Small and Medium Entreprises in an International Context - Research Paper Example

Running Head: Small and Medium Enterprises in an international context Small and Medium Enterprises in an international context of the writer] [Name of the institution] Small and Medium Enterprises in an international context Introduction This research paper advocates and focuses in the field of customer orientation of Small And Medium Enterprise (SME) in Yorkshire and Humberside. The study examines and discusses various relations and characteristics of SME’s. It has been argued and established by authors that role of customer orientation and ‘centric’ is central to the success of business and implementation of strategies, basically this is so because current business environment is very competitive which demands continuos delivery of superior quality services and products. It is the play of market dynamics and the intensity of competition to get set up, operate, overcome problems and manage to survive is the overall background of this research paper, signifying the basic interest of customer orientation of SME, extending to how it is done by the owner / managers, trends and success. In this section of introduction, the reader will encounter a general idea of SME’s, what are they, SME’s in the UK, and further focus on the region of Yorkshire and Humberside (which is the base region of this research paper). Then it states about the position and perception of this study the researcher is going to take the interest in the topic. Last but not the least, is the research structure that how I am going to do the research, tools to be used, systematic procedure in relation to the guidelines stated out, its limitations and advantages. What is an SME SME stands for Small And Medium Size Enterprise category (micro, small and medium) which is economically fair to name and provides certainty to the law of enterprise. It can be said as: - Including all types of enterprises, whatever their legal status, and clarifying the definition of micro-enterprises, family business etc. Introducing a clear method to calculate the relevant ceilings in order to increase legal certainty and guarantee equal treatment across Europe, Designing a method so as to favour investment, in SMEs, innovation training and clusters of enterprises, elements that are considered particularly important in the context of economic development, modernisation and employment prospects and standard of living, innovation and entreprenureship and growth. SME in U.K. In the United Kingdom, it has remained one of the main destinations of FDI inflows. The ability of the region to attain and retain investment and skilled people reflects on the quality of life and environment and perceptions of the region as a good place to live and do business. The U.K. labour govt. have made it known that the future U.K. economy will become increasingly reliant upon SME’s with the formulation: -National Skill Task Force. (The opportunity to networks and access to world class value-adding information.) The perception or estimates held is that there are around 37 million business regarded as active, with 25.000 are medium sized with 50-250 employees in U.K. Focus on Yorkshire and Humber: - SME This region is clearly defined sub-regions, West and North Yorkshire, Humber and South Yorkshire. This region has experienced significant economic upheaval in the last decade, running down of the coal industry, decline in heavy industry, restructuring of steel industry. The majority of SME employ permanent fulltime staff with stable employment profile, the region broadly follows national trend like growth in service sector. It is like land based industries such as fishery, agriculture are significant in rural areas, manufacturing, and real estates, whole sale and retail trade, construction are of great importance in the urban areas. The main stock of business are agriculture, retail and real estate which are at the top, followed by construction and manufacturing, hotel, transport, health and social work, education, finance and fishing. This includes the type of competition characterising the market generally, and the basis on which the SMEs’ saw themselves competing, with respect to marketing information, quality of product and services, employee training, customer satisfaction and orientation. In today’s world of competition and survival, putting the customer at the centre of business is a receipt of success, to customise the future, like what the customer wants, make and develop products to satisfying pricing and quality level and an effective sales support, in short “customer centric”. It is the principle of making customer satisfaction the fundamental business objective to which everything is directed, and how it provides a competitive advantage and edge to do business and sustainable market growth for the SMEs’ in Yorkshire and Humber. Over all aim: - The position and perception of this report is to look at that CRM (customer relationship management) customer orientation is a growing area in SME, its giving an edge and benefit to business operations and what advantage of competition does it provide being ‘customer centric’ in being successful and survive among competitors. This is because previously it was only marketing and sales, but in today’s world of competition it is essential to attack and retain customers. It is one to one relationship marketing, a benchmark of customer satisfaction and loyalty and how information is being used to improve forecasting of needs and satisfactions. This paper intends to investigate areas like how long the SME has been operating in this region, in relation to profit of the company, employee training – support, how do they provide service to customers (effective and potentially), maintain value and quality standards, does the companies are being innovative in planning and operations management. How much the concept of relation marketing is used by SME, to what effect and how much really they are into it and application and providing a competitive advantage over competitors. Research Structure: - It is to highlight the whole process of the report would be carried out in a systematic way, boosting its research worthiness. From this introduction heading, the reader will encounter headings and studies like the Literature review, which primarily indicates what do we already know about the topic or issue of research, to is precise, previous work done in this field of interest. It is specifically to generate an area of study and interest and investigate what research has been done. The next topic, which draws attention, is the Research Methodology. It is in short an orderly approach to data so that information can be obtained from it, processed, polished and manipulated and then to dip upon criteria and critically find and think upon, e.g.: competitive advantage on a respective issue to be discussed. This will make clear of what I am going to do and how. So the aim is clear follows the process I am going to adept and practice in order to gather and generate data. After the big data is collected the next big step is data analysis, which by using tools and techniques to give a definite framework and structure to the data. A well set of data and information helps to understand and discuss its usefulness and will provide an evidence base for my main aim, which is the Discussion section, where this paper chooses to correlate its own findings with previous findings and research (literature) to come to a Conclusion. It is to conclude at the end by saying about the gap found (if any), from my position and perspective, against previous research. Strategic Management. (Literature