Sunday, 8 August 2021

Globalization & its impact on small scale industries

 Globalization is the most discussed term of this generation especially after these increased interconnections between the countries and all the positive and negative impacts of it in our country or any other country. Although mostly we deal with globalization in the sector of business, almost all the sectors are included in globalization since now the world is interconnected through all the sectors. But here we'll be majorly dealing with the business part of globalization.


Many big businesses have got a good exposure due to globalization but it doesn't always have these positive impacts especially in the cases of small-scale industries. It has been a difficult thing for SMEs and MSMEs so here we'll discuss globalization and all the impacts that it has on these small businesses. But we should also keep into consideration the new technologies and the competition to provide better services created by globalization.


What is globalization?


Globalization means something beyond the borders of the country and creating mutually beneficial relationships between them. Globalization allows the free flow of goods and services between nations. This picture shows you a clear scenario of strengthening the relationship between nations with a strong economy. But the reality is not seen all the time. Definitely, for the bigger businesses globalization is a blessing but for the small scale business, the condition is not the same. There are several impacts of globalization on small-scale industries which include both positive and negative ones. In this article, we'll go through both the impacts of globalization.


Impacts of globalization on small scale industries


While discussing how globalization affects small businesses, we need to understand how the market scenario has changed after this process. Globalization in India was a part of the LPG reforms in 1991. Ever after that, we are now benefiting as consumers when it comes to the availability of a variety of goods and services.


There are many advantages when the doors are opened for small businesses, but we can witness a negative impact of globalization on small businesses also. Let us have a look at the effects of globalization. Let us start with the advantages.



Advantages of Globalisation for small businesses:


Business Expansion


Globalization allows small businesses to expand their territory. Also, it's a fact that to compete with the others in the market you need to apply some similar tactics. So the small business gets a chance to expand. Moreover, all the big companies cannot reach all the corners of the market but the product and service are equally demanded by the customer everywhere so the small business can take an initiative to extend their borders and reach out to those corners of the market.


Easy and budgeted marketing

Globalization has been a lot supported by online facilities and especially social media. Even small businesses can connect to a wide audience with the help of global ad targeting. They can also be benefited from the data collection tools and methods. All the methods to promote your business through online platforms won't cost you high and are highly cheap as well. Hence globalization makes it easy as well as budgeted Marketing.


Growth in Travel and Tourism Industry

This is the well-known fact of how globalization has improved and positively impacted the tourism and travel industry which has directly benefited small businesses. Due to growth in this sector, a lot more people are traveling from one country to another and if in any way your company is related to traveling and tourism, you will be in a great profit.


Disadvantages of globalization for small scale industries


We learned about all the possible advantages of globalization for small-scale industries but it is important to know what are the negative impacts made by it on small-scale industries.

Here are some of the major disadvantages of globalization:


Price Reduction


Due to globalization, the bigger businesses get the chance to establish their presence in the global market which negatively impacts the local and small businesses of the market. We can also take the example of the Chinese products and their ability to mass export at a price that is almost impossible to compete with. Even after adding up all the shipping and packaging charges, it becomes more impossible to beat the price. This makes it difficult for the small-scale industries to survive in the market and hence they have to lower the prices despite the good customer service and best quality products.


Trade wars in the global market


If you are functioning your business in the global market, you can be impacted by the trade wars. The tensions between the two countries' trade can block your way to export or import your final or the raw products. In normal situations, you can easily import raw materials from a certain country and export the final product to some other country. But if there is a situation of trade between the countries then you cannot export the final product.


High Competition


This is one of the major problems created by the globalization of small-scale industries. Globalization makes more and more companies joining the Market. So in this way, there might be similar 10 to 15 companies providing the same service or product as one of the SME and hence they face problems of inaccessibility.

All this finally results in great competition and ultimately the drop in the price. Even in some cases, the small industries are forced out of the market because of the global competition. To stay in the market, the small business must keep their eyes on the market conditions as well as the foreign exchange rate.


Therefore, globalization is one of the best ways of enhancing technologies and the creation of new one. It also strengthens the economy of the global market. But despite these many advantages there exist some demerits, especially for small-scale industries. We need to focus on the problems and get remedies for the same because these small businesses support the economy of the country, not the multinational companies of the foreign companies.

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