The Management and Marketing in Small and Medium Enterprises - Assignment Example

Subject: The Management and Marketing in Small and Medium Enterprises Question 1: Critically discuss entrepreneurship behavior By simple definition, an entrepreneur is a businessperson. He can be an individual on solo flight deals, or, a member of a group or a group of individuals who have formed an organization, which objectives are generating monetary profits from the efforts and tasks that they will undergo. He can be into a small or medium business enterprise. In order for him to have reached that stage where his moves or behavior are right the first time, his skills must have evolved into a sharp, wholelistic, out-going, communicable, tactful, analytical, innovative, hard-working and patient leader. He also must be adept on basic skills accounting, algebra, marketing and advertising. Entrepreneur skills are not easy and the saying that “an entrepreneur is born and not made” becomes a fallacy, if the would-be entrepreneur learned the above mentioned skills. As head of a business enterprise, the tasks of an entrepreneur can be enumerated into a chronological order, to wit: (1) starting the organization (pre-operation period), (2) planning, (3) seeking resources, (4) resource allocation, (5) plan implementation, (6) accounting and book keeping, and (7) managerial analyses. The cycle starts again after managerial analyses and goes back to planning. In short, he must look at the activity as a whole and not by piece meal. He must know that there are two basic elements that comprises a business enterprise, namely: (1) its people and (2) its financial capability, which are both considered as resources. From the start, the vision, mission and objectives must be clear to him, so that he could transfer his skills explicitly to other members or his subordinates, to create teamwork and harmony. The roles of each individual in the enterprise can be defined specifically before the ball starts rolling. If, and when a business organization is formed, there will always be a head of the organization, a few subordinates, and then line and staff workers. As head, the entrepreneur’s task is to delineate the organization into the administration, accounting and treasury, personnel, manufacturing, marketing or sales and maintenance as the basic departments. When the enterprise expands and grows larger, he must identify the need to create other new departments. The logical explanation for creating additional departments is for ease of monitoring and control of the responsibilities each department head will be assigned. It is also best that the structure of the organization or the organizational chart is drawn and posted in the main office room. This is to remind everybody how the enterprise functions and who is boss or immediate superior. Once a while when the number of tasks increases, overlapping of functions within the employees will occur and conflict will emerge. Thus, it becomes the task of the boss, to intervene and resolve the conflict. With the delineation of duties or job description amongst employees, it would be easier to resolve such conflicts. The first important rule, when these conflicts occur, is to keep the organization in harmony, perhaps, by touching on the personal lives of the employees if possible. This is where the skills in communication and tact comes in. The second important rule is teaching the employees to love their work. Several theories on psychology, e.g. Machiavellian theory, maybe applied to end conflicts in organizations, but there is no fixed formula and is always site specific due to differences in human nature. What is important to remember is that the organization must run smoothly to attain its goals efficiently and not to waste any resources. Any business enterprise cannot start or run without capital. When the clock starts ticking, money is already being spent. The entrepreneur must be skilled to identify the following kinds of basic disbursements: (1) salaries and wages, (2) permits and licenses, (3) power, water, gas bill, and communications expenses, (4) rent, if any, (5) repairs and maintenance, (6) office supplies, (7) cost of goods sold, (8) representation expenses and (9) sundries or petty cash fund. These are called the overhead expenses and can be estimated on a monthly basis. The estimate also becomes the basis for the start up capital that is needed and for targeting the break-even sales the enterprise has to attain in order for it to survive and become viable. At the end of a fiscal period, usually a year, there is a provision for tax disbursements or payments. Net income or net loss maybe computed before or after taxes, but for submission to the Internal Revenue Service, it usually computed for taxing purposes, which means taxes are already imputed as an expense in the financial statements. Financial statements pertain to the income statement, balance sheet and cash flow for a certain fiscal period. Thus, he must have knowledge of basic accounting principles, how to interpret financial statements and pin point any anomaly. Accounting and algebra are used in these skills. In planning, the concept of computation of the overhead expenses can be applied as targets to attain a breakeven amount of sales, thus a little knowledge of mathematical algebra is used again. An estimate must be arrived on to compute the cost of goods sold and overhead expenses versus what sales should be attained. This is called budgeting. After budgeting is done, he can now go on to planning, for which the largest amount of effort goes to marketing. A marketing plan or strategy becomes the bible of the sales persons that will be involved. Knowledge on marketing begins with market segmentation, which divides the market into classes with corresponding levels of disposable income. Because pricing is an art, the products of the enterprise can be priced differently, provided there are variations in the packaging. In this aspect, skills for innovation in product variance come to use, and it is usually in the product packaging or presentation. Advertising skills become useful at his point. The next skill to focus on is the actual selling. An entrepreneur must know how to sell himself, as he will be selling his enterprise’s products through different people. Thus, psychological skills on how to approach and talk to customers must be taught to the sales people. Retaining the customers with gimmicks like discounts, credits, warranties and after sales service are included in his knowledge on marketing. The culture of people buying the product/products should be analyzed by him to get a market niche or advantage. In short, he must identify what factors must be present in order for his products to attract attention, be bought, and make the customers keep coming back for it. When sales come in, skills on bookkeeping/accounting must also be present, and an entrepreneur is free to formulate his own style as long as violations against proper accounting rules and regulations are not done. It is important to note, that whatever style of accounting and bookkeeping he adopts, must be for the ease of managerial analyses. The process of managerial analyses starts inside a meeting where figures are presented. These figures are that of sales and expenses. For increase in sales, new targets in the market are set, and, how to approach these new markets are points of discussion. On the other hand, the expenses must also be closely monitored, because a big deviation in any of the projected expenses may mean disaster for the enterprise. The next phase of analyses is the human factor. When targets are not met, the entrepreneur must know how to question that person who was assigned the specific task that was not attained. Again, communication skills must be flexed because of the complexity of human nature. The entrepreneur must be able to read between the lines of the character of which he is talking to. He must be able to derive information, analyze that information and convert it into a data resource, which is useful for the enterprise. Managerial analyses becomes routine, if he can easily process the information that he derives from his people and use it to advance the goals and objectives of the enterprise. It is sad to say at this point, that people are being used for attainment of goals, but this is the hard reality of being an entrepreneur. Managerial skills sometimes demand many psychological tactics and warfare to the extent that subordinates are “used”. For a closely related working team, transparency and openness can be discussed first before somebody “uses” anybody to attain a short-term goal. This is called camaraderie. As a leader, the right compensation package must be handed to the team or team member who is most of the time “used”. The entrepreneur must be able to lead his team into battle against competition and threats and in the process, identify the strength and weaknesses of his enterprise. Lastly, it was quoted that entrepreneurship is nothing but hard work and a lot of patience. In so doing, the true entrepreneur must be willing to share his knowledge of skill acquisition to his subordinates or team members. Otherwise, he may be branded as shrewd, which is by the way, considered by some as a good quality of a businessman. Read More