Small Business SWOT

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Part
01

Small Business SWOT

Small businesses with global operations have a larger market and more access to a larger pool of talent than small businesses with local operations. However, they face several barriers and operate in high-risk environments while trying to compete in a global market place. More information regarding these businesses' strengths, weaknesses, opportunities, and threats is provided below.

Strengths

  • Global small businesses have more sales because, as they also have international customers, their market is larger.
  • Their sales do not depend on local and national economies. This is because their international customers may have a better economic situation.
  • Their potential for expansion increases as they enter more international markets. This means that as small businesses open their market to new countries, they can use capital raised outside their country for further expansion.
  • These companies have access to a much larger pool of talent. International labor offers increased productivity, advanced language skills, and diverse educational backgrounds, among other benefits.
  • Small global companies have a competitive advantage over their competitors, as they can build strong brand awareness with consumers before them and also gain access to new technologies.
  • In 2013, global small businesses accounted for 98% of US exporters and today, they are still a driver for economic growth.

Weaknesses

  • Research shows that SMEs around the world face numerous barriers and "operate in high-risk environments" in an attempt to go global and become competitive in the market place.
  • These businesses face "sociocultural differences, political institutions, limited resources, competitive challenges, market threats, and economic and technological issues" as they try to enter and compete in international markets.
  • If these companies do not have experience operating with the employment laws and tax requirements in each foreign country, they might have trouble ensuring that they are managing compliance throughout their entire process.

Opportunities

  • Many governments outside the US offer incentives for companies looking to invest in their region. Hence, global small businesses can benefit from investment opportunities that may not exist in the US.
  • Popular online selling companies, like Alibaba and Ebay, are encouraging global U.S. small businesses to sell on their platforms. This represents an opportunity for these businesses to expand to other countries.

Threats

  • These companies sometimes need to modify their products and packaging to adapt to the local culture, preferences, and language of a new market, which may likely rise their costs.
  • Travel expenses may increase as administrators need to travel to other countries "to oversee their business outlets."
  • They may need to hire professionals in other countries for legal and financial issues as they need to educate themselves on foreign regulations and tax laws, which may also change over time. This would represent another cost increase.

Research Strategy:

In order to provide the weaknesses for small businesses with global operations, we used sources that do not directly define our findings as "weaknesses", but rather define them as "challenges" or "barriers." However, the data we found here is relevant because these "challenges" or "barriers" are also weaknesses as they represent obstacles to remain competitive in the market. Also, one of these sources is a study from Bangladesh that, despite its origin, is also relevant as its findings are applied to small businesses around the world.
Sources
Sources