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.
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