Online tech can spur SMEs into multinational landscape

07 March 2016 Consultancy.uk

Globalisation was long the remit of powerful states and multinational organisations. Today, however, online platforms such as Facebook, Amazon and Kickstarter, are providing a means for smaller players to make a serious international mark.

Globalisation was for many the years the main activity of the world’s governments, large multinational corporations, and major financial institutions – seeking far flung shores to leverage low cost labour and capitalise on untapped market opportunities. Recent years, however, have seen changes to the development of the phenomenon of globalisation, as individuals have gained access to digital platforms that provide a range of tools that ease cross-border engagement allowing stakeholders from all areas – artisans, entrepreneurs, app developers, freelancers, small businesses, and even individuals – to participate directly with each other.

Global digital platforms

The largest online platforms, many of which were founded post 2000, have rapidly grown in scale. Facebook today boasts more than 1.5 billion users, while YouTube has more than a billion. WhatsApp, a subsidiary of Facebook, has more than 900 million users, while B2C platforms such as Alibaba, Amazon and eBay – leveraging cross boarder payment systems such as Paypal – have hundreds of millions of users.

Many of the users of these platforms have forged cross boarder connections that are supported by their continued ‘linking’ through the respective platforms. On Facebook for instance, 12% of Facebook friendships are between people living in different countries, and half of active Facebook users have at least one cross-border friend – a threefold increase from 2014. In emerging markets, 54% have at least one cross boarder friend; which has seen a 3.6 times increase from 2014.

The platforms facilitate more than just a means of staying connected with real life friends and acquaintances, as they open up a huge built-in base of potential customers and effective ways to market directly to them. The platforms allow products and services to go viral into a host of foreign markets, while also providing a means to learn, to collaborate, and to develop capabilities – and to showcase talents to potential employers.

SME Facebook pages

For small and midsize enterprises (SMEs) the development of social media platforms has heralded the potential to scale up rapidly, and connect with customers and suppliers anywhere in the world. Facebook, for instance, supports pages for more than 50 million such companies, up from 25 million in 2013 – for which 30% of their fans are cross-border. Amazon hosts more than two million third-party sellers, with many operating cross boarders to sell local goods to foreign buyers – while many of those transactions are facilitated through PayPal, another globetrotter that has emerged of late. Further developments include platforms like Kickstarter, whose nearly 3.3 million people – from across the web – have seeded multibillion dollar projects such as Oculus Rift, as well as a host of more personal endeavours.

“The world is still far from flat, but its connections are beginning to touch a far broader range of countries, enterprises, and people. Instead of waiting for the benefits of globalisation to trickle down from large corporations,” state James Manyika and Susan Lund, both from the McKinsey Global Institute, the research arm of management consultancy McKinsey & Company. According to them, SMEs can nowadays leverage technology and the power of communities to become micro-multinationals in their own right, and start-ups can be “born global”. They conclude: “Individuals can tap into opportunities, information, and ideas from anywhere in the world. Call it the new era of globalization for the little guy.”

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