Considering the fact that majority of the potential customers in the world are geographically distributed outside the US market, a significant factor to consider in the expansion to the global markets is the advancement of favorable trade agreements. North American Free Trade Agreement is a regional trade agreement that seeks to facilitate the free flow of goods, services, and labor as well as to improve political relations of the US, Mexico, and Canada (Villareal & Fergusson, 2015). NAFTA offers a number of advantages for US small businesses. For a small business seeking to expand into the global market, the establishment and management of international supply chains will be well positioned to take advantage of the growth market. The small business can identify and establish relationships with multinational supply chains in the individual countries as part of the strategic competency. With well-managed relationships with the supply chain members in the global market, cost quality and agility advantages through effective sourcing can serve to increase revenues for the business and eliminate chances of duplication. This is a source of competitive advantage. The region-wide market can thus be tapped and other provisions such as the use of cheap labor in countries like Mexico can also be tapped to increase productivity and reduce costs at the advanced stages of the expansion into the global market.
In regard to the regional market, despite the opportunities such as the ability to export and take advantage of regulatory flexibilities in different countries such as Mexico, federal requirements that govern export licenses and environmental regulations might impact the global expansion bid of small businesses (Villareal & Fergusson, 2015). The regulatory underpinnings dictate what goods can be brought into the local market and the practices that are in line with the environmental protection requirements. This may limit the expansion move because of the legal challenges that limit the physical and economic capacity to expand the business across the borders.
References
Villareal, M., & Fergusson, I. F. (2015, April 16). The North American Free Trade Agreement (NAFTA). Congressional Research Service.
