Globalization is a term often used in the business world—especially over the last few decades; it embodies blurring geopolitical boundaries and operating internationally. If you’re a small business owner who is interested in trading globally, there are a few things you need to know. First, what is the global marketplace? What are the benefits of trading in the global marketplace? Lastly, what are the characteristics of global marketing? Answers to each of these questions will be key to your ability to enter the global marketplace with advantage.
Global Marketplace Definition
Even though globalization has been an increasingly popular – and often controversial – topic in the recent years, some experts argue that it has existed for a much longer period.
The Economist points out that globalization, i.e., the integration of markets over time, was a key theme in Adam Smith’s book The Wealth of Nations, published in 1776.
“The trend is nearly as old as civilization,” the article claims, referring to the division of labor that led to specialization and later brought “communities from disparate parts of the world together.” Think hunters and shepherds in ancient times. When civilizations and countries began trading goods (e.g., silk from Asia and fur from Europe), markets became more integrated, resembling the global marketplace we know today.
The global marketplace, of course, is not a physical space. In short, it exists because technology has allowed businesses and consumers to “have access to the very best products from many different countries.”
Technology is a significant aspect of international trade. It creates new markets and makes entry to existing markets a lot easier, no matter where you are in the world.
Benefits of Global Marketplace
Before discussing the benefits of globalization for small businesses, let’s first examine what the benefits are on a broader scale.
According to The Balance, globalization:
- makes markets more efficient by encouraging specialization;
- increases competition by making markets more accessible;
- increases foreign direct investments (FDIs) at a much greater rate;
- stimulates technological innovation through increased competition, and
- enables companies to realize economies of scale that in turn reduces costs and prices.
As for small businesses, globalization:
- allows you to enter markets more easily through technology;
- opens your business to an international client-base;
- gives you access to a more diverse supply chain, reducing costs and risks at the same time, and
- gives you access to a greater variety of goods and services that can benefit your business.
Characteristics of Global Marketing
As a small business owner, you’re entering the global marketplace like a small fish would a huge ocean. Although globalization allows you to reach a wider client-base, you also face more competitors.
Here are some global marketing characteristics you need to familiarize yourself with:
- Cultural Differences: When dealing with international clients and suppliers, you have to be sensitive to cultural differences so that you don’t offend anyone.
- International Trade Regulations: Different countries have different trade regulations, fees, and so on, that you’ll need to be aware of to avoid legal issues.
- Shipping: Shipping is an important aspect of international trade. Research options carefully so you can minimize costs.
- Money Transfer: There are numerous financial management tools that can help you send invoices and collect payments from clients. You can also use these tools to send payments to suppliers.
- Exchange Rate: Of course, different countries have different currencies. Exchange rates fluctuate every day, so you need to stay on top of this to avoid potential losses.
Now that you are more familiar with the global marketplace, what actionable steps are needed to take your business international?
- Think of a strategy and set goals that will measure your progress, costs, and benefits. You can’t enter the global marketplace without a concrete plan. Consider the characteristics of global marketing carefully and prepare for each component.
- If you can, find global suppliers that will lower the cost of production. Outsourcing is a great way to reduce costs and increase profit.
- Decide on a shipment method. You need a reliable resource that caters for the countries you wish to do business in. Note that shipping issues are one of the primary reasons why businesses fail to retain customers.
- Navigate international trade regulations cautiously and ensure you adhere to the legal requirements. As a small business owner, the last thing you want is to face legal problems that can lead to huge penalties.
- Find a financial management tool that will help you send invoices, collect and send payments, and track your business’s cash flow. Veem is a great international payment solution that cuts costs by bypassing banks and avoiding high wire transfer fees. It also offers free domestic transfers and great foreign exchange rates, so you can maximize profits when transacting with clients and suppliers both locally and internationally.
Globalization allows small business owners to achieve success on an international scale. Going global may seem terrifying at first, but if you’re well-prepared, you can avoid unnecessary problems. Remember that business is a continuous learning process, so don’t be afraid of making mistakes. As long as you have a vision and a solid business plan, you can and you will succeed.