MNM3701
STUDENT NO
Start by discussing these components theoretically and
then apply them practically to the SMME. Advise how
the SMME can segment the market and which segments
it should focus on. Explain how the company can
position itself in the market to attain a competitive
advantage.
Small, Medium and Micro Enterprises (SMMEs), also referred to
as small business, play an important role in an economy. They
can be key drivers of economic growth, innovation and job
creation. In South Africa, government recognises the
importance of this segment of business activity, so much so
that a new Ministry of Small Business Development was
established in early 2014. The aim of the Ministry is to facilitate
the promotion and development of small businesses. These
enterprises contribute significantly to national GDP and have
proved to be major contributors to job creation (The DTI, 2008).
South Africa struggles with an alarmingly high national
unemployment rate of 25% (Statistics South Africa, Quarter 2:
2015), which is partly exacerbated by a chronic shortage of
skilled labour. Against this backdrop, government is aiming to
put policies, strategies and programmes in place which aim to
create an enabling environment for small business. The range
in size is very wide The definition for SMMEs encompasses a
very broad range of firms, some of which includes formally
registered, informal and non-VAT registered organisations (The
DTI, 2008). Small businesses range from medium-sized
enterprises, such as established traditional family businesses
employing over a hundred people, to informal micro-
enterprises. The latter includes survivalist self-employed
persons from the poorest layers of the population. The upper
end of the range is comparable to the small- and medium-sized
enterprises (SME) segment found in developed countries. In
South Africa, a large majority of SMMEs are concentrated on
the very lowest end, where survivalist firms are found (Berry,
2002). These firms can take the form of street trading
enterprises, backyard manufacturing and services, and
, occasional home-based evening jobs. The informal sector
comprises almost exclusively of SMMEs; those classified as
survival entities have very little growth potential and are less
likely to hire staff (The DTI, 2008). Policy development
Government policy on South African SMME development was
initially documented in the 1995 White Paper on SMME
development. The Integrated Small Business Development
Strategy provided an action plan with focus on: 1) increasing
financial and non-financial support, 2) creating a demand for
the products and services provided by the SMMEs and 3)
reducing regulatory constraints (The DTI, 2008). In line with this
action plan, the government established a number of
institutions. SMMEs play a significant role in the economies of
countries, stimulating economic growth through increased job
creation and innovation (posits that IT is an important means of
sustaining, facilitating and promoting SMMEs’ operations.
SMMEs need to identify and invest in technologies that assist in
increasing the efficiency and development of Business
Processes (BP).
which would be responsible for the implementation of small
business development strategy (GEM, 2014) & (The DTI, 2008).
Responsible institutions The Small Enterprise Development
Agency (SEDA) is an agency of the Department of Small
Business Development. It was established in December 2004,
through the National Small Business Amendment Act (Act 29 of
2004). It is mandated to implement government’s small
business strategy, design and implement a standard and
common national delivery network for small enterprise
development, and integrate government-funded small
enterprise support agencies across all tiers of government. The
Small Enterprise Finance Agency (SEFA) was merged with the
South African Micro-Finance Apex Fund (SAMAF) and Khula
Enterprise Finance Limited, to cater for small businesses
requiring funding up to a limit of R3 million. SEFA offers
bridging finance, revolving loans, term loans, asset finance and
funds working capital needs. The National Youth Development
Agency (NYDA) was formed with the purpose of assisting young
South Africans between the ages of 14 and 35 years to start
businesses and to finance existing businesses. In order to
enable and support technological innovation, as well as to
STUDENT NO
Start by discussing these components theoretically and
then apply them practically to the SMME. Advise how
the SMME can segment the market and which segments
it should focus on. Explain how the company can
position itself in the market to attain a competitive
advantage.
Small, Medium and Micro Enterprises (SMMEs), also referred to
as small business, play an important role in an economy. They
can be key drivers of economic growth, innovation and job
creation. In South Africa, government recognises the
importance of this segment of business activity, so much so
that a new Ministry of Small Business Development was
established in early 2014. The aim of the Ministry is to facilitate
the promotion and development of small businesses. These
enterprises contribute significantly to national GDP and have
proved to be major contributors to job creation (The DTI, 2008).
South Africa struggles with an alarmingly high national
unemployment rate of 25% (Statistics South Africa, Quarter 2:
2015), which is partly exacerbated by a chronic shortage of
skilled labour. Against this backdrop, government is aiming to
put policies, strategies and programmes in place which aim to
create an enabling environment for small business. The range
in size is very wide The definition for SMMEs encompasses a
very broad range of firms, some of which includes formally
registered, informal and non-VAT registered organisations (The
DTI, 2008). Small businesses range from medium-sized
enterprises, such as established traditional family businesses
employing over a hundred people, to informal micro-
enterprises. The latter includes survivalist self-employed
persons from the poorest layers of the population. The upper
end of the range is comparable to the small- and medium-sized
enterprises (SME) segment found in developed countries. In
South Africa, a large majority of SMMEs are concentrated on
the very lowest end, where survivalist firms are found (Berry,
2002). These firms can take the form of street trading
enterprises, backyard manufacturing and services, and
, occasional home-based evening jobs. The informal sector
comprises almost exclusively of SMMEs; those classified as
survival entities have very little growth potential and are less
likely to hire staff (The DTI, 2008). Policy development
Government policy on South African SMME development was
initially documented in the 1995 White Paper on SMME
development. The Integrated Small Business Development
Strategy provided an action plan with focus on: 1) increasing
financial and non-financial support, 2) creating a demand for
the products and services provided by the SMMEs and 3)
reducing regulatory constraints (The DTI, 2008). In line with this
action plan, the government established a number of
institutions. SMMEs play a significant role in the economies of
countries, stimulating economic growth through increased job
creation and innovation (posits that IT is an important means of
sustaining, facilitating and promoting SMMEs’ operations.
SMMEs need to identify and invest in technologies that assist in
increasing the efficiency and development of Business
Processes (BP).
which would be responsible for the implementation of small
business development strategy (GEM, 2014) & (The DTI, 2008).
Responsible institutions The Small Enterprise Development
Agency (SEDA) is an agency of the Department of Small
Business Development. It was established in December 2004,
through the National Small Business Amendment Act (Act 29 of
2004). It is mandated to implement government’s small
business strategy, design and implement a standard and
common national delivery network for small enterprise
development, and integrate government-funded small
enterprise support agencies across all tiers of government. The
Small Enterprise Finance Agency (SEFA) was merged with the
South African Micro-Finance Apex Fund (SAMAF) and Khula
Enterprise Finance Limited, to cater for small businesses
requiring funding up to a limit of R3 million. SEFA offers
bridging finance, revolving loans, term loans, asset finance and
funds working capital needs. The National Youth Development
Agency (NYDA) was formed with the purpose of assisting young
South Africans between the ages of 14 and 35 years to start
businesses and to finance existing businesses. In order to
enable and support technological innovation, as well as to
