RESUBMISSION COURSEWORK MKT744

SUPPLEMENTARY PERIOD

2022

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Table of Contents

Introduction...................................................................................................................2

SMEs Contributions towards economic Growth...........................................................3

Economic Growth Theory.............................................................................................3

SMEs Contributions towards economic Growth...........................................................3

MNEs Contributions towards economic Growth...........................................................4

Challenges for SMEs/MNEs.........................................................................................6

Opportunities for SMEs/MNEs in International Markets...............................................8

Role of international Marketing.....................................................................................8

Conclusion....................................................................................................................9

References.................................................................................................................10

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Introduction

Economic life seems to be more diversified and complicated in today's world. There
is no country that is living in isolation and claiming for being self-sufficient. Countries
with unique cultures, ideologies, and social, political as well as economic frameworks
have great connections. The full trade connections of China have with Japan is an
example. International trade is aimed at inclining in production and raising people's
living standards. International trade has proven to be helpful for the citizens of every
nation for consuming and enjoying the goods being produced possession in other
nations. International trade exceptionally increased in which services like theorist
aren't foreign transportation, warehousing, advertising, communication, and banking
are included. Another significant development equally is the incline in foreign
services and goods production and foreign investment.

Modernized technology development, economic conditions, and improvement in

communication and transportation methods that are causing several companies for
performing their operations from different regions like in other countries or in local
countries where they reside. Every company is performing operations in the way of
exchanging services and goods and International transactions external of the country
that is an International market participant indirectly or directly. International business
is coming up with transaction advances that are being implemented via national
borders for the satisfaction of individuals, other businesses and companies
requirements.

This report is giving a short view of SMEs and MNE playing a significant part in the
labour settlement part. Small and medium-sized enterprises are giving their
contribution to the state budget via tax payments. The domestic workforce majority
are being employed in the sector of SME and assessing this as a medium for the
fulfilment of entrepreneurial aspirations will stop several researchers has assessed
SMEs for having a positive influence on the world's economic growth. As there are
several enterprising that are engaged in employing a bigger amount of domestic
workforce which will be helpful for them insulting the issues associated with
Unemployment and the creation of job opportunities.

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This report is portraying key challenges being confronted by MN e's and SM e's as
they are seeking for expansion and growth in internationalization. Internationalization
is considered as the economic activities expansion of business across national
borders. Several businesses are looking for methods for entering into the
International market and gaining competitive advantage and those markets to
reaping the advantages that are accompanying internationalization. In the going
global process, initially, the business is required to adapt its activity to the
International culture with the implementation of strategic changes and diversified
organizational changes. From the strategic perspective, internationalization has
gained crucial significance for MNEs and SMEs. One approach to expansion into
geographic regions is presenting a different growth as well as value creation
opportunity however simultaneously the implementation of the particular approach is
involving several tough and unique challenges (Dimitratos et al., 2016). Both SM e's
and M e's are confronting a different set of difficulties when they are looking for
entering the International market. This is because the SME ecosystem is considered
to be underdeveloped in such countries and numerous SMEs are contributing to the
GDP of nations that are small relatively. The absence of foreign market information
as well as managerial talent contributes to the internationalization challenge. All the
challenges being confronted by SMEs and MNEs are portrayed in this report with
solutions.

SME's Contributions towards Economic Growth

Modernized technology development, economic conditions, and improvement in

communication and transportation methods that are causing several companies for
performing their operations from different regions like in other countries or in local
countries where they reside. Every company is performing operations in the way of
exchanging services and goods and International transactions external of the country
that is an International market participant indirectly or directly. International business
is coming up with the transactions advances that are being implemented via national
borders for the satisfaction of individuals, other businesses and companies'
requirements. There is a link between International business and other institutions
individuals and countries. Several enterprises are required to identify objectives and
go for being positioned in the market. This means that the target countries are to be

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determined as well as selling services and products possibilities in such countries
and for assessing the profitability for gaining from services and products selling in
the markets of the target countries (Foley and Manova, 2015). International trade is
the services and goods trade and exchanges among different nations. This type of
trade is giving their contribution as well as an increment in the world economy. There
is an exceptional agreement in International trade including services like tourism and
travel foreign transportation warehousing banking distribution communication as well
as advertising. There is a significant advancement that are international services and
goods production and foreign investment is inclining in the nations. Such
productions and foreign investments are helpful for the companies in coming closer
to the foreign consumers and therefore serve them with their best services and
goods rates.

