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QUESTION:
In
which area of the economy – Industrial, Merchandising or services would a small
business have best opportunity for growth? Why?
ANSWER:
There
are three main areas of small business activity where these enterprises seem to
be present in great number. These areas
include:
1.
Industrial (Manufacturing): Typical example include bakeries, Dairy factories,
clothing manufacturers, printing jobs, furniture stores and auto spare parts
manufacturing. The activates in the above areas involve the processing or
transformation of the primary or secondary raw materials into a form useful to
the final consumer. Their product could
also be further produce into finished product.
2.
Merchandising: - This involves the activities
of those middlemen in the channel of distribution who either sells goods to the
final consumers or buys goods for resell to retailers, examples includes food
stores, fuel services station, drug stores, supermarket or sales depots.
3.
Service Enterprise: The most common is hotels, auto repairs,
business centres, barbers/hair dressers, private educational institutions, even
management etc. Among the areas identified above, the one with the easiest
opportunity for a small business to grow is the merchandising. These simply involve the creation of market for
the industrial goods and making it available for the consumers at various categories.
Area
with the best opportunity for growth is Merchandising:
The
reason include:-
1.
The
capital requirement is low: An entrepreneur could start a shop with as low as
N50,000 depends on the units and the cost price of the commodity he intends to
trade on.
2.
There
is no strict regulations on the entry requirements for the distribution of
household items unlike what is needed to set up an industrial activity.
3.
Location:
The location of small shops to sell daily need is not difficult to get. Recently some of these products are moved to
the doorstep of the consumers at a minima margin on the cost price. E.g. bread, sachet water etc.
4.
The
act of distribution and sales of most consumables does not require special
training before starting the trade. Some
small business owners learn the relevant act of the trade while already
practicing it.
5.
The
middlemen in the chains of distribution help to create awareness of small goods
in their customers. This is done through
the display of product from different producers in the same shop
6.
Most
goods are very bulky in nature, hence it will be economically stressful for the
manufacturers to make them available in bits to the final consumer without the
middlemen.
7.
The
majority of the population are scattered in different rural areas that are separated
by poorly constructed road network.
Goods can only be made available by the middlemen who patronize the
various local markets at regular interval.
8.
While
the manufacture of a product embarked on mass production, the small of these products
depends on the efficient roles of the merchant who spread the goods to different
geographical zones of the country.
Recently, the manufactures has being involved in boosting the efforts of
the middle men by giving them incentives at the end of the year. Examples includes: Four Mills of Nigeria, Golden
Penny, Dangote Group etc, who gives award to their distributors of their
products.
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