Exploring potential strategies for globalization of New Zealand SMEs

Abstract

In today’s competitive business environment, sustaining a competitive advantage in any form of business operation is not only dependent on the local market; an effective presence in global markets is also a critical element. This research focuses on exploring a potential strategy for globalization of New Zealand SMEs. This study identifies and develops a strategic model for New Zealand businesses to participate in global business communities, targeting those small and medium enterprises for which the migration to globalization is an enormous challenge. This strategic model aims to identify the barriers that constrain New Zealand SMEs from globalizing their international operations, and to review the factors which restrict them from entering a foreign market.

The literature review (of this research) more precisely defines the topic, by considering the definitions of globalization, and international business in general. The New Zealand business environment, its working culture, and finally the SME sector within New Zealand businesses are explored.

A qualitative approach was then followed, with the objective of gathering data from owners/managers of New Zealand SMEs. Twenty one interviews were conducted with the owners/managers of local SMEs from a mixed combination of business sectors and activities. The main focus was to interview businesses already having international operations, followed by those businesses willing to internationalize or export in the future, and those businesses that have not yet thought to enter a global market. A high percentage of response was received, and the information gathered from the interviews collated for further analysis.

After analyzing the results of this study, it can be concluded that local SMEs are generally unwilling to establish relationships with their overseas counterparts. The attitudes of local SMEs were found to be somewhat unplanned towards globalization and so they are generally not successful in globalizing. These businesses also demonstrated a lack of cultural understanding of different nations, and approach international exporting in the same way as they do business in New Zealand, without considering the importance of cultural differences, sensitivities and diversity in approaching unalike nations. The study, therefore, considered all the challenges noted above, and developed a proposed strategic plan which could guide domestic SMEs to successfully globalize their business operations.