Small Businesses Need to Relook Their Approach to Competition

Small businesses should relook their approach especially towards intra-competition and focus on the customer if they want to transform their brands.

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The East African Weekly Newspaper in a recent article identified corruption, high costs and competition to be the primary enemies of a small businesses in East Africa. However, article did not identify low focus on quality as another enemy of small organizations in East Africa. Thing is, issues like corruption and high cost of doing business can be dealt with through political goodwill, change in law and good government policy.

On the issue of cost as a barrier to micro businesses in East Africa we are bound to borrow intellectual bravura from Rosa Luxembourg in her book “Accumulation of Capital” in which she identified rent and government license to be the real killers of private capital accumulation at all levels. This observation by Luxembourg is squarely applicable to the conditions of low capital business men and women in Kenya. In fact rent and licenses in Kenya are the key barriers to survival of small businesses. Unfortunately, landlords and tax collectors in Kenya are lords of mischief. They are not ashamed of seeing oceans of young people wallowing in poverty. The poverty that would be attenuated through small business.

As for high competition within the SME business environment, there is only one way to deal with it – focus on quality. The failure of SMEs in East Africa to focus on quality undermines their success, given the globalized nature of business environment in the region. Hence, the discussion for SMEs should be that of continuous improvement as one of the pillars of competitive corporate quality. This discussion will also be the centerpiece of this article.

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Why small businesses struggle to compete

The challenges that small businesses in East Africa face can be better understood if one focuses on the Hazard Assessment Critical Control Points (HACCP) for the quality process of small businesses. The first one is the prevalence of the anti-customer behavior in the broad national cultures. The current cultural dynamics in the East African communities have not ingrained the market value in their ethnic cultures. They still have a respect for kinsmen more than for customers. To a substantial extent, a customer is perceived as an intruder.

Recent academic research in Kenya has shown that negative ethnic dynamics (tribalism) is among the factors that undermine service quality among small and established corporate enterprises in Kenya. This endemic state of ethnic consciousness and lack of customer-centric consciousness has inherently down played capacity to run a small business within the globalized and competitive East African Market.

The second pain point is the deliberate neglect of value addition. Other than the young shoemakers of Kariorkor Market in Nairobi, who are somewhat sensitive about redesigning shoes as per customer specification, the rest of young traders in the region are focused on buying at a lower price and selling at a higher price without any attempt to add value. Sadly, this is a carry-over trend from the academic culture of ‘copying and pasting’, which is slowly sipping into our industrial practice. Unfortunately, buying and selling alone will not change our state of economic development. It does not create jobs, neither does it contribute towards diffusion and transfer of technology.

The third factor is failure by small organizations to consume intellectual resources. Given their small size, many small scale organizations are not able to commission intellectual resources in form of research and development to support of the quality and continuous improvement processes.

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Read Also: Marketing Kenyan SMEs Globally

Rethinking competition

This article will try to establish congruence with the current deliberations of KUSI Ideas Festival – a two-day, annual conference launched by the Nation Media Group with the aim of building a “Pan-African ideas transaction market” to capitalise on the opportunities and innovations available to Africa. The KUSI deliberations cited competition as among the major enemies of industrial take-off among small scale traders in East Africa. However, the conference was talking about competition from the overseas. In my opinion, this was not logical enough. Overseas competition can be countered through domestic focus on customer satisfaction and by obtaining national or regional protective policies.

The worst sort of competition is intra-competition among small businesses themselves using a hostile model dubbed ‘Pull him down’ (Phd). Logical approach in this situation should not be on the hostile competition among the vulnerable and undercapitalized small businesses, but rather on a collaborative focus on continuous improvement in service to customer.

Continuous improvement is known as Kempa Kaizen in the language of quality movement. It was started among small businesses in Japan. But experience shows that, it can also be applied to small business in East Africa without structural challenge. However, it requires some knowledge on how to use. One needs to understand the concepts of Cause and Effect diagram traditionally known as Ishikawa diagram, Force Field Analysis, Pareto Analysis, Emphasis Curve, Affinity diagrams, Taguchi methods, Variation reduction, Quality function deployment and Six Sigma.

This ideas look complicated but they are very simple in practice. It is also encouraged that small scale traders make effort to attend seminars on capacity building towards quality and business excellence. Such like seminars are regularly organized by the African Institute of Capacity Development (AICD) in Nairobi. For example, the recently concluded seminar was on total quality leadership and Swap based policy leadership. All these are productive knowledge avenues for management of budgets and donor fund resources. These are also very pertinent issues to small scale entrepreneurship.

Focus on the King – the Customer

Above all else, the customer is the heart of a small businesses much like small businesses are the heart of a market economy. Thence, we are all bound to look for the ways through which small businesses in Africa can be supported to thrive. In fact, it is imperative that  some easily usable approaches like benchmarking, continuous customer observation, day of the customer, personalised services, lean production and just on time production, online selling and customer relationships are to be adopted by our small scale business leaders.

The passion for discourse in this article is derived from a recent research in France which concluded that Africa is the third most populated continent in the world. That Seventy five percent of the population in Africa are below thirty five years old, educated to some good extent but not employed. This is a clear indication that governments, big corporations and institutions will not be able to give jobs to the youths of Africa, thus the best way forward is for the political leaderships to facilitate young Africans into self-employment through small scale business.

Africa’s political focus in this regard should be on removing border barriers to intra African business. Funding and loans for small traders must be revolutionized to become friendly to startups. Youths must be facilitated to patent their work and respect for their intellectual property must be adhered to. Such like candour is what the youth and small business owners need for economic development in the continent.

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