Economic Growth Theory

Economic growth theory is just an increment in the major quantity's quantity that is
characterizing the state of the economy initially the Gross social goods in which the
population is being considered. Economic growth is considered as the annual
percentage that is inclined in the actual GDP per capita for the long term. Economic
growth is defined as a gradual procedure to expand production as well as the
reputation of similar methods' applicability.

SMEs' Contributions towards Economic Growth

As a consequence of tested economic development theories of the world And the

aspects that are impacting economic growth has been discovered Output value is
dependent upon the labour role heavily but not on the money and wealth that is
labour value theory. Such theories are being developed and complemented by
theorists that are familiarizing economic growth new classical model which economic
principles marked in the year 1990 (Burstein and Vogel, 2017). Technological
progress role has been affirmed by the theorist. Labour's role is not denied with
capital. Consequently, 2 developmental insights have been provided that are
growing in width (incline in capital labour per unit) and depth development (increment
in the capital usage efficiency) (Karadağ, 2016).

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 In several studies, it has been seen that capitalism and capital are taken into
account as being influential aspects of economic growth. Capital investment and
accumulation increment have resulted in an agreement in society's labour
productivity. The creation of new knowledge has become a significant factor in the
creation of miraculous economic growth. Economic growth source has become the
access labour efficient usage in the sector of agriculture. With the help of the 2
sectors model, it has been seen that industrial growth has been influenced by the
labour aspect. This model of economic growth is presented based on technical and
scientific progress as well as superior quality human resources that resulted in an
increment in economic competitiveness. This model of economic growth is presented
based on technical and scientific progress as well as superior quality human
resources that resulted in an increment in economic competitiveness.

Economic growth is formulated on capital purely as well as labour has resulted in

short-run growth that has become typical in the industrialization initial stages,
Aggregate factors of productivity have become the basis for long-run economic
growth. Economic growth is influenced by crude or simple labour, It has been
presented by the economist that crude labour is not considered for working in the
organization and for the long run growth and Differentiation in the per capita
revenues among countries. It has been seen that experienced skilled and qualified
labour is defined as human capital which means that human capital can be an
indispensable and irreplaceable commodity as well as disparities in growth among
several countries are considered attributable and effective labour contains every
specific worker's knowledge, skills, and capabilities.

Economic growth differentiation among major countries has been described by the
investment efficiency differentiation greatly but not elaborated in human capital and
knowledge will stop it has been seen that human capital is showing a major impact
on the economic growth. The cutting-edge technologies update has been facilitated
by human capital and growth is being generated by a stimulus of technological
innovation. Additionally, Educational attainment has proven to be significant in
playing a vital part in the stimulation of cutting-edge innovation and technology
updates, especially for small and medium enterprises as well as stimulation of the
economic growth.

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MNE's Contributions towards Economic Growth

A depth insight is being provided on the multinational enterprises' activities and rules
that are central for the comprehension of the worldwide value jeans however such
enterprise's empirical evidence is absent. The database of O ECD Is being
introduced in which unique opportunities are being provided for studying 13 the
multinational enterprises' activities as well as the worldwide value chain's effect on
production and investment patterns. A lot of attention to policies is being seen in the
Multinational enterprise's activities traditionally as the government is anxious for
attracting FBI foreign direct investment. It has been believed by MN e's for promoting
employment and growth via the creation of new jobs releasing new investments and
new technologies are being brought and permitting the host economies to
upgradation and integration the GVCs' global value chains (Child et al., 2017).
Several significant implications have been seen in MNE on the economic shocks of
International transmission. The comparative advantage of such countries that are
being gained from the trading and also advantageous for domestic firms and trade
policy of the government is being influenced.

