One of the current topical issues in Zimbabwe is the development and growth of the small-medium enterprises (SME). With the closure of many corporate organizations, SMEs have become critical to the economy, providing employment and sustaining families. Some SMEs have been developed into the main stream economy; others have remained small-medium enterprises while others have collapsed. Literature has dealt in great detail, with the reasons why SME's fail and several reasons have been cited, including lack of finance, education, poor management skills and lack of technology.
However, very little work has been done regarding the influence of the owner manager on the performance of the business. The roles, characteristics and values of the owner manager affect the growth of the SME significantly but this area has not been dealt with accordingly. To cover this gap in literature, this paper will focus on the influence of the owner manager on SME growth and First Pack Marketing will be the case under study.
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The high rate of business failures and challenges facing the SME sector has necessitated this study to examine the owner manager's influence to the growth of the SME.
1.1 Background to the study
First Pack Marketing as an organization is affected and influenced both negatively and positively by the environment in which it operates. Tsiakkiros (2002) said that the radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization.
First Pack Marketing
First Pack Marketing
First Pack Marketing is a "One Stop Shop" for Computer Consumables, ICT Hardware and Office Stationery registered in Zimbabwe and established in 1998. The company specializes in sales of printer consumables, printers, laptops and general office and scholastic stationery. It has got a staff compliment of 70 workers including 5 managers and the Managing Director. The company has got 6 outlets in Harare, 1 in Kwekwe and 1 in Bulawayo. The company enjoys a bit of the market share in Zimbabwe being one of the largest Information technology supplier in Zimbabwe and 2nd in terms of stationery behind Rank Zimbabwe. The company is owned by 2 brothers the Managing Director with 90% shareholding and the other non-active brother with 10 % shareholding.
First Pack is a "One stop shop" for computer consumables, Hardware and Stationery inspired by our vision and guiding philosophy the company has over the past 10 years done well in terms of market share, capital base, human resource expertise and service quality.
To be the biggest and most preffered supplies of stationery and information and communication technology in the world.
To provide first class service in pursuance of our vision.
Quality and excellence
Superior service delivery
Compliance to statutory regulations
To be the leading stationery and IT supplier in Zimbabwe and in Africa as a whole
Understanding of the IT sector that allows us to provide honest, intelligent and insightful advice to our customers.
Expand sales to existing customers and introduce existing products into new markets and build stronger reputation with customer.
Achieving acceptable profitability in a company`s pursuit of our mission/ vision, long term health and ultimate survival, divided growth and acceptable return on investment and good cash flow.
Product quality and recognized as a leader in technology products provider.
The company offers different stationery and information technology products to the Zimbabwean market. The products includes the whole range of stationery both scholastic and office stationery which includes books, pens, markers, staples paper punch and office machines like shredders, guillotine and laminators. For IT products they range from computer consumables, hardware that is laptops, desktops, scanners and printers.
1.2. Environmental Scanning
There are various tools that have been formulated to try and assess the environment for strategic advantages. Some of the tools include the PEST analysis and SWOT analysis. Cooper (2003) supported the view when he argued that the results of such an analysis can be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans. First Pack as an organization does not operate in a vacuum but it also affected by these factors that is political, economic, social and technological. The Owner-Manager is also affected with these environmental issues in terms of the business operations and strategies. Thus the Owner-Managers has to do environmental scanning and see what is happening and what can happen in the future that might affect the business.
Always on Time
Marked to Standard
Oladele (2006) stated some importance to environmental scanning as follows:
the environment is dynamic in nature, therefore scanning is necessary to keep abreast of change;
it reveals the elements or factors that constitute threats and opportunity to the overall objectives of the organization;
competitor's activities can be monitored and appropriate strategies put in place to check market incursion;
it gives necessary inputs to the formulation and implementation of potent marketing strategies.
Government type and stability
Freedom of the press, rule of law and levels of bureaucracy and corruption.
Regulation and de-regulation trends.
Social and employment legislation
Tax policy, and trade and tariff controls.
Environmental and consumer-protection legislation.
Likely changes in the political environment.
Stage of a business cycle
Current and projected economic growth, inflation and interest rates
Unemployment and supply of labor.
Levels of disposable income and income distribution.
Impact of globalization.
Likely impact of technological or other changes on the economy.
Likely changes in the economic environment.
Maturity of technology, competing technological developments, research funding, technology legislation, new discoveries.
Information technology, internet, global and local communications.
Technology access, licensing, patents, potential innovation, replacement technology/solutions, inventions, research, intellectual property issues, advances in manufacturing.
Transportation, energy uses, sources/fuels, associated technologies, rates of obsolescence, waste.
Cultural aspects, health consciousness, population growth rate, age distribution,
Organizational culture, attitudes to work, management style, staff attitudes.
Education, occupations, earning capacity, living standards
Ethical issues, diversity, immigration, ethnic/religious factors.
Media views, law changes affecting social factors, trends, advertisements, publicity.
Demographics: age, gender, race, family size.
Source: A z h a r , K. (2009)
1.2.1 POLITICAL ENVIRONMENT
An analysis of political trends, government leadership and even government structures is done in order to establish their influence on business. Political factors reflect issues to do with the administration of a nation and have a direct bearing on the perceived country risk. No company, domestic or international, large or small can conduct business without considering the influence of the political environment within which it will operate, Cateora and Graham (2002). Zimbabwe as a country has been going through political challenges over the years and this has left an indelible scar which had a huge bearing on the country's economic performance. February 2009 saw the formation of Government of National Unity (GNU) which somehow stabilized the economic and political events of the country. Government introduced the multi-currency system which was instrumental in resuscitating the crippled Zimbabwean economy. First Pack Marketing was able to continue business after the introduction of the multi-currency.
