The Strategies Required for the Management of the Small Business and Big Business - Research Paper Example

Managing Small Business Executive Summary The strategies required for the management of small business and big business need not be the same. Big companies may have more capabilities and resources so that they can implement any type of business management methods. On the other hand, small companies may have fewer capabilities and resources and they cannot tolerate expensive methods of management. Small companies usually try to maximize their yields while spending less. Small and Medium Enterprises or SMEs play a vital role in the economic development of emerging countries such as Saudi Arabia. Therefore, it is necessary for the governments in the developing countries to look after the SME sector more closely and enthusiastically. RAYZ is small company in the Kingdom of Saudi Arabia, having business interests in digital marketing and social media. The purpose of this paper is to analyse the behaviour of small business with respect to established theories and principles, taking RAYZ as an example. Table of Contents Executive summary 2 Introduction 4 Analysis of research process and experience 4 An exploration of the business behavior of RAYZ 7 Conclusions and recommendations 12 References 14 Appendix 15 Introduction In most of the developed countries such as the United States and United Kingdom, big companies or corporates contribute heavily to economic development whereas in developing countries such as India and China, small and medium enterprises (SMEs) play a vital role in streamlining economic progress. Small business or SME has different definitions in different countries. As the name indicates, small business or SME is nothing but a business in which the revenue generated and the number of employees working is below certain standards. These standards will be different in different countries. While the United States has not set any criteria for defining SMEs, the European Union defines Small enterprise as a company with fewer than 50 employees, and medium-sized enterprise as a company with fewer than 250 employees (Investopedia, 2015). Saudi Arabia is one of the most rapidly developing states in the Middle East at present. As in the case of India and China, SMEs contribute heavily to the development of the KSA. A lot of small business operates in the Kingdom by the locals as well as foreigners. RAYZ is one such small company, started in Riyadh 2012 by a young group of creative and ambitious individuals. Bandar Alwabil and Yazeed AlGhuraibi are the founders of RAYZ which is specialized in digital marketing and social media business. Rayan Alwabil is the Chief Executive Officer of the company while Yazeed AlGhuraibi is working as the Chief Operating Officer of the company at present. Around 30 employees work in various departments of RAYZ now (RAYZ, 2015). Analysis of research process and experience The research process for the present study is primarily based on primary research methods. Interviews, observations, and questionnaire surveys are normally used by researchers for the collection of primary data. The present research made use of three interviews in order to get more insights about the challenges and opportunities in the management of small business. Interviews can be classified into three categories; structured, semi structured and unstructured. “Structured interviews use questionnaires based on a predetermined and ‘standardised’ or identical set of questions whereas semi-structured and in-depth (unstructured) interviews are ‘nonstandardised’”(Saunders et al.2009, p.320), Semi structured or unstructured interviews usually labelled as ‘qualitative research interviews’(King and Horrocks 2010). This study made use of semi-structured interviews or qualitative research interviews. The major reason for using semi-structured interviews for this project is its ability to use questions other than the pre-planned ones. It should be noted that structured interviews will make use of only pre-planned questions. While conducting such interviews, the researcher may face limitations in asking other questions. It is quite possible that the researcher may develop some doubts when the interviewee gives answers. In structured interviews, the interviewer has limitations in clarifying these doubts. On the other hand semi-structured interviews do not have such limitations and it is possible for the interviewer to ask unplanned questions at the time of interview, if he feels that such questions are necessary. Two interviews were conducted as part of the current study: Interview with Rayan Alwabil, the Chief Executive Officer and Yazeed AlGhuraibi, the Chief Operating Officer of the company. Some of the questions asked to the interviewees were common while others were different (See appendix for more details about these interviews). Instead of telephonic interview, face to face interviews were used for the collection of data. According to Knight (2001) face to face interviews help researchers to get more ideas and information through