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Read the following case study and answer all the questions that follow. Better Trading Enterprises Banga is a former employee of a large reputable supermarket in Bulawayo. He worked there for fifteen years as a buyer. In 2004, he was retrenched and decided to use his retirement package and vast experience in supermarket activities to open a general dealer's shop trading as Better Trading Enterprises (BTE).

BTE was opened to members of the public ten years ago. Jean and John, Mr Banga`s children, who were school leavers, were the shop assistants. The business enjoyed monopoly during the first five years with sales and profits increasing. Banga managed to expand his business and is now operating four other shops in rented premises in different locations. The business now has a staff complement of sixteen employees, mainly school leavers from the local communities. BTE is now reeling from stiff competition exerted by recently established supermarkets in addition to increasing operational costs.

Mr Banga has then consulted experts from the Ministry of Small and Medium Enterprises on strategic business ideas which will enable the business to continue thriving despite stiff competition. The experts advised him to cut on rental costs by constructing own buildings and either continue trading as Better Trading Enterprises or opt for a franchise.

  1. Explain the advantages that Better Trading Enterprises enjoy as a small business.
  2. Discuss the benefits that will be enjoyed by Better Trading Enterprises if Mr Banga decides to opt for a franchise.
  3. Analyse other strategies that Better Trading Enterprises can employ to survive stiff competition.
  4. Evaluate the sources of finance that can be used by Mr Banga to construct buildings for his business.

 

in Form 6 Business Studies by Diamond (41.3k points) | 10 views

1 Answer

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1. BTE as a small business will fill niches that their larger competitors often overlook and can serve customers more directly and with greater flexibility than their larger competitors. This channel will make them have a market retention, which can not be served by big businesses. Therefore BTE will have more returns.

The other advantage is that BTE as a small business, can be able to change plans or strategy much faster than larger competitors or business. Therefore should leverage on this idea of being small to even outcompete the large businesses.

Employees in BTE business can be cross-trained, making them flexibly attend to any role or function and keep things moving, unlike in a big business where there is rigidity and need for more specialised approach.

2. Opting for a franchise is an excellent and effective approach to business and market venturing. A franchise is based on running a well established big business having organised systems in place, hence if taking a franchise you have high chances of being successful than starting from scratch.

3. BTE has to know their competititors so that they can also understand and identify what they are offering, and what their strengths and weaknesses are. BTE must also know their customers as customers change to different needs.

BTE can also do more of rebranding and marketing so as to raise awareness of its business and product offer. This involves updating your product image and even quality aspects.

Another way to survive competition is to look for new markets and also expand your offer if possible.

4. BTE can source its finance from current income generated, that will be the first way to go. Angels, or wealthy individuals and retired company executives who are willing to invest in small business are also a good source of finance if you present them with sound and well plan of your business potential. BTE can also seek government grants and subsidies and make request to be assisted financially in constructing their buildings.
by Silver Status (31.3k points)
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