Before the formation of GPA from 2005 to 2009 the political situation in Zimbabwe affected business a lot. The company was now trading on cash basis with South African suppliers given that the companies were afraid of the political situation in Zimbabwe. The risk associated with doing business with Zimbabwean companies was very high so all the credit facilities were cancelled. This affected the business given that the owner manager had no additional funds to fund the operations of the company. Apart from that most of our clients were having challenges with viability which affected business to First Pack also thus reducing the level of sales. The political problems also affected schools which are also First Pack customers at the end schools were closed thus affecting our stationery sales to schools. The political decisions particularly the Indigenization Act has affected investors coming to Zimbabwe but for First Pack given its black owned we have not been affected. Most of our foreign owned companies have been affected and this has also affected our business in terms of sales.
The current issues to do with elections is also affecting business in the sense that banks are not willing to extend credit for longer periods and they are giving the companies short term and expensive loans. First Pack's outside suppliers are also no longer willing to extend too much credit which is unsecured because of the elections issue being raised by politicians. Some of our clients are also taking a wait and see approach and others have not even bought from First Pack for the past year because they have down sized their operations. Thus the political environment has affected business to some extent after the formation of the GPA.
1.2.2 ECONOMIC ENVIRONMENT
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The economic environment is greatly influenced by the political framework. It includes elements such as exchange rates, interest rates, economic policies, inflation, gross domestic product and capacity utilization. The Zimbabwean economy has been on a rising trend since the introduction of multi-currency. It has resulted in capacity utilization increasing as industries and firms from all sectors are recapitalizing and growing with the economy. The economy has been growing at a steady rate with economists forecasting a downward trend in 2012.
First Pack has also benefited in the sense that sales has been on the increase in terms of IT business and realizing some profits since dollarization. Furthermore companies have not been changing their IT systems and hardware for a long period now but with the dollarization they are now replacing. Which means business to First pack has been on the increase since dollarization.
On the other hand the funding aspect still remains one of the major challenges for First Pack. The funding from banks has not been forthcoming and some banks require audited account from First Pack when the company is still to get their books audited by external auditors. Thus the firm has failed to access the funding from banks just because of audited accounts.
More so, there was a shift in the business model by the industry players. Prior to the formation of GNU many players adopted a survival mode where transactions were carefully crafted to cushion operations from inflation disregarding ethical issues. However many have since reverted to the basics as hard currency has compelled them to do so. Liabilities are now difficult for companies to easily cover and most of the SME's do not have proper processes and audit trail of events to account for every transaction.
Indigenization policy engineered by the government in the year 2011 has not affected First Pack given that it is owned by black Zimbabweans. The policy requires majority stake to be in the hands of the locals and if it is a foreign firm majority holding should be with Zimbabweans. The policy is driven by the desire to empower the local people and ensure that citizens of Zimbabwe benefit from their resources. This will act as an advantage for First Pack given that some competitors are foreign owned but in terms of sales it will affect given that some targeted firms are our big customers.
1.2.3 TECHNOLOGICAL ENVIRONMENT
The industry has not been spared from the wave of technological advancement. Technology has indeed been a strategic tool for competitive advantage for some players who have invested immensely in it. New advancements such as laptops and other mobile devices have made mobile computing a reality in Zimbabwe. Technology brought new dimensions in as far as out ICT industry is being transacted. New forms of communication such as electronic mail, voice over internet protocol (VOIP), social networks, Iphones, Ipads and mobile phones have engulfed the Zimbabwean market. First Pack has also come into play providing these gadgets. Laptops are now a requirement in some educational institutions which has also come as a ready market for First Pack. The introduction ICT's in schools has also come as an opportunity for the company. Schools are now computerizing it has now become an opportunity for the company as they do require more of the ICT equipment from First Pack.
Technology has been an aid to financial markets such as banking, insurance, government departments, mining and agriculture. All the ICT services introduced in all these sectors require robust ICT hardware which is readily available from First Pack. Companies and the government have introduced the ICT's as an enabler and it has increased their competitive advantage. Thus First Pack has tried to gain more advantage and provide these ICT requirements for all these entities. This has also erased the need for companies to establish their presence in various locations in the form of brick and mortar, technology has sorely become the backbone for increased brand visibility as well as distribution network.
There is need for companies to have robust and scalable system in order to be able to cope with the demands of its mandate and fully service their clientele. Even though First Pack is a player in the ICT industry, the organization is lagging behind as far as embracing technological developments in concerned. When carrying out duties such as sales, procurement, business development, accounting, highly computer literate personnel and advanced systems should be used to enable effective execution of the mandate. The inadequate technological skills by the company provide a platform for fraudsters to manipulate records to their advantage.
1.2.4 SOCIAL/ CULTURAL ENVIRONMENT
The cultural framework for Zimbabwe is now so diverse with people borrowing from various backgrounds. This has been facilitated by locals who have travelled extensively over the years and the development of technology which has readily avails information and exposes citizens to diverse cultural bases. The general population is educated there by increasing their appreciation of ICT products.
