Competition, Small Business Financing, and Discrimination - Assignment Example

? There are different types of business. Generally, most businesses are considered by their size or line of operation. The most dominant type of business are the small businesses due to low set up capital required. However, small businesses face several problems in the United States and this has hindered growth of the businesses. This paper discusses the different problems facing small business with main focus on racism, strategic marketing and management. These factors affect small business in different ways, but they contribute to underdevelopment of small businesses. Introduction There is a large amount of debate surrounding small businesses in America and what can be done to support and grow them in the current economic climate. Small businesses in America face many difficulties, but three that are documented in current literature are financing, race, and having a solid business strategy. The literature researched shows three reasons small businesses in America can have difficulty. Part of the discussion around small business difficulty is the definition of what it means to have a small business success. There are several factors affecting survival of small businesses in the United States, but the most dominant are racism, ineffective strategic planning and poor management. In the United States the race factor plays an important role in most of the operations and functioning in the country. Small businesses require loans to boost their performance and increase income. This is because most if the small businesses have limited financial supply. However, racism has greatly affected availability of loans to most of entrepreneurs with small businesses. Most small business owners are African American and the race factor has hindered them access to loans and hence affected development of small businesses. On the other hand, whites are accessing loans. However, not most of the whites are engaged in small businesses. This has affected growth if the small business industry to the expense of large scales businesses (Weinzimmer and Manmadhan, 2009, p 171). For the survival of an organization, it has to posses an effective marketing department. The marketing department is charged with ensuring public awareness of the services and the products of the organization. The department works in conjunction with the public relation department hence inform the public while maintaining a good relation and image with the public. For proper and effective marketing, an organization has to strategically plan the marketing process. For instance, before a company commences it has to determine the kinds of services or products to offer to the public. For established companies, they use marketing as a tool of determining the changes they ought to make to their products or services so as to enhance sales. Generally, companies use marketing to determining appropriate strategies to use in sales, development and communication with an aim of increased sales and containing competition (Cavalluzzo, & Wolken, 2005, p 2158). Due to the limitation of resources, small businesses ought to strategically plan. Therefore, small businesses strategically plans the marketing process hence concentrate their limited resources to the greater opportunities available. When the process is effective, the company may realize sales increase and hence achieve competitive advantage in the market. The strategy may enable a company to fill the needs of the market and hence reach the objectives of the market. A good strategy has to effectively scan both the external and internal environments. This can be achieved via appropriate Strength, Weakness, Opportunity and Threats (SWOT) analysis. After the analysis then a company may set a strategic plan for market, establish goals, identify alternatives in the market, determine market mix and implement them (Bergen, 2001, p 460). Strategic marketing plan An effective, efficient and adaptable marketing plan has several components. These components help in the implementation and achieving results via the plan within a reasonable time frame. For instance, a good marketing strategy has to posses a good, realistic and effective mission statement and or purpose. This statement helps in describing the basic function of the company to the society it serves with regards to the services and products it produces for consumption (Blanchflower, Levine, & Zimmerman, 2003, p 937). The components of the mission statement address different issues concerning the company. For instance, purpose explains why the company exists that is its target group and the long-term goal. Secondly, strategic scope and strategy defines the products and services offered by the company and its competitive position. It also illustrates the company’s success competencies and methods of competition. The strategic scope further explains the operations boundaries of the company set by management. Strategic scope decision made by management, therefore, determines the nature of the respective business entity that is market, geography, product among others (Fairlie, & Robb, 2008, p 34). Furthermore, behavior standards and policies translate the mission into daily activities. They generally test and monitor the mission of the business. Finally, culture and values provide guidance on code of conduct, commitment and loyalty and the principles of the business. Mission statement plays an important role in the achievement of long-run goals of the company. It basically assist in three major ways; provision of incentive for the implementation of the marketing strategy, provision of outline on how the marketing plan should fulfill the mission and provision for the screening and evaluation of the marketing plan that is ensure consistency