Dominant Form of Business - Coursework Example

Introduction Small business is the dominant form of business in many economies. However, entrepreneurship is what makes a small business successful and it occurs when an individual develops a new venture, a new approach to an old business idea or a unique way of giving the marketplace a product or service by using resources in a new way under conditions of risk (Steinhoff & Burgess 1993:4). Against this background, this essay seeks to explore the significance of concepts of enterprise “pull” and “push” in explaining the factors that influence people to start small business or to be self employed. It also seeks to explore the factors behind the rapid growth of small business sector in many economies as well as to establish the factors that contribute to successful innovation in firms. 1. In order to fully understand the extent to which the concepts of “pull” and “push” influence the way individuals become self employed or start up business, it is imperative to begin by defining these two concepts. According to Ristimäki (ND), “push factors mean those influences, which push individuals toward entrepreneurship and pull factors mean influences, which pull people towards entrepreneurship.” However, it must be born in mind as a point of departure that the influence that can be regarded as push factor by another individual can be regarded as a pull factors by the other. Factors such as unemployment, market opportunity as well as appropriate response to the needs of the society are all factors that can be considered as pull or push in as much as entrepreneurship is concerned. Essentially, entrepreneurship is mainly concerned with recognizing and creating opportunity where the aim is to utilise the opportunity through scanning and analysing the environment to establish a market gap where there are some consumer needs that are not satisfied adequately. In other words, an entrepreneur must add value and needs to be creative by creating an organisational structure geared towards needs satisfaction and survival (Lamb et al 2008). This becomes a push factor where the entrepreneur has realised a gap that needs to be covered. In some instances, an entrepreneur will start by launching a product in the market then launches an effective marketing campaign that is meant to highlight awareness among the targeted customers about the benefits of the new product offering. An entrepreneur can first introduce the product into the market and this will be followed by a marketing campaign to raise product awareness among the consumers. On the other hand, some people feel comfortable to leave handsome jobs after having attracted by the market opportunities which becomes a pull factor. However, in some instances, a pull factor can be a push factor depending on the intention of the entrepreneur as well as the market condition. It can be noted that in most instances, every big business starts off as a small business. Cases studies can be drawn from the evolvement of McDonald’s hamburger, the Apple computer, Ford car as well as even the electric bulb (Steinhoff & Burgess 1993:4). Small business is a dominant form of organisation for American business and together these provide about half of the national output of the products and services. According to the Small Business Administration (SBA), these small enterprises account for 52 % of all US workers (http://economics.about.com/od/smallbigbusiness/a/us_business.htm ).This means that there were more than 19 million small firms providing products, services, and information within United States by 1990 and these provide about half of the national output of the products and services to date according to SBA. Essentially, the main purpose of being in business is to satisfy the needs of the customers profitably and marketing plays a big role in trying to identify these so it is the duty of the entrepreneurs to make sure that they identify the unmet needs of the customers in the market. Where the needs of the customers are satisfied, then there will be assurance that the organisation will be poised to grow since more revenue will be collected through sales to many customers which is the reason why more individuals decide to become self employed or to start business because there is sustenance in small businesses. Entrepreneurs who are concerned about their success know that customer satisfaction and profitability in an organisation are somehow interconnected in that if the organisation promises something to the customers and fulfils it, chances of creating loyalty among them will be high. This scenario can be described as either a pull or push factor depending on the actual goals to be achieved by the entrepreneur. Thus, where there is no customer, there is no business and the entrepreneurs are influenced by the fact that they will get the much needed information from their customers about features and benefits desired in the product or service being offered. 2. The greater influence on the growth of small businesses in US is that they rapidly expand once fully established. According to the SBA, “small businesses represent an entry point into the economy whereby it can be noted that women, for instance, participate heavily in small businesses and the number of female-owned businesses climbed by 89 percent, to an estimated 8.1 million, between 1987 and 1997, and women-owned sole proprietorships were expected to reach 35 percent of all such ventures by the year 2000.” The history of small businesses in US shows that there was a rapid expansion in their development since the period the country took a jump from an agriculture-dominated society to an industrial society. Even to date, unlike in other countries, through the SBA, US is very supportive of entrepreneurs in small business by virtue of their immense contribution to the economy as a whole. The other factor that influences the growth of small businesses is their ability to respond rapidly to changing economic conditions. Investors in small businesses see that there is no great risk. Once established, the entrepreneurs will know that they will have a better position to dance to the tune of their clients as well control the pace of the business. Large multinational