The country has a bias towards international products as of now since the local market is still in its recovery stages and both man and woman are now actively being involved in requesting for more advanced ICT products. They can easy click the button and have a benchmark to compare to and due to the high levels of education and trade, consumers will sooner or later be demanding advanced products from developed countries. This has become an opportunity for First pack to move with the technology and enjoy first mover advantage with those clients in need. Sometimes foreign owned firms have to be aligned to their international owners so their requirements are different from our local customers and their needs give First Pack an opportunity to provide latest products in ICT.
1.3 Industry Analysis
First Pack Marketing is operating in a competitive industry in which there are many competitors with other small SME's also operating in the same industry. Porter's five forces have been used to analyze industry competitiveness.
1.3.1 Threat of new entrants
Profitable industries usually attract new entrants; like in the ICT industries were First Pack is operating new entrants are always joining. Which means the company needs to create barriers to entry like brand loyalty and sole distributorships of certain product lines. Setting up costs should be very high and First pack should know that as long opportunities are their threat of new entrants will always be there.
1.3.2 Threat of substitute products.
Given the rise of the Chinese products the threat of new products is now very high in Zimbabwe. The company sells HP products but there are cheap substitutes from China. Thus the company should maintain quality products against new products.
1.3.3 Bargaining power of buyers
Some of the company buyers like the large corporate companies have the powers as buyers but the ordinary consumers do not have the powers in terms of pricing.
1.3.4 Bargaining powers of suppliers
Some of the suppliers are sole manufacturers of the products they have the powers but to avoid that the company signs contracts so as to reduce their powers. Some big suppliers respect the channel of distribution but some do not respect the channel. Thus it is important to have the suppliers who do not respect the channel of distribution on our suppliers list.
1.3.5 Intensity of the Rivalry
The intensity of the rivalry in the industry which First Pack operates from is very intense and it requires innovation. It requires powerful competitive strategy so as to keep the rivalry behind.
1.5.0 SWOT ANALYSIS
As put forward by Gasparotti (2009), SWOT analysis is a strategic planning method used to evaluate the strengths, weakness, opportunities and threats involved in a business venture. It involves specifying the objective of the business venture and identifying the internal and external factors that are favorable and unfavorable to achieving a firm's objective. He argued that SWOT analysis is an effective method for strategic planning to identify potential priorities, and creating a common vision for the company that answers the question "where are we" as a company.
Strengths are the internal characteristics of the business that give it an added advantage over others Drew (2006). The company boasts of different strengths which include distributorships of the of the leading IT brands in Zimbabwe that is Epson, Targus and Deli stationery products. In terms of stationery the company distributes the Deli products. First Pack is the only HP Gold partner for HP Personal Systems Group, HP Imaging and Printing Group, HP Enterprise Servers and Storage which is the wide range of portfolios under the Hewlett Packard Brand. First Pack is the price setter in the market and the company boasts of wide product range, quality products and stock availability is the main advantages of the company First Pack. The company is building a State of the Art technology centre in Hatfield which is a major strength against competitors who are renting in town and occupying some houses in the areas around town.
Weaknesses are characteristics that place the company or team at a disadvantage relative to others and are found internally within the system in areas such as finance, marketing and production (Gasparotti, 2009). The company is slow in executing some reforms in the company given that you have to wait for the owner manager only. It takes time to implement resulting in little impact and failure to capitalize on certain positions.
There is also a challenge associated with funding and that has hindered most of its initiatives and fulfillment of the business needs. The company relies more on profits and some supplier credit facilities which are short term and the banks that are extending credit to the company the funds are very costly. Given the magnitude of the business opportunities available, there is great need for funding for effective results to be posted. The company does have a number of projects which have been shelved, deferred, poorly funded and even some without funds to kick start. These have been reduced to paper projects without execution and it has weakened the business and for the owner manager to get equity partners to come and fund the company he is not willing yet, fearing the risk of losing his company and autonomy thereby affecting the company operations sometimes.
In today's business, there is need for robust and advanced Information and Communication Technologies (ICT) to fully and effectively operate. It has reduced the world into a global village and greatly improved the way businesses operate and interact with each other. As First Pack we are lagging behind in terms of ICT automation in the company because of the unwillingness by the owner manager to fund the ICT projects like system overhaul, connecting with suppliers , banks and some customers are now doing E-procurement which requires to be connected to our system. This cannot be a reality as long we are not automated and lagging behind in ICT. Some authorities such as Zimbabwe Revenue Authority are on a move to automate their processes so as to be effective. It therefore requires First Pack to invest in some new technologies and be connected with Zimra under the fiscalisation project.
Zimbabwe as a country experienced severe skills flight over the years. It has left many sectors with unskilled, semi-skilled and very few qualified and experienced personnel. Those who have managed to retain these key skills where offering attractive packages which were relatively comparable with the region. First Pack as a company is failing to return skilled Engineers for the Repair Center due to low salaries and sometimes clashes with the owner manager to date there is a need to equip the organization with relevant technical skills to be able to fully discharge their duties and the company can grow.
Opportunities are external changes to improve performance in the environment and are external to the organization in areas such as economic and competitive environment Gasparotti (2009). First Pack has got a wide range of opportunities in the market but it requires the separation of the business into different units which become stand alone. Like stationery business on its own, printers and cartridges on its own, computers and laptops, servers and storage, networking products and repair center. These units have their own opportunities, every student needs a laptop and every school needs computers, every office needs printers and cartridges, servers and storage are required in each and every organization. The company can be in a position to increase their revenues by only tapping the business available in the market but it requires the owner manager to see the opportunities available and make use of them.
