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5 Ways How Globalization Impacts Small Businesses

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globalization and business

Advances in transportation, communication, and technology have enabled the exchange of goods, services, information, and ideas across borders, which is essentially what we call globalization.

As the world becomes smaller, businesses have more opportunities to expand and grow with the rise of technology and globalization. However, this also demands careful strategic thinking to minimize risk and maximize rewards.

Globalization has been driven by many different factors, including:

  • Advances and falling costs of communications and transportation
  • Free trade agreements and multinational organizations
  • The declining significance of national sovereignty
  • The increase in the volume of ethnolinguistic minority groups migrating to other countries

The Internet, apps and evolving technology like 4th and 5th Generation AI, machine learning and NLP have enabled small businesses to compete globally.

Once confined to one geographic area, businesses and organizations now play a more prominent role in the global economy thanks to free trade agreements, treaties, and international laws. However, larger markets don’t just mean more customers; there are challenges for small businesses ‘going global’.

In this business blog article, we focus on how exactly globalization impacts small businesses around the world, including:

  • Access to new markets
  • Supply chains
  • Staff
  • Competitiveness

1. Access to The Global Market

Small businesses benefit from lower trade barriers, which allows them to reach customers in other parts of the world who were previously out of reach. Selling products to customers in different countries can help a small business grow, especially if it offers something those countries want.

Because of advances in technology, communication between countries is more accessible than it’s ever been. You can now conduct customer service, marketing, and sales operations in other countries without a physical presence. This, in turn, can significantly reduce the costs associated with operating internationally.

Now, consumers can reach into their pockets, pull out their smartphones, and access the products or services you and other small businesses are selling. This can massively increase the revenue of any small business beyond what it could produce before globalisation took effect.

Use this product costing template to fully understand the cost of your products. This will ensure the customer gets the best price and your business makes a profit.

2. Supply chains are global

When products are made or assembled by a local manufacturer, they are often transported over national borders. Phones, clothing, and even food are manufactured in other countries.

The rise of globalization has made it easier for these business relationships to cross national borders. In addition, technological advances have made cross-border supply chains more straightforward to manage, mainly when the supplier is located in a different country.

3. Remote Staffing

Another impact that globalization has had is the availability of remote staff, aka remote workers.

Not long ago, startups and small businesses needed a workplace for staff. Now, enterprises hire staff and freelancers anywhere in the world.

Technology can help you find skilled people in other parts of the world, which could be challenging to find locally. This applies to various skill sets, including engineers, designers, content creators, and salespeople. Finding the right people for your business can be easier and cheaper if you cast a wide net outside your country and your business has adopted an inclusive company culture.


Continuing with the influence of technology, consider how life-changing Industry 4.0 tech is with its cloud computing, AI, automation and collaboration tools.

Security is a priority for businesses that have remote workers. Accessing business systems remotely is a vulnerability that cybercriminals are aware of and look to breach, but there are security measures companies can take to prevent cyberattacks.

Another option with globalization is to outsource more business tasks like marketing and the back office. It is not uncommon for companies to use digital marketing services or website developers located offshore rather than hire locally. The cost savings empower startups and small businesses to compete with the big enterprises.

4. Competition from Around the World

Next on the list is competition. With the increasing trend of globalization, more businesses are entering the market. Due to the accessibility that the internet has offered, small businesses worldwide are facing much more competition.

In fact, there are likely to be ten other businesses selling similar products to the product you are trying to sell. This means that companies must ensure that their products are of high quality and offered at competitive prices. Otherwise, they risk getting kicked out of the market due to high global competition.

Therefore, it is recommended that foreign exchange headlines and other financial news outlets be checked to stay updated and ahead of the competition.

5. A Business Equalizer

Thanks to globalization, everything has become a bit more equal.

The Internet gives everyone access to marketing tools, business information, and everything else that can make them as competitive as more prominent and established companies.

That’s part of why Uber and other tech giants rose in popularity so fast. The business world is much more equal now, allowing small businesses to gain popularity where they wouldn’t have been able to before.

Summing Up

Understanding how globalization affects startups and small businesses worldwide is an opportunity.

Small businesses stand to benefit from globalization in many ways. One advantage is the ability to reach new markets. A small business can grow by selling products and services to customers worldwide, especially if it offers something those countries want.

Small businesses can also benefit from technological advances that make operating internationally easier and cheaper. The internet makes finding the right people for the job easier, whether in your own country or another part of the world.

Lastly, small businesses can network with other companies and people in their industry or join online communities where they can learn from others.

While there are threats, you can determine them and plan to mitigate the risks. See our recent article on Globalization 5.0.

Thanks for reading this article.  You might also enjoy our latest update on business economic performance.