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(Source: De Backer and Miroudot, 2022)

MNE is playing a significant part in global economic growth nowadays. MNE foreign
affiliates are accounting for over 1/3 of GDP world output as well as International
trade by 2/3. The contribution is being given by MID to GDP all over the world has
been estimated in the year 2016 to be 32% and around 1/3 is demonstrated by
foreign affiliates and MNEs headquarters has given 2/3 contribution.

Multinational corporations have been global economic growth engines deepening

globalization and technology transfer full star search corporations are groom not only
in the framework of domestic corporate but also in new subsidies has been set up by
them in different regions (Jones and Kierzkowski, 2018). Business activities entire
spectrum has been covered by Multinational Corporations from The process of
manufacturing to the process of extraction chemical processing agricultural
production finance and service provisions (Dimitratos et al., 2016). MNE is making
investments which have become a major revenue source in all the developing
countries that are giving them contributing to stability and socioeconomic
development. Multinational corporations' operations are of globalized nature and
they are planning for entering into the host countries differently along with different
strategies. They are entering into the new market by initially exporting the goods for
testing the acceptability of the market and share in the International country via
export agents. Manufacturing plants and sales branches are being established for
the reduction in operational costs and to take benefit of recent raw materials as well
as favourable conditions of the industry. It has been indicated that foreign capital is
giving them contributions to the economic invigoration that resulted in job
opportunities provision. The operations of Multinational corporations have resulted in
inequality in income through a shift in labour demand. Multinational Corporation's
financial strength can able for paying wages in comparison to domestic forms. As a
result, Domestic skilled workers are being poached by Multinational Corporations.

Multinational corporations are performing their operations in developing countries

which might help achieve developmental targets. Increased technology flow and
FBI's giving their contribution to the accomplishment of the SDG target to reduce the
rate of poverty via providing employment opportunities. Additionally, multinational
corporations via their CSR also giving their contribution to serving the communities

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where they are operating and also their accessibility is being expanded to
necessities and also labour rights are secured. It has also been noted for signifying
a specific Approach to corporate rules that is supporting voluntary initiatives will stop
their effectiveness relied upon the In work of pragmatic policy existence in the Host
country for guiding activities and for the fulfilment of the country's developmental
agenda. Furthermore, MNE activities being performed in a host country are giving
them contributing to the improvement of the domestic firm's productivity. An indirect
contribution is being given to the domestic firm’s profitability as there is an increment
in productivity is seen (Taiwo and Falohun, 2016).

It has been discovered that MNE is likely to be most significant when it comes to
imports and exports where the bigger trading activities are being demonstrated by
such groups. It is the responsibility of foreign affiliates in the year 2016 for the 30
worldwide exports in comparison with MNE headquarters by 34%. When having a
glance at intermediate inputs imports where the categories of the form are being
distinguished on the side of importing then smaller shares are being found for MNE,
foreign affiliates specifically, where 30% of intermediate imports are being imported.

Challenges for SMEs/MNEs

Political conditions

Instability reduced revenue, and rising costs have become major challenge that is
being confronted by SM e's. Several businesses have agreed upon different
reasons. Such reasons involve the raw materials cost, inflation, low product and
service demand, insurance costs, as well as other business costs. Since several
industries are recovering from the pandemic effect the cost to perform the business
and maintenance of profitability has become a significant concern. Several
businesses are forced to make decisions associated with cutting staff members'
wages and forcing them to resign and increase their tender services and product
prices.

Solution- As the new tax and policies are being imposed by the government which
has resulted in incrementing the cost of the raw materials which the supplier is
provided in which text rate is also included caused higher to the corporation for the
manufacturing of the product. If the supplier cost is higher then there will be an

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increment in the prices of the product which harms the productivity revenues of the
company is required to compromise the quality for providing their product at a lower
cost. The company should switch suppliers by overseeing the prices being offered by
them and then the prices should be compared then the suitable vendor should be
chosen that is providing the best offer (Paul et al., 2017). The company should also
be aware of not getting caught in the traps of the contract renewal. As the suppliers
are also doing business as they are intended for keeping their customers and
contracts are being made by them that are ensuring that their customers will
continue to purchase from them. Should be in short that the contacts have no
negative impact on the business in the long run. The company should also focus on
that they are not spending they're valuable revenues on unnecessary expenditures.

