Technology and the Small Business Owner

As I sit here overwhelmed, trying to write a post on something I know very little about, I can’t help but think of the thing that is a big part of helping globalization happen: technology. It is what keeps us connected. It is what keeps up communicating to each other - not only across town, but across the globe. I also think about what it cost the small businesses I have worked for to obtain that technology. The most recent company, a small office in Largo was building its technology from the beginning. In order to write those emails to people across the US, they needed email software. But they also needed computers to install that software on. Then there are the servers to manage and send the emails, and the software to do those tasks. There’s also the monthly internet costs, web hosting costs, and yearly domain name costs. There are also the technologies that may not immediately seem like they’re needed for global communication: a copier that can scan and email a contract in seconds rather than needing to send the hardcopy through the mail, or the fax machine that can receive that signed contract back just as quickly. All of these examples (and many more) are more of a requirement these days than an option. If a company, of any size, is not able to communicate and do business with others in a different town, state, or country, then they will simply be passed by. Add to that the additional costs of upgrading their technology on a regular basis, as well as the support for all of this technology (as most small businesses do not have an IT person) and the costs for playing on a global field can noticeably cut into profits. Larger businesses are able to absorb these costs better, and control them by bringing some of the processes in-house, but the small business owner usually has to pay outside vendors to set up, deploy and manage these items for them.

It would seem that the major factor in helping the small business owner compete on a larger playing field is also the factor that can hinder them from even getting onto that field to begin with.

Globalization of Money

Globalization has many impacts on the small business owner, the mom and pop brick and mortar stores. We only need to drive down our city streets to be presented with the harbingers of business death that permeates our culture, the brightly colored banners and the day laborers walking with huge signs screaming “Store Closing – Huge Markdowns” and “Save 50-70% Inside”. After all who doesn’t love a deal, but at what cost? In the detective novels, the intrepid detective often utters the cliché, “Follow the money”, the same is true if we look at the global effect of money and small business failure we find a real chicken and the egg challenge.

David Robinson, in his Buffalo News article “Globalization hits home in HSBC selloff” states, “That’s why it’s so important to nurture the home-grown businesses that remain. They’re more likely to support local community events and cultural activities. They feel they have a stake here. If those top executives cut local jobs, they have to look their neighbors in the eye the next day.” More and more financial institutions are closing, merging, and moving overseas, leaving their customers and business customers which rely on their credit, and business products to facilitate the day to day running of their businesses. When there are fewer choices in a tough economy, the small businesses are often the hardest hit. They have the smallest cash flow reserves, the most sensitive reactions to increased fees and changing lending practices.

The bailouts, which were to have made available to the consumer housing market and the business owner eased access to lending has failed utterly, with banks taking the money, covering and shoring up their losses, paying themselves uncalled for bonuses and not delivering the intention of the money. The mortgage market continues to freefall, construction business financing is still bone dry, and after all that banks continue to fail and abandon us.

Access to working capital and the relationship with business friendly banking and financial institutions is vital for a thriving small business community. As there become fewer and fewer choices through sale, merger, and closing there are natural and inevitable consequences to the small business owner. As businesses continue to close and struggle it becomes less attractive for banks and lenders to extend credit and invest in that market segment, and as lending becomes tighter, and banking options close up more businesses will struggle and fail. Which came first?

Source:

Robinson, David. “Globalization hits home in HSBC selloff.” Buffalo News June 19, 2011. August 28, 2011 http://www.buffalonews.com/business/business-columns/david-robinson/article459929.ece.

