An evaluation model for small companies international expansion decisions
2011-01-14T11:21:21Z (GMT) by
The owners, managers and executives of companies would agree that change has become a constant phenomenon that must be managed if an organisation is to survive. This change could be the result of internal or external environmental pressure on an organisation, or both. Expansion to global markets is the ultimate target. This was difficult in the past but now the opportunities to do business in foreign countries are much easier as a result of advances in communication, transportation and global treaties. Generally, world trade is still in favour of large companies because of financial, trade and host country aspects. The advantage of the incentives system is also mostly available to larger companies. Furthermore, most large companies have international experience. These types do not need advice or help to implement an international strategy because they probably have their own global evaluation department to do that for them, or they have a business advisor. However, the reduction of custom duties under the World Trade Organisation Agreements and the advancement in technologies and communications have provided opportunities for small-sized companies to enter new markets and to improve their access to production technologies, among other benefits of outward globalisation. The owners and managers of most small-sized companies are nonetheless still cautious about entering a global market because of the problems associated with it. This research therefore will focus on small-sized companies because these are the types of organisation that need advice or consultancy from outside because their resources and skills are limited. The main aim of the research is to develop a new decision model to help owners and managers of small-sized companies to identify weaknesses within their activities, to show how competitiveness can be maintained in their markets, and to enable them to select international markets. In order to propose the final Global Evaluation Model, certain processes and evaluations have been prepared and examined. The development framework of this model was conducted in two main phases: the framing phase and the Global Evaluation Model phase. The framing phase is the process of conducting a survey to provide as full an understanding as possible about the critical factors that shape and affect the practices and activities of smallsized companies in global markets. This phase provides an insight into the influential factors of the real global economy that the small-sized company faces when deciding to enter the global market. The second phase has five stages and has been evaluated by using a number of case studies of companies to be tested. The first two stages have data inputted through multiple sources, including documentation, interviews and literature related theories and approaches. These theories and approaches include Danny Miller's Four Trajectories, Mintzberg's Pentagon of Forces and Forms, Miles' and Snow's approach, and Galbraith's Level of International Development. This author of this research hopes that that this work will succeed in making a new contribution to the domain of manufacturing organisations by providing a Global Evaluation Model to be used as a support tool for small-sized companies when making decisions about their desire to expand globally.