The Relationship of Theory to Practice towards Managing a Small Business - Assignment Example

? Executive summary Every person pays more attention to large companies and dreams to work for them due to which the importance of small business is often neglected. Small businesses contribute highly towards the development of the economy. Although small businesses have tax advantages and quite a few corporate and statutory advantages but the number of small businesses outnumber large businesses by a mile. The total tax revenue generated by these small business often are more than those of large companies due to being in such a high number and being more efficient in operations, In this report a thorough analysis of the relationship of theory to practice towards managing a small business taking Hinna Azeem Jewelry as an example. Table of Contents Executive summary 0 Table of Contents 0 INTRODUCTION 1 CHOICE OF ORGANIZATION 2 Introduction of the organization 2 Choice Of Organization 3 BUSINESS BEHAVIOUR OF STAKEHOLDERS 5 Theories and frameworks in the small business management 5 Reasons of Small businesses to survive and prosper 7 Marketing Mix 9 ANALYSIS OF H AZEEM BUSINESS STRATEGY 11 Development of personal relationships 12 Flexible response to problems & challenges 12 Innovation 13 Low overheads 13 Niche markets 13 Marketing Mix 14 COMPARISON WITH COMPETITORS 15 Conclusions 16 Task B: Reflection on learning 16 References 17 INTRODUCTION There is a very famous German proverb stating that no one is rich or poor without helping himself to be in that position. That is one is to blame himself in what financial situation he may be. It is these kind of words that become a motivational factor for one person to start off of a small business and later on become an entrepreneur (Goel, Sanjay and Karri, Ranjan. 2006). Some people start of their journey of becoming an entrepreneur by seeking a job which helps them to understand the ways a business is run and determine the factors that are crucial in the success of a business. Other may start up a business of their own and then learn from their mistakes. Many believe that small businesses may have some development issues but at the same time most of the people believe and it’s a proven fact that small business play a pivotal role in the development of the society and economy of a country (Aldrich, H.E., & Auster E.R. 1986). This report goes about in three steps. First, the introduction of H Azeem Jewelry, its basic information along with why was it chosen as an example. In the second step an analysis is carried out regarding the behavior of its stakeholders with respect to theoretical and practical ideas. Lastly, H Azeem is compared with its competitors and a reflection of where and why it stand at its current position is described. CHOICE OF ORGANIZATION Introduction of the organization H Azeem is a London based jewelry brand, It is managed by the designer, Hinna Azeem, herself and her aim is to introduce luxurious and stylish jewelry to the community at a cheap price. As they is a large Indian and Pakistani community nearby, who love to wear jewelry on every occasion, providing it on a cheap price gives her an advantage. Her luxurious and stylish designs give the business and brand an added value. H Azeem using both traditional and technological methods when it comes to marketing and sales, that is, jewelry can be bought through retailer shops and also through her e-store online. This also gives the business an extra advantages over its competitors. Another achievement of H Azeem is that it achieved a steady and stable positive growth within two years of business. This reflects the level of commitment and entrepreneurial skills of the management of H Azeem, the designer Hinna Azeem herself. H Azeem has been mentioned up in journals such a Vogue and has even displayed jewelry at the International Jewelry London 2012. This again shows how popular is this brand and how much is it loved by people. . Choice Of Organization We may come across many definitions of small business, some may relate it by the number of employees other may related it by how operations are carried out. Carter refers to small business with respect to the number of employees working, stating that a small enterprise is one that has under 100 employees working for them but at the same time at least more than 10. On the other hand (Burns p 2007), refers to the small businesses as those business who are managed independently by their owners and who have small marker shares, comparatively. Most people consider small businesses as those businesses that are run and controlled by a small number of people, which may be even one individual (Carter, S. and Jones Evans, D. 2006).. Some business analyst also believe it is the revenue generated by these business that determine its type. This may be true because with the passage of time and as more revenue is generated businesses start employing more employees and control is also segregated due to the complexity of the level the business has now achieved. Founded in 2000, H Azeem comes category of a small business. The major part of the control is exercised by the owner and the number of employees are also set at a minimum level. The owner/designer Hinna Azeem prefers to manages the business herself. H Azeem is not a business that became popular and had a positive growth over night. The team had to work hard and show a huge commitment level to reach at where they are positioned today. As the way all business go along with a initially downtrend, H Azeem managed a positive stable growth within two years of its operations, This reflect the efficiency, commitment and hard work of all the people related to the development of H Azeem. In a short period, H Azeem has achieved fame and appreciation from not only people but also from renown journals. This has propelled the analyst/author to choose H Azeem as an example for the report. BUSINESS BEHAVIOUR OF STAKEHOLDERS Theories and frameworks in the small business management Importance of small business Businesses are usually started by a person who has its own ide and analysis towards a market. Some people may see a gap in the market, other mite would want to go with the flow. Some businesses, which later on became famous worldwide are believed to be formed by a touch of luck and co incidence (Politis, D. 2005). Business can be broken down into four main types, namely : Manufacturing business Wholesale business Retail business Service business It is believed that to be a successful businessman/women (entrepreneur) one should possess certain skills and characteristics (Bridge S, O’Neil K and Cromies S 2007). These skills are often called entrepreneurial skills and are possessed by most of the successful entrepreneurs around (Goel, Sanjay and Karri, Ranjan. 