Small business enterprise through strategic management

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Small businesses have a great importance in all the countries of the world. Small businesses play a vital role to increase the growth of a country and give the employment to the people of a nation. A small investment is needed to start a small business but in return the revenue of that business can be huge. Most people prefer to do their own business then to work for others. If a small business does development it can be converted to a large business.

Some strategies and analysis can improve development and expansion of a business. For example business SWOT Analysis, Value Chain, 5 Porter Forces, CSR, Reward Management and Team Building etc. By using these strategies a small business can be developed and can be converted into a huge big business.

A small business is a business that is independently owned and operated with a small number of employees. A small business has relatively less sales volume. The legal definition of a small business is different in different countries and states. A business under 50 employees is a small business in UK and other European countries. In USA small business is the business which has fewer than 100 employees. In comparison, the definition of medium sized business by the number of employees is under 500 in USA and under 250 in European Union. In Australia, small business is defined as 1-19 employees and medium business as 20-200 employees.

Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery , hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses, photographers, pizza shops, chicken shops, small-scale manufacturing etc.

The smallest businesses, located in private homes, are called micro businesses (term used by international organizations such as the World Bank and the International Finance Corporation) .The number of employees is under 10 for the micro business in same in USA and European Union.

Small businesses are the major job providers in most countries. The top job provider is those with less than 10 employees and those with 10 or more but less than 20 employees comes in as the second, and those with 20 or more but less than 50 employees comes in as the third (Longenecker,2008).

(This report will focus on Small Medium enterprise operating within the UK)

1.2 Small Business in the UK:

In UK's 3.7 million businesses SME's accounted for over 99% at the start of 2000, and 50% of total UK turnover (1 trillion). Small business alone counted for 46.2% of private sector turnover and 38.3% of sales turnover.

According to Reuvid (2006), 452,800 new businesses were started up in the 2004 in England and Wales, however the businesses registered in 2003 were 446,300.Committe of Scottish Clearing Banks (CSCB) registered 21,468 in 2003 for England and Wales, an increase of 16 percent over 2002.

The contribution of small businesses to UK employment is significant. Almost all of the just over 4 million business enterprises in the UK (99.2 per cent) employ less than 50 people and are classified as small businesses. Only 26,000(0.6 per cent) were medium-sized (with 50 to 249 employees) and 6,000(0.2 per cent) were large businesses (having 250 or more employees).

At the begging of 2003, there were 2.9 million businesses with no employees in the UK, representing 71.3 per cent of all businesses and having an annual turnover of 178 billion. In the remaining categories of all businesses there were 1.2 million enterprises accounting for a combined turnover of 2,063 billion (Reuvid, 2006).

1.3 Fried Chicken Business in the UK

The concept of fried chicken restaurant originated in USA. These restaurants may also serve other food items like, hamburger, seafood, donor kebab, some other sides and soft drinks.

Fried chicken shops are the small and medium sized business of the UK depending on the number of employees. Some fried chicken shops have chain in the UK. But most shops have no chain system, these are working individually. Fried chicken restaurants are common place in inner city areas of the UK. They are aimed at the late-night snacking market. The United Kingdom has one of the largest, fastest growing and most diverse fried chicken markets in the world, with about 1,000 individual brands and 1,700 outlets. Some of the UK popular brands are KFC, Favorite chicken, Dallas and Chicken Cottage. Many British chicken outlets serve Halal meat and use a more spicy batter formula to differentiate themselves from KFC and get more Muslim costumers.

Fried chicken business is very popular in the capital of UK the LONDON. Most people of the UK prefer to eat fast food in their busy life; fried chicken is the best to eat in the fast food. On the weekend nights after clubbing all the men and the women start going towards the chicken shops.

It can be said the fried chicken business is the one of the best small business to start in the LONDON. In this business small investment is required but the return on investment is very large. (The Guardian 2008)

Chapter 2

Business Performance

Major Fried Chicken:

2.1 Profile

In this report the selected business is the fried chicken shop; this shop also served donor kebab and some other food items. The shop is the Major fried chicken which is operating well.