nonverbal means of communication. Many studies in the past have proved that the ideas communicated in a conversation through nonverbal channels such as body language, gestures, facial expressions and eye movement are more than that through verbal channels such as language. That is why face to face interviews preferred over telephonic interviews for the current study. “The aim of conducting qualitative research interview is to collect details from the real life-world of the interviewee, in relation with the research problem”(Cassell and Symon, 2004, p.11). The company RAYZ might have experienced several expected and unexpected problems since its introduction in 2012. It is quite possible that the management of this company might have made many changes in their business strategies after facing challenges and opportunities from the real world. It is not necessary that all the challenges and opportunities faced by the company might have published. In other words, there could be many unsaid or unpublished experiences and incidents for the RAYZ Company. Data related to such things can be collected through interviews. Instead of survey, the researcher decided to conduct interviews as a mean to collect primary data since interviews are capable of collecting descriptive data whereas surveys are capable of collecting objective data. It should be noted that most of the research projects make use of closed ended questions than have multiple choices of answers. Normally people are reluctant in attending surveys with open ended questions because of the complexity in answering questions of such surveys. At the same time, surveys are capable of collecting data from a wider population. However, the researcher decided to limit his focus only to a particular organization (RAYZ) as part of the study and hence interviews preferred over survey. Another reason for the use of interviews for the collection of data is its ability to provide current data. It should be noted that secondary research methods are capable of providing information from the past whereas primary research is capable of providing information from the present. Both current and past information are necessary to make meaningful conclusions. Therefore, the present study made use of secondary research methods also. Books, journals, articles and websites were used for the collection of secondary data. An exploration of the business behaviour of RAYZ According to Poon (1997, p.466), “never before have small businesses been able to afford a global computer network as powerful and far-reaching, yet as accessible and cheap to use”. RAYZ gives more importance to instant communications with the help of computers and internet as part of their effort to strengthen business. The vision statement of company says that “Being human is the least requirement to communicate. When Social Media entered our life, it had a major impact on marketing concepts by providing the consumers the ability to react and communicate with the brands directly and instantly” (RAYZ, 2015). In other words, RAYZ upholds the importance of communication in human life. According to Bryant, (2013), business is one area in which instant communication brought higher efficiency. Social media and digital marketing companies like RAYZ can help bigger companies to communicate instantly with their customers. As per the views of Rouse (2006), social networking and digital marketing help companies to expand their business by making connections through individuals. It should be noted that man is a social animal and socializing is necessary to maintain his mental strengths. Social media helps him very much in this regard. While engaged in socializing with others through social media, a person may knowingly or unknowingly participate in some kind of business activities. For example, there are many people who share their purchasing experiences with others through social media. According to a recent study, “3 in 4 social media users are likely to purchase a product or service that a friend openly endorses on a social media site. Moreover, 1 in 3 users agree they would be more likely to share information about a purchase they made on a social media site with friends than one made on a traditional e-commerce site” (Marketing Charts staff, 2012). Instead of relying heavily on conventional advertisements, modern consumers give more importance to the views and opinions of their friends while taking any purchasing decisions. That is why Stephen & Galak, (2010) mentioned that there has been a growing interest among consumers and entrepreneurs in understanding how WOM (Word Of Mouth), particularly online WOM, impacts business. It is not necessary that the person who discusses the features of a product he purchased through social media may be the brand ambassador of that product. He may not have any connection with the product owners. Therefore, his opinions will be neutral in nature and others can trust such opinions. At the same time, companies often try to influence such online discussions about their products through social media. RAYZ helps other