Barriers Micro Retail Businesses Face in Growing - Literature review Example

Barriers Micro Retail Businesses Face in Growing Contents Contents 2 Introduction 3 Discussion 3 Definition of the micro retail business 3 Present situation of the micro retail business in the economy. 4 Formation of the micro retail business 6 Establishment of networks by the micro retail business 6 Barriers faced by the micro retail business towards its growth and development. 7 Factor responsible for creating the barrier for the growth and development 8 Overcoming of barriers by the micro retail firms for its growth and development 9 Conclusion 10 References 11 Introduction The topic emphasizes on the barriers faced by the micro retail business for its growth and progress. The Paper stresses on the importance of the small and retail business in the economy. The micro retail business is considered and regarded as the prime source of new jobs and employment in the economy. The micro retail businesses have been regarded as an important element for growth throughout the world. These businesses function and perform as a catalyst for the socio economic development of the economy. The micro retail business on the basis of its economic operations that is carried out is same for most of the countries across the world. The micro retail businesses mainly include the small shops which includes bakery, convenience stores, online businesses and small scale manufacturing. The researchers has focused and emphasized that the micro retail businesses can be started with less investment. When the micro retail business fails then the owner of the business may face bankruptcy. The financing in case of the micro retail businesses is attained by and managed by the owners of the business and from its relatives but many times the business face problem and difficulty in raising capital from the individuals and business houses and as a result the businesses face inadequacy of the capital that is available. The literature that is related to the micro retail industries mainly deals with three main aspects such as psychological, economical, and sociological. Discussion Definition of the micro retail business The researcher (Kiraka, 2013) in his study has emphasized that development and growth of a business is the process in which the business has to face difficulty and failure. He in his paper explains that the micro retail business market is mainly owned and managed by the owner of the micro retail businesses which generally comprises of the employees with the strength of less than ten employees working in the firm or the company (Kiraka, 2013). The author (Bridge, Neill and Cromie, 2003) explains the definition of the micro retail business is very much essential and important but the definition does not explain or define clearly the parameters or the standard that will define the market share that is being occupied by the micro businesses. The micro retail businesses perform successful and purposeful activities in order to initiate develop and maintain the profit oriented businesses author (Bridge, Neill and Cromie, 2003) .The researcher (Wilken, 1979 ) has emphasized on the critical or complex economic and social importance of the micro retail businesses is not defined. The micro retail businesses are considered and regarded as the important source of competition, employment innovation and economic dynamism of the economy and the businesses mainly aim to stimulate or instigate the entrepreneurial spirit and various skills in the economy. The micro retailers that carry out its operation or business separate from its residence are commonly known as the truck shop. The financing of the micro retail business is a matter of concern and therefore it has received much attention for its growth and development and therefore the researcher has found that this is a very important and vital aspect in the field or area of finance and economics (Wilken, 1979). Present situation of the micro retail business in the economy. The researcher (Osotimehin, 2012) focuses on the current situation of the micro retail businesses and explains that the micro retail businesses are mainly carrying out its operation in the various informal sectors and it includes or comprises of the wide majority of businesses in many of the developing countries across the world. The contribution by micro retail business is increasing and developing in the present years. The improvement, growth and development in the micro retail businesses have increased by around more than 40% since 2000. The increase and development in the number of the micro retail businesses in the current years indicates that the recession will be a favourable time for starting or setting up a new venture or business. The economic growth of the micro retail businesses has increased the level of income and has improved the standard of living of the people in the economy The researcher (Sexton, and Bowman-Upton, 1991) has highlighted that currently it has been observed that the growth in the business can be achieved through the increase, adoption and development of technology for raising finance adopting new innovation and finding new and prospective customers and also increasing the application of the shared services which will facilitate the owners of the business to reduce the cost and reaching and adopting rapidly the new opportunities that are available or is being provided (Sexton and Bowman-Upton, 1991).The researcher (Rolfe, 2010) has emphasized that the development and growth of the business cannot only be measured or justified on the basis of the job creation but it can also be justified by the various economic activities that is performed or adopted by the firm and the activity that is being generated through the use of technology, people and services. This indicates that the economic growth of the micro retail businesses increases the level of income and develops or modifies the standard of living of the people. The different ways for the economic growth mainly includes or is comprises of the creation of job and the growth and development of the business. Presently the business environment is undergoing revolution rather than undergoing evolution due to the application and use of the internet. Therefore the associated web and technology can be considered as the important factor for the growth and development of the business (Rolfe, 2010). The article prepared by (Department of business and skill, 2013) defines advancement in the technology has facilitated the micro retail firms and the businesses to undertake export across the borders. But in spite of the opportunities that are being provided and the advent of the technology there are still many firms that are lacking in technical skill and have not undergone any innovation and up gradation in their business process. It has been observed that by the adoption and the frequent use of the technology on the business firm will facilitate the micro retail firm to improve the efficiency and the productivity of their business (Department of business and skill, 2013). Formation of the micro retail business A report that was published by (World Bank, 2011) has explained and focused on the formation of the micro retail businesses in which it explains that the business venture are expected to pass through the three different stages of the entrepreneurship. The entrepreneur is required to have determined purpose, goal and objective for establishing the business, next step is that the business has to establish and formulate according to the well formulated goal and the last step is function effectively and efficiently. For the establishment and setting up of the micro retail businesses there are various elements and factors that contribute towards its formation and its consecutive failure and success (World Bank, 2011). The author (Haskel, 2009) explains the formation of the micro retail business also deals with the involvement of various types of personalities that are involved in the process of initialization, the motivation that is required for operating in such venture and the difficulty or the barriers that is being faced during the process