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