Major fried chicken was established in1998 by Mr. John Alex later on in 2004 he sold the shop to Mr. K Simpson. Now it is running under the management and ownership of Mr. Simpson. It is located in Earls field South London. It is located on the Garret Lane the one of the busiest road of South London. Earls field is located between the Wands worth and Tooting Broadway both are the busiest shopping centre of South London. The MFC is located next to Ears field Railway Station and sandwiched between the two clubs. Two Schools are very near two it as well. The clubs and school play an important role for the good sales of the MFC.

MFC is famous in Earls field to sell the fresh fried chicken and a lot of other sides with the chicken. The major products served by MFC are spicy chicken wings, chicken pieces, chicken burger, beef burger also called quarter and half pounder depends on the size, fish burger, and code fish. The sides served by MFC are beans, coleslaw, onion rings, chicken nuggets, apple pie, fries and soft drinks.

MFC is a takeaway and eat in shop. For cooking all these products MFC have one friar to fry the fries, onions, nuggets apple pie and code fish. Two German made machines called hanypany for cooking chicken pieces, spicy chicken wings and fillet fish. MFC opens at 8AM and close at 12PM Mon, Tue, Wed, Thu and Sun. And Fri and Sat its open from 8AM to 2AM.MFC have twelve employees who works in various shifts depends on the business days. Four of these are shift manager and other six employees are crew members. Two of these are staff trainer who trains the new employees. The owner of the shop is the main manager of the shop as well.

2.2 Objectives of the MFC:

It has become commonplace now to set up a criteria against which the effectiveness of the business objectives can be measured. This is known as 'SMART' criteria by Clarke (2007). Within SMART all objectives that set for business must be:

Specific

Measurable

Agreed

Realistic

Timed

The MFC objects are SMART objectives. The MFC SMART objectives set clear mission statements.

MFC Mission Statements

To provide a first class service to all customers

To achieve high productivity levels through sound planning, organization and team work

To generate sufficient profits to ensure ongoing investment in the business

To earn high employee loyalty and motivation and providing training opportunities

To gain recognition in the market for being a high professional, ethical, quality assured business

2.3 SWOT Analysis of MFC

The SWOT analysis was originally arrived at by Andrew Christiansen, Guth in 1969. SWOT analysis is a strategic planning method used to evaluate the strength, weakness, opportunities and threats involved in a business. It involves specifying the objective of the business and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.

2.3.1 Internal and external factors

Internal factors are those factors which come into the business. Every business has strengths and weaknesses which affect the business. If a business has good skilled employees, huge revenue, good customer service and good internal rules and regulations these are the strengths of the business. If these are not good then it will be the weakness of the business. Internal factors affect on the sales, customer, internal rules and regulations.

External factors are those factors which affects the business from the outside like the threats and opportunities of a business. Opportunities can affect the business helpfully and threats can affect the business harmfully. A business can perform well after getting its opportunities and by reducing the threats.

Helpful Harmful

To achieving the objective To achieving the objective

Strength

Internal origin

Affordable price and high quality product

Profitable

Situated in busy area

Halal food and healthy food

Weakness

Internal origin

Difficult to find employees

No strategies plan

Less technology

Less employees on busy time

Less CSR

Less marketing

Small sitting area for customer

Less team work

No specific uniform for employees

Opportunities

External origin

Attractive and flexible employees

Technology

Strategies plan to make more profit

Honest and real brand

Threats

External origin

Other food shops

No nutritional information

Unhealthy food for children

Table 1: SWOT ANALYSIS of MFC, Field work

Strengths of MFC

The MFC has skilled employees and the revenue is the profitable. MFC has better technology then other chicken shops in the area. The customer service of MFC is better than other shops in the area. The location of the MFC is the biggest strength. MFC products are cheap and good quality. MFC has a good brand name in the local area. MFC offers the HALAL food which attracts the more Muslim customers.