Globalization & The Struggles of SMEs

Small businesses have always fought tooth and nail to make their presence be known to the markets they are trying to reach. With the rapid integration of globalization into virtually every area of business, small businesses are finding themselves backed into a corner against multinational mainstays. My father is an executive of a small frozen dessert business that does battle with companies like Nestle, Rita's and Luigi's. His company has tried to introduce two new products over the last five years that were tested for the global market and were forecasted to be excellent additions to their portfolio of products and create a tremendous amount of revenue. They had success at the domestic level but did not fare nearly as well globally. According to Abhijit Naik, globalization is the encompassing of economic, societal and cultural factors that meld together in the avenues of communication, trade and transportation. My father views some of the cultural factors and marketing limitations as to why these products did not achieve the global success like they had domestically. This lack of international acceptance caused the company to retract these products, both stateside and worldwide, due to profitability concerns. The necessity for global success in this market is the direct result of globalization and has created a harsh market for SMEs like my father's.

http://www.buzzle.com/articles/disadvantages-of-globalization.html

http://www.witiger.com/internationalbusiness/globalization.htm

Outsourcing Small Business Manufacturing

Global business opportunities have expanded in the last ten years. As more products become available to consumers, competitive pricing has become more relevant. Outsourcing has been marketed as the perfect solution to lowering costs and consumer prices. Almost every day we read about another company moving its manufacturing facilities overseas. What isn’t apparent is the hidden costs associated with outsourcing; costs that are hard for small businesses to absorb.

Quality control is an important function in any manufacturing process. As Sleek Audio of Palmetto, Florida discovered, flying around the world every month to discuss unresolved quality issues is an expensive task. Without a corporate representative on site to oversee quality, the company has to rely on the contractor’s promises to meet vital quality standards. After poor quality products and delays in shipping, the company has decided to bring the manufacturing process back to Florida. Now facing higher production costs, the company has chosen to focus on quality and customer service over competitive pricing.

Larger corporations have the resources to have full-time representatives overseas, and can afford to absorb some of the costs resulting from products rejected due to poor quality. They produce in much larger quantities than smaller businesses, and benefit from outsourcing by manufacturing products at a lower cost to consumers. The cost of shipping also becomes less per item when shipping in large quantities. Globalization of manufacturing has resulted in lower costs for larger corporations, making it harder for smaller businesses to compete.


Source:
Wired Magazine http://www.wired.com/magazine/2011/02/ff_madeinamerica/all/1

Globalization: An E-Business Strategy

Although the term Globalization is widely interpreted in different contexts, it’s vastly the colonization or occupation by any type of economic, political, cultural, social and military strategy over foreign land or market. In today’s world, such abrasive and expanding force is the result from advanced technology in a world where corporations only look to expand their tentacles to gain consumers and of course; monetary gain. Capitalism, as a competitive playground, is the force devastating natural resources to feed its business strategies at its path. One source where corporations have used to expand their operation is the Internet. The Internet is a perfect business platform; it is available for business activities 24/7, even in a fully automated environment. It has evolved so rapidly since its beginning that today it is an effective and necessary tool for business to succeed.

        The Internet with its complex languages of protocols makes possible for companies to conduct and operates businesses virtually over the world. That is why is called E-Business Globalization. Globalization, in an e-business context, refers to: “tailoring the World Wide Web (WWW) environments to local market climates through globally-synchronized methodology, operations process, strategy and implementation plans” (Abeson, 2011). Such E-Business strategy is the: “integration of systems, processes, organizations, value chains,  and entire market using Internet based technology and concepts” (Sanayei, 2003). Globalization, theory or applied science, establishes that single markets and multi markets require different models, so that: “single markets need align their technology, branding, creative assets, project management, staffing and strategic recommendations to the needs of the entire system, rather than the single domestic market”(Abeson). But, as Abeson
states in her article, is this essential in order to achieve economies-of-scale? Or it is only the product to override codes, protocols standards and design new programs to remain competitive in a global market because domestic markets don’t have the resouces to design a new product o deliver a service to create a new and unique customer experience as a competiive advantage strategy. This is the evident truth, domestic market is simple a thing of the past.
As a result, people are skeptical to open small business because Globalization is closing their venues and stealing consumers. In addition, natural resources are owned and purchased in great scales by corporations where row materials are manufactured and sold to other corporations.Small businesses don't have the capital to adquire products to conduct their business operation and services. If they have, they will pay a more expensive price to adquire them. Technology, may be essential to conduct business but it is displacing the human labor factor indiscriminately faster.