Zimbabwean market conditions have presented other opportunities for First Pack in the sense that only a few companies are able to provide the ICT products in large quantities. The companies need to deal with well-established companies who have the capacity to supply. So First Pack should utilize the opportunities readily available in the market with the companies now automating and changing their ICT infrastructure after a long time without anything being changed. So with the dollarization companies can now afford to change the infrastructure and also schools moving to video projection in classes like Gateway, Hartmann, Peterhouse and the University of Zimbabwe looking for suppliers of projectors of their lecture rooms. All these are opportunities which need to be taken by the company. The owner manager sometimes he is not willing to deal with other companies for the fear of failing to get paid and his own personal reasons.
There is also an opportunity to deliver training on the use of ICT products and providing service for the products being sold to different companies. Service and maintenance of the products is an opportunity but the owner manager is not yet willing to venture into that business which creates a problem. Even if you raise the issue in meetings to venture into that new business it still remains a project of no priority until the owner manager thinks so to start the business. The owner still remains the overall decider of new ventures there is no delegation to the managers to decide on new projects. The Zimbabwean market is now in its emerging stages and there is need to harmonize the skills and knowledge of the owner, managers and workers so that they pull together in a synchronized manner. The owner manager needs to make us of the managers and workers and to delegate so that new business ventures are started.
These are external variables in the environment that could cause trouble and problems for the organization Gasparotti (2009).Industry has been opening up with new opportunities coming to individuals. Economists have even projected around 4.5 % growth in the year 2012 meaning good results are to be posted by organisations if we are to base on these growth estimates. It poses another challenge to First Pack to try and retain their staff given such growth prospects. People would be searching for greener pastures and that can be another episode of skills flight for the commission.
Globalisation is another threat to First Pack. States are getting into regional and international groupings to facilitate trade. The coming of the Chinese has also brought in new competitors with inferior goods and cheaper coming from the Far East. Which means competition is also going to increase in terms of new competitors coming into play. Apart from that South African companies are interested in coming to Zimbabwe given that they also quote local companies. Thus the company needs to remain focused and the owner manager trusts his managers to develop the business and craft some strategies against the international competitors.
1.6.0 Business Model
The business model of a company is a simplified representation of its business logic. It describes what a company offers its customers, how it reaches them, through which resources, activities and partners it achieves this and finally, how it earns money (Cantrell, 2000) .The business model represents a framework for conducting predictive, what-if scenario analysis (Kittle,2001).A business model can be described by looking at a set building blocks such as customer segments, value proposition, distribution channel, customer relationships , revenue streams, key resources, key activities, partner network and cost structure .
The concept of business models gained enormous popularity during the Internet boom of the late 1990s and later spread across a wider community of management practitioners and business analysts Ghaziani and Ventresca (2005). However, only relatively recently have management researchers turned their attention to this concept Baden-Fuller and Morgan (2010).
Some authors such as Magretta (2002) define business models as stories that explain how enterprises work. The implicit idea is that the term "business model" refers to the logic by which the organization earns money. Two questions should therefore be answered by any business model, one related to the value provided to clients and the other how the organisation creates value in providing service to clients. Some considered the narrow view of it by including virtual markets, innovation, value chain, resource based view of the company, costs, and dynamic capabilities. This was as put forward by Amit and Zott's (2001) who focused on e-business. They defined a" business model" as depicting the content, structure, and governance of transactions designed so as to create value through exploitation of opportunities.
Business model theories are wide and varied with authors such as Linder (2005) arguing that there are four categories in a business model as strategic choices, value creation, capturing value and the value network. Therefore, consistent with the view of the concept that a business model is defined by strategic choices sometimes made by a network of organisations that explain value creation and value capture.
1.6.1 Bricks and Clicks
Bricks and Clicks is a business model by which a company integrates both offline (bricks) and online (clicks) presence. It is known as click and mortar or click and bricks Serge and Rand (2000). This model is mostly used in retail stores that allow the user to order products online and then pick up the order at a local store. This model has typically been used by businesses that have extensive logistics and supply chains. The bricks and clicks model has allowed the convergence of traditional business with the new internet technology.
Timacheff (2010) argues that it is more difficult to implement a bricks and clicks business as compared to online clicks only. The key factor for a brick and click business model to be successful will be determined by a company's ability to manage tradeoffs between separation and integration of their retail and online businesses. In the case of traditional retailers, the Internet channel is often viewed as a logical extension of the storefront's physical presence, a complement to existing customer relationships, business processes, and distribution systems Zerega (2001).
First Pack is following this model where they have a physical presence and they are also utilizing their online capabilities. The organisation uses e-mails to communicate with its various stakeholders. It has enhanced their operations as information is communicated faster and also wide across the country in a cost efficient manner. There is also a functional website which is being utilised to disseminate information and interaction with customers.
The business currently has its physical presence only in the capital with 6 branches and in Kwekwe and Bulawayo selling the same products. Lack of geographic presences has been complimented by online presence in some of the remote areas as a way of reaching out all the interested parties. However the online presence has been hindered by inadequate resources to fully support the platform. The company connectivity is still poor and needs to be improved the running website sometimes has got outdated information on products and pricing which continuously needs to be updated. The owner manager decides what has to be placed on the website.
1.7 Problem Statement
When businesses are formed, they are a brain child of the owner manager. As the business grows, the owner manager shares the vision with others and instead of doing everything on their own, they begin to delegate. Decisions cease to be autonomous and specialists are hired to take up functions which would have otherwise been done by one person. Even in the absence of the owner manager, operations do not come to a halt.