Economic conditions

As per some reports, it has been analyzed that is the absence of financial sources
and Insufficient capital has become a major challenge for small and medium
enterprises and generally entrepreneurs are required for utilizing private financial
sources for starting up the business and expanding the operations as financial
sources and internal sources are insufficient. Some policy biases exist towards
small forms and bigger enterprises that are confronting issues in development
because of the absence of financial accessibility. Several difficulties are being
confronted by SM e's in development because of insufficient collateral incapability for
dealing with formal financial corporation complexities and higher transaction costs.
Small and medium enterprises in developing countries are not accepted for the bank
loans generally due to perceived default higher risk lower productivity as well as
incapable of demonstrating the needed physical collateral (Oehme and Bort, 2015).

Easy accessibility is not being provided to small and medium enterprises throughout
the region equity and credit finance due to weak regional banking institutions and
capital markets lacking and we framework of legislation for collateral and credit.
Dance has become a major issue for developing business is generally the formation
of the primary base of resources where the other inputs of factors are being
purchased. Various methods are provided to the business owners which will help
finance the funds' growth however the main decision is dependent upon whether to
accept or not accept the exterior equity finance for the business's part ownership. In

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the exterior equity, finance is being permitted by the owner's done relinquish part can
be chosen for the individuals are a financial institution.

Solution- Small entrepreneurs can choose to finance their small business start-up by
taking friends' and family's contributions and then they can pay back when the time
comes rather than taking a higher risk of borrowing to start up a business.

Culture

SMEs and MNE are confronting critical factors in today's economy which are rapid
growth flexibility and efficiency. It has been seen that cultural issues are considered
tangible or soft issues for several years. Hard consequences have been realized as
people fail that are likely to confront issues in globalizing their operations. It has been
considered as consensus regarding the combination of the involved party's
significance into the single workforce that is performing to improve the overall
performance of the form. However this has become a complicated task for
measuring and evaluating the organizational culture influence, a positive correlation
has been discovered between the integration of performance and organizational
culture. Several firms are concentrating on the cultural differences that are
determining business success. One of the major challenges is intercultural
communication absence as most firms are not involving their employees in the major
processes and resulting in confronting several delays and challenges.

Solution- Maintenance of an environment that is supporting the changes in culture

should have enough potential for communicating and involving every stakeholder
and employee especially. It has become necessary for developing communication
among employees and other stakeholders (Memili et al., 2015).

Covid 19

The pandemic of covid-19 has become a major challenge for SMEs and MNE.
Several studies are focusing on finance concerning crisis consequences on SMEs
and MNEs that are financing and funding sources are lacking. The covid-19
pandemic has also 4 several businesses to cut their staff members and make them
resign from their companies as they are not able to pay them for the work due to a
lack of revenues and finance sources.

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Solution- Several businesses have moved to online business as a response to covid-
19 challenges and make their business arrive in this dynamic environment.

Opportunities for SMEs/MNEs in International Markets

1. Export and import- SMEs and MNEs are accounting for Paul 98% of importers
and exporters as well as 1/3 of trading when the dollar value is being measured.
Exporting and importing products has become a classic method for pursuing
opportunities in International business. Global trading is continuously strong for
every industry. Companies are provided with a Competitive edge by importing goods
which include access to different products Demand when they are not available
normally in the usual markets and accessibility to products being produced at a low
cost that can be sold for higher profitability (Wiedmann and Lenzen, 2018).

2. Licensing- Licensing has now become an ideal route for major businesses with
goods that have been challenging for exporting and Being in export and import
business that is likely to be inclined in the growth of the International market.
Licensing is considered an agreement between 2 parties where one company is
sharing proprietary information as well as the other one is processing with an
International company for the royalties.

