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Small and Medium Sized Enterprises and the Risks they Face in an International Environment - Essay Example

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Finance & Accounting
Pages 10 (2510 words)


Small and Medium Sized Enterprises and the Risks they Face in an International Environment. Introduction: Small and Medium sized Enterprises or SMEs generally function in the economy’s formal sector, and it employs chiefly wage earning workforce, and involve in the organized markets…

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Small and Medium Sized Enterprises and the Risks they Face in an International Environment

In proportion to other trends of globalization, small and medium sized Enterprises are increasingly occupied in international businesses. “Foreign investments by small and medium scale enterprises have also increased” (Feyter 2011). SMEs account for a major share of exports and imports and go up to international network of production. “Small organizations have very little, if any, influence over the forces of external environment, and this can be attributed to the limited resource of the small firm” (Sha n.d). As SMEs try to internationalize, they frequently come across extensive hurdles. These hurdles are complex, and they can be from the larger, external, business environment of SMEs including barriers of trade policy; or from the internal environment of firms. “Currency fluctuations are the top concern for 49% of UK SMEs” (International Trade: Confidence Concerns and Risk for UK Smes). The various risks that small businesses face when they engage in the international trade include credit risk, interest rate risk, country risk, and currency issue. Credit Risk- SMEs regularly complain that their competitiveness and growth are restricted by lack of access to the financing and high cost of credit. ...
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