Internationalization Strategies for Small and Medium-Sized Enterprises

The assignment provided is focused on the topic of internationalization strategies for Small and Medium-Sized Enterprises (SMEs). It presents a detailed review of various research papers and articles related to SMEs' internationalization, covering topics such as market orientation, innovation capability, business performance, cloud computing adoption, social responsibility, global governance, and non-market strategies. The assignment aims to explore the factors that influence SMEs' decision-making processes in the context of internationalization. It discusses how SMEs can adapt to changing business environments and adopt new technologies to remain competitive globally.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Analysis of factors which drive globalisation........................................................................1
LO 2.................................................................................................................................................2
P2 Explanation of challenges which are faced by organisation while operating in a global
environment.................................................................................................................................2
LO 3.................................................................................................................................................4
P3 Evaluation of impact of globalisation upon various factors in an organisation.....................4
P4 Evaluation of influences of ethical and sustainable globalisation upon organisational
functions......................................................................................................................................5
LO 4.................................................................................................................................................6
P5 Evaluation of different decision making approaches on a global level.................................6
P6 Determination of various routes to internationalisation, inclusion of key barriers................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is referred to situation in which an organisation carries out its
operations. A business environment comprises of a summation of internal and external factors
which carry an influence upon its functioning in a significant manner (Apăvăloaie, 2014). This
assignment focuses on the operations of Clif bar & company. It is an organisation which is
responsible for manufacturing organic food and drinks in the various parts of the world. This
assignment focuses on various aspects which emerge as a key driver for globalization. The
various complexities which are encountered by an business organisation while expanding to
global level will be identified. The various factors which influence on organisational structure,
culture and functions will be ascertained and evaluated. Lastly, evaluation of influence of
globalisation on decision making and strategy could be identified.
LO 1
P1 Analysis of factors which drive globalisation
Globalisation is defined to be a process in which integration and interaction of people,
company and economy of a nation with rest of the world. Globalisation in context of a business
leads to economic expansion of an enterprise. It aims to create an environment which leads to
inflow of investment so that growth and profitability could be attained. The organisation which
carry out their operations in numerous countries are known to Multinational organisations. The
concept of globalisation is generously supported by technology and transportation and have
further helped in interconnection of economies on social and economical grounds (Axelrod and
VanDeveer, 2014). It can be said that there are numerous elements which encourage
international expansion of an organisation. It is very important to consider each factors in the
ideal manner so that better results could be achieved. A brief description of key drivers of
globalisation are as follows:
Cost: Cost states the amount which has been paid by organisation while expanding their
operations at global level. An organisation before carry out expansion invests its time and
resources to identify viability of an idea and at the same time investment in procuring new
machinery and equipment are considered so that demand at the global level could be fulfilled.
The cost incurred by a business can be categorised on two major grounds such as direct and
indirect costs. Direct costs involve insurance, rent, inventories etc. as they involve direct relation
with the amount of units produced. On the other hand, Indirect costs involves expenses which
1

does not carry any direct relation with the quantities produced such include factors such as
Personnel, administration and conveyance costs. The most important feature is that expansion of
global level helps in attaining efficiency in terms of cost. The cost efficiency helps in building
competitive edge and helps presenting customer with goods that are affordable.
Market: Market is known to be an economy in which a business is targeting with its
products or services. The more and more saturation of the current market is the major reason for
emergence of globalisation. For instance an organisation is carrying out its operation in the
economy of United Kingdom and have attained decent growth. Prior to this situation an
organisation does not possess any growth opportunities henceforth businesses chose to expand
on the global level to attain a better profitability and growth. An organisation needs a right
opportunity to expand into particular market with right strategies and marketing so that better
incentives could be achieved.
Environment: Environment takes into account most importantly two crucial factors
which are Technological and political drivers. Both these factors are known to be founding
stones of globalisation. The commercialisation and liberalisation of economies have made it
comparatively easy for organisation to venture into other nation with their products and services
(Belás and et. al., 2014). An organisation with the help of digital tools can launch themselves in
newer market in a convenient manner. The government have made it extremely easy for
organisation to come and conduct their manufacturing processes due to numerous benefit it
caters. A business can be virtually present in the countries through approaches such as e-
businesses and e-commerce.
Competition: The competition can also be treated as one of the major drivers for
globalisation. There is a significant rise in the inter-firm competition which persuades a business
into launching their businesses at global level (Belás and et. al., 2015). This action of launching
at international level is further supported by FDI's and interdependencies among nations through
trade.
LO 2
P2 Explanation of challenges which are faced by organisation while operating in a global
environment
Irrespective of the size, there are numerous challenges which are encountered by
organisation while operating at the global level. Clif bar & company is an organisation which is
2

