Small & Medium Enterprises’ Issues in International Trade

Subject: Economics
Pages: 2
Words: 404
Reading time:
2 min

Small businesses have certainly started to play an important role in the growth and development of a lot of economies in the world today, and they are becoming increasingly popular. The reasons for this are not particularly hard to discern. Growing firms provide significant benefits to regions, with job generation, knowledge spillovers, economic multipliers, innovation drivers and cluster developments. The birth of new firms and their subsequent growth or failure has captivated the interest of researchers, especially during the past decade and a half.The primary reason behind the growth of these small firms is the role internet has played in the reduction of traditional disadvantages faced by these enterprises when trading internationally.

The traditional disadvantages that have been faced by small and medium-sized enterprises (SMEs) when trading internationally include challenges in regard to price determination, reduction in the difficulty cutting a niche in international markets, expansion of customer base, reduction of dependence on few local customers and the reduction in the difficulties in establishing a network of customers and partners. In addition to the above, the challenges of high costs of advertisements due to limited funds in comparison to large companies, reduction in the amounts needed for market research and the reduction in the fear to cooperate with offshore partners.

The internet has played a critical role in the development and evolution of small and medium sized enterprises (SMEs) when trading internationally. The new opportunities presented by the internet include abilities to penetrate offshore markets that have translated to wider market reach. In addition to the above, small and medium sized enterprises (SMEs) has achieved a global presence by the adoption of internet trading. This has been achieved through groundbreaking internet marketing that has been instituted by reduced costs.

Furthermore, broad differentiation that is focused on creating value for buyers and communicating this has been achieved with ease through the application of the internet. In this regard, high costs are incurred in achieving a value-added positioning and while attempts are made to hold down costs through more effective ways of production. Finally, the focus on differentiation is, to a large extent, has addressed a particular group of clients and any products or services are strictly focused on the needs of this group. This has been achieved through simple market research that has been possible by the application of the internet.