The background of the Mauritius Economic Problem

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This chapter introduces the subject in which the author of the thesis has chosen to focus this research. This Introduction will begin with describing the background to the problem, aims and objectives and concluded with research questions and dissertation structure.

Historically, Mauritius has been depending heavily on sugar exports to the European Union for its economic development. However, with the uprising of the multilateral trading system and the emergence of the World Trade Organisation, which has as mandate the promotion of free trade, sugar exports to the European Union was being challenged by large scale sugar producers like Brazil, India and Australia. Under this legal pressure, the EU Sugar Protocol eventually dismantled and Mauritius had to compete in the world market for the exports of sugar. Mauritius being a small sugar producer does not have the capacity to compete with large scale producers.

From the perspective of industrial development in Mauritius, Small and medium enterprises play an important role in the growth of the overall economy by creating employment, providing desirable sustainability and innovation and poverty alleviation. In addition to that, a large number of people rely on the small and medium enterprises directly or indirectly. The significance of their role is clearly indicated by various statistics. Promotion of SMEs has therefore been the center piece of Government's strategy. Moreover, no economy can be reliant on large organizations alone. Besides, today's small businesses are tomorrow's multi-national giants, so it essential they are given the help and support when it is needed most.

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With a view to boosting up the Mauritian economy, the SME sector was identified to become one of the major pillars of the economy and led to the introduction of the Business Facilitation Act in October 2006. The development of the SME sector was to go in parallel with the promotion of the tourism sector as another major pillar of the Mauritian economy. Government's vision in the tourism sector was to attain a target of two million visiting tourists by the end of year 2015 and this vision has implications regarding the creation of small and medium enterprises that would assist the expansion of the tourism industry.

The Business facilitation Act was a revolutionary law which had as a main objective to streamline procedures regarding business set up and business facilitation as procedures for launching new ventures were cumbersome and overloaded with administrative red tape. Together with this act went the development of an institutional support framework to assist entrepreneurs in counseling, training, financial support and other follow up and mentoring activities that would assist the entrepreneurial growth of firms.

The whole support structure was successful in bringing an entrepreneurial spirit within the local population. Massive entrepreneurship promotion campaigns of the SEHDA (now SMEDA) by way of its Caravane de l'Entrepreneuriat with the help of stakeholders had been successful in generating entrepreneurial awareness. Many potential entrepreneurs started registering their new businesses at the Registrar of Companies and Businesses while support institutions like AREU, SMEDA, Enterprise Mauritius amongst others were receiving a huge response from potential entrepreneurs for the creation of new ventures. However, these entrepreneurs were starting their businesses under the assumption that stakeholder organizations will be providing all the necessary support and logistic facilities.

Potential entrepreneurs were blinded by the idea that stakeholder organizations would act as hand holding agents and would also advise on marketing outlets. Some naïve entrepreneurs even thought that support institutions would identify markets for their businesses. Entrepreneurs eventually realized that they had embarked into small ventures without proper planning and many small firms failed as they could not find markets for their products/services. These entrepreneurs did not go through the process of conducting feasibility studies, development of marketing plan and marketing strategies etc. Government eventually started introducing training programmes to assist entrepreneurs in marketing. Institutions like NICE, HRDC and Enterprise Mauritius started providing some form of marketing assistance and seminars/workshops/training sessions in marketing to entrepreneurs with a view to increasing their survival. The path for the development of the SME sector is now well underway.

A proper marketing plan and strategy is vital to the survival of a SME. All firms must be involved in some aspect of marketing, as all firms need customers. Marketing may be inborn or spontaneous but only when a firm adopts certain aspects of marketing functions they will continue to exist and grow. But the question is why small and medium firms are not very understanding of their marketing functions, why don't they give it the same level (if not more) of importance as other functions like finance and accounting.

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The marketing problems currently being encountered by SMEs have inspired me to go for a study and evaluate to what extent SMEs are making use of marketing strategies in their ventures.

Limited data is available regarding the SME sector in Mauritius. There is little research in the field in SME sector in Mauritius. It is anticipated that the contribution of such work will be useful for individual enterprises as well as for policy level recommendations for effective government interventions in the SME sector.

1.2 Problem Statement

In the ever-changing environment as time evolves, consumer behavior, trends and issues have put SMEs on considerable stress. Sustainability of a firm depends largely on its performance in the marketing. Unfortunately, many enterprises are facing problems of marketing due to poor quality of products, poor packaging, inadequate marketing skills and stiff competition. Inadequate marketing services have been prohibiting SMEs to become competitive in local and international markets. Changes and marketing approaches need to be altered accordingly. Thus SMEs are challenged to formulate marketing strategies that will ensure them of achieving competitive advantage over other companies.

1.3 Study Aims

The outcomes of this research will be to help SMEs to understand the importance of marketing strategies, how to use them to gain competitive advantage, reaching new customers and expanding their market share. Many SMEs after launching a successful product or service, have failed to maintain their position due to a lack of Marketing Strategies. Entering a new market is not as difficult as maintaining it and taking the utmost advantage of it.

1.4 Research Objectives and Questions

1.4.1Objectives

From this research work, it is expected that it will provide useful insights to prompt analysis and findings in the evaluation of the marketing strategies of SMEs in Mauritius so as to improve their competitiveness and to enable them to strengthen their presence in the market so as to prevent them from closing down completely and forever. This paper also aims to make contribution to the research field of SMEs.

The objectives have been defined as follows:

To investigate marketing tactics SMEs adopt for entrepreneurial growth.

To identify factors that motivates and inhibits the use of marketing strategies in SMEs

To describe the various Marketing Strategies for entrepreneurs.

To investigate to what extent Mauritian SMEs are currently using marketing strategies for entrepreneurial growth.

To formulate appropriate recommendations and strategies to promote marketing in SMEs.

1.4.2 Hereby the research questions identified for this study is:

H: "SMEs owners are weak at using marketing strategies which are as a result hindering the development of their firms and putting in danger their success and survival"

1.5 Structure of the Dissertation

The Structure of this dissertation is as follows.

Chapter 1: Introduction

This chapter states the research problem and gives the aims and objectives of the study. It also provides a chapter overview of the dissertation.

Chapter 2: Literature Review

Part One contains the review of various authors in the field, covering diverse literature in the area of SMEs including marketing and SMEs approach to marketing and how SMEs define marketing.

Part Two comprises the background of SMEs worldwide and in Mauritius. It includes the characteristics, importance and support in the Mauritian context.

Chapter 3: Research Methodology

This chapter describes the methodology employed in this research in terms of research design, sampling, data collection, questionnaire design and method of questionnaire administered which guides the analysis.

Chapter 4: Research Analysis

This Chapter analyses the results of the survey and submits the findings.

Chapter 5: SWOT and PEST Analysis

This chapter provides a SWOT and PEST analysis of the SME sector in Mauritius

Chapter 6: Conclusion and Recommendation

This chapter concludes the entire project and based on findings, proposed recommendation to the small and medium enterprises in Mauritius have been included. This chapter also summarizes the analyzed data by providing conclusions and answers to the research questions and justifying the research purpose. This is done with the aim of seeing whether the purpose of the thesis is fulfilled.

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