carrying out its operations in the market of UK, Asia and some African region. There are
numerous element which tend to influence working of an organisation in the international market
which are as follows:
Compliance and Regulation: This can be referred to as biggest strategic challenge which
is encountered by an organisation. The small and medium organisation need to understand and
conform to compliances and regulations so that goods and services could be sold to people
(Carneiro and Brenes, 2014). Each country possess its own set of laws which relates to tax or
ethics to carry out operation which are to followed by organisation so that operations could be
sustained in the market for longer duration. The another crucial area which is to be emphasized is
import and export regulation of the country which tend to influence supply of inventories to a
major extent. It is a challenges which is to be overcomes by business operating internationally.
Volatile nature of raw material: It is a common challenges which is encountered by
small or medium enterprise carrying out its operation in the market of United Kingdom. There is
no other means than to comply with ever changing prices of raw material and to form strategies
so that this volatile nature of the market can be dealt by an enterprise in the ideal manner. The
aftershocks which emerge in terms of prices of raw material is to be countered strictly with the
help of financial tools (Cavusgil and Knight, 2015).
Culture and language: it is extremely important for organisation to compete effectively
through culture and language of the operating nations. There are only marginal number of SME's
who are responsible in handling queries of prospects in the right manner. For instance: Clif bars
is already carrying out its operation in the market of Asia and Africa. Therefore, requires a
competent team of individuals who can handle services calls from people so that this strategic
complexity can be dealt with in an ideal manner.
Environmental Impact: It is crucial to conform with environmental norms of countries as
there is a greater emphasis of dealing with global environmental issues. Organisation are
persuaded to incorporate sustainability in its operations if they wish to sustain their operations in
the market for longer durations. Clif bar & company is conscious of all its efforts relating to
procuring of raw material and environmental footprint. The organisational strategies are are
further supported through use of recycled packaging material and toxic emissions are taken into
consideration so that environmental norms are followed and complexities are avoided.
3

Technology and communication: The reliance on technology tend to emerged as a
complexity as technology does not keep up in all the sectors. The lack of communication can be
referred to as a major obstacle when it comes to operating on a global scale. The objectives and
instructions to the management could not be communicated in the ideal manner therefore failing
to achieve its targets (Cohen and Kietzmann, 2014).
LO 3
P3 Evaluation of impact of globalisation upon various factors in an organisation
It has been identified that internationalisation possess numerous strategic complexities
which further tend to influence the manner in which various aspects on the business environment
such as leadership, functions, structure and most importantly culture (Crane and Matten, 2016).
The process of going global is a complex approach therefore, needs to alter numerous aspects of
business so that suitable results could be achieved. The influence on various factors will be
defined in a brief manner;
Leadership: The leadership is defined to be an approach through which helps in directing
and leading a group of individuals towards organisation goals. A leaders possess a set of
opportunities and challenges which are to be countered so operations could be performed in
smooth manner. The concept of globalisation revolves around getting the best out of available
employees so that needs of people could be fulfilled. The concept of global leaders is more
advanced and technology oriented when compared with a national organisation. It is essential for
a leader to thinking globally simultaneously appreciating the cultural diversity and restoring a
cultural balance so that better partnership and alliances could be built. The leaders are bound to
think on these mentioned grounds so that operations could be successfully completed on global
level.
Organisational structure: Organisational structure determines manner in which division
of workforce in an organisation takes place. When operating at a global level it is essential to
form a structure that supports them in building a product which matches demand of people. The
organisation operating global level need to either redefine its structure or form a diversification
(Doh, McGuire and Ozaki, 2015). The decentralisation of structure will help in forming a local
team which takes into consideration demands of people and form decision accordingly.
Functions: There is a shift in manner in which organisation carries out its functions. The
business functions will now possess a heavy reliance upon technological innovation and
4