between decision making and the mission of the company (Jay, Ebben and Alec, 2005, p 1254). Generally, the marketing strategy is a process hence needs to be keenly evaluated to develop the best strategy. It will assist in adjusting to the changing business environment and uncertainties in the business among other factors. It involves understanding of the customers, analyzing the market, analyzing competition, research distribution, defining the marketing mix, analyzing finances and finally revising and reviewing before adoption to ensure its effective operation (Cookie Cutter, 2004, p 231). This process is driven by the market development due to the changing business environment and need for superior value delivery to the customers. Strategic marketing greatly monitors the performance of the company and not only sales boost. This process links the company with the environment and considers marketing as the company’s responsibility and not a specialized function. In the practical business situation, the process has to take into consideration segmentation of the market, analysis of the competitors, the market itself and the environmental changes. This program consists of price, product, promotion, distribution designs and implementation with an aim of meeting the value required by the target consumers. The implementation of the strategy and its management greatly rely on the design of the organization, control and the strategy itself (Jay, Ebben and Alec, 2005, p 1259). Analysis of the strategic situation The information provided by the analysis of the situation is essential for the designing of a new strategy or changing the existing one by the management. The company also needs to define its market so as to enable for competition and consumer analysis. The company also has to forecast and analyze the product–markets future changes. Its main objective is description and identification of buyers, estimation of market size and growth rate, understanding of customers’ products preferences and determining the competing products and companies in the market (Fairlie, & Robb, 2008, p 110). Market segmentation, this is concerned with the needs of consumers, their nature and diversity extent. This enables a company to focus on its capabilities on buyers requirements. Market segmentation identifies segments in product-market after examining the differences between wants and needs. However, industrial segments are greatly influenced by the industry, products use and other factors. For the achievement of success, the company has to frequently review the market. This will enable the company to understand the prevailing competition in the market and its target market demands and requirements. Consistent review of the market also enables a company to forecast the expected changes in the market (Christoph and Raphael, 2008, 13). Market-driven strategy designing This phase of the marketing strategy involves the definition of the market segments, assessing the weaknesses and strengths of the company, identifying the opportunities available in the market, and evaluating the market competition. This research is important for development of an organization as it enables introduction and development of new products by firms, determining the target market among others (Fairlie, & Robb, 2008, p 103). Strategic positioning and market targeting, there are several situational factors that influence gaining of marketing advantage by a firm. They include; competitive advantages, buyer’s differentiations extent, characteristics of the industry and firm type. The purpose of targeting a market is basically to select organizations or people to serve. Its main objective is to match the capabilities of the company and the requirements of each segment in the product-market. On the other hand, positioning strategy is a combination of price, product, promotion, and value-chain strategies used by a firm to effectively compete and meet the wants and needs of the market they target (Cookie Cutter, 2004, p 229). Marketing relationship, there are several partners of marketing relationship. They may include; internal teams, suppliers, members of the marketing channel, competitor alliances, and the end user consumers. Companies may provide a superior value to the consumers upon building a long-term relationship with both the value-chain partners and customers. The strategic partnering may lead to a firm gaining a competitive advantage over other firms in the industry (Christoph and Raphael, 2008, 19). New products planning, a firm may replace its old products with new ones due to decline in profits and sales. A company may produce a high-quality product at a competitive price if it closely monitors and coordinates the planning of new products. Before introducing a new product in the market, a company has to identify gaps in customer satisfaction hence introduce an improved product (Bergen, 2001, p 456). Recommendations Marketing changes; a company has to possess a good and experienced marketing team hence respond to the marketing changes in each environment the company opt to operate. For the survival of any company either profit oriented or nonprofits, it has to possess a good marketing team. It through marketing that organization informs both the potential and existing customers of their goods and services. A company informs general public of new products, changes or improvements on products and services offered how to use a product or any other relevant information concerning their goods or products. This enables the company to avoid unnecessary losses and or improve or increase sales. It is through marketing that a company reaches target groups hence need to be effective (Slater, & Olson, 2001, p 1057). Choosing of location; before a company sets up a business it has to carry out market