Managing Small and Medium Scale Enterprises: Pharmacy2U Case Study

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Managing Small and Medium Scale
Enterprises
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EXECUTIVE SUMMARY
The small and medium scale enterprise plays an integral role in enhancing UK economy.
Small and medium scale enterprises play a significant role in increasing productivity, creating
employment opportunity, strengthen social and communal welfare. The present report is
based on the managing a small and medium scale enterprise named Pharmacy2u. It is a
medium enterprise which is operating in online pharmacy located in Leeds, UK. The main
area it served is UK with prescription and export retail products globally. Phasmacy2U is
founded by Daniel Lee in 1999. Further, report will analyse the different challenges and
government support available to the business which can assist in increasing the business
operations and efficiency. The Pharamacy2U has various routes to expand the operations
through different methods of new business development process. The recommendation has
been made related to financial forecasting and financial aspects of the organisation.
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INTRODUCTION......................................................................................................................4
FINDINGS.................................................................................................................................6
CONCLUSION........................................................................................................................12
RECOMMENDATION...........................................................................................................13
REFERENCES.........................................................................................................................14
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INTRODUCTION
The small and medium scale enterprise plays an integral role in enhancing UK economy.
Small and medium scale enterprises play a significant role in increasing productivity, creating
employment opportunity, strengthen social and communal welfare. It can be said that around
90% of private sector firms are constitute of the small and medium sector enterprises. The
present report is based on the managing a small and medium scale enterprise named
Pharmacy2u. It is a medium enterprise which is operating in online pharmacy located in
Leeds, UK. The main area it served is UK with prescription and export retail products
globally. Phasmacy2U is founded by Daniel Lee in 1999. The organisation is successfully
operated as medium scale enterprise in UK with almost 100 employees and revenue of 25.8
million Pound. From 20 years it has been trading as UK largest online pharmacy that helps in
managing the prescription of the patient. The organisation is also involved in controlling and
monitoring the electronic transfer of the prescription in the UK.
The entrepreneur and founder of Pharmacy2U, Daniel Lee are pharmacist and working in
pharmacy business until 1999. Then he decided to start own company. Daniel has an idea to
found an internet mail-order pharmacy in 1997 in order to take prescription to patients more
efficiently. The present report is based on the evaluation of the SMEs and highlights the key
challenges faced by Pharmacy2U. The report will also conduct the primary data collection
method through taking interview of Daniel Lee towards his entrepreneurial process.
The report will highlight the critical evaluation of the issues relating to the pharmacy2U. It
will include the rapid changing technology, finance and support from the bank, government
policies to support the SMEs in UK. In addition to this, one of the main issues which SMEs
including Pharmacy2U is facing is the impact of Brexit and EU referendum on UK’s small
and medium scale enterprises. The report will also cover the strategic issues which
Pharmacy2U has to manage in order to achieve its vision and reduce the negative impact of
these strategic issues on the organisation’s performance. The strategic issues involves both
internal and external. The internal strategic issues related to the poor management structure
and style, the unskilled employees that can impact the organisation’s performance. Along
with this, the external strategic issues are related to the changing preferences of customers,
changing laws and regulation on UK, increasing competition in industry etc. Further, report
will also include different routes of the business development of Pharmacy2U in UK. It can
be said that, some of the ways is technological advancement, innovation and financial
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availability. The report will also highlight diverse business development techniques for
Pharmacy2U. This business development involves several ideas related to increasing revenue,
profitability and growth for the expansion of businesses, and making strategic businesses
decisions. Furthermore, report will include different financial aspects of business expansion
of Phaemacy2U. The report will highlight different development processes in small and
medium enterprises such as Pharmacy2U.
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FINDINGS
SMEs are known as backbone of the United Kingdom’s economy. Pharmacy2U is UK’s
largest online Pharmacy and involved in managing electronic transfer of prescription in UK.
Being a medium scale enterprise, the organisation has to face different challenges and issues
on operating. Below presented some aspects of the SMEs such Pharmacy2U:
Evaluating recent challenges related to SMEs
In UK’s there are lots of issues sand challenges are arises for the Pharmacy2U which they
have to face (Park and Ghauri, 2015). These issues and challenges can affect the
organisation’s performance and the decision making process for the future aims and
objectives. Following are the main contemporary issues that are facing by the SMEs include
Pharmacy2U:
Uncertainty of Brexit: UK leaving the EU referendum is going to impact every sector of the
business in UK. Fluctuation in currency rates and increased import duty is forcing major
issues to the small and medium size enterprises. As Pharmacy2U involves in retailing its
products outside the UK will impact the business revenue. However, it can be said that
majority of the organisation revenue are depend on the UK customers and patents. Thus, like
most of the SMEs Pharmact2U will not be affected from the uncertainty economical and
political scenario post-Brexit.
