Analysis of Small Business - Assignment Example

?Analysis of Small Business Table of Content Introduction 5 Literature review 6 Research methodology 8 Company Profile 10 Company Analysis 11 Political 13 Economical 13 Social-cultural 14 Technological 14 Environmental 14 Legal 14 Competitor analysis 15 a)Direct competitor: 15 a)Indirect competitor: 16 b)Future competitor: 16 Recommendations 17 i.Systematisation: 18 ii.Web presence: 18 iii.Customers: 18 iv.Plan: 19 Conclusion 19 Reference 20 Bibliography 24 Introduction Small business enterprises play an important part in the economy if a country. Small businesses constitute the maximum business establishments in any country where the number of employees is less than 500. In developed countries the major portion of the business is occupied by the small business entities, whereas in developing economies it is seen as an opportunity to eliminate unemployment and poverty (Unido, 2004, p. 17). A small business enterprise is defined as an independent business entity. The small business entity is found not to be dominating the operations in its own field. A small business is different from the large business in context to its functionality and way of approaching the business market. The main objective of this research is to provide an insight about the small business. An analysis based on the strength and weakness of the small business enterprise will be part of the research. Moreover, the contribution and affect of the small business enterprises to the economy of a country will be analysed. Literature review Literature review plays an important part in any research based on a particular topic. The main focus of this research is to analyse the small business enterprises and their role in shaping the economy of a country. Also, the impact of small business on the market as compared to the large business enterprises will be evaluated. The principle source of the research is secondary data collected from books, journals and articles. This was adopted to gain better understanding of the issue related to small business enterprises and its importance in the global context. The sector of small business is largely exemplified by different activities which are performed by the owners of these small business firms and as well as the people who work in these firms. The study on small businesses reveals that the owners of such enterprises do not prefer innovation or change in their functioning of business. Most of the small businesses are founded based on the established business models and practices (Stokes & Wilson, 2010, p. 34-35). Small firms are believed to have added large share of employment to a country’s economy. Most of the new jobs are added in services such as leisure and hospitality. In the study of small businesses it has been noted that most of the large enterprises faces stiff competition from the smaller firms. Though the competitions will not be matched in every aspect, still competition helps the small business firms to enhance their efficiency in terms of productivity (Pride, Hughes & Kapoor, 2011, p. 143-144). The small business enterprise is found to have certain important features which make it a different entity. The characteristics can be discussed below: Small businesses are managed in a personalised manner by the owner of the business entity. The market share for such enterprises is small in comparison to the large business enterprises (Needham & Dransfield, 1994, p. 135). The owner holds all the power for making decision and implementing the same. The small business enterprises do not have any specific shape and size as they range from a coffee bar to a retail outlet. The large enterprise has no control over such enterprises which makes them independent in their operations. It has been noted that the number of employees in small business enterprises are significantly less than 500 or even lesser for construction business. The small business enterprises are no more confined to a particular location, but are rather going global. Globalisation has become the need of the hour and with the communication process becoming easy more and more small business entities are internationalising. It has been said that the size of a business enterprise does not limit its chances of globalisation. The small businesses are becoming global competitors by taking advantages of the resources which are unique to them (Longenecker & Loeza, 2010, p. 444). Strategic planning as per study is an aspect for a small business enterprise. The owners of small enterprises are believed to adopt strategic planning to expand the firms reach in the competitive market and to develop strategies which will be efficient in the context of their business. However, the researches show that the strategic planning has limited implications in the small business enterprises. The reason behind this fact is that most of the planning, strategies and the decision are taken by the owner of such firms and outside interference is limited or null (Analoui & Karami, 2003, p. 156). The studies on small businesses reveal that small enterprises hold the key to the success path for a country. The whole structure of small business defines the independent approach of doing business. A country’s large portion of industrial segment is dominated by such small enterprises. They not only contribute towards the economy but also lead the way in terms of recruitment by offering new jobs to the unemployed individuals. Globalisation has become the goal for the business entities around the globe. Small enterprises are no exception; many small firms are exploring new territories in quest for greater opportunities. The research is mainly based on secondary data and research methodology like quantitative and qualitative will further improvise on the small businesses through analysis. Research methodology The research methodology has helped to a great extent in determining the objective of paper which is to analyse the small business enterprises. A small business enterprise like any of the large business entity has a primary role in terms of business prospects which is largely based on the target market to extend the market share. The research has will play a significant role in determining the relation between the small enterprises and the market share. The research also emphasises on the globalisation structure of small businesses. The other objective of the research methodology was to define the relationship between the small enterprises and its customers through information aimed at problem solving and recognising the opportunities. This will enable better understanding of the research topic. The research will further involve the importance of effective business strategies related to small business enterprises by