Definition of Small Businesses

Businesses exist in many forms, but the most common form of business is retail business commonly referred to as small business. The developments of businesses usually start with small enterprises which are major drivers of the global economy. In the world of business, most of these businesses are referred to as SMEs (Small and Medium Enterprises). Due to the many challenges they face they tend to remain small in size (Bridge 2003).

Definition of Small Businesses

Small businesses have very many defining factors that differentiate them from other types of businesses. The impact of small businesses in the global economy is very significant, that is why many governments are making efforts to support them. The most defining characteristic of small businesses is sole ownership; according to the Institute for the Study of Labour, around 80% of small businesses are owned by a single individual who solely operates the business with little or no help (Scarcelia 1999). Small businesses provide self-employment to many people worldwide, especially to families as nearly all small businesses are family-owned (Longenecker 2006). According to statistics, approximately 70% of small businesses engage in one line of business; for instance, it may be a family-owned grocery, restaurant, or law firm. Definition of a small business is a challenge, but according to United Nations Industrial Development Organisation (UNIDO), a small business is the one which employs between 1 and 49 people. Other nations and organisations define small businesses according to revenue turnover, size, and taxation laws (Puryear 2008).

Studies conducted by international organisations on small business owners reveal a lot as concerns inheritance and family ties. Most small businesses owned by family members show that people with parents or family members who are self-employed tend to later in life own small businesses. Strong intergenerational links exist in the emergence of many small businesses (Moore 2006). According to statistics, around 15% of small business owners inherited their business from family. Most small business owners started the business due to influence from family, it is estimated that there is a likelihood that two out of three people who had parents in self-employment through business are likely to own a business in the future (Fairlie 2005). The linkage between parents and their children in establishment of businesses is very strong; this could be attributed to the experience gained by the family in managing such businesses or entrepreneurial skills gained by certain individual in the small business (Lyles 2001).

Type and Scope of Small Businesses

Small businesses are found within many sectors of the economy and range from professional, skilled, to non-skilled industries. The services offered by small business range from highly sophisticated industries, such as energy consultancy work, to simple businesses, such as groceries. According to research and statistics, many small start-up businesses never make it beyond the first; and the more educated the business owner is, the higher the rate of success of the business (Weinrauch 1992). In a study conducted in the United States, many small business owners who had a college degree and above had twice the chances of doing well compared to business owners with no or little formal education (Lyles 2001). The advantage of small businesses over big businesses is that they provide personalised services to their customers due to a closer interaction with the customer.

Small business owners are distinct from big businesses in that in their business operations they are able to interact with the customer easily and, thus, most small businesses end up providing niche services (Abdullah 2010). For instance, Nagin Pattni is a small jewellery dealer based in Jaipur in India, his business deals with smelling gold and gemstone jewellery. Such business is unique in that it offers customer centric services compared to big businesses such as Tiffany’s or De Beer. Small businesses have a characteristic of being highly competitive; the competitive nature of small businesses is due to need to satisfy a certain customer request (Robb 2008). There are many forms of businesses, most small businesses engage in all forms of activities that need little or no experience and expertise to operate. However, in the recent years, some educated experts or individuals have opened up small businesses which offer service such as consultancy and expert services (Neeley 1992). 

Capital, Growth and Operations of Small businesses

Small businesses are among the easiest forms of business to start, however the challenges that these businesses face are numerous. The biggest challenge that most small business owners face include the lack of capital, taxation, and lack of expertise necessary in expanding of the business (Watson 1996). According to UNIDO, a lot of small business owners surveyed in a research undertaken by the organisation comprehend to the fact that they face the problem of raising enough funds to start and operate their businesses (Gates 2007). Many banks and financial institutions lack faith in supporting business ideas by small business owners. In middle economies such as Asia and Africa, many businesses complain of problems related to financing and lack of sufficient governmental support (Brunetto 2007). In more developed nations, many small business owners face the challenge of taxation, new businesses have small operating volumes and, therefore, high taxes affect their operations and numerous businesses don’t survive beyond their first year (Kennedy 2005). In some global regions, small businesses face the challenges like bureaucracy; for instance, African countries lack proper policies in enabling small businesses to establish and grow their operations. For example in a Kenya, the small business owners like Mrs. Kamau, a chemist owner, has had to contend with applying for many business licenses, which is an obstacle in opening her business.

Growth of small businesses has been tremendous with many small businesses opening operations especially in developing nations like Brazil, India, and China (Brunetto 2007). However, small business owners are easily threatened by economic situations and, in case of a bad economic outlook, many small businesses end up in closure. During the financial crisis that hit the globe in 2010, most small businesses failed to withstand the effects of the credit crunch. Some of the businesses that had been hit included restaurants in regions like Las Vegas; even the toughest businesses suffered, yet most of them were able to withstand the recession (Stephenson 2011). In the operation of their businesses, small business owners usually lack enough expertise to enable them to grow into big enterprises and they normally use unorthodox methods in operating their business (Neeley 2009). Small business owners, for example, may hire experts to deal with issues like filing tax returns or providing financial advice (Asiado 2010). According to IZA, most small businesses have not embraced the use of information technologies in their operations leading to a failure of their businesses.

