AB209 Small Business Management

Unit 5 – The Business As a Global Entity

Contact Information

Vanessa Paskaitis• Email: vpaskaitis@kaplan.edu• AIM: vanpask06• Phone: 484-707-7439• Office Hours: Sunday 6pm and Thursday 11am EST• Kaplan Technical Support: 1-866-522-7747 • (For all computer related issues)

Global Business

Today’s businesses are now operating within today’s global marketplace! In this unit, we pause from our business plan to briefly examine the collaborative opportunities as well as global competitive challenges that this global marketplace presents for the small business leader. How he or she responds to this global reality may very well determine the success or failure of the venture.

Unit 5 Outcomes

• Identify the basic forces driving global business

 • Describe the potential for global collaboration and cooperation

within small businesses.

 • Understand and compare strategy options for global

businesses.

 • Recognize available assistance for small businesses engaged

in international business.

Unit 5 To Do ListStart the Unit:•Review the key terms

 

Study:•Read Chapter 18 in your text

Prepare:•Carefully consider role of your venture in a global market.

Graded Assignments: •Respond to the Unit 5 Discussion Board•Complete the Unit 5 Review Quiz•Attend the Unit 5 Class Seminar or complete the Alternative Assignment

 

Unit 5 Class DiscussionUnit 5 Discussion:

Read the scenario in “You Make the Call – Situation 1” at the end of Chapter 18 concerning Luis Aburto and his firm Scio Consulting International, LLC. After reading this scenario, respond to the following questions:

 

1. What additional information would be helpful to Aburto as he ponders his decision?

 

2. What additional advantages and disadvantages can you think of that Aburto should consider when choosing between off shoring this work to India and “near-shoring” it to Mexico?

 

3. Which location would you choose – India or Mexico? Be sure to build a strong case for your final decision.

Any questions?

Why Would a Small Business Engage in Global Trade?

1. To gain access to additional markets with more customers

2. To reduce costs (labor, transportation, etc.)

3. To gain access to resources (raw materials)

4. To capitalize on the special features of a location (Italian designer goods, Swiss chocolate, French wine, etc.)

Because it is what we do…“Because it is what entrepreneurs do. To wax deductive:

Globalization is risky. Entrepreneurs embrace risk. Therefore entrepreneurs embrace globalization. Of course there’s risk and then there’s risk, with the latter including such potential spoilers as an unfamiliar language, an alien business landscape, and political volatility. Still, the chance to try new things in new places is like a jumper cable to the entrepreneurial engine. [Small company owners] describe running their international efforts as the most exciting aspect of doing business, not just for themselves but for their employees as well.” Lehigh Buchanan (p. 468)

What are your thoughts? Is this statement true?

Two Ways Small Businesses Can Use Global Trade:

1.Competitively: • Traditional methods involving exporting, importing,

countertrade, licensing, franchising. • Expanding markets• Lower costs

What examples of competing globally can you list?

Two Ways Small Businesses Can Use Global Trade: (Continued)

2. Collaboratively: • Innovative ways to use the specific expertise, special

location features or market knowledge and experience of foreign firms (International strategic alliances, outsourcing, Greenfield ventures, etc.).

What examples of collaborating globally can you list?

Challenges to Global Business!

). Political Risk: The possibility that a country’s political circumstances will negatively impact the performance of the business.

Can you cite an example of political risk?

Challenges to Global Business! (Continued)

). Economic Risk: The possibility that a country’s political leadership will mismanage the nation’s economy such that it negatively impacts the performance of the business.

Can you cite an example of economic risk?

Challenges to Global Business! (Continued)

). Managerial Risk (Limitation): The possibility that a business’ management may not possess skills sufficient to deal with the complexities of a foreign country’s markets.

Can you cite an example of managerial risk?

Web Field Trip

• Locate the site http://www.executiveplanet.com/index.php?title=Main_Page

• Choose a country and click on the name

• Spend 5 minutes reading about Business etiquette in that country

• Report back with your findings

Business Practices

Why is knowing about another country’s business practices important for a global firm?

Global Resources for Small Businesses

).

1. Trade Leads – Many Web-based trade leads sites.

2. Trade Missions – Prearranged visits to foreign countries to promote trade.

3. Trade Intermediaries – Contract agencies that assist a foreign firm in doing business in that country.

4. Private Banks – Larger banks usually have representatives skilled in foreign trade.

5. The Small Business Administration – Government agency offers a host of resources to facilitate trade by small US businesses.

Any questions?

See you next week!

Remember, our Class Seminars will always be held at the same hour and the same day each week! After this seminar has concluded, there will be a recording in the archives located in the seminar room. It may be selected by date.

Thank you for joining me today! I look forward to joining you next week!