Sunday, August 29, 2010

The Threats of Globalization

Small businesses have been seeing the new trends on globalization and how they shall adapt in order to surpass the negative effects of this and their way of doing business.

With more accessibility to the Internet consumers often seek the best price available for a product that they might be looking to purchase. Since outsourcing has increased over the last few years, many small businesses are obliged to compete against bigger retailers that purchased their goods over seas. For example Walmart, that bases most of its manufacturing in China, is making American manufacturers go out of business as they can’t compete against the financial capabilities of bringing a whole lot more products for very low cost.

Moreover, the effects of outsourcing leave many Americans out of jobs as companies frequently look to lower their labor costs in order to increase their profits.

Small “Mom & Pops” neighborhood’s retailers are out of business and they’re slowly disappearing as a result of the globalization, they must adjust their business strategy to the economic changes and adapt to the new market demands; but an important point to mention is that consumer behavior needs to change as well, we “vote with our wallets” and we are the ones responsible of Walmart’s phenomenal growth. (

It’s all connected in a chain of events: Asian countries like China or Taiwan, offer low-cost labor but at one cost: QUALITY of the goods is often times sacrificed by the means of time production. The focus is to make as much as they can so it can be shipped quickly, by doing so, the quality control isn’t always the most important thing in mind.

Small to Medium size businesses face many challenges as a result of the global marketplace; keeping up with the technology and the way of doing business can negatively affect these companies if they don’t embrace and implement the necessary changes to keep their business and customers.


1 comment:

  1. Unquestionably, the most negative effect of outsourcing is leaving Americans without a job and buying power. Another big impact to our economy is that small businesses are forced to compete against bigger retailers that purchase their goods and services overseas at very low prices from countries like China and India.

    You cited how the “Wal-mart effect” is making American manufacturing companies go out of business due to a cheaper labor from China. With the link you provided, I was amazed by the following article section “What is Wal-Mart's effect on the local economy? One famous study found that the arrival of a Wal-Mart store had a dramatic impact. ‘Grocery stores lost 5 percent of their business, specialty stores lost 14 percent of their business, and clothing stores lost 18 percent of their business—all while total sales were rising 6 percent, mostly due to Wal-Mart.’{15} Critics of Wal-Mart say that it forces small businesses into bankruptcy. But if you think about it, it is the consumers who put people out of business. We vote with our wallets. Shoppers are the ones who have made it possible for Wal-Mart's phenomenal growth. And we are the ones who need to pay attention to what we buy and where we buy it.”

    I agree with the Critics of Wal-Mart saying “that it forces small businesses to close.” I live in southern Pinellas County and when the Wal-mart 34th Street South Supercenter Store opened its doors, soon after, the nearby stores Albertsons’ Supermarket and K-mart went out of business. However, we the consumers decide where to shop, and we need to pay more attention to the ethical and business practices of the companies where we shop.


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