Challenges Faced By Small Business Enterprises In Queensland Industrial Area

Problem Statement

The major contributor to the economy of Queensland is the Small Business Enterprises. Around 20% of the small businesses of Australia are based in Queensland. These small businesses at national level contribute nearly $100 billion to the gross state product of Queensland (Australian Bureau of Statistic., 2016). A small business can be defined in several ways. The common definition used normally takes into account the number of employees, legal structure, revenue generated, balance sheet size and other economic factors (Avermaete & Viaene, 2003). The bank research has stated that there are various definitions suggested by different organization but for this paper, the definition given by Australian Bureau of statistics which states that “Small Businesses are small independent and privately owned entities which are managed by individuals or a group of individuals limited to a maximum of 20 employees.

Small businesses contribution in the Australian economy has been identified as very crucial. They are accountable for privately owned businesses situated in the country and are responsible adding value and generating employment (Australian & New Zealand academy of management. 2012). Small businesses have been faced with many operational challenges that contribute in the failure of small businesses in comparison to the large business. The features have been identified in previous literature but how these challenges affect the business decisions of small businesses as compared to large ones are still to be examined in detail. To address these issues, the data of private and official sectors have been used in these papers and to examine the challenges the information is extracted from the Liaison program initiated by Reserve Bank of Australia. The objective of this assignment is to study and examine operating challenges faced by the small business enterprises situated in Queensland, and giving necessary recommendation to face such challenging situations.

The structure of this assignment is as follows: The introduction will be covered in section 1 of this research proposal, which will be followed by a problem statement, objectives of research, explanation of the suggested proposal and then the expected outcome which will also be covered under section 1. The section II comprises of conceptual framework, Research methodology and hypothesis. At the end, the section III will consist of study of the organization, Gantt chart and estimate budget for the proposal.

The major factors affecting the growth of the business in any economy are good management and operational skills. According to an international research, the effective management and operational skills are responsible in increasing the growth of sales and market share which results into higher productivity (Cooksey, 2008). According to a survey conducted in 2007 by the Ministry of Commerce and Industry on the management of small businesses by the Queensland Industrial Estates found that there are number of challenges faced by the small business enterprises in Australia. There are many organizations that shut down their operations because of lack of financial resources and poor strategic implementations and planning. Connolly, et al., (2012) found that due to the continuous efforts of SBEs to sell their large number of products in the market, they are still on the breakeven or in a situation of loss. By conducting an investigation the entrepreneurs discovered that the reason behind the financial instability were petty expenses. The researchers of the Australian University during their study of Australian firms for the IMI found confusing results in this context. They stated that the small, midsize and large firms operating in Australia had poor management practices. They were significantly lagging behind UK and US firms. Australian firms were behind by 20% as compared to other multinationals, in terms of management practices.

According to the chamber of commerce and industry Queensland (CCI survey 2015), it was discovered that there are different challenges faced by the businesses at different lifecycles. Commencing and operating a new business have a possibility of both success and failures. Due to small size of the business and no past experience does not allow the individual to make any small management mistakes as it will directly lead to downfall of the organization. This statement was also supported by Craig, et al. (2007), he stated that for the growth of the small businesses more management competencies are required as compared to the large scale businesses. Due to the limited availability of the financial resources and insufficient training opportunities, the workers failed to adapt new skills, competencies and knowledge for the growth of the business.

Therefore the purpose of conducting this study is to analyze the small business enterprises situated in Queensland industrial area and provide supportive evidence for the gap. What are the difficulties faced by small and micro business operating in Queensland industrial area in context of management and operations? What are the strategies adopted by these small enterprises in Queensland to cope up with these challenges? What are the possible solutions to deal with these challenges encountered by the organizations in future?

The study focuses on identifying and examining challenges which affects the growth of small business enterprises situated in Queensland with the help of case study of the Brisbane Market and to find required solution to overcome these challenges. The research is based on the theoretical framework discussed under this paper and examines the variables identified in the literature. While researching the objectives, following research question were identified:

• RQ1: What are the challenges and difficulties faced by the small business enterprises situated at the Brisbane market in context of operations management?
• RQ2: What is the impact of these challenges on the operations of the business?
• RQ3: What are the strategies formulated by the small businesses to overcome the challenges faced by them?
• RQ4: What principles can assist the small enterprises to effectively manage and improve their performance?