communication. The reason being when operating on a global level business tends to emphasize
on manner through which goods could be produced at lower rates and achieving superior
business position in the market. The availability of low priced workforce and inventories will
assure that globalisation is working towards advantage of an organisation.
Culture: It can be said that globalisation carries a significant impact upon the culture of
an organisation and communities surrounding it. The globalisation helps in facilitating a better
understanding of culture of one another. The upliftment of technology in this contemporary era
assures that right communication is facilitated between various individuals and simultaneously
improving human connections (Epifanova and et. al., 2015). The understanding of culture of one
another assures that they are being respected and treated with dignity. The influence on culture
reflects upon the manner in which organisational activities are carried. It is essential to adopt to
local culture so that local employees and prospects are invited to be a part of the organisation.
Clif bar & company have initiated a employee ownership programme in which 20% of
ownership is possessed by workforce of the company.
P4 Evaluation of influences of ethical and sustainable globalisation upon organisational
functions
Sustainable globalisation is referred to a transformative approach in which redefines the
manner in which business expansion are carried out. The focus of sustainable globalisation is on
whole ecosystem which undertakes human beings, communities and natural resources so that a
favourable future could be created. Whereas ethical globalisation focuses upon integration of
human right norms so that local and national efforts related to workforce could be supported.
Clif bar & company is an organisation which is diverting its effort to conduct a green-
friendly approaches so that environmental sustainability could be emphasized. This organisation
have to switched to organic inputs so that foreign customers are presented with products which
are more environment friendly and high in nutritional value. This medium sized enterprise is
known to save approximately 90,000 pounds of plastic which costs around $400,00 yearly.
Adopting to measures of sustainability carries a major impact on organisation functions stated
briefly down below:
Higher costs: According to this element, it has been understood that while expanding the
business across the globe company might face high expenses because of differences in various
other factors. It means, opting for organic means of carrying out of operations will cost a
5

business a lot more as the packaging material. Therefore, it can be ascertained that a business
have to pay heavier prices of opt to sustainable means of carrying out operations (Ferraro and
Briody, 2017). The higher cost carries a direct impact in which business functions are carried
out and there is an emphasis on minimizing wastages during productions processes. Along with
this, company might face problem.
Harnessing latest technology: Clif bar and company known to possess a heavy reliance
on technology such as bar code scanning and metal detectors. To organically produce and deliver
products, this organisation have implemented measures of advanced supply chain which
enhances sustainability in an organisation. The adoption of latest technology will definitely
carries an impact on manner activities been carried out in the company.
Workplace environment: It can be said that opting for sustainable expansion definitely
carry an impact on workforce of an organisation because changes are not easily acceptable by
staff members. The efforts of an organisation are aimed to develop which does not comprise
with the ability of future generations. The employees are persuaded to opt for greener approach
rather than travelling individually to work. There will be a major shift in dynamics of the
employment and social and economic aspects will see a transformation as well (Huhtala and et.
al., 2014). While expanding a business may not be able to garner positive response with its
greener approaches and may results in inability to provide employment to people. The inability
to change with the dynamism of the environment may results in them losing their jobs. In context
of Clif bar & company, provide flexible working hours to their staff members so that they easily
perform well and also improve their productivity as well.
Lesser requirement of marketing approaches: Clif bar & company have been successful
in forming sustainable reputation at international marketplace and emerged to be top organic
product caterer in the market. Therefore there is a lesser need to promote products and services
in the market through paid mediums. The aspiration of business of nutrition and sustainability
helps this organisation in possessing decent brand name in the market which arises minimum
need for promotional marketing tactic.
Mainly, the term Globalisation is more important for every business organization to start
their business across the international borders. From the last few decade, it has become the centre
point of all type of company. As it directly impact on the entire activities such as functions,
knowledge, technology and many more. When a business practise their operational activities
6

operas then they responsible for adopting the culture and life style of the specific country. In
addition of this, ethics is refers to what is right and what is wrong for business organization. Both
ethics and globalisation are vital that are easily gains much attentions. As there are various
organizational functions of Clif bar & company that directly influences by ethical and
sustainable globalisation:
Marketing function: Due to globalisation, marketing approaches are change because
every country is follow their specific approaches. As a positive brand image, company does not
required more promotion to invite customers at international level. Thus, company needs to
implement all the trends of international market for improving their sustainability for longer
period of time.
Human resource: This is one of the important function of business organization that
highly influenced by ethical and sustainable globalisation because every country follow the
specific rules and regulation towards their workforce. In context of this, Clif bar & company
have to provide all the rights to workers at workplace to maintain positive work environment.
This will directly contribute in building ethical performance of the company at market place. On
the other side, if company does not follow rules and regulation about the employment so that
they reduced their image in front of global market.
LO 4
P5 Evaluation of different decision making approaches on a global level
Decision making is an approach which aims to select best alternative amongst available
ones. However, making judgement at international level is really difficult task due to the
fluctuation in various internal and external factors. For example; business managers needs to
consider political and legal norms before entering into global contract because it might affects
their profit level. Along with this, sometime it helps in controlling probabilities of fraudulent
activities and mistakes. The choices which are identified are well thought upon and are predicted
to be best alternative resurrecting problem encountered by an organisation (Kasemsap, 2015.).
An organisation carrying out its operations is encountered with numerous challenges which are
to carried out by opting for suitable approach to decision making. Clif bar & company operations
in emerging nations and faces numerous issues relating to procurement of raw material, customer
relationship and maintaining defined level of efficiency and sustainability. The major approaches
to decision making are mentioned briefly down below:
7