2008). The common characteristics most of them have include their will to take risk even though going through failure repeatedly. Being self-motivated and driven through/by achievement. And most importantly, their sharpness towards an opportunity and analysis towards the market which keeps them a step ahead of all its competitors and hence market share is not lost (Sarasvathy, S., et al 2010). The small business sector contributes highly when it comes to innovations. Although most of these innovations are being took for granted, examples include website designs and clockwork radios. We have many examples of businesses who started off as a small business and developed fame and achievement worldwide. Henry John Heinz's the founder of Heinz first product was horseradish in 1869. This was followed by other products such as pickles and vinegar. All of these products were distributed and delivered to grocers by horse-drawn wagons. Later on Heinz went on developing many of the world's best known products, such as, tomato ketchup and baked beans. Small businesses along with playing an important role in the success of the economy of the country, they also provide the following: They meet the local needs, such as, consultants, hair dressers etc. They provide future success stories They are also responsible for serving the requirements of large businesses, such as, maintenance, printed stationary etc. Most of the businesses in UK are small and fall in the small business category. According to a survey about 2.5 million workers in UK are self-employed, that’s like one in eighth of all the workers in UK. These small business are foreseen to be as the future leading big names. Reasons of Small businesses to survive and prosper Development of personal relationships An advantage of small businesses is that they are well placed to build personal relationships with their stakeholders whether it be their customers, employees or suppliers. This means you know who you are exactly dealing with and you are in face to face contact with that person. Communication is of utmost important to develop any kind of relation and a person to person interactions is the best ever way of communication and it assures building a healthy long term relationship. Flexible response to problems & challenges The best thing about small business is that the hierarchy is of a minimum level due to which small business are far more flexible when it comes to countering problems and challenges. An instant decision can be made or what to do and what not to do (Dew, N., Read, S., Sarasvathy, S. D. and Wiltbank, R. 2008). In larger companies the hierarchy constitutes a long thread of people, hence resolving problems are often more challenging due to the operational procedures. Innovation Due to the fact that the owners are not answerable to anyone and don’t require any sought of approval before implementing or even suggesting a new idea, small business are very well set to introduce and encourage new ideas and innovation. A very famous example being that of Anita Rock, who set up THE BODY SHOP. Her cosmetics constituted a range of environmentally friendly cosmetics that came by in an unsophisticated packaging. This sought of idea could have been ignored or even made fun of if it was presented to a traditional cosmetic company. Low overheads Small business usually have low overheard. This is due to the fact the scale of operations is relatively small as compared to larger companies. They have a limited rent to pay and their business is usually operated in a smaller place. This leads to lower bills. In return lower priced products are provided to their consumers. Niche markets Small business usually target a specific market segment and as time goes on and with respect their output they get may expand their business. This leads to increasing overheads only when revenue is increasing. On the other hand large business are required to produce a higher level of output and target all audiences in an effort to spread their high overhead costs. Hence, small business might be able to make high profits even when they are not generating much revenue while larger companies may be making high losses even by achieving high level of revenues. They are two major advantages of setting up a small business Firstly, you are independent of what you do and are not answerable to anyone. Secondly, you reap the rewards of all your effort and commitment yourself, rather than it being distributed among all stakeholders and you been given just your salary or may be a small bonus. Marketing Mix Marketing mix describes the different types of choice an organisation makes in the process of introducing a product in the market. The marketing mix, also known as 4P’s was first described by E J McCarthy in 1960 The best way to understand the 4p/s is by questioning about these elements. Below are the elements along with example of questions to be asked. Product What need does this product satisfy? Is they any feature you should of add in the product that you haven’t What should this product be named? How is it different as compared to the products offered by your competitors? How will it be attractive for the consumers/customers. Place Where can your consumers/customers find your product? What are your distribution channels and how are they to be accessed.? Are you using the right distribution channels Will it be anything unique from what your competitors are offering. For example e-store. Price How much does it cost? Will you allow any market discounts? How is it priced with respect to alternative products offered by your competitor? Till how long can you stay on you projected price? Do you have to increase it regularly or can you let the same price flow for a couple of years? Promotion How can you attract customers/consumer? What means of advertisement will you use? internet, tv, cable, radio, magazines,? When is the best time to launch and promote the product? A season or may be a special event? How do your competitors promote their product and would you like to follow the same channels or would you want your way of advertisement a