implementing certain actions (Schmidt & Hollensen, 2007, p. 19). The data collected through the secondary research will be analysed using a mixed research methodology. The mixed research methodology involves qualitative and quantitative techniques of research. Qualitative research method has played a significant role in analysing the structure of small businesses. The study has opted for qualitative research as the research tool based on two factors, communication and observation. Communication is an important process to have an insight of the risks and opportunities that may occur in small business venturing. Observation is another method involved to collect data on the research topic (Isikli, n.d., p. 88). Qualitative method will also be helpful in generating a cause and effect analysis of the research topic (McLeod, 2011, p.1-3). The research will use secondary data from different articles, journals and books on small business enterprises. These secondary data gathered will be integrated and analysed to get a holistic view of the small businesses and their importance in the economy. Descriptive research will also be used to analyse the small business market. Descriptive research is applied to get a clear picture of the situation and its aspects (Wrenn, Stevens & Loudon, 2006, p. 44). Company Profile Eland Cables is one of the fastest growing small companies in UK. The company is involved in global supply of electrical cables and the accessories related to the cable. Since its establishment in the year 1975, the company has greatly emphasised on delivering the best customer service to its clients along with the range of quality products. Eland Cables is highly reckoned as the company with highly motivated customer-centric employees. This approach of Eland Cables if often related to its unique focus on the customer service. The company has regularly been in limelight for its efficiency in being voted as one of the top companies by the people in context to work culture. The company offers wide range of products such data cable, armoured cable, rail cables, telecom accessories, cable accessories, etc. Eland Cables quality can be measured with the fact that it covers most of the sectors through its wide range of products. The sectors which are covered by Eland Cables are transport, switch gear, oil and gas, power, telecommunication and data (Eland, 2012). The mission of the company is to constantly keep striving towards the success by catering to the needs of individual customer. The goal to keep innovating and delivering the best services is amongst the primary objective of the company. Company Analysis Eland Cables is a highly rated small business company in UK with its presence globally in the cables sector. The company over the years has grown significantly and seen many ups and downs. The company’s progress towards attaining the tag of large business entity can very well be analysed through small business management literature. This will provide an analysis not of the company alone but with a broader view in context to the small business enterprises. Business knowledge, experience, exclusive idea and financial backup are the ingredients required to setup a business. Though, there is no guarantee for immediate success (Kakkar, 2009, p. 1). The operations of small firms is not disorganised but still faces stiff competition in the business market. The small enterprises like Eland Cables are bound to experience change in the management and leadership style. This change occurs as the small firms’ progresses from a new business entity to the well established small business enterprise by recruiting professional managers and other skilled employees to run the business in a more systematic manner (Longenecker et al., 2005, p. 401). There are various theories related to the small business and its transition into a large business enterprise. The entrepreneurs who start with small business eventually strive towards achieving managerial skills in the long run. Eland Cables which began its journey as a small business entity is slowly moving towards being recognised as one of the large business firms in the cables segment. But, for any entrepreneurial firm the transition from a small enterprise to a large business firm is not an easy task. The entrepreneur of small firms like Eland Cables need to possess certain characteristics: The small firms are required to maintain certain entrepreneurial characteristics which will ensure creativity and innovation. The entrepreneurial characteristics are to be passed on to the employees of the firm. Also personally the entrepreneur needs to bring in a change in the way of doing business; rather a shift from entrepreneurial to managerial skill is required (Kuratko & Hodgetts, 2008, p. 432). Further to have better input about the company PESTEL analysis is one of the tools which can be implemented. PESTEL Analysis is the tool which is used to gather the data related to the macroeconomic factors. These factors are neither specific for any company or to the industry to which the company belongs (Herzog, 2010, p. 27). Political Eland Cables is located in UK whereas it supplies products to other European countries as well. The political environment of these different countries is different from UK. Issues related to tax, government stability may create a problem for the company to perform smoothly in different territory (Businessmate, 2010). Economical Economy of a country can have an impact on the company. Issues like recession, poverty and availability of resources can cause serious concerns for small businesses like Eland Cables. The survival in tough business environment can bring down the productivity of the company. Since the global downturn is no more an issue, Eland Cables can expect to see a rise in its growth prospects (Endvawnow, 2011). Social-cultural Change in lifestyle of people, changes occurring in demographics, income of the people will have a great impact on the preferences of people towards brand like Eland Cables (NHS Employers, n. d). Technological Technology plays an important role in the growth prospect of any company. Eland Cables innovation and creativity has contributed towards the success story for the company. Environmental Eland Cables dedication towards green energy for its products will make it one of the most sought after company in the cable industry. Legal The norms and regulations of the country in which Eland Cables are actively present will be a key issue for the company. The company has to make sure that it follows all the legal criteria required in context to the business. Abiding by all these norms and regulations the company will make situation friendlier for the business purpose. Competitor analysis Eland Cables after analysing all the