MSEs witness different unique issues that significantly affect the business growth and profitability which questions their ability to contribute actively in the sustainable development of an economy (Damanpour, 2015). The most common issue identified is weak business management approach. An effective management approach and efficient operational skills are major components of organizational growth in an economy Department of Innovation, 2011). It has been proved in international research that management and operational skills can enhance the sales growth and growth of the market share as a result the productivity also increases (Friar, et al., 2003). Therefore, this proposal will be accomplished with the help of widespread literature review and feedbacks and suggestion from the manager and owners of small enterprise (with the help of questionnaires and surveys).

Project Justification

The research can benefit the stakeholders in following ways:

• Policy Makers: The research will help policy makers to design effective business strategy that will assist the small business to grow and expand in the market. The study will also help to extract important data and information which will benefit the Government and Universities.
• Academicians and researchers: The study will provide a great source of reference for the researchers who wish to pursue this topic and for the academicians it will provide a strong base for their studies.
• Research Institution: Research will provide strong materials for conducting further research to the research institution.
• Other Stakeholders: Stakeholders such as financial institutions, shareholders, investors, employees, pressure groups, etc., can benefit from the information provided in the research. The research will help the business management facilities providers situated in Queensland to improve their service delivery.

The information obtained from this research study will help the practicing and potential entrepreneurs (includes managers and business owners) to identify their weaknesses and overcome them in order to provide maximum benefit to the business. The findings of the research will also assist the Queensland state government in developing important policies and involve business development agencies who are competent so that they can help the small businesses to become innovative by improving their technological capabilities so that they can improve their quality and delivery of their product so that they can survive the competition. This will also empower the SMEs to move ahead in their respective industry and help them to realize their future vision. The study will also contribute in the existing body of knowledge on this topic in the area of strategic management and can form a strong base for extensive research on this topic. The research will allow collecting and studying substantial number of experiences and provide a strong basis for validating and refining the findings and data collected from the study.

• Conceptual Framework and Research Hypothesis

• Environmental Dependence Theory

According to Fritsch and Mueller (2006) macro environment which is also known as societal environment, consist of number of forces. The external environment is dynamic and undergoes rapid changes. The changes are unpredictable and have a significant impact on the management of the business. Grey (2006) stated environmental changes have a strong relationship with the strategies of the management and its performance. The argument was supported by Hurst and Pugsleyr. (2011). Child in Genus (1998) that environment plays an important role in management strategies and change. The external environment consists of general as well as specific forces. The specific forces have direct impact on the enterprise ability to obtain the resources. General forces affect the ability of the business to obtain scarce resources from the environment (Huang, at al, 2001).

In Queensland, the technological development or availability of the technology impacts the product offerings of a micro business. After analyzing the level of technological development in Queensland, it is recommended for management to use both manual and automatic technology in their operations. The technological changes in an enterprise directly affects the competitors action (Fritsch and Mueller., 2006). It can be concluded that the management should try to anticipate the influence of variables existing in the environment on the business activities. The management should monitor these factors on continuous basis as they have a significant impact on the management decisions. This will allow enterprises to make effective strategies to cope up with the changes in the external environment.

Expected Research Outcome

Resource Based View examines how the external resources will affect the enterprise behaviour. The procurement of external resources is an important principle in the tactical and strategic management of the company. The resource based view seeks enterprises as group of members known as coalition in constant state of change (Pfeffer and Salancik (2003) pp 24-25).

The group can be internal (managers, employees, shareholders) or external (customers, competitors and suppliers). The members of the coalition can have a dominant position than enterprise due to various reasons. Resource based view also has direct implication on the divisional structure of the enterprise, strategies of production, recruitment of employees and board members, the structure of the contract, external links of enterprise and other parts of the enterprise strategy. The resource dependence theory supports the argument that the enterprise is dependent on resources for their operations and these resources are ultimately obtained from the external environment. The external environment consists of many other enterprises. The resources which are needed by one enterprise are often seen in the hands of other enterprise; as a result resources form the basis of power. In legal context enterprises can be dependent on one another which signify that resource dependence and power are directly linked. Power is thus considered as mutual, relational and situational (Fritsch and Mueller., 2006).

