Role of Small and Medium Enterprises in Economic Growth and Development

This document discusses the role of small and medium enterprises (SMEs) in economic growth and development. It explores the business activities of Qbic, a hospitality organization offering affordable luxury accommodation services. The document also highlights the challenges and strategies for managing SMEs.

MSME
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Executive Summary
It has been summarized about the small to medium enterprise which plays important role in term
of economic growth and development. In order to show as a contribution towards economy,
innovation and growth. Afterwards, it acquire to establish the strong connection with production
networks. Furthermore, It has analysed about the business activities of Qbic which providing the
better accommodation service to their potential customers. This is the brand that offers the
affordable luxury for discerning modern travelers. The documentation is based on the process by
using primary techniques. In order to collect or gather information with use of undertaking the
interview of the entrepreneur named Paul Rinkens. Thus, aim of the report is to managing the
small and medium enterprise growth.
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Contents
INTRODUCTION...........................................................................................................................4
FINDINGS.......................................................................................................................................5
CONCLUSION..............................................................................................................................10
RECOMMENDATION.................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
Small and medium size enterprise is business that maintains the profitability, assets or
number of employees (Harper, 2019). Hence, small to medium enterprise makes key contribution
to the economy, innovation and growth. SME are the important part of the economy. In addition
to this, SMEs play a vital role in the country’s and this has the overall production networks and
this is the entity that has core to the economic growth of developing countries (Peters,
Kallmuenzer and Buhalis, 2019 ). With help of considering the lower investment cost than large
businesses, SMEs is the entity that mainly supports to lower poverty in communities with help of
offering meaningful employment to locals in addition to raising the standard of living. By
developing new local technologies, services and products aids benefits the communities in
which the SMEs are located. For achieving the effective growth and success in the enterprise this
is crucial to appoint the entrepreneur that can add value to business. Henceforth, small medium
entity is firm that works as to increase the performance and teamwork (zakova, Kapustina and
Vozmilov, 2019).
The present report will cover the business activities of Qbic, it is hospitality organisation
that offers the accommodation service to its customers. This is the brand that offers the
affordable luxury for discerning modern travellers (Meyer and Meyer, 2017).. Henceforth, the
modernity of business is mainly focused on arrival, check in desk in the lobby and also provides
the communal living area that taking the prominence on the ground floor. It is the hotel that
mainly focus to boost employment in the local area. However, Qbic Hotels is a company that is
operating a chain of budget boutique hotels. Therefore, the main aims is to offer green
credentials, quality beds and showers, quirky style and sociability.
Therefore, the type of business hospitality that offers accommodation services to
customer. Hence, the size of business is small and medium sized entity. It is the entity that is
trading that business from last 5 years or more. The present report is based on research process
such as primary techniques. It is the approach that aids to collect the first hand information with
use of undertaking the interview of the entrepreneur named Paul Rinkens. Thus, aim of the report
is to managing the small and medium enterprise (Meyer and Meyer, 2017).. Thus, objective of
the study is to undertake the findings on the basis of interview of Paul Rinkens. Hence, the main
challenges has been identified such as competition of the existing firms, changes in technological
advancement, effective customer assistance services etc. Also, this has been identified that Labor
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shortages are one of the greatest challenges facing the hospitality industry. Hence, Skilled labour
shortage, staff turnover and Irregular working hours are some of the issues that highly affected
the productivity and profitability of the enterprise ( Ambong, Mark and Liberty, 2020).
FINDINGS
Nature of entrepreneur-
By conducting the interview it has been analysed that Paul Rinken is at the age of 40, he
is male. He has done MBA in Management of Hotel services. He has also added that he has
grater experience in the field of hospitality as he has worked with varied hospitality entities. In
the interview he stated that He has started the business in this field as this assist to earn and
generate large amount of the profitability (VORONKOVA, KUROCHKINA and BIKEZINA,
2018). Also, he added that he was having the greater experience in the field of hospitality and
accommodation services. With help of interview, finding suggested that He was the entrepreneur
that involved in activities such as inventor, developer and owner of Qbic concept. He stated in
the interview that he has involved in the number of businesses before that known for design for
the hotel La Bergère, Hip Hotel St. Martenslane, La Bergère etc. Therefore, the name of the
company is Qbic and nature of the business is to providing hospitality services.
Start up process-
By undertaking the interview, this has been analysed that he has started the business with
aim of turning empty real estate into the stylist accommodation. To set up a process he made a
team that can aids to initiate the hospitality service in UK (zakova, Kapustina and Vozmilov,
2019). To bring out activities effectively, he has focused immaculate cleanliness, a comfortable
bed, a great shower, soundless bedrooms and free WiFi. He has made the objective to initiate the
business working in proficient manner. Also, findings of interview has suggested that he has
started the business with aim of offering better customer customer service and to generate long
term profitability. With help of analysis, it has been identified that Paul Rinkens has involved in
varied hospitality services such as hotel La Bergère, Hip Hotel St. Martenslane, La Bergère etc.
