KAMAYOYO Kelvin, Zambian Economist, Scholar and BuyZed Chief Technical Advisor has noted that the implementation of local content strategies such as home-grown solutions, domestic preferential schemes or promoting inward looking by most countries on the African continent continue to face the risk of miniature success due to the rapid evolution of globalization. Arguably, this is because globalization has potential to influence double-edged sword consequences on small and medium scale businesses across the continent. A double-edged sword situation effects both positive and negative implications on the health of the small and medium businesses given their size, market structures, exposure to behavioral and structural barriers and access to capital for idyllic expansion. Additionally, a double-edged sword situation ordinarily presents effects that are positive and negative simultaneously and this occurrence is prospective in the case of globalization vis-à-vis existence of small businesses on the African continent.
Africa today enjoys a population of over 1.4billion people which in itself presents substantial market opportunity for small businesses’ growth. The continent is considered to be the world’s next big growth market. However, Kamayoyo has argued that in most instances on the African continent the target population for home-grown strategies largely has been the small businesses but their desired pace of growing or expanding is somewhat constrained by the scale of globalization and its unintended adverse consequences on different markets. This is also because globalization often advocate for eliminating of any restrictions or trade barriers so as to improve market access and as such even small businesses are involuntary compelled to compete with big firms with substantial years of immense experience in business across different markets.
According to Thomas Friedman he defines globalization as “the inexorable integration of markets, nation states and technologies to a degree never witnessed before- in a way that is enabling individuals, corporations, and nation states to reach around the world farther, faster, deeper, and cheaper than ever before and in a way that is enabling …” However, other scholars have also defined globalization in varied ways and contexts but overly at the end of it all there is some form of convergence with respect to the integration and geographical outreach through interconnectedness or interdependence. According to Martin Albrow and Elizabeth King, sociologists, they defined globalization as “all those processes by which the peoples of the world are incorporated into a single world society’’. According to Charles Hill, globalization refers ‘‘to the shift toward a more integrated and interdependent world economy’’. Furthermore, according to Tomlinson, globalization ‘‘is a process of complex interactions between societies, cultures, institutions and individuals world-wide’’.
Kamayoyo stressed that globalization induces countries to reduce tariffs, and removal of subsidies which cause unfair trade, and eliminate other barriers to free trade thereby boosting export capabilities of small businesses. However, this situation could be deleterious to the small businesses if they are not sufficiently capacitated because such favorable market conditions can only be easily exploited by bigger firms. In view of the foregoing, it is important that small and medium businesses on the African continent considers the following market techniques and or market tactics to be able to thrive:
1. Market intelligence: Small businesses must invest more in market data collection in order to better understanding the rapid evolution of markets and create an effective business strategy.
2. Market innovation: It is important for small businesses to have appetite for trying new ways of doing things or embracing change or processes that enhances their performance or improves the value of their product. this helps to discover varied ways of production and productivity. further, innovation could lead to discoveries that helps build economies of scale and competitiveness.
3. Business partnerships: Partnerships are very important in business for various benefits including synergies, acquire necessary skills or technology and also gain access to new markets. There is need for mindset change and embrace a progressive culture of working together for a common purpose which is to realize the business motive and thrive for the foreseeable future. This partnership can be either horizontal or vertical agreements with a view to enhance production and remain competitive on the market.
4. Cultural literacy: There is need for small businesses to learn more about different cultures of the world so that it becomes easier to package the products on the ever growing competitive market environment. It is important to know different cultures because it helps to adapt the marketing strategy and build an effective bargaining strategy.
5. Practice entrepreneurship: Small businesses must act as entrepreneurs by being able to be creative and innovative too. Undoubtedly, demonstration of better understanding of creativity and innovation is a prerequisite of a good entrepreneur. The small businesses must be able to understand the language of risk assessments, for instance, risk-taking is innate in any new business venture because viability of any business is predicated on some level of uncertainty.
6. Use social media: it is vital that small businesses get addicted to the social media applications and utilize them for positive gains in terms of advertising and market connect. the firms can also use social media to market their product brands and persuade consumers to like their products on offer.
7. Learn more about domestic regulations: It is important that small businesses understand the domestic or any environment they are operating in or exporting their products to especially knowing the prevailing regulations and policies in the respective jurisdiction of operations. Such regulations, guidelines and policies could include all rules and measures targeted at domestic production, company registration, environmental protection rules, consumption, rights for workers, domestic taxes, incentives for investment or other activities. Understanding the regulations and rules helps a business firm to plan properly and manage expectations including knowing available legal recourse in case of a business dispute.
Small businesses are regarded as the pillar of the world economy, accounting for most businesses across nearly every continent including Africa, and providing an estimated 80 per cent of jobs across the African continent while making up 90 per cent of the private sector. Africa is often considered to be on the rise but this status is under pressure by the unavoidable market architecture that globalization presents which compels small businesses to be subjected promptly to equal market terms and conditions as the bigger companies with vast experience.
Globalization presents a piercing double-edged sword on small and medium businesses in Africa thereby limiting their ability to grow at a faster rate. The concept of globalization has become a global phenomenon and is a catalyst for multilateralism and market interdependency and connectivity across the world.
