Small and Medium Enterprises Across the Globe, Research Paper Example

Introduction

Some decades ago, personal computer was considered to be the object of luxury and only few people could afford it. Particularly, in the early 80’s when the computers started becoming affordable to the general public, the majority of people were afraid of these innovative technologies. Nevertheless, time flies and now we are the witnesses of the drastic changes in our society connected with the development of the PCs.

Nowadays people are sending their messages with the help of email, surfing the Internet, shopping online and communicating with their friends using social networks. Generally, everyone has got used to the PC, which is the instrument for work and entertainment. Although people have become comfortable with operating their computers, there are still not many who would be able to correct software-related problems at home. It is believed, that this process requires some special background knowledge and skills in order to perform it successfully. However, there are many “self-taught yet technically competent people” who prefer repairing PC even though they lack of corresponding credits within the area of information technologies. The thing is that the abovementioned category of ambitious and determined people can find a lot of interesting materials related to the topic in Internet; the only problem that distracts such specialists from running PC repairing business lies in the absence of coordination necessary to organize “repair franchise network”. As for the case study, which is under discussion, it is worth saying that Damien Mellick and Hemi Nikora are interested in building a network aimed at providing PC repairing services in Auckland, New Zealand.

Naturally, repairing the PC with the help of Internet-related manuals is quite a challenging yet rewarding. The performance of this task requires great desire to build the components together and some financial investments. As for Mellick and Nikora, they are focused on offering quite a nonstandard approach to dealing with potential clients. The point is that these two men are aimed at diagnosing software-related problems via telephone; in case the problem cannot be solved via telephone, the franchisors will send out the repairer. Such an approach emerges to have prospects. All in all, it is necessary to distinguish both strengthens and weaknesses that the aforementioned case study organization is likely to have; moreover, the environmental issues as well recommendations are worth being reviewed.

Internal Analysis     

Nowadays, considering the issue computer services market, one can witness the situation when the organizations can present and supply their customers with the wide range of certain services. It creates the sphere of very tough competitions.

SWOT-analysis is one of the most common types of analysis in strategic management today. SWOT-analysis allows identifying and structuring strengths and weaknesses of the company and the potential opportunities and threats. This is achieved by comparing the internal strengths and weaknesses of the company with the opportunities offered by the market. In agreement with the quality of the conformity, the organization finds the direction in which it should develop its business and how to distribute the resources to the segments.

Strength is the internal characteristic of the company; it shows what distinguishes this company from the competitors.

Weakness is the internal characteristic of the company. It shows what part of the company can be improved in order not to look weaker or less developed in the relation to the competitor.

Opportunity is the characteristic of the environment of the company. This characteristic provides all the participants of this market with the opportunity to expand their business.

Threat is the characteristic that shows what can reduce the attractiveness of the market for the participants.

On the ground of consideration of these factors, the company adjusts its goals and strategies of the enterprise, which, in turn, determine the key elements of the organization.

Contemplating upon the Strengths of case study organization, it is possible to name the following ones:

1. High quality of service;
2. Unaccredited yet qualified staff;
3. Up-to-date approach to cooperation;
4. Reasonable pricing policy of tariffs;
5. The use of innovative technologies;
6. Wide range of services.

The main Weaknesses of the company are as follows:

1. Competitive market;
2. Pretentious modern-day customers;
3. Insufficient number of IT specialist.

The Opportunities for the organizations in computer services market include:

1. Expanding the list of services;
2. Start of Internet smart-phone services;
3. Its further global expansion;

The main Threats of the case study organizations are as follows:

1. Substitute services with lower price;
2. New market participants;
3. The weakness of suppliers;
4. Change of trend demands;
5. Customs and legislative barriers;
6. Actions of competitors;

Peculiarities of SMEs

It is clear that the significance of SMEs “…varies greatly across the countries.” (Ayyagari., Thorsten., Demirgüc-Kunt, 2005, p. 8) As for New Zealand, they are considered to be a driving force in this area. According to statistic data, there were about 460 000 SMEs in New Zealand in December 2014 and they covered over 78% of the territory’s business units and approximately 38 percents of private sector. Thus, the role of SMEs in the region cannot be underestimated and the authorities provide special policy in order to support them on various stages of development. The government adopted different funding schemes for SMEs.

The idea that SMEs face more difficulties as compared to big companies is supported by Melville, Kraemer and Gurbaxani (2004). They state that it is possible for SMEs to avoid fierce competition when the company is operating within a particular segment of the market, thus avoiding direct opposition. All in all, in view of some scholars, SMEs emerge to “…enhance competition and entrepreneurship and hence boost economy-wide efficiency and innovation.” (Levine, 2006, p. 2)

The main task for the enterprise is to specify the values of its products and services and concentrate on them because these actions will distract the company from price competition. For the majority of SMEs in New Zealand this strategy will be predominantly built on creative and innovative approach to business organization, systematic updates and improvements, flexibility of ideas and actions and reduction of time for production and distribution. Therefore, SMEs can always benefit from its size and main peculiarities of their organization due to various objective reasons. In any way, it worth taking into account the fact that SMEs are usually driven by political contempation (Hallberg, 2001).