of business. It also deals with the encouragement that is being provided to the business and also financial and economic problems that is faced by the micro retail businesses (Haskel, 2009). Establishment of networks by the micro retail business The writer (Foster, 2002) in his research paper indicates and explains that the entrepreneur are required to focus on the importance of developing and establishing network towards the increasing and improvement of the business. It is required by the owners of the business to organize the formation of the business and it is very important and essential; in gathering and collecting the information that is required for the successful formation and implementation of the new venture. The development and strengthening of contacts will enable the owners to test and develop the idea related to the introduction of the various connections of the businesses that is providing beneficial services (Foster, 2002). Barriers faced by the micro retail business towards its growth and development. According to the researcher (Nishanth, 2014) in his research paper has suggested that the elements and the hindrances that is restricting the growth of the micro retail business are due to the creation of the new venture includes various problems and difficulties. The main reason for the barrier is the establishment or setting up of new venture that is mainly related to the management of money, the business is mainly faced with both financial and non financial barriers that creates there problem in acquisition of capital and this problem is the inability of obtaining external financing, cost associated with starting and setting up of the business, inability of gathering internal financing high cost of raw materials and the increase in the whole sale price. The micro retail business is also faced with the problem of bankruptcy due to the size of the business this occurs due to the poor and ineffective planning (Nishanth, 2014). As per the author (Siringoringo, 2009) the barrier towards the growth of micro retail business is the competition that is faced by the firms from the large enterprises because the large and the well developed and established business may possess great reserve of cash to face the market uncertainty and the unpredicted problems which will compromise its profitability. The large firm has the advantage and can reap the benefit is that it has the capacity and the ability in purchasing at a high volume price from its wholesalers. The large firms also have the ability in negotiating with the workers and the union for reducing the cost that is associated with the labour and the benefit that is being provided to the workers or the labourers. The large firms has the ability to secure and establish good and better terms with its lenders and providing better arrangement for obtaining credit from the suppliers and the vendors in contrast the micro retail firms are involved in the establishment of small business set up which includes high amount of risk to the firms and the lenders that generally arrange and provide credit to the micro retail firms or businesses and therefore the micro retail business may not be capable of obtaining credit or borrowing money from its vendor at favourable and suitable terms and conditions. The author (Nkonoki, 2010) in his study has pointed or found out the problem that is a serious matter of concern for the micro retail firms for its development and improvement which is related to starting or setting up of the business is the requirement of the suppliers and the vendors and the physical premises that is required for conducting the business and while considering the micro economic perspective is that it is related to demand and supply factors (Nkonoki, 2010). Factor responsible for creating the barrier for the growth and development The author (Biswas, 2007) in his study have highlighted the characteristic or the features that is responsible for creating the barrier towards the growth and development in the micro retail business are mainly manpower and finance that mainly affects the growth and development of the business are finance that is required for boosting up the business the capital shortage is the main factor which is creating barrier for its growth and development and the micro retail firms face the problem because of lack of accessing of the credit facilities which creates the problem and creates hindrances in selecting appropriate technology that is required for the growth of the business as it cannot afford very high and effective technology for its operation. The accessing of finance by the micro retail business can create barrier and restriction in carrying out operation though it is not intentional. The level of uncertainty is high in case of the micro small firms as compared to the risk and uncertainty of the large scale firms and businesses (Biswas, 2007). The author (Young, 2013) has also emphasized on the factor causing the barrier against the progress and development of the micro retail businesses the loan that is provided by the micro credit operations generally bears a high rate of interest as compared to the interest rate of the commercial banks in providing loan to the prime customers (Young, 2013). The author (Bwisa, 2013) in his research paper has focused on the barriers or the limitations of the micro retail firms or the business is the difficulty in selecting of technology that is required for the growth and development of the business. For the advancement in the business the selection and application of the technology and also up gradation of the technology plays an important and crucial role in the growth of the business. The micro retail firms face problem and difficulty in selecting the appropriate technology that will match with the opportunities and will provide the desired result. The author (Cooper, 1993) in his journal has also discussed about the barriers which explains about the government policies which explains that the micro retail firms face problem in adoption of changes and modification along with the changes in the policies that is related to the implementation of new business policies, improvement and development of new infrastructures, and reconstruction in the economy. The researcher (Baumol, 2004) in his research paper has identified and focused some of the other factors that is acting as a barrier such as the lack of management skill, lack of proper and adequate planning, adoption of the poor and ineffective procedures and ignoring the risk and uncertainty related to the assessment of various alternative opportunities (Baumol, 2004) Overcoming of barriers by the micro retail firms for its growth and development The author (Gupta, 2013) in his study has suggested the methods or the steps that are to be adopted by the micro retail firms to overcome the barriers which mainly includes the personal savings, grants from the private institutions and foundations, loan that can be availed from the relatives and self financing which is very important to strengthen its equity capital base and together with it is adoption of latest technology and its up gradation (Gupta, 2013). Conclusion The micro retail business faces many problems and barriers for the success, growth and development of the business that is required for starting the business. The barriers are mainly caused due to the large business firms, financial institutions and the government agencies that are creating hindrances and threatening the growth and development of the micro retail businesses. The barrier of raising finance can be reduced or decreased by the effort or the initiative of the owner by increasing and developing their knowledge and the better and effective utilization of the various resources. The micro retail business mainly face problem at the initial phase of the business but the early stage is the critical and the vital stage as in this stage the success of the business is determined therefore it is required by the business to identify and solve its barrier in the initial stage for the survival and growth of the business. References Baumol, W. 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