touch different, for example, offering charity organisations the product free of cost or at a discounted price. ANALYSIS OF H AZEEM BUSINESS STRATEGY Hinna Azeem the owner and designer of H Azeem has a considerable influence on all of the operations and activities being carried out by H Azeem Jewelry with comparison to the large entities. She has played and is currently playing a pivotal role in the success and development of H Azeem. Development of personal relationships Hinna Azeem directly interacts with customers and make sure their demands are fulfilled. She is opened to suggestions and interacts with people freely which gives her an added advantage. Many families prefer to get their wedding jewellery (Indian- Pakistani) culture custom made by H Azeem. This is mainly due to her friendly nature, her attitude and her commitment towards her work. Due to her being easily to meet and interact with people are assured that they shall be no compromise with regards to the quality of the work Flexible response to problems & challenges H Azeem has been at the spot light herself while facing challenging and problem. She has an attitude of not relying on others and believe in fulfilling task and keeping updated on activities herself. This helps her analyse the market thoroughly. Innovation Her luxurious and stylish designs speak out for her innovatory powers their self. H Azeem has not only produced unique designs but also has offered custom made products in which the customers may themselves suggest how something is to be made. This helps H Azeem understand the needs and ways its stakeholders, hence is updated with the market demands Low overheads H Azeem has ensured lower overheads even while expanding by outsourcing its manufacturing to china, gulf and far east. This reflects her commitment to her objectives of introducing luxurious and style designs that are yet affordable. Niche markets After initially targeting women aged 15-50 for jewellery and watches, H Azeem is now focusing on men wear which includes watches and cufflinks. Her women jewellery has been awarded much appreciation in different journals and she has now developing as a symbol of satisfaction. Marketing Mix H Azeem believes that marketing has an important role in introduction and success of a brand hence special attention is paid during marketing planning and launch of any new item. Below with the help of 4p’s an analysis of how H Azeem is performed so far. Product The product offered by H Azeem although being common, that is, jewelry and watches, its unique design and style makes it stand out with respect to its competitors, She has now on the verge of introducing men wear items is well, her custom made cufflinks are unique as no competitors is actually offering that at the moment. Other than this, H Azeem is offering after sales services which no other competitors is offering. Price The main focus and objective of H Azeem was to produce and introduce stylish jewelry at affordable rates, Rather than going for a status of symbol approach and pricing everything extremely highly, for example, APPLE, she went for introducing jewelry with affordable rates yet being extremely stylish and luxurious. Most of her competitors are offering jewelry at a price which only the rich can afford. Place H Azeem has utilize both options when it comes to her ways of distribution. She has gone for the traditional way, that is, having retailers outlets and also after seeing the success of online business and started up an e-store where all the jewelry may be viewed and order online. This has added extra value to her business. Promotion Although promoting herself through the web and print media, the main promotion and success of H Azeem have been her customers themselves. Having so much satisfied customers and lead to more and more orders being furnished as each satisfied customer has referred friends and family to H Azeem. Hence H Azeem strategy of no compromise on quality but yet providing affordable rates is paying off. COMPARISON WITH COMPETITORS Being a jewelry designers one may ought to comes across many competitors. Each providing something unique to attract its customers. H Azeem offers many value added services and product what none of its competitors are offering. These are as follows: Cufflinks made from precious gem stone Free after sales service Custom made cufflinks Newsletters H Azeem has also a proposed business partnership with H Samuel, The Jewelers. This will help her expand her market share. She also has a partner network with 6 UK retailers. She also has exhibited in International Jewelry Exhibition 2012 and features in fashion magazines like Vogue and Retailer Jewelry. Conclusions Small business although have many advantages but they may face problems such as poor debt management, lack of managerial skills especially by the owner and not being able to retain experienced staff, who are a valuable asset to such businesses. It is your entrepreneurial skills and your level of commitment that steps you aside from the rest. Every business takes time to achieve stability. Once stability is achieved this does not mean that the work is done. One is to have a close watch on the market conditions, look out for competitors, use technology in the best possible way and also make sure their products are not outdated. H Azeem has managed to get through all these problems and the managerial skills of the owner/designer and her sharpness towards the change of market and expansion process is exceptional. Task B: Reflection on learning This module has helped me enhance my knowledge and skills with respect to small businesses. The lectures and academic readings has ensured I gain an in depth knowledge on the differences between small and large entities, their advantages and disadvantages and how are they to be run. I went through the experiences of some entrepreneurs and read about their success stories. I have also come across the main characteristics and skills a successful entrepreneur should possess. The in depth knowledge I have gained by studying is the first step of my dream of becoming a successful entrepreneur myself and I hope to apply this knowledge according to the situation in my practical life. The framework and related theories shall guide me during working in the field and I hope to update and enhance my knowledge on the way to success. References Aldrich, H.E., & Auster E.R. 1986. 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