Prelim Business Studies Essay Example

align="justify">Economic contribution of Seems The SEEM sector contributes: approximately 50 per cent of gross domestic product (GAP) approximately 73 per cent of total private sector employment approximately 5 per 1 OFF Characteristic Summary Gross domestic Product The ABS estimates that SEEMS contributed about 50% of Australia's GAP - approximately $560 billion. The total output of the country diverse collection of SEEMS, makes a significant contribution to the national economy. Employment During the last 20 years the SEEM sector has been the major generator of new Jobs in the Australian economy.

During times of the economic downturn Seems were more likely to try to maintain their existing employees compared to large businesses. SEEMS nutrient to the revenue raised through taxation, not only do they pay tax but their employees pay income tax and are used to provide goods and services that benefit the whole community.

Balance of payments One of the most dynamic changes to the Australian SEEM business culture is the increasing awareness of the need to service the overseas markets. The number of SEEMS Australian exporters is growing faster than large exporters SEEMS in agribusiness, manufacturing and professional services.

Another crucial role is that the adaptability and flexibility of SEEMS make them more responsive to the needs of overseas markets. Invention and innovation SEEMS are the main source of invention and innovation and this has improved efficiency and increased productivity.

Success and/or failure of Seems While many people are successful in their business ventures, many others unfortunately experience failure. In fact, of every ten Seems started, about seven go out of business within five years after opening their doors. The financial risks of running

a SEEM are very high, although some businesses are more risky than others.

In addition to psychological and financial pressures, SEEM owners tend to be victims of hysterical stress. Often, they must not only be the owner but also the accountant, marketing manager, sales representative, stock clerk and receptionist.

The hours can be long and vacations are rare. SEEM owners also face major challenges as they attempt to Juggle home and work responsibilities. Success of Seems The five common 'keys' to SEEM success are: Flexibility: The small size of the business allows the owner to adapt quickly to changes in the external environment.

Because there are fewer levels of management, decisions can be made quickly. In addition, the close contact between owners and their customers allows the establishment of personal relationships, helping owners to respond quickly to clients' changing tastes and preferences. Reputation: Because the SEEM is servicing a narrow market niche, it can develop enviable reputations for quality and service.

Focus on market niche Small businesses can concentrate their efforts on a few key customers or a specific segment of the market.

This provides the opportunity for the SEEM to become more specialized and able to deliver a high level of service. Entrepreneurial abilities personalities of owners will vary enormously. Some will have drive and enthusiasm, many will set targets, and some will take big risks. Some will thrive on the challenge of a potential failure, enjoying the process of solving the problem.

The majority will be highly motivated and optimistic, as outlined in the Snapshot below. Access to information. It is always difficult for a SEEM owner to choose relevant information and to

gauge the quantity of information needed.

As a bare minimum, the SEEM operator must have information regarding profitability, the quality of products and services, and the performance of employees. Accurate and up-to-date information will allow the SEEM owner to make better decisions.

Failure of Seems Seems have a high failure rate. The most common causes of SEEM failure are managerial inexperience and incompetence, internationalization, and lack of planning. A SEEM is classified as a failure when it is: a. Unincorporated and declared bankrupt -? a legal process of distributing among the creditors the property of a business or person who cannot or will not pay their debts b.

Incorporated and either forced into liquidation or voluntarily closes down because it cannot pay its debts and aces a cash flow problem. Seems failure rates Accurate fugues are hard to obtain because not all business failures are reported.

However, statistics collected by the Australian Bureau of Statistics point to an alarming trend: one in four businesses will fail within the first year of being established. This means that approximately 80 000 Australian small businesses fail each year -? roughly 219 per day.

Reasons for SEEM failure Small to medium enterprise failure is not usually caused by one single factor but rather a combination of several factors: failure to plan lack of information dervish crisis inaccurate record keeping failure to delegate complacency incorrect marketing strategy poor location lack of financial planning negative cash flow new competitors illness supplier problems poor use of external support services economic downturn new taxes change in government policy insufficient capital partnership problems lack of management experience incorrect pricing policy not enough sales staff

difficulties Being under-insured.

The most common causes of SEEM failure are managerial inexperience and incompetence, internationalization, and lack of planning. Future prospects of Seems What are the emerging growth areas for Seems? Perhaps the most noticeable recent trend, and one that has the potential to revolutionist the small business sector, is the expansion of high technology.

High technology (hi-tech) is a broad term used to describe new and innovative types of businesses that depend on advanced scientific and engineering knowledge.

The prediction is that people with these specialized skills, who are also innovative and able to identify new market niches, will become a major segment of the SEEM sector. Hi-tech businesses start small but tend to expand ore rapidly than many other businesses. The service sector is another growth area for small business.

The following four areas as likely to present future opportunities for those who are able to meet market expectations.

Aged services With the ageing of the population, there will be an increase in the demand for specialized services to cater for this group. Such services as home-delivered meals, house cleaning, garden maintenance and healthcare will be among those in most demand. Small office home office (SOHO) With the number of 'small office home office' (SOHO) or micro businesses rapidly expanding, services to support these businesses are destined to escalate.

Currently these micro businesses, run by one or at the most two entrepreneurial people, make up 90 per cent of Seems in Australia.

Businesses that can provide support services, such as accounting, personal computers, telecommunication facilities and office equipment, will find a ready market. Franchising Franchising has become a popular form of operation,

Franchising lends itself to these business areas and, with franchises presently increasing at a rate of 14 per cent per ear; the industry should provide many business opportunities in the future.