In order to set up the business activities, the entrepreneur has taken the loan banking and
financial institution VORONKOVA, KUROCHKINA and BIKEZINA, 2018).. At the initial
level he has start the working of the enterprise with help of selecting the employees such as 50 to
100 as the size of the business in the start up is small and medium sized. In the start up, he has
faced varied challenges such as raising finance for undertaking activities as products roll out,
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hiring key staff. In the interview, this has been analysed that getting loan from the bank was
never easy process. Also, he found the difficulties in selecting and finding the team to process
the business activities. Therefore, he has faced issues in dealing with the competitors (Meyer and
Meyer, 2017).. In the initial level he faced difficulties in with offering the highly satisfied and
loyal customer base, start-ups can scale fast and make progress towards excellence. He also
added that he has faced varied issues in marketing the working of enterprise and gather the
attraction of customers in market as in market there was existence of fierce competition.
Business concept and any source of competitive advancement-
By conducting the interview, this has been analysed that the main idea behind initiating the
hospitality services is to bring business activities in way that promotes Elegant hotels, budget
motels, quick service restaurants and upscale dining establishments. To successfully
incorporating the business activities in market, he takes initiatives on to keep up with the latest
hospitality trends (Meyer and Meyer, 2017). From the findings, it has been analysed that this
business has earned high amount of profitability by attracting the huge number of the customers.
For this, he has used the online platform services that can be effective in providing ease services
to customers. He has mainly focused on the essentials such as immaculate cleanliness, a
comfortable bed, a great shower, soundless bedrooms and free Wi-Fi that all services has helped
him to stands out in the market (zakova, Kapustina and Vozmilov, 2019). Also, he added that he
has provided smart key and artificial intelligence services that has made the check in process
more effective and efficient.
From the findings of the interview, it has been analysed that the being small and medium
sized hospitality organisation the working of the entity is far better then its competitors that
stated by him as he puts its core focus on providing better customer services VORONKOVA,
KUROCHKINA and BIKEZINA, 2018).. Therefore, excellence of customer services has helped
him to enhance the brand recognition in market and to maintain the profitability levels of
enterprise. Thus, he said that service enhancement is the one of the core of hospitality business
that assisted to accomplish the excellence for customer and this also has helped in managing
company brand, reputation and credibility.
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Current level of demand and competitive environment
As per conducting interview with entrepreneur, it has been increased the demand of
customers to hospitality industry in term of accommodation service. it is anything but require to
implement the innovative technology which help for increasing the performance and efficiency.
In order to fulfil particular need and requirement in proper manner (Amentie, Negash and
Kumera, 2016). Through interview, it has been gathered a lot of information about the
competitive environment because competitors already established their business in global
marketplace. They always targeting the new customer by using innovative idea or technique. In
this way, it bring us current scenario of SME which continue to acquire new facilities, services
and applied new strategies (zakova, Kapustina and Vozmilov, 2019). Therefore, Qbic hotel have
to run longer while achieving the significant goal and objective. On the other hand, Paul Rinkens
revealed that competition level has rapidly increases due to customer changing profile and
adaption of technology.
Porter’s five forces
By using model, it analysis about the competition level of Qbic hotel in global
marketplace.
 Threat of New entrant: Qbic hotel is globally characterised by high capital price, which
required to operable status. Organization has to make sure that high capital price which
gained more output with the help of resources (Anumudu, Joseph and Chinasa, 2017).
The new entrants have conscious about the particular target market as well as high quality
of services.
 Power of Supplier: The power of supplier over Qbic hotel is comparatively low. It is only
consider the power of staff members, labour. It is leading the hotel to maintain the cost
advantage, benefits (VORONKOVA, KUROCHKINA and BIKEZINA, 2018)..
 Threat of substitutes: it is relatively low when expect in term of recession that can thrive
without any threat. Many customers are looking for cheap accommodation that can easily
provide by Qbic hotel.
 Power of Buyer: when the concentration of buyer is becoming higher than other market
competitors. Potential enterprise travellers are concerned about the differentiation which
become significant (zakova, Kapustina and Vozmilov, 2019).
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Current sale level and competitors
After conducting interview, it has been analysed that current sale level increase due to
fulfil the demand of potential customer. On regular basis, Qbic hotel will be adapting the new
innovative idea which help for providing the better quality of service (Ikupolati and et.al., 2017).
in order to give online booking service so that potential customer can easily use them.