corporations which often rely on huge loans from the banks face the risk of being negatively impacted if there has been an abrupt change in the economy. Economic woes such as the recent global economic recession had a greater impact on big companies in particular compared to the small businesses which were able to adjust to the situation obtaining on the ground. During the contemporary period, it can be noted that new information and communication technology has revolutionised the way people conduct their business in different arenas. The advent of the internet in particular has made dramatic changes in how the businesses operate as well as the way in which the customers perceive the world around them. These changes in communication make it relatively easier to conduct market research with the aim of identifying the needs of the customers. The use of new communication technology allows a two way communication channel where it is relatively easy to get feedback. Prospective entrepreneurs also have the opportunity to scout for business ventures in that information is readily available from different media ranging from print to electronic. The customer tastes are also constantly change and this state of affairs means that new opportunities will be created in the market which gives room to the other prospective entrepreneurs to fill that gap. Through proper use of information and communication technology, it is easy to penetrate the market and it is also easy to reach the customers. Some business opportunities are even created by this new information and communication technology. Some entrepreneurs have seen the need to bridge the information gap that may exist between the business community and the target market and have opened internet cafes as well as phone shops in different places. It can be noted that the use of new information and communication technology has also greatly contributed in creating other opportunities for the growth of small business which shows that their evolution is like a vicious circle. In other developing economies, it can be noted that it does not require a great deal of investment to start up a small business. Most governments particularly in developing countries in Africa have also realised the significance of small businesses and their contribution to the overall development of their economies and have put measures in place to promote them. Many governments now have ministries of Small to Medium Enterprises and these are mainly concerned with championing the cause of these small businesses. Prospective entrepreneurs are given financial assistance in the form of loans which makes it easier for them to quick start their own businesses. This stance taken by many governments in developing countries has immensely contributed to the rapid growth of small business enterprises. 3. In a small business context, innovation entails that an individual develops a new venture, a new approach to an old business idea which means that the untried ideas become innovations that become concepts that will change the business world (Steinhoff & Burgess 1993:4). Basically, innovation in small business will be primarily concerned with finding a unique way of giving the marketplace a product or service through utilisation of resources in a new way in conditions that are likely to be risk given that customers may not readily accept or adopt the product given that they will be aware of its life cycle stage. Most customers buy a product when it is still in its life cycle and in a small business, the entrepreneur has to constantly keep a close eye on the changing needs of the consumers. As noted, an innovation is a product perceived as new by a potential adopter and there are different factors that contribute to the success of innovation in small businesses. Diffusion of innovation is the major process that ought to be adopted by any entrepreneur who is concerned about the success of his or her business. Diffusion is the process by which an adoption of an innovation spreads among the customers. The entrepreneur can seek to identify five categories of the adopters to participate in the diffusion process. Mostly, the entrepreneurs target a group of people with higher income who are not influenced by group norms. These in most cases are well educated and they are often referred to as innovators (Lamb 2008). Having first targeted the affluent in the entrepreneurs will seek to convince the others that the product offered will be unique and personal information is very effective here. Through effective use of the marketing strategy particularly the product life cycle, innovation is successful in small business scenarios given that it will be unique in all respects from the other products offered in the market. Over and above, it can be concluded that entrepreneurship is mainly concerned with establishing a small business venture by an individual. As discussed above, it can be noted that there are both pull and push factors that influence the individuals to start their own small businesses or to be self employed. In most cases, the situation obtaining on the market either compels them to invest which is a push factor or it attracts then to invest which is a pull factor. Small businesses have been growing at a tremendous rate in many economies as a result of different factors of which some of the include the following: they are not badly affected by large scale economic factors, opportunities are constantly opening up and in many developing countries, the governments have sought to take a leading role in promoting small business enterprises due to their immense contribution to the overall performance of the economy. References Bekker F. & Staude G (1988). Starting and Managing a small business. CT. JUTA. Goyal M (13 December 2007). Entrepreneurship: Trust your gut feeling.(Accessed on 28 December 2010 from: http://www.rediff.com/getahead/2007/dec/13mohit.htm Lamb C.W. (2008). Marketing. Oxford University Press. Steinhoff D. & Burgess J.F., (1993) Small business management fundamentals. New York. McGraw Hill Inc. US Department of State (ND). Small business in the United States (Accessed on 28 December 2010 from: http://economics.about.com/od/smallbigbusiness/a/us_business.htm Read More