First Pack Marketing has expanded and the owner manager requires specialised assistance to run the business. However, the business is still being run as if it employed 10 and not the 70 employs that it now has. The management style that was appropriate for First Pack five years ago is no longer appropriate today because of the size of the business.
If the problems caused by the style of management are not addressed, First Pack will not grow into the main stream economy, remain a small scale enterprise or at worst, even begin to deteriorate in performance.
1.8 Research Objectives
To evaluate owner managers influence to the growth of a business.
To establish the owner manager's managerial style on business growth.
To present the importance of personal objectives in the decision making process of a business.
To investigate the manner in which strategic objectives are set by owners or shareholders on business.
To investigate the characteristics of an owner manager that affect growth of business.
1.9 Research Questions
How do owner managers affect growth?
What is the role and impact of owner managers on the growth of an SME?
What is the management style used by the owner manager?
How is the strategy formulated by the owner managers.
What are the personal characteristics of an owner which can affect growth of an SME.
1.10 Research Proposition
If SME's owner manager employs the appropriate management style, the business will grow into the mainstream economy.
1.11 Justification of study
SME's play a critical role in the economy of Zimbabwe and this has necessitated this study. The Government is encouraging SME's to play an important role in the economy thus with this study it will assist the Ministry of Small Medium Enterprises in assisting owner managers on how to run their businesses. Apart from that the Directorate of First Pack Marketing will also benefit from the study by improving the way they are running the business. The management team of First Pack will also learn a lot from the study on the things they have to manage when dealing with an owner manager and the way they have to do their work. The employees will also benefit from the study because it major aim is to improve the way the company is operating under the owner manager.
1.12 Delimination of the Study
The study is limited to the case of First Pack Marketing only. The study will be conducted within the First Pack Marketing Company also in the branches outside Harare that is Kwekwe and Bulawayo.
2.0 Literature review
This chapter reviews the literature around the problem as discussed in the previous chapter. The problem is analysed and discussed in light of submissions by various scholars and authorities clearly highlighting the swivel around which this research is premised. Discussion points will be guided by subtitles drawn from the research objectives.
2.1 Definition of Terms
2.1.1 Small Medium Enterprises
In Zimbabwe, an Ministry of Small-Medium Enterprises Policy and Strategy Framework has defined small and medium enterprises as those who are 'registered in terms of their legal status' and 'employing anywhere between 6 to 100 workers' (Zimbabwe, 2008: 20). The standard definition of the SME sector has been provided by the SME Department of the World Bank, which views small enterprises as those formal sector entities with up to 50 employees and total assets and total annual sales of up to US$3 million.
SMEs are defined as enterprises in the private non-primary sector that employ less
than 250 staff. Within this definition, the following sub-categories are distinguished:
Micro enterprises: enterprises with 0-9 occupied persons, and whose annual
turnover and/or annual balance sheet total does not exceed 2 million euro
Small enterprises: enterprises with 10-49 occupied persons, and whose
annual turnover and/or annual balance sheet total does not exceed 10 million
Medium-sized enterprises with less than 250 occupied persons, and whose
turnover is less than 50 million euro or balance sheet total less than 43 million
euro (The Gallup Organization,2007)
Small and medium-sized enterprises (SMEs) exert a strong influence on the economies of all countries, particularly in the developing countries. Mulhern (1995) reported that the SMEs have been a major engine in the economic growth, innovation and technological progress. In addition Carrier (1994) noted that the SMEs are more fertile than their larger counterparts in terms of innovation and development. However, the importance of SMEs lies in their role in growth at various stages of economic development. They contribute to output, fulfil social objectives, attract considerable foreign reserves into a country and have a clear importance in providing employment, which means that they are the backbone of the private sector all over the world and they employed around 60 percent of the total labour force in the world.
2.1.2 Owner Manager
Owner-managers of incorporated enterprises are workers who hold a job in an incorporated enterprise, in which they alone, or together with other members of their families or one or a few partners, hold controlling ownership of the enterprise and have the authority to act on its behalf as regards contracts with other organizations and the hiring and dismissal of persons "in paid employment" with the same organization, subject only to national legislation regulating such matters and the rules established by the elected or appointed board of the organization. (ILO,1993) Owner-manager is a person who makes all the major management decisions in a small business and has substantial equity capital at risk in the business.
Porter (1979) emphasised that corporate strategy cannot be planned and implemented without considering the competitive environment, whereas according to Mintzberg, strategy is an evolutionary, organic process which is unpredictable Hamel and Prahalad (2002) further added that core competence gives a company competitive capability that remains central to its strategy and planning process. Much of the literature in the area is based on corporate business environment wherein corporate planning activities are vested on a group of individuals representing various stakeholders. However, one does not find a clear treatment of strategy planning in which the perceptions of the entrepreneur towards growth and his/her competence in strategy planning are addressed. This is important because the entrepreneur's vision, convenience, priorities and competencies influence the strategy planning processes and growth.
The majority of small firms did not utilize the traditional tools and techniques of strategic planning in the study by Meers and Robertson (2007), yet their findings suggested that internal and external business condition assessments were worthy of consideration. This clearly shows it is usually difficult for owner managers to do strategic planning for their organisations they usually see strategy as a waste of time.
There is a different perspective at the firm level entrepreneurs intentionally link their own and others resources to build a firm to add value (Bird and Jelinek, 2002). Strategy and the firm structure directly influence growth of the small entrepreneurial businesses. Entrepreneurs of small businesses are the sole strategic decision makers and their close control facilities translation of entrepreneurial vision into action. The effects of the founding owner grows with time, and over the years, organisational growth become self-fulfilling prophesies (Eisenhardt and Schoonhoven, 2002). Unless the entrepreneurs possess some strong positive beliefs towards growth they would not consider strategy planning worth attempting.
