Globalisation On Sme Essay

Explain the impacts of globalisation on SMEs operating in Australia.

INTRODUCTION

Globalisation has had a significant impact in the Australian market as companies utilise labour cost saving advantages and also allows companies to achieve economies of scale significantly impacting Australian businesses such as Mr Wiley. Mr Wiley, founded in 2017 by two partners investing $4,000 which they had received from winning a lottery show. Mr Wiley is located in Melbourne and is part of the textile industry known for their tie tops, bike shorts and their most popular item, hoodies. Globalisation is a process by which the world is becoming more increasingly interconnected as a result of massively increased trade and cultural exchange. It involves reducing

Economies of scale are when businesses are selling globally, and able to increase sales which result in increased production. These businesses will then be able to take advantage of economies of scale. When production is increased, fixed costs can be spread more thinly over a greater volume of sales, allowing firms to lower their costs, improve efficiency, raise profitability and make them more competitive. Globalisation has allowed Mr Wiley to achieve economies of scale, utilising cost saving advantages through bulk producing their resources. In 2021, As a small enterprise of 18 employees, Mr Wiley was able to successfully sell their goods globally through effective online marketing operations resulting in higher sales of $46978. These increased sales then resulted in an increase of production which meant that the enterprise was able to order in bulk and have cheaper production. The cost of producing a single unit, such as a jumper, was $20 in 2018. However after globalisation influencing economies of scale, Mr wiley was able to manufacture 30,000 units,so the cost per unit decreased to $15. This allowed Mr Wiley to become more cost efficient because they were producing more products for a cheaper price. Therefore as a result of Mr wiley producing more it was able to take advantage of economies of scale, such as using more machines, consuming less electricity, and requiring staff for fewer hours. Therefore, globalisation has brought significant advantages to Australian businesses by facilitating economies of