External Factors Affecting the CSO

Undoubtedly, modern business organizations are operating on the extremely competitive and changing market where the use of the modern marketing strategies is considered to be a key to success. That is why community relations are considered to be one of the most significant activities performed by the case study organization. The management of the discussion organization is extremely interested in an ongoing, reliable and trustful external communication process as this is the priority of the entity attempting to survive in the community. All in all, it is necessary to make mention that there is a variety of external factors, which are also likely to impact the enterprise. Obviously, the external factors are likely to drive change in industry. Basically, it is worth saying that any kind of business is influenced by external factors. Thus, taking into consideration all the external factors belongs to the most important components of the company’s strategy.

The majority of the organizations are concerned with the necessity of the good relations with the community while the others overlook this opportunity that usually leads to success. Nevertheless, the community in which the company operates reflects its perspectives and values for the other audiences. Therefore, the main objective of the case study organization should be developing, shaping, transforming and updating the public opinion. Basically, this opinion accumulates the ideas of the individuals that are related to particular issue. It is not stable but dynamic, and its components all depend on each other (Wells & Sprinks, 1999).

The reputation of the organization usually depends on its employees, customers, investors, creditors and the media resources, which provide necessary information about the firm within the community and shape the perception of the company by the representatives of the internal and external levels. From this perspective, media performs the news-reporting function of the press to the individuals who are reading the newspapers and magazines, listen to the radio, watch their television sets and surf in the Internet. Therefore, the company has to ensure that all the information the people read, hear and view is favorable for the company and emphasizes its strong sides. The organization should have positive image within the community, and it must be positively featured in the mass media sources that are available for a number of citizens. This may be achieved by different approaches and with the use of various media types, especially the Internet-based ones, which are considered to be modern and very useful nowadays.

In particular, the organization’s policy should be focused on ethical, moral and honest attitude of the company towards the other institutions, employees, customers, investors and creditors because these virtues will be beneficial for the company. Thus, good communication with these participants of the market will enhance the media coverage and the company will be positively reflected by the media sources. Besides, the management has to provide the media with the full, reliable and updated flow of information about all the important activities of the company in order to communicate with the surrounding environment. It is necessary to mention that the members of the enterprise should be involved into the civic and community affairs in order to increase the flow of positive information associated with the company and create its favorable image (Victor, 1992).

Indisputably, modern world is influenced by the drastic changes in the traditional understanding of the marketing communication due to the appearance of the Internet-based technology. It is proven that they make great contribution to the marketing process and the majority of organizations attempt to implement the new policies and strategies in order to encompass larger amount of the customers. Basically, modern approach to the successful communication in the sphere of business is constructed on the mixed use of all the available means of media: press (newspapers and magazines), radio, television and the Internet. It is believed that such a strategy is vital for the organizations that are performing on the global market and are influenced by the modern tendencies of globalized community.

Strategy Growth Options

Undoubtedly, the issue of economic growth is essential in XXI century due to the appearance and fast development of the companies and extreme compatibility of the modern market. Thus, it is a necessity for the discussion SME’s to pay more attention to the available marketing techniques and approaches in order to target the customers; the marketers should define the services that are valuable for the customers and model their behavior with benefits for the company.

In accordance with Porter’s five forces analysis, it is necessary to offer the use of Cost leadership strategy (Senge, 2006). The strategy can be applied at any stage of the life cycle of the company. This strategy is aimed at creating the lowest prices for the company’s services. It is particularly effective in the case of high elasticity of demand. What is more, it can be applied in order to penetrate new markets or in order to increase the existing share on the market. It also can help in repressing the competitors. This option is appropriate when the cost per unit of output declines rapidly with the increase in sales. Low prices do not encourage competitors to offer a similar service, as in this situation, they give a low income. Furthermore, this strategy can be used with the purpose of additional loading capacity. However, it is also very effective, when the company wants to avoid bankruptcy (Miller, 1997). Low-price strategy is aimed at production of long-term profits.

Another strategy is Differential pricing strategy. This strategy is used by SMEs by establishing a scale of possible discounts and premiums to the average level of prices for different markets, their segments and customers, market characteristics and location, the time of purchase. Differential pricing strategy provides seasonal discounts, discounts for quantity of purchased services, discounts for regular partners, establishing different levels of prices and their relation to different services. This involves a complex and painstaking work to agree on a common commodity, market and pricing strategies. Differential pricing strategy is used in cases when it is easy to segment the market; when it is possible to get recovery of costs of this strategy through additional revenues as a result of its implementation. What is more, this strategy can be used when the company cannot sell its services at a low price in those market segments where they are already being sold for high prices. However, this strategy can be used only in case it is possible to get the account of favourable or unfavourable consumers’ perception of the differential pricing (Nickels., McHugh., McHugh, 2008).

