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CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND TO THE STUDY

This project takes a broad look on the small business enterprises and their effect employment generation in Lagos State  performance, evidence from Charles Isimeme and Son Nigeria Limited, Sharon House, Plot 6, Bisi Oluwole Crescent, Agbado Lagos. Management practices of small business enterprises is a type of business which does not require any legal procedures and can be owned and managed by one man or by group of friends as the case may be. In Nigeria, the Third National Development Plan (1975-1980) Defines a small business enterprise as a manufacturing or service organization which employs not more than 10 people.

In addition, the individual research unit of the Obafemi Awolowo University (1987) defines it as “One whose total assets or capital is less than 50,000 Naira and employing fewer than 50 fulltime workers”. Glosetal (1976) referred to it. Skill of motivating employees that will enable the employees work towards achieving great success. Skill to tackle problem before they arise i.e a good sales manager should have the foresight to see problems that can arise in the future and should take appropriate safeguard. Time management skills which involves manager working under tight schedule and has to keep up to the deadlines fixed by the clients, he has to have exceptional time management skills. A sales manager has to be diplomatic and tactful so that he can easily mediate the internal conflict that arises time to time in every company. Negotiating skills which involve a sales manager properly negotiating with the customers as well as with the employees.

ADVERTISEMENT MANAGEMENT

Advertisement contributes immensely in promoting the total sales of the business. Earlier advertisements used to appear in print media or electronic medical that is in the newspaper or in TV, radio and cinema. But nowadays, advertisements are being displayed on vehicle like buses, taxis and in public place like shopping mail and streets. Reach of advertisements has further been widened by arising of TV commercial and by advertising in company webs and other websites. Advertising creates public awareness about the particular product, which results in increase in sales and in turn increases profits. So, advertisement management plays a vital role in the success of a small business.

PROMOTING SMALL BUSINESS FOR GLOBAL COMPETITIVENESS THROUGH BEST PRACTICES

The ultimate in competitiveness through best practices is the ability of the firm to gain and sustain competitive advantages over its rival at least in some areas of its operations so as to succeed in today’s highly competitive business world. This advantage may derive from a lowest cost position, which a firm enjoys in the industry while realizing better-than average returns on its investments. On the other hand, a firm may gain a competitive advantage by offering products or services with greater differentiation, which customers perceive as unique and attractive and are, therefore, willing to pay premium prices for them.

These two broad – based options (low cost strategy and product differentiation strategy) for achieving strategic advantage dominated the scene for decades before the recent emergence of speed or quick response as an important form of competitive edge. This is the ability of a firm to respond to customer needs faster than competition. A firm must hold at least one of these options in order to succeed and earn above average returns on its investments. A firm that earns more than one of them is in a particularly strong competitive advantage when customers perceive that its  products or services are better than those of its rivals. An enterprises can, however, create this perception in numerous ways, including those mentioned briefly above. Studies have shown that in the long run, an enterprise that is unable to have one or more of these competitive advantages most probably cannot earn above normal or average profit (Dess and Miller, 1993). This is so because performance that results in only normal profits is not particularly noteworthy or attractive since normal profits are just average. It is necessary for enterprise, large or small, to strive to perform and earn above normal profits through “pursuit of advantage that is now the central theme of strategic management at the business level”. He further emphasized this point in his article “competitive advantage: The cornerstone of strategic thinking”, where he stated.

The process  of strategic management is coming to be defined, in fact, as the management of competitive advantage i.e as a process of identifying, developing and taking advantage of enclaves in which a tangible and perceivable business advantage can be achieved. Since SMEs compete in the same markets with their large rivals offering the lowest prices can be successful in some instances, but it can be a dangerous approach to building a competitive advantage. By their nature, SMEs have special advantages over their large rivals that enhance their creating competitive advantages using factors other than low cost.

The existing firms, whether small or large, typically do not welcome new competitors and may adopt various tactics to discourage new entrants to the market, the entrepreneur who wants to break into an existing market requires to fortify himself with some strategy advantage or ‘entry wedge’ to do successfully. Before selecting such a strategy, it is necessary for the entrepreneur to recognize and understand the underlying forces of competitive pressure so that he or she best position his or her enterprise to cope with the industry environment, otherwise, he or she would find it very difficult to create a competitive advantage. A renowned marketing and strategic management expert, Michael Porter, in his work competitive advantage, presents five marketing forces that collectively determine the nature and degree of competitive in the industry:

Bargaining power of buyers

Threat of substitutes

Bargaining power of suppliers

Rivalry among existing competitors

Threat of new competitors

Depending on the circumstances in a given industry, the power of buyers and the threat of substitutes influence the prices that competing firms charge. The bargaining ability of powerful suppliers’ impacts on the cost of raw materials and other inputs just as the intensity of competition influences prices as well as cost of doing business in areas such as product development, sales force, advertising, plant and so forth. The threat of entry puts a limit on prices and shapes the required investment in order toward off new entrants (Moore and Petty, 1997). As “A wholesales whose annual sales do not exceed 9.5 million dollars is a small business”. A manufacturing company that does not have more that 250 employees is ordinarily classified as a small scale enterprise and under some circumstances it remains in that classification even though it employs up to 1000 workers.

Management practices of small scale enterprises are however very important in the Nigerian economy and it would not be overstatement to say that are the foundations upon which the large business are built. Some of the importances are listed below: They constitute the very basis of the national economy. They initiate the development of local technology. They provide an effective means of stimulating indigenous entrepreneurship. They foster greater employment creation per unit capital invested. They help to mitigate rural-urban migration. Having defined small scale enterprises, emphasis will now be placed on sourcing of funds, promotional mix and marketing. The situation quite easy to state but the task of accomplishing it requires the combination of many resources of the organization which would be communicated in form of messages to the consumer and Nigeria as a country. This will lead to increase in the business profit. Small scale enterprises sources for funds from friends, relatives and personal income but sometimes find it difficult to secure loans from banks they have no collateral securities. Promotional Mix: Is made up of advertising, personal selling, publicity and sales promotion. It is obvious that a business cannot exist in isolation of the society in which it operates. Therefore, promotional activities and source of fund should view with all seriousness and its importance is immeasurable and unlimited in the processing and marketing of goods and services.