The Impact of Globalization on the Relationship Between Multinational Enterprises and Small-scale Suppliers
The globalization process keeps on producing new surprises. Globalization 1.0 lasted until world war 1 and shrunk the world from large to medium size. Globalization 2.0 lasted until 2000, but still, most of the companies are at this stage. This stage shifted the world from medium-sized into small. Lastly, globalization 3.0, which is the current phase is believed to make the world very tiny. It is characterized by increased use on internet technology (Bremmer 104). As multinational enterprises move from the 2nd phase of globalization to the 3rd phase, they impact the relationship that exists between them and their small enterprise suppliers.
The Shift to Electronic Systems
As MNEs move to globalization 3.0, they adopt new technological systems to ease and fasten their ordering and payment procedures. As a result, they upgrade to using electronic systems to facilitate their operations (Hirst et al. 206). This then requires the small-scale firms to adopt such electronic means to cope with the changes. Now, communication between the two firms takes the electronic form. Also, there may result in knowledge transfer from the MNEs to the small firms. This is because moving into globalization 3.0 enables the company to reach individuals with varying needs and preferences. To meet such demands, the MNE may engage in educational activities to equip their small-scale suppliers with the relevant information and techniques to supply the appropriate products with respect to different preferences and needs.
The Benefits for Small-Scale Firms
Such relationship changes are beneficial to small-scale firms. The adoption of electronic communicating systems may lead the firm into discovering new customers other than the MNE in new markets (Bremmer 106). Also, knowledge transfer creates more room for the firm to grow. Upon gaining techniques to produce a variety of products, the market widens leading to more revenues and thus business growth.
Disadvantages for Small-Scale Firms
In conclusion, the relationship changes still have some disadvantages. The small scale firm may face challenges as a result of information and technological advancements. This is specifically in data collection, entry, and analyzation. The firm may need to hire data entry experts since a slight mistake may result in massive losses. Also, the firm may face global competition in cases where the MNE is not satisfied with their products in suiting various individual needs. In such cases, the MNE may turn into other global suppliers.
Works Cited
Bremmer, Ian. "The new rules of globalization." Harvard Business Review 92.1 (2014): 103 107.
Hirst, Paul, Grahame Thompson, and Simon Bromley. Globalization in question. John Wiley " Sons, 2015, pp. 206.
