Small Business Management - week # 4 chapters 15,16

* This posting covers chapters 15-16*

Chapter 15 - International Small Business

On this chapter we have - - Listed the factors to consider when preparing an international business plan. - Enumerated the five ways for small businesses to conduct international trade. - Analyzed the advantages and disadvantages of exporting for small businesses. - Discussed the factors to consider when importing products and materials. - Explained how small businesses can manage their finances in international trade. - Articulated the cultural and economic challenges of international small business activity. I don't know how relevant this issue will be for me if I do manage to make my plan work and one day become an independent interior designer. don't know if I want to go international with my business, don't know what kind of direction my business will follow. It's much too early to know. But I do realize the importance and the potential of international small business. Since I am a foreign student (waiting for permanent citizenship...) - I would like to talk about the importance of getting familiarized with the culture of a country you're doing business with. Where I come from, Israel, greeting customs and courtesies are abit different than in the States. Being a country of warm, temperamental, passionate people – Israel is accustomed to friendly gestures even among business partners. It is customized to shake hands, and even kiss on both cheeks (depends on how close the relationship is). Exchanging presents and meeting over dinner or lunch is a regular thing, and sometimes you can even get invited to a business partner’s house for dinner with his wife and kids. Business meetings tend to be less formal than in Europe, for example.

As they say - When in Rome...

You have to get to know the culture of the people you are planning to do business with. It can make the business process much smoother and prevent simple mistakes that can sabotage your work.

Joint Ventures and Strategic Alliances ....

I really like the idea of using a strategic alliance in order to penetrate a market abroad. I think it can deffinitely make the whole process of starting a business abroad - much easier and faster.

Closing case # 6 , brings a story of a windsurfing school that has a potential of expanding business abroad. here it is -

http://college.hmco.com/business/hatten/small_business/3e/students/case/international.pdf

Closing case # 6 – International Windsurfing school S.N.C Summary: Benno Schmieder, German in origin, is the owner of a windsurfing school and boat rental company in Italy. For many years, he used to run his company illegally, without keeping any financial records nor paying taxes. For a long period of time he had to maintain a low profile due to those reasons, as well as deal with an Italian partner who basically pushed his way into Schmieder’s business by blackmailing & threatening him. In 1995, after years of attempts and struggles to keep his business profitable, Schmieder finally decided to keep proper books and advertise his company. Questions: Using theories, concepts, and models from the course, explain to Schmieder why he should, and how he could, expand beyong Italy. - I think that Schmieder can expand beyond Italy because he offers a unique product that has a demand in the world; his windsurfind lessons and boat rentals were popular in Italy so there’s a good chance they’ll be popular in other contries, especially Western European countries like Spain, France, Greece, and even countries like Turkey who serve as resport & vacation destinations for many Europeans. - Schmieder obviously has managerial skills (keeping his company going for so long despite all the difficulties ! ) and lots of experience working in a country other than his origin’s country. He also traveled a lot and is familiar with foreign markets and cultures. I don’t see a reason why he should not go international. There are several options for Schmieder to expand his business outside Italy: 1- Create a Strategic alliance or a Joint venture ; find a large well established company looking for fresh ideas and create a strategic alliance with them so his penetration into the local market will be faster and easier. 2- Direct Investment – Set up a permanent location in another country. Of course, both options involve finding the right market for your product, finding investors and raising capital. Serve as a marketing communications consultant to Schmieder, creating a realistic advertising program consistent with a viable international marketing plan. As Schmieder’s marketing communication consultant, I would firstly advise him to write an international business plan. Such a plan, should identify issues such as target market, countries that may serve as potential opportunity, ways to raise capital, the chances of finding a strategic alliance or a partner for a joint venture, Application for licensing and all legal documents needed. Once a target market is defined and selected, I would reaserch social courtesies of this market and cultural characteristics in the specific country. I would research competitors products and compare them to Schmieder’s, to verify and identify his competitive advantage. I would probably recommend him to find a strategic alliance, meaning a partner, because that would most likely assist Schmieder in penetrating the market and speed up the process. Once capital has been raised, a location has been set, licenses applications submitted and authorized, alliance legally signed and a target market has been identified - I would publish the business on the internet, in travel agencies and local tourist information desks. Invite travel agents for an OTH (“on the house”) windsurfing lessons day at the beach, create promotional deals with travel agencies, youth summer camps, and offer “fun windsurfing day” packages to large corporations who wish to forge team spirit among their employees. I would even contact sports organizations and promote Schmieder’s windsurfing school through them, while offering their representatives free lessons as a PR tool . In reality, Schmieder decided not to internationalize. Justify his strategy and prepare a realistic advertising program consistent with his decision. Since Schmieder did not keep financial records nor paid taxes for many years, it will probably be difficult for him to find investors who can trust him, and raise capital that will allow him to start an international business. He will need to get legal permission and licensing to operate his business in a foreign country, and not keeping records for so many years will make his background checking difficult or actually impossible. Raising capital for expanding a business abroad can be difficult enough without the problems mentioned above. In addition – penetrating a foreign market can be tough. Travelling will be necessary and Schmieder will have to devide his time between the two locations of his business or hire a manager to manage one of them, a fact that will make quality control difficult for him. Windsurfing season lasts about five months, and tourism & watersports activities (like windsurfing ) can be influenced by many factors such as political situation, which makes it an unstable, risky business. Trying to be realistic, I would offer Schmieder to start a promotional campaign for his business all around Italy. As windsurfing season approaches, by the end of winter and beginning of spring, advertise the windsurfing & boat rental company in travel agencies in large cities around Italy. Many Italians like to go on vacation during the whole month of August for example – so I’d try to create some kind of a travel package in conjuction with travel agencies in large cities like Rome, Florence and Milan, and offer windsurfing lessons and boat rentals in addition to hotel accommodations close to the beach areas. I’d offer large corporations to take their employees out for a day of fun and windsurfing at the beach at a special promotional price. If financial situation allows - I’d consider purchasing a couple of large Yachts that can be leased for summer dinner parties. I’d offer windsurfing deals for children’s summer camps, and perhaps contact International summer camp agencies and offer them summer windsurfing lessons and water activities for kids. Conclusion: Going international can increase profits and serve as an opportunity for growth – but not for everyone. There are many factors that need to be taken into consideration. Licensing, capital raising, and market identification are only part of the things that need to be compeleted before expanding business overseas. Sometimes finding the right alliance abroad can speed up and ease-up the process but again – it needs to be well considered and there needs to be full commitment on the business owner’s side – to run a business in a foreign country, with all that comes along with it. -------------------------------------------------------------------------