Technological advancement: In the rapid growing technological era, the SMEs are facing
the issues of adapting the new technology which can assist ion increasing their efficiency and
profitability. SMEs are facing issues relating to the budgets for adopting the new
technologies, which decision makers have to comply with. However, it has been seen that
many of the small and medium size enterprises are increasing their investment in new
technologies (Ayandibu and Houghton, 2017). Pharnacy2U are using combination of state of
the art technology which assists in delivering the prescribed medicine to the users at their
home.
Financial issues: It is the main issues which the SMEs are facing in UK. The small
businesses are looking for cost-effective and customer-centric banking to raise fund for their
business operations. The major problem for the Pharmacy2U and other SMEs is to search for
the bank which will provide the low interest rates on their funds in order to enhance the profit
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of their business. In addition to this, around 80% of the SMEs including Pharmacy2U believe
that Brexit will have a negative impact on their investment decisions.
Exploring strategic issues in SMEs management
Strategic issues can be referred as the issues that can affect the business performance that
leads to make it difficult for business to achieve its mission and goals. The strategic issues
which Pharmacy2U needs to consider in order to enhancing the productivity and profitability
can be described as internal and external. The internal strategic issues for Pharmacy2U are as
follows:
Poor management structure and style: It can be said that absence of poor management
structure and absence of proper leadership can affect difference business operations and
activities of the SMEs (Julien, 2018). The management needs to prepare a strategy to make
the administration structure and style which can perform in better ways. Adopting proper
leadership style will assist Daniel and other executives to carry out different task effectively.
Unskilled employees: As employees are main asset of the organisation that perform in order
to increase the productivity and completion of the business activities and operations in more
efficient manner. However, employing the unskilled employees is one the main strategic
issues which requires resolving by making proper planning and making decisions related to
employee the skilled and competent employees to be worked in a pharmacist organisation.
In addition to this, there are some external strategic issues as well which can affect the
strategies and performance of the business enterprises. The external strategic issues which
can affect the Pharmacy2U are as follows:
Customer needs and preferences: Pharmacy2U has comes up with a unique idea of
delivering and managing the customer’s prescription and medicines. However, organisation is
facing the issues related to the changing preference and needs of the customer along with the
medicine (Uwonda and Okello, 2015). The management has to conduct a market research and
make strategies to change the business operations as per the needs of the customers.
Increasing competition in industry: In today’s changing business scenario, every
organisation is seeking to offer innovative and new product and services in market in order to
stay competitive. The retail industry in IK is highly competitive with the increasing new
entrants and competition from the leading retail stores. Pharmacy2U offers inline medicine
and electronic mail prescription. The retail market in UK also comes up with different
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innovative ideas, which can create strategic issues to the organisation and can affect its
growth and development.
Exploring new ways of business development in SMEs
It can be said that there are various ways in order to achieve the business development for
Pharmacy2U. In order to grow or expand the business process an effective business
development processes us very essential (Coles, Dinan and Warren, 2016). Business
development can be reefers as the number of tasks and different processes which aims at
developing and executing the growth opportunities within and between two or more
organisations. It can be said that there are various contemporary routes for the Pharmacy2U
and other SMEs for business development, which are described as follows:
Financial availability: Having sufficient cash surplus and cash flow will assist in providing a
new way to the new business development process in the organisation. Different government
and non-government institute are keen to provide funds to the small and medium enterprises
in UK. New business development process in Pharmacy2U serves as an opportunity to grow
the business and economic growth of the country. It is an effective process which also leads
to increase the employment opportunities.
Entrepreneurial capabilities: It can be said that, besides the ability to identify new
opportunity in market the business development of resources base as the new opportunity is
an increasingly important concept. It is used to explain the resources and skills required for
effectual entrepreneurial activities (Georgiadis and Pitelis, 2016). The capability and ability
of entrepreneur to use the available resources for the new business development opportunities
are the new way that assists the organisation to enhance its effectiveness.
Innovation: The small and medium enterprises are the main way for the business
development process and offered new products and services in the market. The Pharmacy2U
needs to dwell on new innovation ideas in order to start a new business development process
and increase the business revenue and growth.