3. Franchising- Several retailers are seeking for growing their foreign markets'
influence will stop International franchising has become a popular method for
expanding their business abroad. Several James is utilizing franchising as their
method for growing their business. This method can be used for leveraging a
successful name of the brand whereas upfront risk will be minimized.

4. Outsourcing- Several business parts can be outsourced by the companies like

IT, manufacturing, customer support service, and logistics for the reduction in the
operational cost. The procedure of manufacturing can be outsourced by tapping into
the expert workforce which leads to lower costs. However, it also leads to concerns
regarding security and having control over the procedure. It has become another
popular method for outsourcing the processes of the business such as recruiting for
taking advantage of automation technologies.

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Role of International Marketing

International business is income passing every commercial activity that is taking

place for the promotion of services goods people resources technologies and ideas
transferred across international boundaries.

International business takes place in several unique formats that are-

The products movement from one country to another country in the form of importing
exporting and trading

Contractual agreements is permitting International companies for using services

products and procedures via licensing and franchising

Manufacturing, sales, development, research and development, distribution facilities

operations and formation in the International market

Conclusion

Economic life seems to be more diversified and complicated in today's world. There
is no country that is living in isolation and claiming for being self-sufficient.
Modernized technology development and the creation of new knowledge has
become a significant factor for the creation of miraculous economic growth.
Economic growth source has become the access labour efficient usage in the sector
of agriculture. With the help of the 2 sectors model, it has been seen that industrial
growth has been influenced by the labour aspect. Economic conditions, and
improvements in communication and transportation methods that are causing
several companies for performing their operations from different regions like in other
countries or in local countries where they reside. Multinational corporations have
been global economic growth engines deepening globalization and technology
transfer full star search corporations are groom not only in the framework of
domestic corporate but also in new subsidies that have been set up by them in
different regions. Business activities entire spectrum have been covered by
Multinational Corporations from the process of manufacturing to the process of
extraction chemical processing agricultural production finance and service
provisions. As the new tax and policies being imposed by the government which has

13
resulted in incrementing the cost of the raw materials which the supplier is provided
in which text rate is also included that caused higher to the corporation for the
manufacturing of the product. International business is income passing every
commercial activity that are taking place for the promotion of the services goods
people resources technologies and ideas transferred across international
boundaries.

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premium. Journal of Political Economy, 125(5), pp.1356-1412.
https://www.journals.uchicago.edu/doi/abs/10.1086/693373

Child, J., Hsieh, L., Elbanna, S., Karmowska, J., Marinova, S., Puthusserry, P., Tsai,
T., Narooz, R. and Zhang, Y., 2017. SME international business models: The role of
context and experience. Journal of World Business, 52(5), pp.664-679.
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De Backer, K. and Miroudot, S., 2022. In this section.

https://cepr.org/voxeu/columns/multinational-enterprises-global-economy-heavily-
discussed-hardly-measured

Dimitratos, P., Johnson, J.E., Plakoyiannaki, E. and Young, S., 2016. SME
internationalization: How does the opportunity-based international entrepreneurial
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Dimitratos, P., Johnson, J.E., Plakoyiannaki, E. and Young, S., 2016. SME
internationalization: How does the opportunity-based international entrepreneurial
culture matter?. International Business Review, 25(6), pp.1211-1222.
https://www.sciencedirect.com/science/article/pii/S0969593116300300

Foley, C.F. and Manova, K., 2015. International trade, multinational activity, and
corporate finance. economics, 7(1), pp.119-146.
https://www.annualreviews.org/doi/abs/10.1146/annurev-economics-080614-115453

Jones, R.W. and Kierzkowski, H., 2018. The role of services in production and
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Karadağ, H., 2016. The role of SMEs and entrepreneurship on economic growth in
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Memili, E., Fang, H., Chrisman, J.J. and De Massis, A., 2015. The impact of small-
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Oehme, M. and Bort, S., 2015. SME internationalization modes in the German
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Paul, J., Parthasarathy, S. and Gupta, P., 2017. Exporting challenges of SMEs: A
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Wiedmann, T. and Lenzen, M., 2018. Environmental and social footprints of

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