The growth and development of business
The Qbic hotel is expected to grow at rate of 8.0% from 2010- 2016, placing in the UK
marketplace. The progressive thing is that when hotel participate in the infrastructure design
while developing an effective policies and procedures (Eneh, 2017). As per conducting
interview, it has been identified that Government always support for SME. It is also
implementing the efficient strategies to improve market share in global marketplace.
On the other hand, it also understand that Qbic hotel increase job opportunities for
people. The international chain will put the Qbic hotel on the global map. In order to integrate
with the other enterprise for establishing the coordination between them. SME always
contribution towards economic growth and development because it has increased the rate of
sales. As per discussion with entrepreneur, it has found that 3.56% contribution to country GDP
(zakova, Kapustina and Vozmilov, 2019). The large number of tourist arrive to visit in Qbic
hotel because their facilities and affordable price/cost (VORONKOVA, KUROCHKINA and
BIKEZINA, 2018).
In past decade, UK hotel such as Qbic anticipates slower growth which reflecting as
uncertainty in development. Therefore, it directly impact on the economic, demand trends and
high availability of accommodation service. This situation has been occurred due to recession
which affecting on the entire business growth services. At that time many countries was
supported inbound leisure travel, hotels, protracted negotiations around Brexit, which are helping
to improve business hotel condition. Nowadays, it has completely changed the trends, demand of
customer towards SME, it forecast to gain the marginal occupancy in 2018 of 0.1%, supply chain
continue to operate at global level (Bagh, Arif and Razzaq, 2017).
On regular basis, it has been monitored the progression within market share and improve
overall business capabilities of SME in global world. The occupancy growth rate has been
increased. In 2017, it come with biggest percentage up to 13% while London occupancy up to
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5% (Bagh, Arif and Razzaq, 2017).. So it become easier to identify the demand with little change
in supply chain which means that average price rate changes according to trends.
Challenging of managing and running the business
Pestle analysis is based on the tool which help for providing the positive as well as
negative aspects of business (Bandara, Kodithuwakku and Jayaweera, 2019). It provide the brief
idea about the Small enterprise where how they will gain more opportunities for business
expansion in global marketplace. Qbic hotel must identify the potential threat long before they
arrive. In order to deal with threat for managing and controlling the business growth.
 Political Factor: when many political parties have tried to lower or higher taxes so that it
directly impact on the economic. Small business waiting to decide that perform some
action but it will require more development expenditure (Bandara, Kodithuwakku and
Jayaweera, 2019). In this way, it directly impact on Qbic Small enterprise in the decision-
making of construction, design. Sometimes, the business could be lost if plan is not
executing in proper manner.
 Economic Factor: In this factor, it is to be considered the interest and inflation rate which
often main concern to identify the current economic condition. Qbic hotel operate in the
other cities but they have faced the problem in regards of uncertainty (Bandara,
Kodithuwakku and Jayaweera, 2019). It also increased the fluctuating exchange rate
which directly affects on the small enterprise. in order to reduce the level of economic
condition.
 Social Factor: This factor is related to the aging population. Nowadays, it has rapidly
changing the demographic value in global marketplace. For instances, customer can
choose the particular service according to the preferences. But in most of cases, it affects
on the Qbic when develop customer base issue (Bandara, Kodithuwakku and Jayaweera,
2019). They do not appeal the young demographic and follow the certain menu.
Ultimately, it unable to maintain the position of dominance.
 Technological Factor: It is based on the advance technology that impact on the overall
business performance and efficiency (Bandara, Kodithuwakku and Jayaweera, 2019).
Qbic hotel is not completely focused on the modern technology that’s why, it will be
generating as threat in business growth and development.
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The SME Current growth and development strategy
With the help of interviews, it has identified the current scenario of Small scale enterprise, it
always contributing 47% of revenue to UK economy. Small enterprise have a key role play in
boosting the overall business productivity and profitability in global marketplace. It can be
possible when implementing the internal strategy that help for improving overall business
capabilities (Bandara, Kodithuwakku and Jayaweera, 2019).
As per interviews, it has been assumed that Policy making is an important part of SME
business growth and development. It mainly participating as internal strategy, encouraging the
greater growth ambition among small business. It could be supported through private as well as
public partnership because they are delivering the high quality of services. On the other hand,
SME applied the practical based approach which is positively impact on the business expansion.
On the other hand, SME is based on the fundamental which help them expand internationally and
innovate (Ambong, Mark and Liberty, 2020). Sometimes, it has been conducting the success
program such as peer to peer network that useful for targeting the potential public. Policies and
procedures always supporting to the small business operation when every employee follow the
regulation and complete their task on time.
Apart from that it has found that government support to the small business in term of
growth and development. They can provide better opportunities so that it can easily expand the
business in global world (Ambong, Mark and Liberty, 2020). In order to overcome the challenge
that mainly faced by organization during business expansion.
