FRACINO: Report on Entrepreneurship, SME Growth, and Development

This report provides an in-depth analysis of FRACINO, a British coffee machine manufacturer, focusing on factors that influence the growth and development of Small and Medium Enterprises (SMEs). It explores the concept of entrepreneurship, emphasizing its role in establishing new businesses and generating revenue through innovation and creative ideas. The report identifies both internal factors, such as managerial capacities, leadership, and human resources, and external factors, including economic and legal considerations, that impact SME growth. The report also analyzes the business model canvas and its significance in strategizing business operations. Furthermore, the report examines how innovation and creativity can address the challenges imposed by these internal and external factors, providing a comprehensive overview of SME development within the context of FRACINO's operations. The analysis includes the impact of economic factors, such as inflation and taxation policies, and legal frameworks on the company's performance. The report highlights the role of human resources, including the importance of employee training and development, and the influence of managerial skills on the success of the business.

Creativity and Innovation

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
ASSIGNMENT ...............................................................................................................................1
TASK 1............................................................................................................................................1
Concept of entrepreneurship and their role in the development and growth of SME's .........1
External and internal factors affecting growth and development of SME's in the global
economy. ...............................................................................................................................3
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Entrepreneurship is a practice for setting a new business with objective to earn profit and
financial revenues. Innovative and creative ideas are used for starting operations of a new
venture. Under entrepreneurship major focus is given on developing new products, identifying
new market areas and assessing new ways for selling products and services of entity (Kuratko,
2016). Innovations and creativity supports for creating demand for commodities and services in
market. Present report is based on FRACINO which is a large coffee machine manufacturing
company of Britain. The report describes about factors that impact the growth and development
of SME's. Methods through which innovation and creativity can help in overcoming the
challenges imposed by external and internal factors has been mentioned.
ASSIGNMENT
TASK 1
Concept of entrepreneurship and their role in the development and growth of SME's
Entrepreneurship is explained as procedure adopted for carrying out activities for
launching operations of a new business. It requires that a systematic approach should be
followed for starting a small new enterprise. Person who is involved in the process of
manufacturing, offering, selling and distributing products is known as entrepreneur.
Entrepreneurship is about launching a new business with objective to earn profit and financial
revenue (Schaper, 2016). A new business is developed by willingness and desire of an
entrepreneur and all the operations of business are managed by entrepreneur.
Opportunities available in market are grabbed under entrepreneurship and advantage of
market conditions is taken for developing new products and services. A new business is started,
managed and run by entrepreneur and risk associated with business are also faced by the person
who starts the business (Carraher and Paridon, 2015). A new business is started with a new idea
and new concept and innovations are made for rendering better services and products to
consumers. Various resources are needed for executing operational activities of entity and it
includes financial resources, human resources, raw material and some other necessary resources
(Bruton, Ketchen and Ireland, 2013). All the resources are needed to exploit the business
opportunity that is available for the business. Leadership provided by entrepreneur supports for
carrying out business functions in effectual and productive way. Entrepreneurship is all about
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setting a small business and generating wealth by selling product and commodities in a new
market area. An income stream is generated by entrepreneur by starting a new venture and
substantial wealth is created and profits are generated through business activities (Malerba and
Radoševic, 2015). Moreover, wealth can be created at faster speed by expanding existing
operational activities of enterprise. There are some risks that are associated with starting
operations of a new business and entrepreneur needs to make effective strategies for meeting
challenges that are imposed by external and internal business environment.
Model for entrepreneurship :- Entrepreneurship is defined as an activity undertaken for
carrying out activities for starting a new business. It is vital that proper strategical framework
should be adopted for running activities of a new business. Business model canvas is framework
which is used for developing new ideas for running activities of enterprise (Spieth,
Schneckenberg and Ricart, 2014). It is a representative and visual chart on which resources of
organization such as financial resources, human resources, consumers, suppliers, material
resources and infrastructure are depicted. Key activities of business are shown on this canvas and
it aids in managing and executing desired activities of enterprise in effective and successful way.
Resources that are necessary for carrying out operational activities of enterprise are also
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Illustration 1: Entrepreneurship model
(SOURCE- DaSilva and Trkman, 2014)

allocated in optimum manner by making use of existing resources of entity. Customer segments
can be identified by targetting specific group of consumers so that products and services of
enterprise can be sold to large number of buyers (Veit and Spann, 2014). Value proposition for
business can be determined and cost for products, design for products and other elements can be
determined by making use of business model canvas.