Weaknesses of MFC

The owner manager of MFC does not spend much money on the marketing. Less employees work on the busy time. The customer service area is small. It is difficult for MFC to find trained employees. Management doesn't do the strategies to expand the business. Technology is less as compared to the big threats of MFC like, KFC and MCDONALDS. The team work is not too much in the MF

Opportunities for MFC

MFC can get the more technology in this century to get the better quality of food. More strategies can be done to make the performance of the business more affective. MFC is a known and honest brand in the local area it can be the honest and valuable brand nationally and internationally.

Threats and Competitors of MFC

Other chicken shops in the area are the competitors of MFC. There is no KFC and McDonalds in this area. KFC and McDonalds can be the threat for the MFC. Other food shops in the same area like, Starbucks, some bars and pubs offering food are the competitors of MFC as well. Other threats of MFC are there is no nutrition information is available on the food labels. Fast food can be unhealthy for children.

Chapter 3

Improve Management and Business Performance

Business performance management consists of a set of processes that help organizations optimize their business performance. It provides a framework for organizing, automating and analyzing business methodologies, metrics, processes and systems that drive business performance. (BPM Magazine)

People say if the management is successful the business is successful. There are many strategies by using them management and business performance can be improved. MFC is facing a lot of weaknesses. Although it is a profitable company but the profit is not increasing because the owner manager of the business is not applying strategies to get the goals. There is lack of team work, marketing, regulations, shop structure, management in the MFC. MFC can increase the revenue if it improves these terms.

3.1 Strategies to overcome weaknesses, Increase Performance & Management

There are many strategies by applying them a business can be improved. The weaknesses MFC is facing can be overcome by using,

Corporative Social Responsibilities(CSR)

Value Chain Analysis

3.1.1 Corporative Social Responsibilities (CSR)

CSR is defined by Business for Social Responsibility, a global non-profit funded by corporations, as "achieving commercial success in ways that honour ethical values respect people, communities, and the natural environment" according to Plazzi (1997).

One of the core beliefs of the European Bahia Business Forum that business has a social responsibility as well as economic mission. Peter Drucker argued that companies have a social dimension as well as economic purpose in his second book, The Future of Industrial Man, in 1942. The economics of a business can increase by increasing its CSR.

A business doesn't exist in isolation, simply as a way of making money. Employees depend on the business. Customers, suppliers and local community are all affected by the business. A product a business make how it makes it affects on the environment.

Corporate social responsibility (CSR) takes all this into account and can help to create and maintain effective relationships with stakeholders. It isn't about being "right on", or mounting an expensive publicity exercise. It means taking a responsible attitude, going beyond the minimum legal requirements and following straightforward principles that apply whatever the size of a business.

MFC profitability depends on how it manages these six CSR responsibilities.

Investors

Communities

Environment

Business Partners

Customers

Employees

Fig1: CSR Six Responsibilities, Field Work

Corporate social responsibility (CSR) can cut across almost everything MFC management do and everyone deal with.

MFC needs to think about the suppliers it choose and the way it deal with them. For example, trading with suppliers who pollute the environment could be as irresponsible as doing so.

MFC needs to think about how you treat your employees. For the responsible business, this means doing more than simply complying with legal requirements.

MFC needs to think about how its business affects the local community and whether it should be actively involved.

MFC needs to think about how what it affects the environment and what it can do to reduce pollution and waste.

This doesn't mean that MFC can't run a profitable business. In fact, CSR can help MFC to improve its business performance. By looking ahead, MFC IS ready to cope with new laws and restrictions. MFC can avoid unnecessary costs such as wasted energy or paying unnecessary waste fees. Perhaps most importantly, MFC can keep winning business from increasingly demanding customers.

CSR can help the MFC to make a good reputation in the local area, nationally and globally. There are other benefits that MFC can enjoy from CSR,

A good reputation makes it easier to recruit employees.

Employees stay longer, reducing the costs and disruption of recruitment and retraining.

Employees are better motivated and more productive.

CSR helps ensure MFC comply with regulatory requirements.

Activities such as involvement with the local community are ideal opportunities to generate positive press coverage.

Good relationships with local authorities make doing business easier.

Understanding the wider impact of MFC business can help it think up profitable new products and services.

