"The study of international business is fine if you are going to work in a large multinational enterprise, but it has no relevance for individuals who are going to work in small firms.” Evaluate this statement.(International Business)

  This could have been a matter to be noted if we were in the closed economy where each firm (big or small) were self-sufficient, i.e. their home countries have enough factors of productions to maintain sufficiency in the demand and supply. But currently except some exceptions (like North Korea, Iran, Venezuela) almost most of the countries are into the global mainstream of international trading based on the doctrine of comparative advantage as postulated by Sir David Ricardo and SME’s (Small and Medium Enterprises) plays significantly important role in the global business. SME’s passivity could not be ignored rather each government has persuaded SME’s to come into the international trading stream. 

      The small business firms have become an integral component of the global business chain rather be it in the least developed(Nepal), emerging nations(India) or developed countries(USA), it has equal importance. Due to the low level of investment required for initiation, supportive government regulation and technological and internet boom small firms have ease to come into the mainstream of international trading either through providing the raw material to the big firms or by directing trading in the international market. 

          In the context of Nepal, WTO provides specialized preference to least developed countries and thorough multi-fiber trade agreement, Nepal was allowed to export the textile to the USA market. During 2001-2002, Nepal exported approximately US 9 million of readymade garments generating four hundred thousand jobs which were mostly in the small industries (Nepuane, 2016) which also high lights the immensity of the small business involvement in the international business. But for that, the involved business has to maintain the tight protocol of international trade mechanism, i.e. from the country of origin requirement, labor code, quality assurance, letter of credit (LC’s) et cetera. 

        My friend operated an industry back in my country Nepal which was into the manufacturing of the agriculture tools. The investment was huge and since the agriculture sector has a significant contribution to the GDP, the business seemed promising. But soon after its market penetration in the national level, it had to go through cut-throat competitions from Chinese and Indian products which it could not sustain. Sadly, the managements lack global business scenario jeopardize and bankrupt his company. Had he taken care of Nepal’s accession to WTO since 2004 which allows international companies to trade with Nepal, the management could have diversified the investment before it was too late. 

             The major portion of international trading, either be in the goods or in services industries are also backed by small businesses. There are constant flow and interaction of resources in the economy between small and big firms. As the per the statistics of the USA government in 2009, small business accounted for 96.4% of all manufacturing exports, which was 17.2 percent of the sectors $562 billion in exports. Similarly, SME’s accounted for 95% of firms and 60-70% of employment generation in the OECD economies (“Small and Medium-sized Enterprises”, 2012). 

         Further, an invent of liberalization, industrialization and disruptive tech innovations have made SME globally active. The SME’s contribute between 25-35% of world exports of manufacture (“Small and Medium-sized Enterprises”, 2012). Essa (2019) has voiced the importance of small firms in building the global ecosystem of international business and the learning of international business helps the small firms to co-evolve and innovate along with the global pace. 

       If it is the case of closed economy and self-sufficiency than international trade might not be a case for small and big firms and people working there but it would not be wrong to say that in the globalized economy the understanding of international trade is unequivocally important to the big as well as small economy in local, regional as well as national level. 

Bibliography 

Essa, T. S. (2019, January 08). SMEs are the most valuable partners. Here's why. Retrieved from www.weforum.org: https://www.weforum.org/agenda/2019/01/smes-make-the-most-valuable-partners-heres-why/ Nepuane, S. (2016, April 11). Seize the opportunity. Retrieved from thehimalayantimes.com: https://thehimalayantimes.com/opinion/seize-the-opportunity/ Small and Medium-sized Enterprises: Local Strength, G. R. (2012). Small and Medium-sized Enterprises: Local Strength, Global Reach. OECD.