The Study of International Business Is Fine If You Are Going to Work in a Large Multinational Enterprise, but It Has No Relevance for Individuals Who Are Going to Work in Small Firms

QUESTION 2:  "The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small firms."  Evaluate this statement.

I will not agree with the statement above, as in the current era globalisation and international trade is at its peak.

Google defines ‘Globalisation’ as “the process by which businesses or other organisations develop international influence or start operating on an international scale.” Personally I would describe globalisation as a term which is used for describing the sharing and availability of good, services, technology and resources around the world.

Small businesses are privately owned corporations partnerships or sole proprietorship. A business is determined to be small by the number of employees, the revenue generated per annum and assets owned at the end of the financial year. Depending on the locality of the business, these conditions may vary.

SMEs have flourished a great deal in the last decade because of the globalisation. This has also been affected a lot because of the advancement in technology bridging the gap in communication. Finding ways to cut down spending on products and services for individual consumers and corporations is easier because of globalisation. Problems can be solved much more efficiently and cost effectively because of the globalised world we live in.

However there are those who argue that ‘internationalisation is not an indicator of globalisation’, that it is just a sign of regionalisation (Schmid & Kotulla, 2011).

“Internationalization refers to the increasing importance of international trade, international relations, treaties, alliances, etc. International, of course, means between or among nations. The basic unit remains the nation, even as relations among nations become increasingly necessary and important. Globalization refers to global economic integration of many formerly national economies into one global economy, mainly by free trade and free capital mobility, but also by easy or uncontrolled migration. It is the effective erasure of national boundaries for economic purposes.” (Saunders, 2013)

Keeping the above information in mind, I think the study of international business is necessary for any SME to evolve and grow. This gives them more opportunities to grow, as well as a competition and market on a larger scale. For instance, being a hospitality student the first example of an SME which comes to mind is of a restaurant. Having an international knowledge of the industry helps to understand the patterns in the targeted market and provides opportunities.

The globalization of production makes many people aware of the differences in manufacturing costs worldwide. (Hill, 2013) This helps in reducing production costs and increasing the market for SMEs. Taking a small fabrics producer into consideration from a small town in India, for example, his fabrics being bought by a bigger distributor and being shipped to different parts of the world. If the fabric producer realised and understands the international business, they will be able to exploit the international market even more and generate more revenue.