The disvantage and advantage of globalization

Topics: Multinational corporation, Corporation, Small business Pages: 8 (957 words) Published: May 22, 2014
“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, they sever the specific communities. Such as they are willing to run their small business in some small villages and remote area where multinational firms do not pay attention to. McClave, K. (2002) argued that small business have to overcome these rules: “…information technology (IT) priorities 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. However, low price is the most popular strategy for small business to make profits and attract customers’ attention. Small business spends less money on advanced invention. Comparing Dell Company mentioned by McClave (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 Lenovo, and then, spend almost one million hired Chinese famous movie star Jinglei Xu as their spokeswomen. Not only this, Lenovo 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 McClave (2002). Preston (2010) cited Bob Evans (2010) who discussed in a latest open letter about “in terms of what they need rather 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, taking 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 CBD, 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...


Bibliography: ⒈ Wikimedia Encyclopedia. 22/11/10 Globalization
http://en.wikipedia.org/wiki/Globalization viewed 23/11/10
⒉ McClave, K. (2002) Small business: Product solutions that create competitive advantage. Commercial Lending Review, 17(4), 5-13.
⒊ Girma, S., & Görg, H. (2007). Multinationals’ productivity advantage: Scale or technology?. Economic Inquiry. 45(2), 350-362.
⒋ Preston, R. (2010). The world’s most “strategic” IT Vendors, Information Week, Iss.1258, 56.
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