The rationale for SMEs to expand their business internationally

Small and mid-size businesses making the decision to go international, may be supported by the digital transformation, this lowers the obstacles that makes entering new markets difficult. Today, there are many SMEs deciding on globally expanding but it is important for them to realise that they must familiarise with the cultures and behaviours of foreign countries and must be prepared to approach new ideas. (pageexecutive, 2019) There are many benefits for SMEs to expand their business internationally, some of these include gaining a competitive advantage, access to new markets, diversification and foreign investment opportunities and many more. By accessing new markets it gives them the opportunity to reach a wider range of consumers. (bizjournals, 2019) SMEs expanding their business globally gives them new opportunities and access to new revenue streams.

An SME is a small or medium enterprise. It is a business with less than two hundred and fifty staff members and has a turnover lower than €50 million. The three different groups include medium, small and micro businesses. In the UK they are known as a key aspect in growth and sustainability as roughly 99% of businesses are SMEs. (simplybusiness, 2019)

Only 14% of SMEs in Singapore have shown that they are considering expanding globally, after a survey was conducted involving over 400 SMEs in Singapore, 45% has no interest at all. One of the main concerns for SMEs expanding internationally is shortage of funds, another concern was lack of knowledge and the newness of foreign markets. Some SMEs claimed it was competition or legal matters. (insurancebusinessmag, 2019)

 

SMEs expanding globally may benefit them through increasing their resources available in which they can use to increase their sales and profits while reducing costs at the same time, it also gives them the opportunity to reach a wider consumer base and attract new customers. It also gives them the opportunity to reduce risks such as competition or changes in the markets they operate in. Although there are many advantages for SMEs expanding globally there are also disadvantages such as shortage of funds, and increased capital requirements and staff turnover. (nibusinessinfo, 2019)

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Mac Interiors is an example of a business that started small in Newry. This business was established back in 2002 and the business has offices in Newry, Dublin, London, Prague and Hamburg. The total number of staff within Mac interiors is 212 people. Mac interiors owned by Paul Mckenna recently added two directors just as the revenue reaches £86 million. (belfasttelegraph, 2019)

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A business in Singapore that started small is Grab, this is a mobile ride-hailing service for ordering taxis, this runs in Southeast Asia. Due to the great success from the taxi booking service, they extended their business to private cars, motor cycles, food deliveries and many more. They now have an online payment service available. (aseanup, 2019) This business operates in Singapore, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Vietnam. This business was established in 2012 and has currently 6,000 employees. (grab, 2019) Grab has raised over $2.7 billion this year alone and has a value of $10 billion in the recent cash round, and it has raised $2 billion for upcoming growth and development. (forbes, 2019)