It is vital that strategic vision should be set for starting a new business and it provides
directions for running business functions. FRACINO is a leading British manufacturer of coffee
machines and management of company is planning for expanding its business operations in
European market. SMEs have contributed for growth and of UK economy and infrastructure of
nation has been developed due to it. SME's have played a significant role in doing social and
economic development of country and these organizations are backbone that are driving growth
of nation. Employment opportunities are created for people and wide variety of products and
services are made available in market for people (Carraher, 2014). Expansion in operational
activities of SME's aids in opening new market and enhancing competition in market area. Taxes
and revenues provided by SME's supports in increasing funding of government which is spent on
providing better public services to people. Small business enterprise helps in the proper
contribution of the products and services as it helps in the proper contribution to the community
in the different ways by which they can facilitate the job opportunities.
TASK 2
External and internal factors affecting growth and development of SME's in the global economy.
There are some external and internal factors that gives impact on the growth and
development of Local Small Medium Enterprise's. These factors are as mentioned :-
Internal factors :-
1- Managerial capacities and leadership provided by managers :- Top management of
FRACINO provides directions and instructions to subordinates and it supports in giving better
directions to subordinates. It leadership provided by management will not be good than it will
due to it difficulties will be faced in executing day to day operations of business. Managerial
skills shown by managers plays a significant role in rendering better instructions and commands
to subordinates (Ramdani Chevers and Williams, 2013). Growth and development of enterprise
gets affected when there is lack of proper leadership and it affects activities of enterprise.
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Managerial capacities of top management is associated with the growth patterns and due
to that overall success of enterprise gets affected. If there will be lack of core competence and
managerial skills than due to that proper commands will not be given to subordinates. If
subordinates will not get proper commands and instructions than daily functioning of entity will
get affected (Blackburn, Hart and Wainwright, 2013). Managerial skills are a significant factor
that gives impact on the growth and success of SME's. Positive support shown by leaders aids in
enhancing morale and motivational level of staff members. However, if managers will not be
providing proper commands and orders to subordinates than enthusiasm of employees will
decrease and they will show less effectiveness towards completing their work.
It is assertive that managers should render better and effective leadership to subordinates
so that required function of entity can be completed on due time. Proper leadership provided by
managers enhances quality of work procedures and desired functions are completed on due time
with great efficiency (Laforet, 2013). Motivation provided by managers enhances morale of staff
members and they complete their assigned task in more effective way.
Seminars and conferences can be organized for top management people so that their managerial
capacity and capabilities can be enhanced. In addition to this management games and role
playing sessions can be organized in entity so that leadership skills of managers can be
developed (Agan, Acar and Borodin,2013). All the methods will support for developing
leadership skills and managers will become capable for rendering better directions to
subordinates.
2- Human Resource :- Employees are most significant stakeholders that supports for
accomplishing set targets of SME's by rendering their positive support. All the strategies and
action plans formulated by top management are executed and implemented by effectiveness
shown by staff members of FRACINO. If employees in the entity will not be skilled and
experienced than they wont be able to complete their assigned task in proper way.
It is assertive that workers should have capabilities and competence for completing their
assigned task in productive way. Well educated and skilled workforce supports for meeting the
desired goals of entity in successful manner. Positive effect is shown on growth and success of
the firm by effective and productive work shown by staff members. Training and development
program organized in enterprise helps in imparting necessary skills and capabilities to staff
members (Child and Hsieh, 2014). They become capable for performing their assigned work in
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more effective and better way and daily operational activities of enterprise gets executed in
productive manner. Innovative abilities and capabilities of staff members increases when
conductive work environment is provided to them. If workers will lack sufficient technical and
other required skills than they will face difficulty and trouble in performing their assigned task.
Significant initiatives can be taken by top management for imparting required skills to
employees (Ramdani, Chevers and Williams, 2013). Training and development programs can be
organized so that staff members should acquire required skills. In addition to this online learning
material can also be provided to employees so that they can learn new knowledge and
capabilities.
External factors :-
 Economic factors are the biggest factor of the external factors which affect the business.
By this factor, market fluctuates, and it is based on the politics, wars, the attack which is
done by terrorist and the devaluation of currency so that they can attain the success in the
competitive market. It affects the consumer buyer behaviour and also affect the
environment. At the time of recession employees facing a problem of unemployment and
by that consumers can not purchase the products (Blackburn, Hart and Wainwright, ,
2013). This factor is related to the changes which include cost and price of products and
the exchange rates along with the rate of inflation. This affects the ability of the business
so that they can generate the profits and need close monitoring. Inflation and deflation
situations in country also gives impact on growth and success of FRACINO. At the time
of inflation purchasing power of people decreases and due to that business of SME's gets
affected. On the other hand at the time of Inflation purchasing power of people enhances
and they give more preferences for purchasing products that are of higher quality and it
enhances business of SME's. Changes in taxation policy of government also gives impact
on the growth and success of enterprise and due to that total financial revenues of entity
gets affected.