While the management and academic literature on the topic area of strategic planning has predominantly focused on the large business environment, there is now a growing body of knowledge related to the SME context. The link between strategic planning and small business success has been researched and documented (Meers and Robertson, 2007) and the value and contribution from strategic planning for small firms is important. In their empirical study of 267 firms, (Eisenhardt and Schoonhoven, 2002) concluded that organizations using systems of strategic management made faster decisions and successfully implemented change and innovation to bring about growth. Even while acknowledging the importance of strategic and business planning, many owner managers do not undertake the process, frequently citing lack of time, lack of familiarity with strategic management techniques and processes, lack of skills and confidence to begin the process, and lack of trust in internal stakeholders in relation to sharing business information as the reasons for non-implementation of strategic planning (Meers and Robertson, 2007).
Greater clarity is provided by Wang, Walker and Redmond (2007) where the ownerâ€Ÿs motivation for being in business, whether profit or growth maximization compared with personal fulfilment, was presented in their analysis of SMEsâ€Ÿ engagement in strategic planning processes. Owner motivations are presented as a key determinant for engaging in strategic planning. Further, in investigating owner-managers and the practice of strategic management it was determined that SMEs had access to fewer strategic tools than other managers, and as a consequence, used fewer tools in planning (Eisenhardt and Schoonhoven, 2002).
Problems in defining and measuring growth in small business organisations have impeded our understanding of strategic management in small business settings (O'Farrell and Hitchins, 2002). Employment, profit, value addition, turnover, total assets and market share are the major parameters of growth suggested by theorists. But high-performing small manufacturing firms also place emphasis on new product development, product improvement and adoption of new methods in addition to the indicators measuring current business performance such as product quality, customer service, employee productivity and efficiency and employee welfare
(Kotey and Meredith, 1997).
Growth, however, is not defined uniformly and consistently by the entrepreneurs of small business organisations. Burke and Jarratt (2004) based on an empirical study of small and medium enterprises (SMEs) in Australia, described strategy as an explicit plan and an implicit pattern of behaviour. Entrepreneurs' attitudes and their decisions pertaining to growth, influences the growth of small organisations. The growth agenda, however, varies from one entrepreneur to another even when they operate in the same market (Matthews and Scot, 1995). Patel (1995) similarly viewed that entrepreneur' attitudes are important for growth as most of the problems lie within the venture rather than outside it. He advocated for a carefully crafted strategic growth plan with a high degree of entrepreneurial intensity in order to create a niche.
2.2 Owner managers attitudes and visions towards growth.
Vision is of central importance to defining the basis of a system. It is an image projected to the future, the place the entrepreneur wants his/her product to occupy in the market. This also deals with the kind of enterprises needed to reach such position and provides a guiding framework to reach there. The framework attracts, stimulates and motivates the people working with the entrepreneur. In this way the team feels motivated and eager to work hard to realise the vision. Vision offers a point of reference around which the entrepreneur assimilates information. Entrepreneurial growth intention is displayed and communicated through the vision. This reinforces the core set of values. Hence, clarity of vision is important to venture success. Small business entrepreneurs focus on management practices which provide a framework for effectiveness and aids formulation of action plans. Emerging visions are formed around the ideas and concepts of the products or services imagined by the entrepreneur. The single emerging vision which the entrepreneur wants to pursue becomes the central vision. This also aims at providing the big picture for strategy planning (Filion, 2002). However, Wiklund (2003) argued that by providing relevant information and knowledge about growth, owner manager's growth beliefs can be influenced. Contrary to the generally held beliefs, financial gains were not the major motivation for growth.
2.3 Characteristics of an Owner Manager
Over the last two decades in particular, growth SMEs have received considerable attention from researchers and policy-makers around the world for reasons identified by O'Farrell and Hitchins, 2002 as that there is considerable interest within the field of small firms policy and research in the identification of features that distinguish firms which grow from those that stand still or fail. This is thought important if more selective small firm's policies are to be developed. Identifying distinctive features of more and less successful firms may also provide insights into the factors influencing small firm development and hence improve understanding of the growth process.
The strong desire of many small business owners to retain personal control and business independence has long been recognised as a key factor limiting the growth of many small enterprises, (O'Farrell and Hitchins, 2002) Hence, key constraints on growth are related to a combination of internal factors, an unwillingness to delegate or bring in external skills, and external factors including finance, employment and competition (Storey, 1994), poor products and inefficient marketing (Cromie, 1991)
Owner-managers often possess the entrepreneurial drive but lack formal management training. This weakness can eventually become a critical factor limiting growth and expansion. Past studies on SME failure show that lack of managerial experience is one of the main reasons for SME failure. In a case study of Ghana, Inkoun (2003) found out that SMEs performance is closely linked to entrepreneurial skills of the proprietor. He found out that proprietors with business related qualifications tended to survive by 30% more than non-qualified proprietors. Inkoun (2003) found out that although management training for proprietors is important for SMEs in Peru, it is more important when the company has higher growth potential than it is when the growth potential is low.