CSR can make MFC more competitive and reduces the risk of sudden damage to reputation (and sales). Investors recognise this and are more willing to finance MFC.

3.1.2 Value chain analysis

The strength and performance of a MFC can be increased by using value chain analysis strategy. Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Influential work by Michael Porter in his book, Competitive advantages (1985) suggested that the activities of a business could be grouped under two headings:

(1) Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and

(2) Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities.

Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others.

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Fig.2: Value Chain Analysis, Porter (1985)

Primary Activities grouped in 5 areas

Inbound logistics:-Receiving the food and storing them.

.

Operations:-Ensuring that the foods are warehoused approximately related to product or production.

Outbound logistic:- Activities concerned with the distributing the services customer.

Marketing & sales:-Advertising, promotion to attract customer and make awareness for other.

Services:-Pre-installation or after sales.

Support Activities include:

Procurement:- evaluate various option but choose the best one/ appropriate ensuring to maximize output but minimize cost ,purchase highest quality good in lower price.

Human Resource development:-Hiring/ selecting the right person for the right training.

Technological Advancement:-Technological innovation training and knowledge is essential.

Firm Infrastructure:-Include planning and control system such as account, finance strategy.

Linking Value Chain Analysis to Competitive Advantage

According to Michael Porter (1998), the three methods for creating a sustainable competitive are through;

Cost leadership - Cost advantage occurs when a firm delivers the same services as its competitors but at a lower cost.

Differentiation - Differentiation advantages occurs when a firm delivers the great services for the same price of its competitors.

Focus (economics) - A focused approach requires the firm to concentrate on a narrow exclusive competitive segment, hoping to achieve a local rather than industry wide competitive advantage.

What activities a business undertakes is directly linked to achieving competitive advantage. For example, a business which wishes to outperform its competitors through differentiating itself through higher quality will have to perform its value chain activities better than the opposition. By contrast, a strategy based on seeking cost leadership will require a reduction in the costs associated with the value chain activities, or a reduction in the total amount of resources use.

Suggestions for MFC

By using these strategies CSR, Value Chain Analysis and Porter five Forces MFC can increase its profit and can improve its management and business in different better way.

From Corporative Social Responsibility (CSR) MFC can improve the relationships with the local authorities, customers and CSR will help the MFC to decrease the pollution. By analyzing Value Chain analysis and Porter's Five Forces MFC can make more profit, can increase the management and can boom the sales. By reward management the skilled employees of the MFC will stay longer in the business and they will do their best for the business growth.

Chapter 4

Business Objectives and Plans

4.1 Business Objectives

A business objective is something the business is aiming toward or a strategic position it is working to attain. Usually it is a step in the strategy. Objectives are similar to goals, but often have success/failure rather than quantifiable metrics by John (1997).

It has become commonplace now to set up a criteria against which the effectiveness of the business objectives can be measured. This is known as 'SMART' criteria by Clarke (2007). Within SMART all objectives that set for business must be:

Specific

Measurable

Agreed

Realistic

Timed

The MFC objects are SMART objectives. The MFC objectives are as follows:

To provide a first class service to all customers

To achieve high productivity levels through sound planning, organization and team work

To generate sufficient profits to ensure ongoing investment in the business

To earn high employee loyalty and motivation and providing training opportunities

To gain recognition in the market for being a high professional, ethical, quality assured business

To provide the customer fresh and healthy food

To provide the customer affordable prices

Cheap deals as compared to the competitors

4.2 Business plans

A business plan is a written summary of everything already know about the business and the industry it is in, and the future you expect to create with that business, According to Jan B (2000). Well-done business plan is realistic, but conveys the energy and optimism feel about the business's future. It is an opportunity to convince the world that the idea is worth the time, energy and money it will take to make it a reality. Make it compelling, exciting, but believable and understandable. A business plan shows what business have now in terms of resources like management talent and a great idea, and what it will take, step-by-step.

The MFC business plans are as follows.

Owner manger of MFC will do more marketing to get customer

Team work should be more

MFC will do different strategies to get the more customer

More money will be pulled into the business

Good and fast customer service will be give to the customers

More fresh food will be supplied

To open more shops in the UK and world wide

A business plan should provide details of how owner are going to develop his business, when owner are going to do it, who's going to play a part and how you will manage the money.