Review) In this Literature Review section, the reader will encounter various research work being done by authors and management gurus of their study and findings in the my research area of customer relationship, ‘orientation’. The main areas I will highlight in this area are of SME the segment they operate, market dynamics and competitiveness, (how competitive is the segment basically) and what does the competition offer to, customer behaviour. Other topics to explore are in their operations in the market, service mechanism, what authors have stated in this contexts in relation to my research topic. The literature will highlight what previous work and studies of various authors have said is what the reader will encounter. During the last decade, a significant change in management thought has been the realisation that organisations often fail to focus on the customers and market they serve. A market focus is directing the efforts of the firm to meet customer needs and wants. This change in management perception of the customer developments started by an increasingly competitive global business environment, fast technological developments, which have shortened product life cycles and the difficulty of many organisations to survive and sustain superior performance. As stated by the author and referred from RUEKERT (1992) it defines the orientation as the degree to which the organisation obtains and uses information from customers, develops a strategy which will meet customer needs and implement that strategy to satisfy customer ‘needs and wants’. It is argued that customer relationship management and orientation is a strategic management approach, its implementation has an effect on the overall operation of the firm. Communications in SME: - Another important issue that needs to be highlighted and discussed is how do the SME use and practise communication channels and networks with their customers and key clients which might enhance their marketing prospects both strategically and at the operational level to achieve competitiveness, customer service (after sales). Customer orientation and SME. SME in U.K. are usually characterised by relatively simple organisational structure and more cohesive cultures. In addition, SME businesses have limited range of product and services, thus minimising the need for a formal procedure developed to gather and process customer or market information for decision-making. It relation to this I can say SMEs’ in this region full exploit and enhance the ability for a customer oriented culture. It is argues that SME are noted for their lack of long range focus, strategic orientation, systematic decision making, so customer orientation could be a critical determinant for performance. The author states and the main objective is that a business which improves customer orientation will enhance its performance, and it will be a vital determinant for success because such firms generally lack the financial resources to explore sources like research and development, competitive advantage, low cost leadership. So under such conditions will the practice of customer orientation provide a good competitive advantage and high survival rate? Customer orientation calls for a company to understand and satisfy customer needs and it is assumed so that the firm will benefit in the form of profits. A company to perform, it must create a sustainable superior value for its customers. (Porter, 1985) Because a relationship developed with a consumer/customer can be an avenue to gain competitive advantage. The best prospects could be the current consumers of the firm, because at least one point of time the service or product was attractive enough to use or buy it. However it is know that markets spent more time and effort to gain new customers without considering the value of current customer base. So from the above review it can be hypothesised that – a firms’ level of customer orientation is positively related to its performance measured by – new product development, sales growth. Innovation in SME: - A lot of theory and research has been undertaken under the heading, innovation in SME. A lot of researchers have tried to establish a relationship the level of innovation a firm is into to its products and services offered to its growth, survival and profit. (Cavanagh and Clfford 1983, Kuhn 1982, Peters and Waterman 1992) goes on to say that ‘it appears that there is a relationship between better performance and higher levels of innovation. Further more, Cavanagh and Clifford (1993) in a study of the strategies of successful mid sized companies concluded that innovation is a way of life among the top performing mid sized growth companies. Author Frederick F.Reichheld of Bain & Company, Inc says is very interesting, that the responsibility for customer retention and defection belongs squarely on the CEOs’ desk specially for small enterprises, where it can get the same kind of attention that is lavished on stock prices and cash flow. But the truth could be also, what the author says that, a firm could not progress beyond a superficial treatment of customer loyalty without delving into employee loyalty. There is a cause-and-effect relationship between the two; that it was impossible to maintain a loyal customer base without a base of loyal employees, and the best employees prefer to work for companies that deliver the kind of superior value that builds customer loyalty. Customer loyalty This literature review supports the theory that satisfaction is related to customer loyalty, which in tern relates to profitability leading to competitive advantage in the market. The service profits chain (Hesnett et al, 1994) states that satisfaction – loyalty-profit. Customer satisfaction is related to customer loyalty Customer loyalty is related to profitability. The author and service management literature says that satisfaction is the result of customer perception of the valued received in a transaction or relationship, where value equals perceived service quality relative to price and customer acquisition cost, relating to value expected from transactions with competing vendors. Loyalty behaviour including relationship continuance increased scale or scope results from customer belief that quality of value received from one supplier is greater than the available from other supplier. Loyalty in one or more of the forms created increases profit through enhanced revenue, reduces cost of customer acquisition, lower cost price, and decreased cost to customers familiar with a firms’ service delivery system (Reicheld, Sasser, 1990). The author argues that customer loyalty can be defined in 2 distinct ways, with reference to (Kyner, Jacoby 1973) defines loyalty as an attitude, which is attached to a product, service or organisation. Loyalty is behaviour (continuing to purchase service from the same supplier, increasing the scope for a relationship, or could be an act of recommendation. References Sara Carter, Dylan Jones – Evans, Enterprise and Small Business, Principle Practice and Policy. Financial Times. Prentice Hall. (Vassilios P. Valsamakis, Linda G. Sprague) The role of customer relationship in the growth of small- to – medium sized manufactures. Kwaku Appiah-Adu, Satyendra Singh) Customer orientation and performance: a study of SMEs’. (Jay Kandampully, Ria Duddy) ‘Competitive advantage through anticipation, innovation and relationship’. Frederick F. Reichheld, Bain & Company, Inc, ‘The Loyalty Effect’ Harvard Business School Press. Webmaster (2002) CRM publications info date accessed [07/12/2002] Webmaster(2003) CRM info date accessed [05/02/2003 Webmaster(2002) CRM infodate accessed [18/12/2002] Read More