REFERENCES:

Abeson, E. (n.d.). E-Business Globalization Brief.
Abeson.org. Retrieved August 28, 2011, http://www.abeson.org/docs/e-Business_Globalization_Web_Brief.pdf
Sanayei, A. (2003).
Globalization and E-Business. Iranian Journal of Information Science &
Technology, 1(1), 89. Retrieved August 28, 2011, from http://www.srlst.com/ijist/ijist-vol1/ijist11-87-95.pdf

Global Companies Effect on Small Businesses

I find myself a bit apprehensive about writing a blog post pertaining to something I know next to nothing about. So I go straight to the source, a small business owner. My parents own a small restaurant in Dunedin, Florida that serves mostly ice cream and burgers. So I asked my mother, “What is one aspect of the global market that affects your business on a daily basis?” I am surprised to find out that what she notices most is something that as consumers we think little about; credit card purchases. I think as consumers we have become accustomed to using credit/debit cards provided to us by global companies to make our purchases, whether online or in store. We just think it’s easier. I hand you the card, you swipe it and pass me a receipt. However, we don’t often consider the effects on the small business owner. Every time that card is swiped, it costs the business owner money. Swipe fees, support fees and batch fees are all paid to companies like Visa, Discover or MasterCard. Not to mention most companies get a percentage of each sale which differs depending on the company. In the case of my parents business, this total comes to about $500 per month. While these credit card companies are in fact businesses that need to make money too, the effects on the small business are much greater than on globalized companies.

Sources:

Merchant Express - http://www.merchantexpress.com/mg_merchant_account_fees2.htm

Globalization and Job Loss

Globalization is seen not just as an economic process, but as a process of the world becoming increasingly interconnected. There is an increase in the outsourcing of jobs overseas by competitors, which many feel is making it harder for companies, since they can now hire people from anywhere. Globalization has given the big multinational companies the freedom to scour the world looking for the cheapest labour in countries such as India and China (Delaney,2008). As I read more about this I realized that many people are living in fear for their jobs and even fear losing income. When companies realize it's cheaper to outsource jobs and pay individuals in other countries at a less salary they act without concern for human rights. With that fear consumers are less likely to spend because they are underemployed and if they are unemployed they have no money to spend. So with less to spend it reduces demand, which reduces prices, which leads to layoffs. This could be a major reason as to why those students graduating with degrees are desperately looking for jobs and in the mean time moving back in with parents.

Delaney, Joan. "Globalization: Future Job Loss a Problem." The Epoch USA, Inc. 2008. http://en.epochtimes.com/news/8-4-24/69681.html

A business owner's perspective on globalization

Globalization can be viewed in many different perspectives, positive and negative. It is natural for humans to want to expand and improve their ways of life. In today’s world globalization has allowed people to easily access their wants and needs by simply going on the internet. Many businesses that are a part of this global expansion are benefiting from the internet but it’s the small local business owner’s that are still struggling to keep up.

Customers in today’s economy utilize the internet more than ever. The negative side of strictly using the internet for this purpose is that in most cases this skips over the smaller local business owner’s opportunity to be seen. Larger businesses like Wal-Mart and Target have such an online presence that small business owners can’t afford the marketing money it takes to have their business seen. So the question is how much should a business spend on marketing and advertising? Businesses typically spend a certain percentage of sales on marketing. This percentage can be from .5% up to 10% of sales. For most businesses this is an achievable number but compare sales of a small business versus a business like Wal-Mart. The dollars spent on marketing are outrageous compared to what a small business can contribute. This is why larger businesses are gaining ground and small businesses are struggling. The concepts of customers driving around to brick-n-mortar locations to shop are quickly fading away. The cost of owning a store location versus having your business strictly online is night and day. Creating an online business is very affordable and this is why so many businesses are being forced to go this route.

Personally I am a small business owner. My business is party rental equipment. This type of company does not require a store front but it requires a large effort in marketing online. I constantly feel the pressure to be competitive online and in many cases it can cost more money than it’s worth. I’ve spent large amounts of money marketing online and received poor results due to my competition. Keeping a high ranking online can be very costly and that is why now I typically spread out my marketing with other local options to gain business exposure.

