Opinions expressed by Entrepreneur contributors are their own.
The world’s small and medium-sized business enterprises are up against some serious competition against multinational corporations (MNCs) when entering new markets. The far-reaching populous resources, recognition of brand and economies of scale that MNCs command serve as major obstacles for small and medium-sized businesses to feel that they must overcome to be successful when competing against them.
However, with the correct strategies in place, small and medium-sized businesses can generate profitable enterprises of their own and surely find success in their own right. By flexing the strengths that larger corporations lack, small and medium-sized businesses can compete effectively with their bigger counterparts in the global market.
Related: 6 Ways Small Businesses Can Win With Big Corporations
Agility and innovation
One of the greatest competitive advantages that small and medium-sized businesses wield over MNCs is agility. Unlike their bigger competitors, where layers of bureaucracy often line the long road of decision-making, smaller businesses should be on the lookout for changes to customer needs or market environments. By focusing on agility, smaller businesses can more readily make adjustments to their business models and processes. These quick pivots to changes in the market and customer needs translate into growth. Smaller companies are perfectly situated to innovate significantly faster and create a unique product and service mix in ways that MNCs simply cannot.
A good way to leverage a smaller company’s flexibility is to utilize an Employer of Record (EOR) to quickly enter into new markets and innovate based on local information rather than waiting for long-term trends to emerge. EOR service providers like INS Global make it easier for small and medium-sized businesses to move quickly into a new market without the cumbersome process of setting up a local entity. Using EOR, small and medium-sized businesses can hire employees in foreign countries while still complying with local laws and regulations. This strategy will not only help maintain agility but will also allow small and medium-sized businesses to focus on innovation and growth with more time-sensitive and specific information about a foreign market.
The meteoric rise of Crumbl Cookies can be attributed to its agility. The company’s unique approach involves rotating its menu weekly and creating excitement among customers through platforms like Instagram and TikTok. Its limited-time cookie options and social media presence have turned Crumbl Cookies into a viral sensation, with fans posting mouthwatering photos and videos, further amplifying brand awareness. If Crumbl Cookies only sold the same six cookie flavors at all times, as larger companies typically do, it would not have found such success.
Related: 4 Ways Small Businesses Can Compete Against the Major Competitors
Creating a competitive advantage with a customer focus
By creating more personalized customer experiences with an emphasis on understanding customer preferences, small and medium-sized businesses can compete with MNCs.
According to Salesforce’s 2024 State of the Connected Customer report, 65% of customers expect companies to adapt to their changing needs and preferences, but 61% of customers say most companies treat them as a number. In today’s age, an improved customer experience has been repeatedly shown to yield higher profitability. By providing personalized experiences and fast responses to customer queries, small and medium-sized businesses build loyalty and a long-term customer base.
The online women’s clothing boutique Beautiful Disaster offers a compelling case for building up a company based on a strong brand identity, targeted audience and sense of community. What was once just another online clothing store, Beautiful Disaster, is known for having a unique identity that its customers embrace. The company also fiercely embraces and responds to customer feedback, giving it the competitive advantage of being willing to openly improve in terms of its product and service options, clothing quality and sustainability of clothing. MNCs may only be able to focus on one area of customer experience at a time, while small and medium-sized companies can focus on holistically improving multiple aspects of customer experience simultaneously, giving them a clear customer advantage. This multi-faceted approach to the company has allowed Beautiful Disaster to achieve sales in excess of $12 million per year.
By utilizing social media and digital platforms, you can effectively connect with audiences, attain direct engagement and boost customer retention. Identify untapped niche positions in highly competitive industries through the use of differentiated value propositions and high-touch customer relationships.
Related: 3 Effective Engagement Tactics to Help Small Businesses Create Authentic Connections With Customers
Actionable insights for entrepreneurs
In order to compete with larger companies in the global market, consider implementing a combination of these strategies:
Embrace technology: Make use of digital tools and platforms to improve operational efficiency, strengthen customer engagement and streamline processes. For instance, having a strong CRM tool for email marketing or social media management can both simplify the work and allow for more personalized and targeted customer reach.
Focus on the niche market: Enter into niche markets of limited depth, where larger competitors may not have many choices or lack flexibility. Develop products or services to cater to the needs of those markets.
Build your brand: Build your story and tell it in such a way that it resonates with your target audience. Authenticity and transparency do build brand loyalty by pushing consumers into small and medium-sized businesses instead of bigger competitors.
Use data analytics: Employ data to gather insights about the behavior patterns and preferences of specific customers. This could provide small and medium-sized businesses with powerful information that can be used for developing and executing their product and marketing strategies.
Strategic partnerships: Partnering up with other businesses can be an excellent strategy, especially if partnering with businesses that already have a foothold in a market. For example, Lucy’s Cookies, a small business, entered into a partnership with Starbucks to meet the needs of customers with dietary restrictions and now sells its cookies in Starbucks stores, creating a beneficial partnership between the small business and MNC.
In conclusion, small and medium-sized businesses can compete with multinational corporations in the global space by leveraging, rather than minimizing, their size. This very difference gives small and medium-sized businesses the exact edge they need toward creating a space of their own to thrive.
Read More
Wei Hsu