Companies begin as multinationals; they must pursue a global vision from inception and globalize rapidly. • Born-globals are critical to the international business environment. • Threat to traditional multinationals: Very flexible, fast moving, knowledge intensive; introduce innovations. • Global start ups are riskier than domestic startups. • Yet, they offer an avenue for new venture success in rapidly globalizing industries. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 7.1: Comparison of Small Business Model Firms & Born-Global Firms © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Small Business E-Commerce • Technology has leveled the playing field for small firms. • The internet offers a rapid way to go international. • A web site configured for e-commerce is a low cost and quick way to sell across national borders. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Advantages of Small Business E-Commerce • Ability of small firms to compete locally, nationally and internationally • Possibility and opportunity for more diverse people to start a business • Convenient and easy way of doing business 24 hours a day, 7 days a week • Inexpensive way to compete with larger businesses • Makes domestic products available in other countries • However, psychological and resource barriers remain. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Overcoming Small Business Barriers to Internationalization (1 of 2) • Small size barriers include: • Limited financial and personnel resources to dedicate to international operations • Lack of sufficient scale to produce goods efficiently • Top managers with limited international experience, or negative attitudes, viewing them as being too risky • Organizational cultures with strong domestic orientation • Contextual and environmental issues that magnify difficulties in international operations © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Overcoming Small Business Barriers to Internationalization (2 of 2) • Overcome small business barriers to internationalization by: • Developing a small business global culture • Changing attitudes of key decision makers • Gaining experience • Overcoming size limitations • Using the small business advantage © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing a Small Business Global Culture • Global culture is achieved when managers and workers value view strategic opportunities as global and not just domestic. • Workers share common language to describe international operations at all levels. • Develop a framework to understand international operations. • Develop an international mindset. • Global thinking: Do business and conduct value chain operations anywhere in the world. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Characteristics of Key Decision Makers • Characteristics of decision makers affecting development of a global culture • Perceived psychological distance to foreign markets • International experience • Risk aversion • Overall attitudes toward international strategies © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Changing Attitudes of Key Decision Makers • How to change attitudes of key decision makers: • Begin with sales to countries close in culture and geography • Experience and success overcome skepticism regarding the international markets. • Eventually, foreign markets perceived as more profitable than domestic. • But positive attitudes crucial for global start-ups from beginning. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 7.2: Attitudinal Differences Concerning Internationalization for Small Business © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Gaining Experience: Duties and the Personal Life of the Small Business CEO • Internationalization affects personal life and company duties of the CEO more than workers. • For small firm, opening new markets is CEO’s time- consuming and challenging personal responsibility. • The CEO must bear social and business costs: • Increased travel, stress from undertaking a new venture, can adversely affect family life, risk whole business. • Job restructuring, retraining, new skills for international business requirements . © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 7.3: Training and Knowledge Needs of Small Firm CEOs Entering Internationalization © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Is Size a Barrier for Small Business Internationalization? • Liabilities of smallness: challenges facing small businesses in the resources necessary to internationalize • Large firms serve more national markets, have access to resources, can negotiate with geographically dispersed partners, & invest in cross cultural training. • Small firms lack scale to produce goods or services as efficiently as larger companies, and absorb risks. • Size liabilities, however, may exist only in the initial internationalization stage. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Using the Small Business Advantage • Speed becomes the small business advantage: • Faster innovation • Can change products and internal operations faster • Speed can overcome size disadvantages • Larger firms must often overcome bureaucratic procedures, slow to take advantage of new markets • First to market allows capture of market share before larger companies can react. © 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or