2.3.1 Demographic Characteristics.
Age sometimes plays a critical role in the sense that younger owner managers have the drive and take risks unlike old owner managers who want to maintain their level. As for females the issue is now different in the sense that they can now start their own business. Reynolds (2000) found that individuals ranging from 25 to 44 years were the most entrepreneurially active. Finding from another study in India by other authors disclosed that successful owner managers were relatively younger in age. Mazzarol (1999) found that female were generally less likely to be founders of new business than male. Similarly, Kolvereid (1996) found that males had significantly higher entrepreneurial intentions than females. Kolvereid (1996) found that individuals with prior entrepreneurial experience had significantly higher entrepreneurial intentions than those without such experience.
2.3.2 Individual Characteristics.
According to Cragg and King (1988); Rutherford and Oswald (2000) small business success has often been classified into three categories of antecedents, the individual characteristics of the owner-manager, firm characteristics and environmental characteristics. The individual characteristics include attributes like the age, education, managerial know-how, industry experience and social skills of the owner/manager. She summed up that entrepreneurs with business and technical educational background are in a better position to appreciate and analyze hard reality and deal with it intuitively, which seems to play a critical role in entrepreneurial effectiveness.
2.3.3 Personal Traits.
The personal characteristics of the owner-manager have been under increasing interest. Some attempts have been made to explain business success or failure in terms of personality traits of the entrepreneur (Glancey, Greig and Pettigrew 1998). The role of individual characteristics, values and expectations of owner managers have been explored and literature disagrees on how it affects the growth of the firm.
2.3.4 Entrepreneurial Orientation.
Some researchers have argued that success is driven by the entrepreneurial orientation (Wiklund and Shepherd 2004). According to Lumpkin and Dess (2001), the concept of entrepreneurial orientation consists of five dimensions, autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness. Autonomy is defined as an independent action by an individual or a team aimed at bringing forth a business concept or a vision, and carrying it through to completion. Innovativeness refers to the willingness to support creativity and experimentation. Risk taking means a tendency to take bold actions, such as venturing into unknown new markets. Proactiveness is an opportunity-seeking and forward-looking perspective. The fifth dimension, competitive aggressiveness, reflects the intensity of a firm's efforts to outperform the industry rivals (Lumpkin and Dess 2001).
2.4. Managerial Skills
A key internal constraint on growth of SMEs is a reluctance or inability of owner managers to diversify control over business functions to professional managers (Storey 1994). However, once a firm has reached a certain size, or stage in its life cycle, there is a need to professionalise the management function if a firm is to continue to grow. The strength and salience of internal barriers is likely to vary with the size of the firm. In the early stages of a firm's growth, an owner manager can cope alone with many of the areas of management such as finance, human resources, marketing, and product development. However, once a firm has reached a certain size, or stage in its life cycle, there is a need to professionalise the management function if a firm is to continue to grow.
Storey (1994), notes that the owner managers ability to generate new ideas, ability to solve problems and the level of technical sophistiphication on SME owners have a major influence on SME growth. The owners' ability to use their resources fruitfully would add to the expansion of the business and does not affect the chances of success.
The experience s and competence levels of SME owners are also an important factor influencing SME's growth performance, Rutherford and Oswald (2000). Working style of owner manager's speed in which they can produce high quality work that meets the needs and requirements of customers and suppliers can impact on the growth of the SME. Owner manager's with high skills and trained have been confirmed to be able to grow the SME.
3.0 Research Methodology
In order to realise the target of this paper, the researchers believe that a well-designed questionnaire is the best instrument. To overcome this and due to the lack of information about SMEs generally and its performance to follow up the factors that affect their success, the only feasible source of such information are from the management, workers, stakeholders and the owner manager. Interviews will also be carried out to by the researcher to solicit for more views on the management and influence of the owner manager.
3.1 Research Design
Research design is blueprint for research, which tries to look at four problems which include, which questions to study, which data is relevant, what data to collect, and how to analyze the results, Philliber, Schwab, and Samsloss, 1980. The type of the design will determine the design to use in the research. Research design is meant to describe and explain the approach and methods one is going to use in order to address the questions that are meant to answer the topic. Research design is a framework for conducting a research. This will satisfy the most suitable methods of investigation, the nature of the research instruments, the sampling plan and the types of data, i.e. quantitative or qualitative (De Wet, 1997:10).
3.2 Research methods
Given that the researched is relying on the following methods for gathering information, semi-structured interview, unstructured interview, questionnaires and analysis of documents and materials available in the organisation. The researcher is going to analyse the case of First Pack and use qualitative research methods. Bell (1999) states "a case study approach is particularly appropriate for individual researchers because it gives an opportunity for one aspect of a problem to be studied in some depth within a limited time scale".
QUALITATIVE AND QUANTITATIVE METHODS
Emphasis on understanding
Focus on understanding respondents social informant's point of view
Interpretation and rational approach
Observation and measurement unnatural setting
Subjective insider view and closeness distant to data.
Generalisation by comparison of properties membership.
Emphasis on testing and verification
Focus on facts/and or reason of events
Logical and critical approach
Objective 'outsider view' from data.
Hypothetical -deductive focus on hypothesis testing.
Particularistic and analytical
Generalisation by population and contents of individual organisation.
Source: Dillon (1986) Marketing Research
Qualitative research is commonly used in social and behavioural sciences and is suitable for studying organisations and individuals. To support the use of qualitative research, Miles (1996) says, qualitative data are attractive for many reasons. They preserve chronological flow where that is important and suffer minimally from retrospective distortion and in principle offer a far more precise way to assess casualty in organisational affairs than other efforts like cross-legged corrections Chauri (1995).
The author is in support of this notion and the research will utilise and blend the two approaches so that a fair and in-depth assessment is done on the subject matter.