In conclusion globalization has made owning a small business very challenging and competitive. Small business owners now have to choose to convert their businesses to more of an online setting or possibly go out of business while larger corporate businesses continue to grow and increase profit. The future of the small business owner’s are fading away and the rise of large global corporate businesses are here.

Sources:

http://www.businessweek.com/smallbiz/content/feb2009/sb20090210_165498.htm

http://www.buzzle.com/articles/negative-effects-of-globalization.html

Globalization Negatively Impacts Small Businesses

Globalization is a term that refers to the breakdown of national boundaries in business and trade thus creating a worldwide economy. Technology has especially sped up the process and ease of doing business overseas. Globalization is not always a good thing for the small businesses. An example is the Hooker Furniture Corp. (HOFT). Hooker is a furniture manufacturer based in Virginia. In the year 2000 Hooker Furniture made most of their products here in the U.S. but global competition compelled them to outsource their manufacturing. Savings reached 20-25% but cost many of HOFT's U.S. workers dearly by eliminating their jobs.

Hooker Furniture is but one example of domestic U.S. manufacturing that has been outsourced overseas, with a loss of good-paying jobs. The benefit to the U.S. economy from globalization is supposed to be quality goods at lower prices for the American consumer. However, even as U.S. furniture manufacturing has declined import prices on furniture from China have increased 6.7% since 2003, thus negating much of the benefits to consumers.

Sources:

"Wrenching Process" paragraph on HOFT
http://www.businessweek.com/magazine/content/07_25/b4039001.htm

Globalization definition
http://www.investorwords.com/2182/globalization.html

Global Management Skills for Small Business

Probably like many North Americans I tend to see globalization as having a positive economic effect, although at times it is difficult to reconcile this perception with current events. For example, we all see small businesses caught in the transition to globalization without the skills to adapt. These companies and the people that they employee are often hurt by globalization. It is not enough to adapt old business practices to today’s technology; new models and processes must be created to remain competitive. Cultural diversity, training, and wage expectations are but a few of the challenges now facing small business owners. U. S. small businesses employing offshore workers will need to train their existing work force in the cultural issues that will be encountered when interacting with their foreign counterparts. Communication will take more time and will become of great importance when collaborating on joint projects. Local wage expectations need to be balanced against off-shoring a given position and profitability. In other words how many positions can be sent off-shore to support profitability and still maintain the wage level of the local workers? According to my experience this is not a common or easily mastered managerial skill. In conclusion, I believe that one of the major negative effects on small businesses are these new skill requirements to effectively manage and operate in a multinational business environment. In the long run I believe that globalization will greatly benefit the U. S. economy.

Sources:
The Effects of Globalization in the Workplace by Kate McFarlin, Demand Media
http://smallbusiness.chron.com/effects-globalization-workplace-10738.html

World Public Opinion.org
http://www.americans-world.org/digest/global_issues/globalization/general.cfm

Globalization; http://en.wikipedia.org/wiki/Globalization

Global Challenges for Small Businesses

The extensive use of the internet has allowed more businesses than ever before to go global. “Globalization creates a unified playing field that connects millions of users across the world to a wide array of products or services produced outside of the country.” (thaynecarper.com) This, however, is not necessarily always a good thing for small businesses.

Globalization increases the number of companies that small businesses have to compete with. Smaller local businesses which once cornered their market are being overrun by large corporations with the ability to outsource, obtain bulk discounts, have a larger knowledge base, and are able pull from a larger customer pool. As cited on page 9 of the book Creating a Winning E-Business: Second Edition by H. Albert Napier et al, “The Tattered Cover Book Store, a popular independent bookstore with three stores in the Denver, Colorado area, has [at the time of printing] been doing business successfully for over 30 years. The Tattered Cover Book Store traditionally competed with other local Denver bookstores, but these days, it must also compete with online bookstores such as Amazon.com and Barnes&Noble.com.” These large giants have the ability to reach customers across the entire world. Although small businesses like The Tattered Cover Book Store could also create a web site and join in the global market, the owners must learn new skills beyond their job’s original scope – selling books. They also would need to come up with enough capital to out-market the giants. Large companies are benefiting from globalization by being able to “exploit underprivileged workers in third world nations, paying them pennies an hour without benefits." (thaynecarper.com) Small local businesses are not afforded such cheap labor costs nor are they able to get the bulk shipping and purchasing discounts that large corporations get.