The differential pricing strategy can stimulate or, conversely, restrain the sale of various services in different segments of the market. It is also possible to consider a strategy of preferential prices and discriminatory pricing strategies as the variants of this strategy.

Functional strategies are strategies that are being developed by functional departments and services of the company on the basis of corporate and business strategies. Functional strategies include production strategy, marketing strategy, financial strategy, R & D and personnel strategy. The aim of the strategy is the functional allocation of resources of the department, the search of effective behaviour of functional units within the overall strategy.

Mandatory Skills to Be at the Head of Business

Apart from the need to reinterpret the major approaches to encouraging the staff to stay on the board, it is also necessary to make mention of the significance of the effective leader responsible for reaching logical conclusions and make rational decisions based on the available information and with respect to the common goals. The logical conclusions are extremely consequential while speaking about optimizing the process of functioning and, mainly, motivating the staff. Above all, effective decision-making presupposes tactical awareness. Tactical awareness positions itself as the ability to offer the optimal solution of different circumstances inside certain organizations. Another essential leadership skill is planning. A leader is supposed to develop a strategic plan that would determine all future activities in order to successfully reach the common goals. Planning is based on setting goal and defining a strategy of development. In practice it appeared that planning process firstly required getting data and facts, which in result provided more alternative solutions. After gathering all information, in order to achieve common goals, priorities were set under the supervision of a leader. All these procedures and techniques allowed fulfilling the plan effectively step by step. Nevertheless, an original plan should be often transformed or changed due the new conditions or requirements. Therefore, good planning skills mean also the ability to adapt the original plan to the situation when it is needed.

When applied practically, planning process turned to be a great opportunity to unify a particular organization by getting all employees involved in the working process. Coordinating and monitoring team work was a part of the planning process. Besides, responsibilities were shared between employees in such a way that everybody was doing part of work regarding his or her area of expertise. It helped to optimize the working process and reach the goals with the highest effectiveness.

Additionally, due to the present unstable economic situation in the world, it is highly recommended to be familiar with techniques or methods of how to predict and prevent damage or losses in case of crisis; furthermore, the organization should be organic, which is also the matter of great significance (Robbins et al. 2012). Thus, crisis planning may be regarded as one more attribute of an effective leader as it helps to minimize the adverse effects of the possible economic decline. In today’s context, planning calls for intuition, fast decision-making, adaptability to changes and a willing to take chances. Planning under the sensible supervision will provide steady growth. Otherwise, even the most brilliant ideas may appear to be useless and ineffective without proper planning.

Conclusion

In conclusion, it is necessary to mention that the choice of the right strategy initiation and its development process models is very crucial for the organization. Obviously, the discussion case study proves a promising business idea to be not the only thing necessary to succeed in running business. It is worth taking into consideration all the complexity of modern-day computer services market. It becomes apparent that apart from well-designed suggestions on how to implement business ideas, the organization should not skip with the significance of flexibility necessary to prevent bankruptcy. At last, the discussion type of organization should be based on understanding the need to meet ever-shifting standards of running business.

References

Ayyagari, M., Thorsten, B., Demirgüc-Kunt, A. (2005). “Small and Medium Enterprises Across the Globe,” World Bank Policy Research Working Paper 3127, World Bank, Washington, D.C

Hallberg, K. (2001). A Market-Oriented Strategy For Small and Medium-Scale Enterprises. FC Discussion Paper # 48.

Levine, R, (2006). “Should Governments and Aid Agencies Subsidize Small Firms?” in Lael

Brainard (ed.), Transforming the Developing Landscape: The Role of the Private Sector, Brookings Institution, 2006

Melville, N., Kraemer, K., and Gurbaxani, V. (2004). “Review: Information technology and organizational performance: An integrated model of IT business value,” MIS Quarterly, 28(2), 283-322.

Miller, S. (1997). Implementing Strategic Decisions. Organization Studies, 18(4), 577-596. Retrieved from http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=6&sid=13a29cff-777d-4958-855a-19fd4d95fcd1%40sessionmgr113&hid=120

Nickels, W., McHugh, J., & McHugh, S. (2008). Understanding Financial Information and Accounting. (8th ed.) (pp. 88- 115). New York: McGraw-Hill Irwin

Robbins, S. P., Coulter, M., Leach, E., & Kilfoil, M. (2012). Management (10th ed.). Toronto: Pearson.

Senge, P. (2006). The Leader’s New Work. In J. Gallos (Ed.), Organization development: A Jossey-Bass reader. San Francisco: Jossey-Bass.

Victor, D.A. (1992). International Business Communication. HarperCollins Publishers, New York, NY.

Wells, B. and Spinks, N. (1998). Organizational Communication: A Strategic Approach, 5^th ed., Dame Publications, Houston, TX.