3.3 Target population and sampling
The population which is going to be considered is First Pack marketing company. The sample to choose from will be the workers, management, stakeholders and the company directors. Survey research is a systematic gathering of information from respondents for the purposes of understanding and or predicting some aspects of the behaviour of the population of interest. (Tull and Hawkins, 1993).Survey research is made up of four components namely:
There are seven steps in the sampling process.
Definition of the population.
Specification of the sampling unit.
Specification of the sampling method.
Specification of sampling unit.
Determination of sampling size.
Specification of the sampling plan.
Selection of the sample.
The researcher is going to use simple random sampling for the management, directors and the shop managers. For the workers the researcher would use random sampling.
3.4 Development of research instrument
Questionnaires will be used to collect data from the participants and the Likert scale will be used to for responses ranging from strongly agree to strongly disagree. The Likert scale questions will make it easy for the respondents to indicate their views. It will consists of 2 sections one with general information of the organisation and characteristics of the owner manager. The questionnaires will have to be send to an independent researcher who will also input and make suggestions. A mini-pilot study will have to be carried out to see if it covers the literature covered in the study. Unstructured interviews will have to be conducted by the researcher and a study of the organisation will have to be done.
3.5 Data collection process
The participants from the workers will be randomly selected and the questionnaires send to participants will be 60. The researcher will send questionnaires to all the respondents and will be collected after a period of 2 weeks which gives time to the respondents. The researcher will also have to make sure that he adds more respondents if some questionnaires are not returned on time with low respondents. Interviews with the director, management and shop managers will have to be conducted. The Shop managers from Kwekwe and Bulawayo will be interviewed on the phone and visit all the branches in Harare. Some issues will have to be studied during the data collection process. Unstructured interviews will have to be conducted with the managers, shop managers, supervisors and other stakeholders like bankers and insurers. Interviews questions will be both open-ended and structured to enable participants to give more detail were they fill they need to elaborate.
3.6 PRIMARY DATA
This is information specifically collected for the purposes of the current research. In order to obtain reliable information about insurance consumer protection in Zimbabwe, fieldwork will be undertaken in the form of questionnaires, interviews and observations. All these have different advantages and disadvantages.
3.6.1 SECONDARY DATA
Birn (2004) states that secondary data is obtained primarily from the company's own sources, for example company reports, sales figures and budgets, company and trade journals, previous researches and others. This data will be collected from already available sources by credible authorities and other researches that were done on the same subject. It involves theoretical data from textbooks, internet, journals, media, magazines, newspapers literature from various authors and publications. Information drawn from such source in order to give possible explanations and background to the research. It is also crucial in putting the research into perspective and highlighting what some authors have said or believe about the subject matter.
A questionnaire (with structured and unstructured questions) will be designed, and used in this research effort. There will be judicious balance between open-ended and close-ended questions. Highly structured standard questions to which respondents will be given the option to choose their responses and open-ended questions to which respondents will give their own answers and explorations will be employed.
3.6.3 SCALE QUESTIONS
These are used often to collect data on attitudes and beliefs. The most common approach is likert style rating scale in which one asks the respondent how strongly they agree or disagree with a statement or a series of statement.
According to Robson (1993), to minimize bias, the interview approach gives some control whilst allowing the respondent to air their views and feelings. An expert interview will be used in this research. An expert interview entails gathering data from knowledgeable persons in an informal way. Interviews will be conducted on insurance commissioner's representative in order to get the underlying framework being utilized as well as some platforms for consumer protection already in place such as how they are handling grievances and surveillance into company operations by the regulator.
In employing this data collection technique the following issues will be considered;
Cost involved in successfully meeting appointment and executing the interview
Honesty of responses
In carrying out this study, the targeted population is the First Pack directors, Management, Branch Managers, Supervisors and shop floor workers including the workers committee. The focus is only on one owner manager who is willing to contribute to the study unlike other owner managers who will not be willing to assist in carrying out the study.
Composition of the sample
Type of Participant
Number in Sample
The sample includes the workers and management given that they will be the major beneficiaries of the study. So their participation will be critical and other stakeholders are also interested in the study given that they will also benefit from the study.
4.0 Data analysis techniques
Data analysis refers to the transformation of raw data into a form that will make it easy to understand and interpret. Both qualitative and quantitative methods will be used to give a clear picture of the findings. The information collected will be analyzed through the use of tables, graphs and pie charts as far as the quantitative aspects are concerned for analysis purposes as well as making it easier to comprehend the detail.
The main aim for the research is to explore the influence of the owner manager on company growth. The unit of analysis for this study is the owner manager for First Pack Marketing and random sampling is to be used to gather data, interviews and study of the company. The Statistical Package for Social Science (SPSS) would be used to analyse the validity and reliability of the measurement scales and testing the hypothesis. The data collected will be analysed and presented using the descriptive statistics. Cramer's V test will be used to test the relationship between the owner manager and the growth of the company.
Plan of Activities
Start the Task
Review of proposal
Chapter 1 Introduction
Chapter 2 Literature Review
Submission First Draft
Final touches to the paper
Final Draft and submission
The researcher is going to carry out the study on the influence of the owner manager on SME growth. The main objective of carrying out the study is to examine if the owner manager influences the growth of the SME. The study will try to answer the research questions and various literature will be reviewed to understand the area of study. The research methodology would include the use of questionnaires, interviews and other cases from other owner managers in Zimbabwe. The data will be analysed using SPSS to provide the statistical results of the study.