Having a website helps small businesses join in the global economy. “An online presence opens up a potential global pool of customers… which can lead to increased revenues.” (digitalbusiness.gov) The website helps put the small business back on a level playing field with the large corporations that now, thanks to globalization, compete with them. While large corporations can afford to hire their own webmasters, small corporations will have to contract their web design and maintenance needs. The issue of lower cost is still not resolved, however. With thousands of stores at the consumer’s fingertips, price shopping is at an all time high. The small business will have a hard time matching a large company’s low prices so they will have to offer a service to their customers to make up the difference.

My dad owns a printer company, Peripheral Services, Inc. The company has been in business since 1987. It sells printers and supplies and provides printer maintenance. With increased use of the internet and big box stores like Staples and Office Depot competing, the profit margin on consumables such as ink and toner have become so low that the company was finding it difficult to compete. Peripheral Services, Inc. came up with an innovative idea which has helped revive the sales of consumables – free service. Online suppliers and big box stores can offer lower prices on toner but they cannot provide service if the printer breaks. They found that most customers were willing to pay slightly higher costs or settle for a non-manufacturer brand of toner at the same cost for the comfort that if their printer breaks someone will respond to fix it for free.

Increased competition and decreased profit margin are two negative effects of globalization that small companies face. With some creative marketing and innovative ideas, however, small businesses such as The Tattered Cover Book Store and Peripheral Services, Inc. can still compete with the large corporations.

By: Lee Harrington

"A Flat World Could Flatten Small Business"

“The world is flat” is a phrase coined, and the title of a best selling book, by Thomas Friedman detailing how globalization creates an even economic landscape for countries and businesses alike. Many factors, including increased communication technology, outsourcing, and off-shoring foster a climate where businesses need to adapt to a changing world or they will not survive. Small businesses in particular have a difficult time assimilating to global markets due to their lack and access to resources. Outsourcing to countries with lower regulation, lower taxes, and lower labor rates means that small business must find a way to adapt to the changing world or go out of business. For an example of how business, including small business can be effected by globalization, look no further than an American staple, General Electric.

In July of this year, the medical giant decided to relocate its X-ray manufacturing division from Waukesha , Wisconsin to Beijing , China . GE called Waukesha home for more than 100 years, but this year, something needed to change. GE will train foreign engineers, invest billions in a foreign country, and layoff their Waukesha domestic workforce to compete globally and stay ahead of the curve. This company paid less in taxes than you or I last year (actually GE was refunded more than a billion dollars) and decided to take their business overseas. The closing of a large plant immediately impacts the workers; however, we should also consider the smaller businesses that served the plant. Brick and mortar businesses provided materials. Shipping companies benefited from delivery sales. Restaurants fed a work force. All will undoubtedly take a financial hit. Without adaptation, creativity, and ingenuity, small business, like the ones that served GE, will be out of work because of a flatter world.

Sources:

http://en.wikipedia.org/wiki/The_World_Is_Flat

http://dieurope.com/articles/e-news/details/article/ge-healthcare-relocates-its-x-ray-base-to-china/index.html

http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes.html

http://trinitygames.files.wordpress.com/2010/09/flat-planet-431x300.jpg

Brick-and-Mortar being forced to Brick-and-Click

As I sit here, trying to determine how to post an article about something that I know very little about, it occurred to me to just go off of my own experience and what I have seen locally happening because of the booming Globalization of the e-marketplace. I only had to go as far as my resume to see the many companies that I had once worked for that have gone from brick-and-mortar, to brick-and-click, and even transitioned all the way to pure-play e-retailers. One of my first jobs that I had as a teenager was working at Kmart. I remember the Christmas rush, the black Fridays, the craziness that was the toys and electronics department, and for the most part that has all changed. I recently went into the store I used to work at, one of the few remaining in the area after Chapter 11 bankruptcy in 2003 and the closures of hundreds of stores. I was shocked to see how quiet, calm and empty it really was, especially for a Saturday afternoon.

