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Friday, 8 May 2015

SMALL BUSINESS MANAGEMENT ASSIGNMENT – EXAMINATION QUESTIONS AND ANSWERS



For: Questions and answers email: theotherwomaninmarriage@gmail.com
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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