companies to monitor the social media discussions of their products and streamline such discussions in the right direction so that the company may get positive publicity instead of negative publicity. It is extremely difficult to influence the social media discussions about a particular product or service since those who are engaged in such discussions may develop doubts when third parties interfere in such discussions. That is why Berg & Kalleberg, (2001, p.469) mentioned that “at the simplest level, employers and potential job holders must learn about one another and word of mouth communication is one way which that happens”. As per the views of AlGhuraibi (2015), RAYZ is facing smaller difficulties in influencing the discussions of products and services through social media since they know the local traits, culture and communication styles much more than other social media companies in the Kingdom such as Facebook or Twitter. According to Dickey & Lewis (2010) social network marketing increased from $884 million to $2.34 billion during 2007-2009. As per their views, viral marketing or marketing with the help of eWOM (Electronic Word Of Mouth) is the most effective marketing channels for modern companies, especially the small and medium scale companies. That is why big companies seek the services of local social media and digital marketing companies like RAYZ while thinking about the introduction of new products or services in the Kingdom. “The greatest benefit of social media marketing is that it can increase awareness about a company within a short time. With the help of interesting information and graphics, you can encourage people to visit your site. Social media marketing allows businesses to create a loyal clientele that opts for your products/services regularly”(Social Media and E-Marketing, 2011). RAYZ has many talented employees including graphic designers and copywriters. The creativity and talents of these employees are the best in the industry. Since the workforce of RAYZ consists of many expatriates along with locals, it will be easy for the company to blend the modern trends in in digital marketing and social media in the west or East with local trends. “Computer literacy is growing day by day in the Kingdom. As a result of that companies like us has many opportunities in the market” (Alwabil 2015). Many of the Saudis, including males and females are going abroad for better education nowadays. U.S. or U.K. education is highly valued in the Kingdom. Thus the quality of education is increasing in the KSA as time goes on. Computer literacy is necessary for high quality education. Moreover the government of Saudi Arabia has recently introduced the Saudization policy as part of its attempt to provide more jobs to the locals. This policy made it inevitable for the local youths to seek computer education. Increased computer literacy is a blessing for companies such as RAYZ since more and more people will seek the services of digital marketing and social media companies when computer literacy increases. According to AlGhuraibi (2015), stiff competition is the major problem facing by RAYZ. He has pointed out that a lot of advertising, marketing, digital marketing and social networking companies are operating in the Kingdom at the moment and all these companies are causing challenges to RAYZ in one way or another (AlGhuraibi, 2015). Alwabil (2015) also expressed similar opinions. In his opinion, Facebook and Twitter are the prominent players in the social media and digital marketing business in the Kingdom. They have enormous capabilities in social media marketing. Therefore, it will be difficult for RAYZ to compete effectively with these companies. Facebook is gearing up for a huge social commerce push. The developer who recently discovered that the social network is testing a "Want" button, which would allow you to add products to a virtual wish list, has found a series of new coding for actions that would allow users to share product purchases, charitable donations or items purchased within Facebook games to profile pages and Timeline. Using official Facebook channels to share this information would open up a lot of opportunity for merchants or game developers, allowing products to go viral (Kelly, 2012). At the same time, RAYZ is a local company and they know local culture and communication styles better than others. Therefore, they can formulate much better digital marketing and social media marketing strategies compared to the strategies of Facebook or Twitter, at least in the Kingdom. Another importance challenge facing by RAYZ at the moment is the declining oil price. According to Alwabil (2015), declining oil prices is a major problem for RAYZ since the oil price decline has the ability to reduce business activities in the Kingdom. At the same time, advertising and marketing expenses are skyrocketing in the Kingdom. In fact small and medium scale companies in Saudi Arabia are struggling to compete effectively with larger companies because of their inability to spend more for the advertising and the marketing activities. It