While I was there, I ran into the Electronics department manager, who was my manager 10 years ago, and asked her why the store was so empty. She was shocked by my question and said that she was busier than she had ever been. I could see the sweat on her forehead, but did not see a single customer in her department. She then explained that Kmart had recently updated their website and added a “site-to-store” option, where customers would by the merchandise online, and they are able to come into the store mere hours later to pick up the merchandise. They used a system called mygofer which is basically an order fulfillment site.

I went home shortly after that and started researching Kmart and their bankruptcy and the reason for it, etc. and I came across an article from 2003 on www.abcnews.go.com. The article, which can be found here, was about the bankruptcy and it had a quote from Howard Nemiroff, professor of finance at Long Island University, where he stated the following in regards to how Kmart can get back on track, “Trim the fat. Try to get back on track. Try to steal some ideas from Wal-Mart or from their competitors to see how they can service the consumers better,” and that is exactly what they did. While the company eventually merged with Sears and they are doing much better than they were, they are still years behind the curve of other companies that jumped on the Globalization market much sooner.

Because of Globalization, and having to compete with brick-and-click juggernauts like Wal-Mart, thousands of people lost their jobs, and a company was changed forever.

Globalizations effect on American small business

The expansion of the global market has provided great opportunities for businesses. Developments in technology, communications and transportation have enabled businesses to service customers worldwide 24 hours a day, 7 days a week and 365 days each year. Along with this ability to attract new customers, in the global market, comes the added competition from foreign companies. Global competition forces companies to be more efficient and productive and stay current of technological changes, or face being left behind. Ahearn cites the Institute for International Economics, estimating a gain of between $500 million and $1 trillion each year, to the US economy, from the integration of the global economy. He goes on to state that not all businesses benefit equally from this increase. "Substantial economic losses are borne by specific groups" (Ahearn,2008). The increased competition can create anxiety. Workers from low wage countries can erode the bargaining power of American workers. American companies trying to cut expenses have already eliminated or decreased benefits to workers. In addition jobs, manufacturing processes as well as supplies are increasingly outsourced to other countries, where they can be found cheaper. Businesses and workers fear that losses will exceed benefits, resulting in a stagnant or decreasing standard of living. Small businesses need to find a niche, stay ahead of the technology curve, or find some competitive edge to thrive in the global economy.

Ahearn, Raymund J. "Globalization, worker insecurity, and policy approaches." Congressional Research Service(CRS) Reports and Issue Briefs. 2008. Academic OneFile. Web. 25 Aug 2011.

http://go.galegroup.com/ps/i.do?action=interpret&id=Gale%7CA193183536&v=2.1&u=lincclin_spjc&it=r&p=AONE&sw=w&authCount=1

Globalization VS The "Mom & Pop" Shop

Think back to a time when your town; any town, USA, had a speciality shop of any kind. It may have been a camera shop, a pharmacy, a clothing boutique, a florist, a greeting card store, a movie rental shop, or countless other examples but, now it's gone. Some of these establishments survived the booming big stores because they provided expert knowledge that the minimum wage sales associate at "We Have Everything Mart" failed to possess. Why then, have so many of these local, friendly, knowledgeable businesses been forced to shut their doors? Globalization plays a key role. Today, I can research, gain a plethora of insight, read reviews, search for the lowest price, and have an item in my hand the next day...and I haven't even left the comfort of my home. I'm shopping globally. I'm online. I'm getting a new release video game from Japan. I'm sending flowers to a sick friend. I'm not buying pet meds from my dog's vet. I'm streaming brand new movies to my cell phone...while in the car...on vacation...with a cranky child. It's the era we live in. There are new rules; and while "Mom and Pop" are great people, if they don't jump in and make themselves seen in my search engine...I'm passing right by their shop!

Sources:

http://en.wikipedia.org/wiki/Globalization

http://www.consumerreports.org/

http://www.1800flowers.com

http://www.dictionary.com

The negative effects of globalization upon small business