11 Unilateral decision making: This approach is known to be most common measure of
decision making under which emphasises on top down approach. The tend to be rigid on
the manner they carry out their functions across the international level and are not
comfortable in explaining each and every aspects of business to their employees. The
major benefit which can be availed from opting to this approach is that quick decision
making can be facilitated and helps while complex circumstances of business can be dealt
effectively by a leader through not procrastinating tough decisions (Kolk, 2016). When it
comes to globalised organisation this approach is less emphasized as they are numerous
factors which a leaders is not aware.11 Ad hoc decision: This approach is very less emphasized as there is an very high
involvement of employees and very less process involved. Leader in this approach carry
authority of modifying teams, decisions and numerous factors which are supported in the
concept. There is a lesser involvement of stakeholders in this decision making approach
and mainly focuses on input of employees and leader's influence. This decision making
approach is not preferred as it excludes stakeholders which are crucial element in
decision making in international organisation.
(Source: Approaches to decision making, 2017)
8
Illustration 1: Approaches to decision making

11 Administrative decisions: These decisions takes into consideration long processes and
does not involve any input by the workforce. This decision making approach tend to
focus on rigid processes which are entertained within an organisation. The major benefits
which can be availed through this decision making approach is that there is in-depth data
and information available on the subject topic which helps in choosing right alternative
among available ones. The information obtained can further be leveraged to improve
decision making in the future (Peng, 2016). This approach lack key inputs from
employees as well as stakeholders leading to formation of improper decisions.
Organisations such as Clif bar & company does not prefer this technique of decision
making.11 Collaborative decision making: This is referred to one of most important decision
making approach which is utilised by organisation to form right decisions. Collaborative
forms of decision making takes high input from stakeholders and consists a high level of
process. The leaders are able to identify role which has been played by inputs from
employees and collecting information from the same. The lengthy process of choosing
alternative assures that right measures are taken with the help of possession of right
information (Savrul, Incekara and Sener, 2014). Organisation emphasizing on this
approach leads to formulation of correct decision on a global level.
In addition of this, there are various tools that help business in effective decision making.
All these can be understood by following points:
Brainstorming: It is an effective method of decision making which includes combination
of both problem solving and group discussion as well. Mainly it related with the starting of
generating new and innovative ideas towards the specific action to resolve the issue. For
example, when Clif bar & company tries to start their business in new country then they launch a
new marketing campaign and also involve host county so that they can easily choose the right
and best ideas to improve performance.
Nominal group technique: In this the team divide into smaller groups for generate the
ideas by note down all the best options to discussed with other team members. For establishing
new business in another country, Clif bar & company includes ideas that select through voting.
By this they operate their business in across the world.
9

P6 Determination of various routes to internationalisation, inclusion of key barriers
In this contemporary era, it has become essential for organisation to expand at
international level so that competitiveness of business could be enhanced along with facilitating
infrastructural improvement and commercialisation of demand of product. There are numerous
ways through which a business can venture into international market such as:
Exporting: Exporting is referred to an progressive manner through which operations of
an organisation could be internationalised (How SMEs Can Internationalize, 2015). In fact, it is
highly indispensable for the success of an organization because internationalization supports an
association in maximizing their income level. This strategy will definitely assist in selling
products and services abroad without being physically present in the country. The production for
Clif bar & company will be the same and will be successfully manufacture organic and
nutritional bars to other nations. The exporting of products and services could be carried out
through direct and indirect measures. The direct approach is preferred when a business aims to
retain its control over business and indirect approach takes assistance from middlemen in selling
products and services.
Relocation: This is another approach which can help an organisation to expand its
operations at the global level. In this approach a part of business is transferred to other nation
which carries high potential relating to sales of products or attain profitability through
availability of cheap labour or inventories.
Strategic alliances: Strategic alliance is known to be an approach under which
organisation agree to share resources and efforts in catering needs for particular community. Clif
bar & company can form alliances with organisation dealing in the same segment so that so that
expertise could be pooled and better products are offered. It is an approach through which
opportunity in the market could be availed in a rapid manner and there are comparatively lower
barriers to entry in the market.
Opting for technology: Modern technology is really beneficial for the development of an
association because advanced tools and equipments aids in conducting business operations in
more effective manner. Along with this, company can easily build their positive relations with
clients as well as customers across the international level. However, expansion at international
level could also be achieved with the help of technology as well. It is essential for a business to
form strong grasp on technology so that operation could be expanded to global markets (Wild,
10