 Legal factor :- Rules, regulations, policies and norms formed by government also gives
impact on the growth and success of SME's. It is assertive that guidelines given by
government should be followed while carrying out business activities. The company
members have to do the changes in the laws, policies and this having a direct impact on
the business. These factors are included in the external factors which effect the law
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affects the way by which they can operate the business and the behaviour of the
consumers. It includes the product transportation and profit margin so that the company
members can increase the productivity and proficiency and by that, they can attain the
success. The staff members of FRACINO have to follow the proper rules and regulations.
If not than then they affect the performance of the entity in the competitive market
(Abebe, 2014).
It is assertive that all the business functions should be executed in proper way so that no
unlawful activities should be performed in enterprise. If there will be unlawful working
environment than negative impact will be observed on overall performance of entity. Taxation
policy, environmental protection law and other Regulatory mechanism are needed to be followed
while carrying business functions. Assistance from a legal professional can be taken for carrying
out business activities in legal and lawful manner. Moreover, a legal advisor can be hired in
enterprise for taking advice on various legal matters. All the methods will support for executing
all the business functions in legal and lawful manner and impact of legal factors on growth and
success of SME's can be reduced by adopting this strategy.
Innovation and creativity :- Innovation refers to implementing the idea in to the reality
form creative process. Creativity can played a significant role in the innovation. It can be useful
for the developing SME sector which can be beneficial for both firms and the economy as well.
For example, creative ideas can help to FRACINO to managing finance for converting these
ideas in to reality (Csikszentmihalyi, 2014). Another important thing in innovation is that the rate
of return which can be invested in to an idea. Therefore, it is important for the growth of SME
sector to careful analyse their idea in terms of monetary value. Creativity is the tendency by
which staff members of FRACINO have to generate and recognise the ideas and the possibilities
which will help in solving the problems as well as proper communication with the others.
Creativity has three components which include creation of knowledge, sharing of knowledge and
reuse of knowledge (Moulaert, 2013.). The company members can use the theory of creativity
which includes four phases:-
 Preparation – In this, they have to define the issue and observation.
 Incubation – In this laying the issue aside for a time.
 Illumination – The company members can use the new idea for making the better
products.
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 Verification – In this last step they have to verify all the ideas so that they can do furthers
process, and by that, they can attain the success (Hatten, 2015).
Innovation is the process by which company members can create or modify the ideas so that
they can develop the process, products and services so that they can manufacture the new
product. Innovation is classified into three parts which include product, process and market
innovation. The employees of FRACINO have to improve the products. In the process
innovation, company members have to change the process of making the products, or they have
to change the technology by which they produce the products which will help the entity in
attaining the success. In market innovation, they are concerned with the mix of products and
have to serve the best products in the market so that they can achieve the targets (Shiu, 2014).
Innovation and creativity can help in overcoming the identified 4 external and internal
factors that gives impact on the success and performance of FRANICO. Managerial skills of top
management people needs to be effective so that better directions and instructions should be
rendered to subordinates. New creative ideas can be adopted for making modifications in
existing leadership skills and capabilities of subordinates. Management games can be organized
in company in which all staff members should be invited to take part (Hemlin and Mumford,
M.D., 2014). Role playing sessions can also be organized so that managers should develop better
understanding with subordinates .
It will help in enhancing cooperation and co-ordination with staff members and due to
that positive relations will be developed among top management people and employees. Some
innovative ideas can also be used for developing managerial skills of managers and seminars and
conferences can be organized and motivational speakers can be invited for giving better
understanding to managers for how to give orders and commands to juniors. Second internal
factor that affects growth and performance of FRACINO is Human Resource capabilities. If
workers will not be having required skills to perform their assigned task than it will lead towards
failure of enterprise (Moulaert, 2013). On the job and off the job training can be provided to staff
members and training and development programs can be organized for making modification in
their weak performing areas. Recommendations and suggestions can be taken from staff
members for how to make improvements in their existing skills and capabilities and they can be
encouraged towards self learning.
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A small library can be opened so that employees can read books, magazines, journals and
other study material and make significant improvements in their existing skills. Innovation and
creativity can also be used for overcoming impact of legal factors on operational activities of
entity. An open discussion sessions can be organized and staff members can be made aware
about their rights. Attractive pamphlets can be designed in which various rules and regulations
needed to be followed by staff members can be mentioned.