should be noted that when oil price increases or economic growth increases, locals get more money in their hand and they will spend lavishly. Lavish spending habit of the people is necessary for big and smaller companies in the Kingdom to increase their business. When oil price decreases, Saudis get less money in their hand and they spend less. As a result of that business groups in the Kingdom will face many problems. As part of the betterment of business, RAYZ tries to hire good people from the Saudi market and find a place suitable for them (RAYZ, 2015). Even though this policy may help the company in the Saudi market, it may not help them very much if the company wants to operate in overseas countries. According to AlGhuraibi (2015) RAYZ is planning to enter other Middle Eastern states before the end of the present decade. If the company wants to enter Non-Arab states or rapidly emerging economies such as India or China, it is necessary to recruit more talents from overseas market. It should be noted that the work culture in the Kingdom is entirely different from that in other countries including Middle Eastern states since religion is a prominent entity in Saudi culture. In short, local talents will help the company to attain its goals in the Kingdom, but they may not help the company very much when the company enters overseas markets. “We are Arabs and proud of our language, and we are aiming to enrich the Arabic content on the web by every single job we perform or service we provide, without compromising the level of quality” (RAYZ, 2015). This policy may not work well for RAYZ in future. It should be noted that a substantial portion of Saudi’s population is expatriates. Majority of them are unaware of Arabic language. Therefore, too much emphasize given by RAYZ for the development of Arabic content may not help the company beyond certain limits. It is necessary for the company to develop digital contents at least in one more language such as English since majority of the expatriates staying in the Kingdom have proficiency in English language. Management of social media business involves a lot of challenges. Jaques (2009, p.20) has expressed a lot of concerns about the dangers associated with respect to social media. In his opinion, “businesses are afraid of social networking because it represents a real and present danger to their corporate security”. The image or reputation of a company will be lost if the social media business managed poorly. Hough (2010) has written on Telegraph UK that facebook is currently facing many security problems. He has mentioned that “anonymous users bombard victims with offensive messages or abuse with the help of stories of Cumbria shootings victims and soldiers who died in Afghanistan which resulted in some teenagers committing suicide” (Hough, 2010). Same thing can happen to RAYZ also. Therefore, RAYZ should give more attention while publishing digital contents in order to make sure that all the published contents may not cause any damages to the interests of the people. Conclusions and Recommendations RAYZ has immense business potentials not only in the Kingdom of Saudi Arabia but also in other states in the Middle East since social media and digital marketing are getting more popularity in the Arab world in recent times. RAYZ has enough talented employees to cater the needs of the Saudi people. However, the company is not so keen in developing digital media or social media content in English language at the moment. Since a substantial portion of the Saudis are expatriates, it is essential for RAYZ to develop digital contents that are understandable to the expatriate community also. In other words, RAYZ should develop social media content in English language also along with Arabic language Compared to older generation, younger generation in the KSA is more interested in using social media. They have enough proficiency and knowledge in using social media. Therefore, it is necessary for RAYZ to develop social media contents targeting the younger generation. Since younger generation has better exposure to the external world, it is necessary for the company to employ more expatriates in order to give the company a global look. RAYZ should think about the diversification of the business. “A 2011 study found that when it comes to social communities and online shopping, women rule the Internet. They use more social features on their mobile devices. They are more engaged online, making them a perfect target to engage on community websites” (O’Dwyer, 2013). At present, RAYZ is giving more importance to the interests of male community while developing social media contents. RAYZ needs to develop more digital contents to target the women community in the Kingdom. If not managed properly, social media business may bring more harm than good to the company. “Just as a careless employee driving a company vehicle can create liability for his employer by crashing into another car, so can an employee’s use of social media expose you to liability both inside and outside your workplace” (Hettinga, et al., 