Chapter 16 - Professional Small Business Management

On this chapter we have -

- Described the functions and activities involved in managing a small business. - Explained the stages of small business growth and their consequences for managing your business. - Discussed the significance of employee leadership and motivation to small business. - Applied the foundations of total quality management to running a small business. - Discussed the special management concerns of time and stress management. What is management ?

Management is the process of getting things done through others.

The four functions of business are Planning, Organizing, Leading and Controlling.

What is delegation ? Granting authority and responsibility for a specific task to another member of an organization; empowerment to accomplish a task effectively.

On the first half of this blog I have discussed the priciples of management and have brought an analysis of a manager I used to work for. I have mentioned that part of his job was to delegate responsibilities to other people. Delegation allowed him to clear more time for planning, meeting with clients, searching for new potential clients and more.

When I worked for Eshet Incoming in Israel (An Incoming tourism company) - the company's management planned to promote me to manage a small team of people and call it the FIT Department (Fundemental Individual tourism ). One of the things that concerned me the most when considering my promotion - was the question whether or not I will be able to delegate?

I always took upon myself to do alot of work, and I found it hard to pass on responsibilities to others. But I guess that If I want to become a business owner one day - I will have to learn to do so. I will not have a choice ~!

Last semester I had a chance to manage a small team on a group project. I got a chance to delegate and I kinda' got comfortable with it after some time, so there's still hope for me...;-)

The following link brings an article about ERG - a family owned small business, that used to be overdependable on the two owners - Claude and Sherrie. The change they have implemented into the company turned it into a successful growing business.

http://college.hmco.com/business/hatten/small_business/3e/students/case/erg.pdf

Leadership is important to every business, but Delegation is an inevitable part of it. A manager cannot possibly do everything ! a manager cannot make all decisions . Some freedom and decision making authority should be given to employees. It also increases motivation among employees because one of the most basic needs of a person is self actualization. Letting employees become involved in the company's being - can satisfy this need to contribute to the businesse's success.