Globally Effecting Small Businesses

Written by Shelley Godra

A small business in the United States need to be aware of the undeniable affect globalization has on their future profits. For example, when managing an Italian restaurant in Philadelphia, one must realize that there are global factors that affect the business. These factors can be affected by political, social, and economic changes. Political relations can change people’s view of Italy. Social changes can affect customer’s tastes and demands. Economic factors can affect prices of imports and in turn raise the prices of the Italian restaurant.

First, political factors can range from new regulations to country relationships. For example, new regulation has been set in place regarding the United States and Mexico. There are more immigration laws and barriers; therefore, fewer Mexican immigrants are coming into the US. This can hurt the Italian restaurant because there are fewer prospective employees that will work for low wages, and the restaurant must spend more money on its employees’ salaries. The United States and Italy currently have a good political relationship; however, if political relations changed in the future, the change may influence customer’s opinions of Italy. Customers who think less of Italy because of unfavorable relations will eat less Italian food and this would also hurt the restaurant.

Second, social changes can affect where consumers choose to eat. In the past twenty-five years, people’s tastes have changed dramatically to become more sophisticated and cultured. In order to keep up with the chic changes, the Italian restaurant may decide to incorporate a larger variety of food into its menu. The restaurant could also attract more of the sophisticated crowd by inviting a celebrity chief to come and cook one night for its customers. There have also been social changes specifically in the Philadelphian region. Two decades ago, Southern Philadelphia was inhabited with many Italians; since then the Italians have moved out to the suburbs and Southern Philadelphia is populated with other ethnic groups. This change in residents could change the kind of food demanded in the area. The restaurant can no longer assume that the population wants the traditional Italian food and, like overcoming the sophisticated class, the restaurant could offer more variety in its menu.

Finally, economic changes most often than not affect the meal prices of the restaurant. Global food shortages, specifically in Italy, due to weather could increase the prices of imports. Many of the ingredients the restaurant needs, such as olive oil, would come from Italy. Currently, our economy is not doing well, and United States residents have less disposable income. Less disposable income means less money to spend on luxury goods like eating out. Also, the price of oil has been steadily increasing in the past few years. This would deter people from driving into the city from the suburbs because gas is too expensive; this change would cause a shortage in customers.

In conclusion, there are many factors that affect managing an Italian restaurant in Philadelphia. Some factors can be controlled, however, global factors are outside our reach of influence. Global factors such as political, economic, and social changes can hurt an Italian restaurant in Philadelphia by creating higher priced imports, less employees, and less customers. Some of these changes can be overcome by offering new food options and keeping up with what the consumers want.