2010). RAYZ should take more care in making sure that all its employees behave diplomatically and decently while dealing with clients through social media. References AlGhuraibi, Y (2015), Interviewed by Your name please on 20 April 2015 Alwabil A (2015), Interviewed by Your name please on 20 April 2015 Berg I.E. & Kalleberg A.L. (2001). Sourcebook of labour markets: evolving structures and Processes. Springer, 2001. Bryant, B.J. (2013). What Are the Benefits of the Internet to Business? [Online] Available at: http://smallbusiness.chron.com/benefits-internet-business-316.html[Accessed 21 April 2015] Cassell, C. And Symon, G. (2004). Essential Guide to Qualitative Methods in Organisational Research, SAGE, London Dickey I.J & Lewis W.F. (2010). The Evolution (Revolution) of Social Media and SociaNetworking as a Necessary Topic in the Marketing Curriculum: A Case for Integrating Social Media into Marketing Classes. Society for Marketing Advances Proceedings, January pp. 140-143. Hettinga, A. Ploor, P & Immel, O. (2010). Employee Social Networking — Hidden Dangers for Employers. [Online] Available at: http://www.quarles.com/employee_social_networking_dangers_2010/[Accessed 21 April 2015] Hough, A. (2010), Facebook vows new security measures to combat alarming trolling abuse trend, The telegraph, 11 August 2010 Investopedia (2015). Small And Midsize Enterprises – SME, [Online] Available at: http://www.investopedia.com/terms/s/smallandmidsizeenterprises.asp [Accessed 21 April 2015] Jaques, R. (2009). Anti Social. Financial Director. Sep2009, p20-20 Kelly, S.M. (2012). Facebook Working on New Features for Huge Social Commerce Push. [Online] Available at: http://mashable.com/2012/07/05/facebook-social-commerce/[Accessed 21 April 2015] King, N. and Horrocks, C. (2010) Interviews in qualitative research. Publisher: SAGE Publications Ltd (February 25, 2010) Knight, P. (2001). Small-scale Research. London: Sage MarketingCharts staff, (2013). Social Networking Eats Up 3+ Hours Per Day For The Average American User. [Online] Available at: http://www.marketingcharts.com/wp/interactive/social-networking-eats-up-3-hours-per-day-for-the-average-american-user-26049/[Accessed 21 April 2015] O’Dwyer, D. (2013). Women and Waders: Targeting forgotten verticals with social commerce [Online] Available at: http://startupbeat.com/2013/04/23/women-and-waders-targeting-forgotten-verticals-with-social-commerce-id3218/ [Accessed 21 April 2015] Poon, S. (1997). Determinants of Small Business Internet Usage: A Multi-method Investigation of Perceived Benefits. Proceedings of "Bled97 - 10th International Conference on Electronic Commerce, Bled, Slovenia, June 9-11, 465-483. RAYZ (2015), Rayz story. [Online] Available at: http://rayz.co/RayzStory [Accessed 21 April 2015] Rouse, M. (2006). Social networking. [Online] Available at: http://whatis.techtarget.com/definition/social-networking [Accessed 21 April 2015] Stephen A.T & Galak J. (2010). The Complementary Roles of Traditional and Social MediaPublicity in Driving Marketing Performance. INSEAD Working Paper, October, pp. 1-40. Social Media and E-Marketing. (2011). [Online] Available at: http://www.designers- den.com/services/social-media-e-marketing/[Accessed 21 April 2015] Saunders, M. N. K., Lewis, P. and Thornhill, A. (2009). Research methods for business students, Harlow: Prentice Hall, 5th edition. Appendix Details of Interviews Questions Rayan Alwabil Yazeed AlGhuraibi What are the major challenges facing by RAYZ now Declining oil prices is a major problem for our company. Business activities were reduced in the Kingdom in the recent past because of the declining oil prices in the market Stiff competition is the major problem facing by us. A lot of advertising, marketing and social networking companies are operating in the Kingdom at the moment. All these companies are causing challenges to us in one way or another What are the opportunities for RAYZ in the present market Computer literacy is growing day by day in the Kingdom. As a result of that companies like us has many opportunities in the market. The popularity of social networking and digital marketing is increasing in the Kingdom at the moment. Since RAYZ is a local company, it is easy for the locals to communicate with our company and to get their job done. Which are the major competitors of RAYZ Facebook and Twitter are the prominent players in the social media and digital marketing business in the Kingdom. They have enormous capabilities in this field. Many small and medium sized companies are currently operating in the market along with big ones such as Facebook and Twitter. All these companies are causing challenges to us in one way or another Do you have plan to diversify business Definitely, We will think about it near future itself since diversification of business is instrumental for the success of business in the modern day Do you have plan to expand business to overseas countries At present, we are concentrating only in the KSA market. However, we are planning to enter other Middle Eastern states before the end of the present decade Read More