It is important to note that the paper "Importance of Finance in the SMEs that Needs to Be MNCs" is an outstanding example of management coursework. The aim of the business is to make a profit by offering products and services that meet the specific needs of the customers (Sokoto & Abdullahi, 2013, 128). However, with a continued change in the tastes and preferences of the customers, purchasing behavior, and increasing level of competition, most of the small and medium enterprises (SMEs) are experiencing challenges in satisfying the needs of the customers. Financial capability is one of the factors that constrain the growth and development of such businesses.
Access to finances is the key to the development of businesses. Without the adequate financial base, there is a limitation in investment and innovation, which in turn affects the ability of the SMEs to compete at international levels (Calciano, Fiordelisi & Scarano, 2015, 118). However, for the SMEs, the major obstruction for development into MNCs is the difficulty in accessing various financial opportunities that hinder growth. With increasing poor economic performance in many countries, MNCs continue to experience different challenges associated with loss and increment in the production cost.
As a result, most SMEs that are considering investing in the international markets have an adequate financial base to fulfill various needs of the market segments and remain competitive within the ever-diversifying global market. Even though the financial flows of the SMEs have increased over the year, it has remained subdued (European Commission, 2015). Most of the SMEs still perceive that access to finance is their most important problem. In addition, in the United Kingdom, important differences in the financial conditions between the SMEs and the Member States continue to exist.
Comparing various types of enterprises, the micro-enterprises, and many innovative businesses often consider their financing as the major problem. SMEs and Finances Most of the SMEs have limited financial base; as a result, most of their activities are constrained making it difficult to explore the international market. Countries differ significantly based on their financial intermediation models; thus, while considering the investment in the international markets, the business needs a huge financial reservoir to survive the numerous economic challenges associated with operating in international markets (Eiteman, Stonehill, & Moffett, 2015).
The diversity in the international markets is reflected in the relative significance played by different sources of the fund through the companies and the level of development of various financial institutions to handle the financial needs of these businesses. Access to international sources of capital could allow the businesses to overcome numerous challenges associated with the local capital markets especially while considering an investment in the emerging market. Some of the evidence of such comes from the paradigm shifts within financial openness.
Financial market liberalization has the capacity of reducing the cost of capital for the local firms that aims to invest in international markets since it increases the stock market valuations and is associated with investment boom witnessed in most MNCs (Ayadi & Centre for European Policy Studies, 2005, 122). In addition, access to international capital markets could as well affect the relative performance of various subsets of the firms within the economy that has the ability to access such markets.
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