It will support in rendering legal information to staff members in innovative and creative
way and they will understand it in impelling manner (Shiu, 2014). Some innovative concepts can
be used for meeting the challenges that are imposed by economic factors. Risk assessment
process can be conducted for assessing the threats that are imposed by economic factors. It will
aid in overcoming the challenges that are created for business by diverse range of economic
factors and growth and success of entity can be ensured.
Innovations and creativity that can be adopted in FRACINO :- There are so many challenges
which are facing by the entity in the global business environment which includes energy and
environmental security. In this company, members have to provide the proper security to their
consumers which help FRACINO to achieve long-term success in the economic, national
security so that they can do the proper improvements on technology so that they can manufacture
the proper products so that they can attain the success in the markets. Another challenge is
conflict. In this staff members of FRACINO have to do the proper communication so that
conflicts can not occur.
When entity has to start the new business in the new market for that, they have to bring
about the new products and services which help in attaining the success and achieving the
leading position in the competitive market (Creativity and Innovation: Your Keys to a Successful
Organization.2016). If they are facing the conflicts, then they have to use the proper policies so
that they can resolve the conflicts which help the entity in attaining the success for the long term.
Another is high competition in the market. They have to manufacture the products and services
by which they can attain the success in the high competition. Along with this these challenges
having an impact on the strength and weakness of entity and for that they have to improve the
weakness (Bruton, Ketchen and Ireland, 2013). By these challenges' entity can do the proper
operations and functions along with this, they can provide the best services to their consumers by
that they can attain the leading position and by that, they can improve the productivity and attain
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the sustainability in the market. They have to provide the best solutions to the consumers if they
are facing the problems. Along with this, the managers of FRACINO have to provide the
motivation or encouragement to staff members so that they can do the best work and attain the
success in the competitive market (Carraher and Paridon, 2015).
There are various global challenges which having a great impact on the SME sectors.
Political stability is one of the key factor which can impact of the SME. Because there are
various political decisions like import and export duties on various machinery part can affects the
business operations and profitability of FRACINO. Apart from that issues regarding the tax can
also effect the business. For example if government can increase tax on SME's it can affect their
return on investment and revenues. Therefore, government can try to provide tax benefit to
SME's sectors which can help to provide more leverage.
CONCLUSION
Summing up the present report it can be concluded that it requires a strategic approach
for starting a new business and expanding existing operations of enterprise. Innovations and
creativity supports for making improvements in existing products and services of enterprise.
Moreover, business model provides effective framework for managing the operations of
enterprise in successful and effective way. Resource allocation and key activities of entity can be
planned and executed effectively by adopting business model. There are various external and
internal factors that gives impact on growth and development of SME's and business functions
gets affected due to that. Managerial capabilities, human resource, economic factors and legal
factors are some major elements that gives impact on the success and working of SME's. Impact
of these elements can be reduced by adopting innovative and creative approaches. It will support
for stimulating growth and success of enterprise and ensuring long term growth of entity.
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REFERENCES
Books and journals
Abebe, M., 2014. Electronic commerce adoption, entrepreneurial orientation and small-and
medium-sized enterprise (SME) performance. Journal of small business and enterprise
development. 21(1). pp.100-116.
Agan, Y., Acar, M.F. and Borodin, A., 2013. Drivers of environmental processes and their
impact on performance: a study of Turkish SMEs. Journal of Cleaner Production. 51. pp.23-
33.
Blackburn, R.A., 2016. Government, SMEs and entrepreneurship development: Policy, practice
and challenges. Routledge.
Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Bruton, G.D., Ketchen, D.J. and Ireland, R.D., 2013. Entrepreneurship as a solution to poverty.
Journal of Business Venturing. 28(6). pp.683-689.
Carraher, S., 2014. Leadership, entrepreneurship, and suggestions for future research. Journal of
Management History. 20(1).
Carraher, S.M. and Paridon, T.J., 2015. Entrepreneurship journal rankings across the discipline.
Journal of Small Business Strategy. 19(2). pp.89-98.
Child, J. and Hsieh, L.H., 2014. Decision mode, information and network attachment in the
internationalization of SMEs: A configurational and contingency analysis. Journal of world
Business. 49(4). pp.598-610.
Csikszentmihalyi, M., 2014. Society, culture, and person: A systems view of creativity (pp. 47-
61). Springer Netherlands.
DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long Range
Planning. 47(6). pp.379-389.
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