The role of small and micro enterprises is considered as very crucial in the economic development of the country. This sector contributes in generating employment opportunities and reduces the regional imbalance arises due to economic conditions in very less investment (Solis and Breakenridge., 2009). There are various challenges faced by SME’s that restricts them to play their role effectively. Due to inadequate training and development opportunities in small scale sector, they cannot contribute as optimally as expected from them. Since the size and operation of the business is not large they are unable to understand the importance of training and development. Also the workers engaged in small sector generally have low level of education which restricts them to face the challenges arise from the modern productive system (Fritsch and Mueller., 2003)

Small and micro enterprises play a very crucial role in the industrial system of the country therefore suitable strategies should be designed to overcome the challenges faced by the SMEs in their operations. SMEs should analyse the problems and issues faced by the small sector with the help of a survey and accordingly design productive program for them. According to a study, there are only few entrepreneurs who initiate their business on the basis of meticulous planning. Lack of planning may result into inaccessible locations, underestimation of budgeted costs, lack of experienced consultancy services and no proper technology, etc. Effective planning is important for survival of the SMEs.

Section II

The chapter includes information about the course of action that will be followed in order to find a reliable solution of the problem which is; challenges and strategies designed for small and micro enterprises situated in Queensland industrial area. It consists of five sections. Section one discusses about the research design used. Section two highlights more about the study site. Section three focuses on analysis and procedure used for sampling. Section four elaborates about the sources of data and the method of data collection. The last section focus on how the data collected will be analysed and interpreted with a view to obtain meaningful information.

A research design provides a plan and structure to conduct an investigation with an aim to find solution of   achieve from the hypothesis and what are the operational implications of the analysed data. According to Cooper and Schindler (2003) sum up the essential component of research design as an activity and a time based plan; based on the research questions; helps to select types of information and sources from where it has been collected; allows to form a relationship between two variables under a common framework and design a procedure to conduct a research activity. The design used by the researcher to collect the data from the respondents is cross sectional. Cross sectional is preferred because it addresses all the questions related to who, what, how, when etc. (Cooper and Schindler, 2003). An elaborative study is undertaken to know the details of the description, making sure that there is no biasness in collected data and there is no errors in the data interpreted.

Population can be defined as group of individual, things or elements or anything that are being investigated for the purpose of research. The population which is being investigated should be homogeneous. For the purpose of this study a population of 300 micro enterprises from various industries such as manufacturing, textile etc. The only requirement for this study is that these micro enterprises should be operating in Brisbane’s Industrial area.

In order to select respondents stratified random sampling is used. Population was segregated into strata of 50 SMEs, which has been referred as business categories. Proportionate stratification is used to take out sample from each stratum on a proportionate basis. To decide what business was to be interviewed, sample from each business category was chosen. While selecting the sample units the technique adopted was, two stages stratified simple random sampling. Ten sectors in the small and micro enterprise are selected in the very first step.

The research will be conducted on the basis of primary source of data. The method used for collecting primary data is a self-administered questionnaire which ensures uniformity of questions and gives the researcher an authority to restrict the mode of answering.  A questionnaire is a printed form that is designed to extract information important for the purpose of the research. The questionnaire was distributed among business owners and managers and they were collected by the researcher after a week.

The data collected from the questionnaires are analysed and interpreted using statistics. Closes ended questions and their solutions are depicted through percentages, frequency counts, and statistical indexes and then a conclusion was drawn about a particular population segment. Microsoft excel is used for processing data and they were further presented using measures of central tendency and other percentages.

Chapter one will consist of a research proposal as mentioned in this assignment.

Chapter two will discuss the case study of management business and in depth analysis of the implication on the Small business enterprise.

Chapter three will consist of details of methodology used, data series, data collection methods and literature review, key indicators of management skills of business and methods used to analyse the data.

Chapter four will include the findings and analysis of research.

Chapter Five will deal with the important findings and analysis and how these will help SMEs to survive the competition in the future (it will include strategies adopted for survival).