Successes and Failures of Small Business Owners

In the operation of a business, numerous challenges are encountered by any business owners, with the small business owners being no exception. Some of these challenges include availability of capital, taxation, bureaucracy, and competition. Many business owners earn considerably more than employed individuals, and statistics have found that small businesses support around 50% of the globe’s population (Frey 2008). Due to this success, small business owners have a higher purchasing power compared to other people; therefore, they can spend more on goods and services, thereby uplifting the economy. The fact that small businesses support the economies of many countries through tax payments and employment is a successful feat by small businesses (Thompson 1991). For instance in Russia, statistics show that 40% of governmental taxes are collected from small business owners. Small businesses can offer the much-needed success in life; they could be the hope for the globe in the future as revenues, taxes, and employment creation could be harnessed from these businesses (Landström 2009). 

Small owners enjoy a lot success, albeit with a few failures here and there wherein tough challenges faced by small business owners have led to some of their businesses collapsing. Many small businesses fail due to the lack of transition mechanisms, i.e., many small business owners don’t have enough contingency mechanisms to continue their businesses once they retire from the business (Warner 2002). Another failure of small businesses is their inadequate use of information technologies in the operations and, therefore, they fail to grow and exploit the opportunities provided in technological fields (Callahan 1995). Failures in the sector of small businesses stem from varied reasons; some of the failures experienced by small business owners are the lack of innovation and, thus, most small businesses end up offering similar services and creating high competition, which leads to slow margins in sales and profitability (Chawla 2007).

Roles Played by Marketing Research in Decision Marking

Market Research is an organized collection and investigation of information concerning a particular target market, situation and competition whereof, which helps in decision making. It may be primary or secondary research. Marketing research is a brilliant means for discovering opportunities which are available in the market (Aaker 2005). It helps a firm to identify the most profitable opportunities available in the market. It provides information on the success of the present marketing mix to the decision makers. It helps in the collection and presentation of the reality of tread of sales in the industry and the attitudes of the consumers. Marketing research helps the firms in understanding how to take the best advantage of opportunities as soon as they occur in the dynamic market. It also helps the decision-makers in knowing how goods and services can be changed in order to improve customers’ satisfaction (McDaniel and Gates 2001). And finally, the decision makers are assisted in making the best decision from the alternatives available.

Nature of marketing research

The information collected during market research must be interrelated, well-timed, and trustworthy. Marketing research links the customer, consumer, and public to the
market through the information used to identify their needs. It evaluates marketing events and monitors performance in the marketplace (McDaniel and Gates 2001). Marketing research cannot be avoided in the today’s dynamic business organization because of high competition and new technology. The research is very important in improving and maintaining the overall competitiveness of the company. Many firms frequently gather and assess environmental information in order to identify potential opportunities and threats in the market.

Ethics in marketing research

Ethics are a set of principles or correct ways that shape the decisions made by organizations or an individual. Ethical issues arise when researchers believe that they have the right to inquire about certain information which the respondent may deem a violation of privacy, hence refusing to respond to similar questions or contributing to the entire survey. For instance, it may be asking the respondent about his or her personal income and how they spend it. An individual who volunteers to participate in a research has the right not to disclose their identity and demand confidentiality and protection. Personal details of the respondent should not be disclosed to sponsors or any other third party; for example, the name, address, or any other identifiable data should be safeguarded. The researcher should avoid giving out the information without the respondent’s permission. Deception and harm is another area of ethical concern in marketing research. Deception occurs when the researcher misrepresents the correct reason for research. Sometimes, the researcher may try to make a false impression by changing the actual objective of the research in order to acquire important information which he or she could not have otherwise obtained. For instance, a researcher may pretend to be a student who is interested in certain subject in order to acquire vital information concerning the competitor's goods and services (Smadi 2003). Unethical activities which may be done by some of the researchers might violate the confidentiality of the client, for example disclosing the information about the outcome of client’s project or business activities to third party without permission of the client. 

Marketing environment

Coles Company is one of the key players in Australian retail industry offering online grocery services. The key competitors of Coles online are Woolworths Home Shops, eBay, and Amazon (indirect competitors), Coles supermarket and Aldi & IGA (direct competitors). All these competitors try to gain competitive advantage over the Coles online service. They achieve this through applying marketing techniques like target market strategies, pricing, product, promotion and distribution chains strategies (Kotler & Armstrong 2010).

In Australia where Coles sells online and its potential customers are located all over the place has had a sustained high growth rate of GDP per capita. The global financial crisis which shook the world economy did not affect Australia. This economic stability and the high per capita GDP in Australia has raised the purchasing power of Coles customers. Consequently, the effective demand of people preferring online services has increased. The customers can now receive more services in response to their needs with less money. Compared to other countries like UK, customers from Australia and the region have been favoured by the economic conditions prevailing in the country (Gay & Charlesworth 2007).

Social and cultural factors have affected the Coles online services both positively and negatively. In Australia, there has been an upward trend of the numbers of people using online grocery services. This is attributed to the increased awareness of the online services. There is a proportion of 47% of people with adequate online shopping experience. Variation in income has resulted in some people shifting from buying meals to cooking at home (Butter & Peppard 1996). The increase in the number of people using healthier foods has made people opt for cooking at home. They, therefore, have gone shopping online, thus promulgating the Coles online services.

Technological changes in Australia have resulted in more people accessing the Internet. Australia is a country with a relatively high proportion of people with the Internet access experience. Coles online customers can, therefore, shop online from home, school, or offices. The number of people using the Internet in Australia is projected to increase and this will most likely promote online shopping. However, political changes like pressure from the government and different liquor laws across states have posed a great threat to the Coles online services (Bhasker 2009).

My role in the study has been to carry out the company overview of wine import regulations and trade agreements in India, but we didn’t put the information in the assignment. I also helped my friend Umesh to carry out the country risk analysis. I and my colleagues Badr and Naeem did the Power Point slides for the group presentation.