research hence determine if the location favors nature of the business. It should be located where operation costs are reasonable, that is transportation and cost of other support services. Before commencing operations in a given location, it is essential to carry out analysis. The management has to carry out market research before setting up. An organization has to be aware of competitors in the market, level of competition, expected returns, and purchasing power of consumers among others. This will assist management in determining or estimating expected returns among others. The business should not be located in inaccessible, insecure among other factors that may hinder its survival (Jay, Ebben and Alec, 2005, p 1252). Risk management; when a business is incorporated, it is bound to loss or profit. International companies usually have growth plan in place hence always venture into new markets. Due to the prevailing cultural differences, what is acceptable in one environment may not be acceptable in another. Due to thirst for profit increase, an organization may opt to try out new things irrespective of the business environment. The strategy may fail or succeed. Failure of a strategy definitely leads to loss while success leads to increased profit levels and grant a company a competitive advantage over other firms in the market. Therefore, a company should effectively have an effective risk management plan. This enables a business to have a competitive advantage over other companies and hence increase their level of income. Therefore, due to presence of uncertainties in the market, organizations ought to establish and maintain an effective risk management plan (Cavalluzzo, & Wolken, 2005, p 2156). For the survival of an organization, it has to strategically manage its affairs. The company has to consistently review its marketing strategies so as to suit market changes and demands. This is only possible when a company carry out self analysis and that of other relevant companies and competitors. A company may use the Strength, Weakness, Opportunity and Threat analysis (SWOT) or the Political, Economical, Social and Technological analysis (PEST) (Blanchflower, Levine, & Zimmerman, 2003, p 934). For instance, the SWOT analysis may be helpful in strategic management because it concentrates on potential issues that impact performance of an organization. This analysis is also useful in addressing strategic situations that are complex in nature incase time is limited. It also allows an organization to understand their position in the market (Fairlie, & Robb, 2008, p 23). On the other hand, the Political, Economical, Social and Technological (PEST) analysis, analyses the macro-environment factors affecting firms. These factors are external, and firms have no direct influence over them hence may pose threats to firms. Since management has no influence over these factors, they may pose threat because the business has to operate despite their changes. Since expected changes in these factors are difficult to determine, organizations has to monitor them and prioritize those that affect or influence their operations. Therefore, firms ought to strategically plan to deal with these uncertainties (Cavalluzzo, Cavalluzzo, & Wolken, 2002, p 645). Management also has to analyze competitors. A business has to know capabilities and weaknesses of competitors hence work on gaining competitive advantage through competitors’ weaknesses points while majoring on strengths of the organization. This will help them obtain information concerning close competitors and hence use the information to predict behaviors of competitors. This analysis helps an organization to understand; competitors plans and objectives, reaction of competitors towards their actions, how to influence behaviors of competitors to the advantage of the firm and close competitors. The analysis should also assist the firm determine strategies, objectives, capabilities and assumptions of competitors (Weinzimmer and Manmadhan, 2009, p 169). Conclusion For effectiveness of any strategy developed by an organization, it has to be planned for. For this reason, the strategic marketing planning process becomes essential for effectiveness of any strategy. There are several strategic planning processes but most organizations adopt the top-down formalized process. Under this process, the top management is charged with the responsibility of strategy formulation and the lower managers and employees are basically charged with strategy formulation. This strategic management process is most appropriate for management of a business or a company. This is because it is continuous and dynamic. The entire strategic system may change due change in one component hence the process has to be continuous to adapt to environmental changes. Therefore, strategic marketing management forms the most important basis of the management process. Therefore, strategic marketing management is an important aspect of business success. Finally, racism should not be allowed to influence operation of business for development of small businesses. References Bergen, Rosen U. (2001). The Effect of Market Size Structure on Competition: The Case of Small Business Lending. Small business Journal. Blanchflower, D. G., Levine, P. B., & Zimmerman, D. J. (2003). Discrimination in the Small- Business Credit Market. The Review of Economics and Statistics, 85(4), 930-943. Christoph, Z and Raphael, A. (2008). The Fit between Product Market Strategy and Business Model: Implications for Firm Performance Strategic Management Journal 29(1), 1-26. John Wiley & Sons Article Stable URL: http://www.jstor.org/stable/20141998 Cookie Cutter, (2004). The Micro Structure of Small Business Lending by Large and Small Banks. 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