factors necessary in expanding its business cannot ignore the biggest challenge of competition. Competition in any field is bound to occur for the greater market share. Eland Cables being one of most recognised small business company in UK and international supplier of electrical cables also faces stiff competition from its counterparts such as Morvan Trading Ltd., Cable-Tec and MJE Electrical in terms of manufacturing of electrical cables and product sale worldwide. Eland Cables having its footprints in many countries through its services & products is still not assorted from other companies in terms of healthy competition. With the rise in raw material prices for manufacturing electrical cables the competition is bound to be stiffer and the company which can cost-efficiently run its business and grasps an opportunity in different country will have an edge over its competitor (Hoovers, 2012). Competitor analysis is mainly based on three fundamental aspects- a) Direct competitor: Direct competitor for Eland Cables can be those companies which have products similar to that of the company. a) Indirect competitor: Indirect competitors can be those companies which has substitutes for the products of Eland Cables. b) Future competitor: Future competitors can be defined as those competitors who in near future can be a tough competitor for the company with their technology which can be more cost-effective and durable. It may be further noted that identifying each and every competitor for Eland cables may not be possible but to some extent having a brief idea of who can be its arch rivals can help the company plan in a better way to expand its business in other international markets without any difficulty and competition (Barringer, 2008, p. 89-90). Further it can be noted that small business enterprises like Eland Cables is all about being independent or being autonomous. Small business enterprises have limited resources in terms of man power, finance, technology, etc. Such firms are more about possessing risk along with opportunities in the market. Apart from this small businesses are also about: The owners having higher authority and greater influence towards the entrepreneurial behaviour. Small businesses are about being more flexible, easily adaptable to the changes in the business market. The small enterprises are required to be more active and responsible in terms of taking up the responsibility of meeting the needs of suppliers and customers (Bridge, O’Neill & Cromie, 2003, p. 184). Being more attentive in observing and grabbing the opportunity which comes in the way while doing business. Developing strategic plans and implementing the same to have competitive advantage. Having the right attitude towards business which will make small enterprises far more valuable. Recommendations Small businesses are boon to any country’s economic structure. The rise in number of small businesses will have a positive impact on the country’s economy. There are certain factors which these small businesses need to implement to sustain continuous growth in the competitive market. Moreover, recommendations providing the basis of business will be an important aspect for small business enterprises like Eland Cables to see considerable growth in its revenue and market. It will also help the company or the small businesses as whole to emerge as winners. i. Systematisation: Though Eland Cables is growing significantly in terms of its market reach but it still needs to make sure that its business process is systematised. Systematisation is more than offering the product; it’s about ensuring the right product delivery as per consumer preference. ii. Web presence: Small businesses are required to have a strong web presence similar to the large business entities to have a greater market reach and providing better information to the consumers worldwide. Eland Cables already has a web presence where it provides information about its products and the company. To further enhance its grip on the electrical cables market it can connect with the consumers through various social networking sites as well. iii. Customers: Customers hold the key to success for any organisation. It is important for the small businesses to design and manufacture products as per the preferences and demand of the consumers. Eland Cables can opt for market research to find out what are the customer’s requirements in terms of electrical cables and accordingly design its products. iv. Plan: Eland Cables has been doing well but it still needs to grow as a company. To sustain growth, the company needs to have backup plan or alternate plans which can be implemented if its actual plan fails. This will ensure the company a considerable growth and opportunity to emerge as a large business enterprise. Conclusion The small business enterprise whether established or a new venture holds an important place while contributing towards the economic growth of the country. The rise in number of small enterprises ensures more independency and better employment rate for the country. There are certain pros and cons also related to the small businesses. The small business enterprises offers innovation and creativity in their products and at the same time lacks the approach of managerial skill to run the business. It has also been experienced that small businesses are vulnerable to the business market. In the stiff competition some of these enterprises are unable to resist and becomes extinct within a short time period. Eland Cables as a small business enterprise has seen considerable growth and has managed to sustain its growth. The company has been able to explore to many offshore territories through its wide range of electrical products and also through its services. The desire to perform well and keep achieving the prime objective of the company which is to serve the customers with best service has made the company one of the most sought after to work with. Eland Cables is well on the course to emerge as future leading company in electrical cables and other associated products across the globe. The company with few changes in its way of functioning can further enhance its growth prospects not only in the native UK but also worldwide. Reference Analoui, F. & Karami, A. (2003). Strategic Management in Small and Medium Enterprises. USA: Cengage Learning EMEA. Barringer. (2008). Enterpreneurship: Successfully Launching New Ventures. New Delhi: Pearson Education India. Bridge, S., O’Neill, K. & Cromie, S. (2003). Understanding Enterprise, Entrepreneurship and Small Business. New York: Palgrave Macmillan. Businessmate. (2010). What is the PESTEL Framework?. [Online]. Available at: http://www.businessmate.org/Article.php?ArtikelId=16. 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