International Business

International Business

When a government start participating in a regional trade block, the country’s trade increases and the country is better off. Consumers gain as they have to pay less for the same goods which they were getting at much higher rates. But there are some losses too for the small companies. Small companies face high competition from multinational companies; they also face loss of valuable human resource to the big multinational giants. Small companies can sometimes go out of business as the multinational companies have more resources due to which they can hold onto competition for a longer time.

One way to help small companies is to reduce tax burdens and regulations. This will not only help them to survive but also help them to be more responsive to market needs as compared to multinational companies.

Another way for the government is to provide quotas to the small companies of the country. This will reduce the amount of imported goods yet allowing some portion of imports for the growth of the economy at the same time.

Another way is to impose tariffs and import duties to reduce competition though it may be sometimes contrary to the regional trade bloc terms of trade but it can reduce imports leaving out opportunity for the small companies to step in this situation and provides them survival.

Government can also help by small companies attain better technology and hence achieve economies of scale as a result reduces cost per unit increasing profit.

Government can help by increasing the level of education so that short coming of the small companies can be addressed. If not that it happens very often that small companies need a little financial assistance for a short period of time, later they can survive on their own, government can help by providing this assistance in the beginning.

References

 Bren Parks (2007), Global marketing and regional trade block

Michael Bowe, Lino...