Wild and Han, 2014). It does not only caters means through sales could be expanded but also
helps in identification of measures through ROI and profit margins could be identified and
evaluated.
Franchising: It is also an effective route which used by the business to internationalise
their operations in an appropriate way. In this one party grants to another party to use its trade
mane with the aim of attaining success in market. The main benefit of this type of entry is that it
does not required to invest more money in their advertising activities. The main reason behind
this is that the individual are already aware about the brand image of the company.
Partnership: It is also an effective type of enterprise in which two or more than two
individual comes together and invest their funds, skills to attain entire business objectives. With
the help of this method, company can easily enter in global market and attain success.
A business will be encountered with numerous barriers while expanding at international
level are as follows:
 The first major barrier which is encountered by medium scale organisation is language
and culture in which expansion will be taking place. The use of similar approaches tend
to pose as a major barriers for an institution looking to expand its operations.
 The route to the internationalisation of business invites huge amount of costs which are to
be dealt by a business organisation in the ideal manner. The lack of financial resources
pose as a major barrier for medium scale institutions.
 There are numerous taxes which are to be paid for actually initiating operation in a
nation. Therefore it is essential for a business to prepare plans through which
international tax issues would be resolved.
 There are problems on grounds of workforces as well. Recruitment of ideal human
resources tend to pose as a major barrier with the institution when looking to
internationalise operations.
Therefore it is essential for a business to analyse mentioned grounds thoroughly so that
internationalisation could be carried out in the desired manner.
CONCLUSION
It can be concluded from the above report that, it is very important for organisation to
expand at global level so that major competitiveness and cost efficiency could be obtained. The
factors such as cost competitiveness,favourable environmental factors and competition are tend
11

to be factors which assure that a business expands to the global market. The challenges such as
volatile nature of global market, culture, language and technology are amounts the crucial factors
which are to be dealt in an ideal manner so that globalisation could be perceived as opportunity
for business expansion. Organisation is emphasizing on expanding through sustainable and
ethical manner which tend to influences costs, functions and resources related to an organisation.
The organisation can internationalise itself through exporting of products, relocation and forming
strategic partnerships with other organisation catering the same segment.
12

REFERENCES
Books and Journal
Apăvăloaie, E. I., 2014. The impact of the internet on the business environment. Procedia
Economics and finance. 15. pp.951-958.
Axelrod, R. S. and VanDeveer, S. D. eds., 2014. The global environment: institutions, law, and
policy. CQ Press.
Belás, J. and et. al., 2014. Significant attributes of the business environment in small and
meduim-sized enterprises. Economics & Sociology. 7(3). p.22.
Belás, J. and et. al., 2015. The business environment of small and medium-sized enterprises in
selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management.
(1). p.95.
Carneiro, J. and Brenes, E. R., 2014. Latin American firms competing in the global economy.
Journal of Business Research. 67(5). pp.831-836.
Cavusgil, S. T. and Knight, G., 2015. The born global firm: An entrepreneurial and capabilities
perspective on early and rapid internationalization. Journal of International Business
Studies. 46(1). pp.3-16.
Cohen, B. and Kietzmann, J., 2014. Ride on! Mobility business models for the sharing economy.
Organization & Environment. 27(3). pp.279-296.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Doh, J., McGuire, S. and Ozaki, T., 2015. The Journal of World Business Special Issue: Global
governance and international nonmarket strategies: Introduction to the special issue.
Journal of World Business. 50(2). pp.256-261.
Epifanova, T. and et. al., 2015. Modernization of institutional environment of entrepreneurship
in Russia for development of innovation initiative in small business structures.
European Research Studies. 18(3). p.137.
Ferraro, G. P. and Briody, E. K., 2017. The cultural dimension of global business. Taylor &
Francis.
Huhtala, J. P. and et. al., 2014. Market orientation, innovation capability and business
performance: Insights from the global financial crisis. Baltic Journal of Management.
9(2). pp.134-152.
Kasemsap, K., 2015. The role of cloud computing adoption in global business. Delivery and
adoption of cloud computing services in contemporary organizations. pp.26-55.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Peng, M. W., 2016. Global business. Cengage learning.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
globalizing business environment. Procedia-Social and Behavioral Sciences. 150.
pp.35-45.
Wild, J. J., Wild, K. L. and Han, J. C., 2014. International business. Pearson Education Limited.
Online
13

How SMEs Can Internationalize. 2015. [Online]. Available through:
<https://www.forbes.com/sites/iese/2015/04/20/how-smes-can-internationalize/
#458e76f11eb8>.
14

15