Clarity on these issues is particularly important if looking for finance or investment. The process of building plan will also focus on mind on how the new business will need to operate to give it the best chance of success.

4.3 MFC Action Plans

MFC is making essential strategies to get the more customers and getting more profit. Every action plan is a mini goal for MFC. Some of MFC business plans are explained in the table below.

ACTIONS

MEASURMENTS

TIME FRAME

ACTUAL ACTIONS

Increase the sales by 3 to 5% at the end of 2010

Marketing

Advertisement

Promotions

Medium

Sales increased by 2 %

Increase the customer by 10 % in 1 month

Fresh food

Good customer service

Small

Customers increased by 9 %

30% more profit until the end of 2012

Increase in sale

More customers

Large

Profit increased by 20%

Honest and reliable brand within 10 years

Seminars about MFC

Website and telephone marketing

Large

Recognized honest brand

Good Management in one week

Skilled and experience manager

Small

Skilled manager

More effective, clean and fast work in next one week

Team work

Small

Fast and clean work

Healthy food for children

Special foods for children

Medium

New food

Avoiding mistakes by next year

Good management

Skilled workers

Medium

Mistakes avoided 40 %

Table 2: Action Plans of MFC (Field work)

These are the some action plans that MEC can look at to increase the business and to make its performance more successful.

Chapter 5

Impact and management of change

Any external or internal changes in the business environment impact the MFC business. Different changes inside the business like management change employees change affect the MFC business. But mostly the external environments affect the business. The current UK business environments can be affect the MFC business in different ways

5.1 Business Environment in UK

Currently the UK business environment is affected by the credit crunch. More than 2 million peoples are unemployed and the number is increasing. The business sales are very low. Businesses are offering new low prices to boom the sales. UK Government recently has decreased the VAT from 17.5% to 15% to help the businesses in these downturns. MFC can also be affected with these downturns.

5.2 Impact of External Factors on MFC

External factors are those factors which affect the business externally. External factors can explain by "PESTEL".

P=Political Factors

E=Economic Factors

S=Social Factors

T=Technological Factors

E=Environmental Factors

L=Legal Factors

Political factors, how and to what degree a government intervenes in the economy. Specially, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, traffics and political stability. Furthermore, governments have great influences on the health, education, and infrastructure of nation. Whenever politics change in the UK it affects the MFC in different ways.

Economic factors include economic growth, interest rates, exchange rate and the inflation rate. These factors have major impact on businesses operate and make decisions. For example interest rate affect a firm's cost of capital. Exchange rate affects the cost of goods export and price of imported goods in an economy. Most of MFC raw materials are exported from other countries so if the exchange rates change it affect the MFC.

Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. Most customer visit MFC are Muslims so MFC sells the Halal products. Because it is very near to the school, pupils mostly come in afternoon so MFC has children meals to get more children in the shop.

Technology factors, includes automatic machines IT systems. Technology factors can affect MFC cost, quality and lead innovation. If any of the competitor of MFC has good technology it can affect the MFC.

Environmental factors, includes weather, climate and climate change, which may affect the business. For example if the weather is wet less people come to the MFC to buy the food.

Legal factors include discrimination law, consumer law, employment law and health and safety law. These factors can affect how a MFC operates, its costs, and the demand for its products.

6. Conclusion

Small businesses have great importance for a country; small businesses play a vital role to make the country economic strong. In UK the small businesses are contributing a huge amount into the turnover. Small businesses have great importance for the UK government.

MFC is a profitable business and it is growing by using different strategies such as SWOT analysis, Porter's 5 forces analysis, value chain analysis and CSR etc. MFC is affected by its internal and external factors like management, development, political changes, economic changes and social changes. The management and team work in this business in not too much. The management and team work needs to improve. The objectives and objective plans of MFC are very good. By more marketing, advertising MFC can get its goals. The good customer service, fresh and healthy food of the MFC can convert it into a huge business.

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