CONCLUSION
From above discussion, it has been concluded that small to medium enterprise plays
important role in term of economic growth and development. It always help for contribution
towards economy, innovation and growth. Afterwards, it acquire to establish the strong
connection with production networks and this is the entity that has become as a core economic
growth of developing countries. It has summarized about the business activities of Qbic which
providing the better accommodation service to their potential customers. This is the brand that
offers the affordable luxury for discerning modern travelers. As per finding, it also identified that
Small business faced many challenging issue or problem but government always support for
business to improve their performance and efficiency. In this way, organization has been
achieved their desirable goal and also impact on the economic condition of country. Small
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enterprise has been increased the employment opportunities in the local area. However, Qbic
Hotels is a company that is operating a chain of budget boutique hotels.
RECOMMENDATION
A consistently improvement to enhance the Small enterprise growth and development. It
is important for monitoring the business activities, utilising the best marketing strategies. It
should be considered the essential suggestive point which always support for business growth
and development.
 To recommend that use modern technology within business operation which help for
increasing the overall efficiency as well as performance (Bandara, Kodithuwakku and
Jayaweera, 2019). It is helping for collecting and gathering large amount of information
related customer preference, demand and market trends.
 It is an essential thing to motivate or inspire staff member which can bring on big
improvement in the entire business. In order to impact on the business productivity as
well as profitability in global marketplace.
 It should be developed a healthy working environment or culture so that every employee
participate their significant role in the business operation (Bandara, Kodithuwakku and
Jayaweera, 2019). The workplace culture influencing the staff members towards the
organizational goal and objective.
 It has been suggested to implement the policies and procedures which provide equal
oppptunities of employee to share their own innovative idea in business development.
Sometimes, a small idea has enhanced the entire business capabilities and abilities.
Furthermore, many essential legislation have made by government to improve business
environment.
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REFERENCES
Books and journals
Ambong, A., Mark, R., Mendaña, D.P.A. and Liberty, R., 2020. Constraining and Enhancing
Factors of Business Enterprise in Occidental Mindoro, Philippines. International Journal
of Management. 10(2). p.2019.
Amentie, C., Negash, E. and Kumera, L., 2016. Barriers to growth of medium and small
enterprises in developing country: Case study Ethiopia. Journal of Entrepreneurship and
Organization Management. 5. p.190.
Anumudu, C.N., Joseph, O.A. and Chinasa, E.I., 2017. ENTREPRENEURSHIP
DEVELOPMENT AND SMALL AND MEDIUM ENTERPRISE (SMEs) GROWTH
AND DEVELOPMENT IN NIGERIA. PROCEEDING BOOK. p.490.
Bagh, T., Arif, M. and Razzaq, S., 2017. Impact of Financial Constraints on Growth and
Development of Small and Medium Enterprises in Sialkot Pakistan. International Journal
of Financial Market. 2 (4). 131, 145.
Bandara, T.U., Kodithuwakku, S.S. and Jayaweera, V.W., 2019, October. Entrepreneurial
Marketing of Small & Medium Scale Enterprises in a Selected Divisional Secretariat
Division of Sri Lanka. In Proceedings of The International Conference on Economics and
Development (Vol. 3, No. 1, pp. 25-46).
Eneh, O.C., 2017. Growth and development of sustainable micro, small and medium enterprises
sector as a veritable factor for poverty reduction in developing countries. Preface and
Acknowledgements. 6(1). p.149.
Harper, S.C., 2019. The McGraw-Hill guide to managing growth in your emerging business:
guidelines for transforming your small business into an exceptional enterprise. McGraw-
Hill.
Ikupolati, A.O. and et.al., 2017. Entrepreneurs’ managerial skills as determinants for growth of
small and medium enterprises (SMEs) in Nigeria. Journal of Small Business and
Entrepreneurship Development. 5(1). pp.1-6.
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Izakova, N.B., Kapustina, L.M. and Vozmilov, I.D., 2019, January. Relationship Marketing
Management of a Small Industrial Enterprise in B2B Market in The Context of Digital
Economy. In 2nd International Scientific conference on New Industrialization: Global,
national, regional dimension (SICNI 2018). Atlantis Press.
Meyer, D.F. and Meyer, N., 2017. Management of small and medium enterprise (SME)
development: An analysis of stumbling blocks in a developing region. Polish Journal of
Management Studies. 16.
Peters, M., Kallmuenzer, A. and Buhalis, D., 2019. Hospitality entrepreneurs managing quality
of life and business growth. Current Issues in Tourism. 22(16). pp.2014-2033.
VORONKOVA, O.V., KUROCHKINA, A.A. and BIKEZINA, T.V., 2018. Current trends in the
development of small and medium-sized enterprises and individual entrepreneurship in the
Russian Federation. Revista ESPACIOS. 39(41).
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