Evaluating diverse business development method for Pharmacy2U
It can be said that, there are different opportunities and ways for the business development
process of small and medium enterprises (Lyngstadaas and Berg, 2016). It can be said that,
there are different business development method available for the Pharmacy2U. This
development method includes different innovative and creative idea related to the new
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product, services or smoothing the business operations process. The criteria of the business
developnment are creating long-term value and image of the organisation in the mind of
customer, stakeholders, and markets and so on. The business development process is all about
identifying the new opportunities for the growth and expansion of Phaermacy2U in different
markets as well (Vajjhala and Ramollari, 2016). Diverse business development methods and
techniques are the different strategies which assist in increasing the revenue, profitability and
growth for the expansion of businesses, increasing revenue and profitability and growth for
the expansion of businesses through identifying expansion of the businesses and making
strategic business decisions
Determining financial aspects of expanding business in SMEs
It is the most essential aspects of the SMEs including Pharmary2U. It can be said that raising
funds for the small businesses gave various potential sources some of which are difficult and
limits in term of amount (Ključnikov and Belás, 2016). In order to take the business
opportunities and new business development process for the expansion of the organisation, it
is equally important to carry out a plan and financial forecast related to the available
resources to carry out the plan effectively. Financial forecasting includes the need for the
finance, the profit new business expansion will going to produce, the cost incurred during the
expansion process etc. After forecasting the financial resources, the organisation can go
through various source of funding available to the organisation. It includes personal savings,
cow funding and bank loans. The management of Pharmacy has to determine the best source
of finance, each source of fund will comes up with its own strength and weaknesses which
can impact the business plan of expansion.
Primary data collection from the Daniel Lee, entrepreneur and founder of Pharmacy2U
From collecting the information from Daniel Lee, the following findings have been found:
Nature of entrepreneur behind the venture: Daniel Lee is a pharmacists and working in
family business of pharmacy until 1999. Daniel father was the owner of the chain of a
chemist stores in Leeds. From where, he comes up with an idea to start a venture of internet
mail order pharmacy. Pharmacy2U, has becomes the UK’s first online pharmacy.
SME start-up processes: Pharmacy2U has started in 1999. First it started to sell the
prescriptions by mail although it was illegal at that time. The British Medical Association
expressed concerns over the innovation and national Pharmaceutical Association resist
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towards the filling of the prescription online (Klute-Wenig and Refflinghaus, 2015).
After few days the care quality commission has visited to check the business practices and
structure and results with positive review for the organisation.
Current level of demand and competitive environment: It can be said that, currently
Pharmacy2U is managing 30000 patients. However, business is facing competition from
other retail stores that has started offering prescribed medicines as well.
Challenges and managing the business: At the initial stage, the business has to face the
business gas to face challenges from financial aspect. For which Daniel has sold his
apartment in order to start the website (Mutandwa, Taremwa and Tubanambazi, 2015).
Further, the business also has to face some laws and legislation from different regulation
bodies related to the health and social care services.
Government support schemes to the SMEs
The UK government has formed various programmes and schemes in order to provide
the support to the small and medium scale enterprises. Following are some schemes of the
government to support SMEs:
Home office Support: The government has introduced new rules relating to the home offices
with an aim to make it easier for the entrepreneur to establish and run their business more
efficiently.
Raise investment for growth: The government has planned to provide financial support for
a scheme designed to deliver loans and funding to the small and medium scale enterprises
around the company by 30 million pounds (Five ways government is assisting SME growth ,
2019). The government is providing loans to entrepreneur of age between 18 and 30 in order
to support their business opportunity.
Advice for growth: it is one of the most crucial steps taken by government to provide advice
related to the business growth strategy (Iddris and Ibrahim, 2015). The schemes Government
Voucher Scheme, government offers advice related to the growth to the small and medium
enterprises along with the different funding option that can support their strategy of growth
and expansion of business.
Innovative for growth: innovation and creativity in the main aspects of the SMEs that leads
to increases the effectiveness of the business and growth of business as well as country as
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whole. In this regards, the government provides chance to claim up to 225 percent tax relief
on research and development costs.
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CONCLUSION
By summing up the above report, it can be concluded that, Pharmacy2U is UK’s largest
online Pharmacy and involved in managing electronic transfer of prescription in UK. Report
will conclude the issues and challenges can affect the organisation’s performance and the
decision making process for the future aims and objectives. It can be analysed that UK
leaving the EU referendum is going to impact every sector of the business in UK. Fluctuation
in currency rates and increased import duty is forcing major issues to the small and medium
size enterprises. The findings has analysed that SMEs are facing the issues of adapting the
new technology which can assist ion increasing their efficiency and profitability. The
findings have concluded that the challenges of small businesses are looking for cost-effective
and customer-centric banking to raise fund for their business operations. The major problem
for the Pharmacy2U and other SMEs is to search for the bank which will provide the low
interest rates on their funds. The report has also concluded the strategic issues which
Pharmacy2U needs to consider in order to enhancing the productivity and profitability can be
described as internal and external such as Poor management structure and style, Unskilled
employees, Customer needs and preferences, Increasing competition in industry. In order to
grow or expand the business process an effective business development processes us very
essential. Business development can be reefers as the number of tasks and different processes
which aims at developing and executing the growth opportunities within and between two or
more organisations such as financial availability, Entrepreneurial capabilities, Innovation.
The report has also analysed financial aspects of expanding business in SMEs. The report has
also analysed the Primary data collection from the Daniel Lee, entrepreneur and founder of
Pharmacy2U related to the Nature of entrepreneur behind the venture, SME start-up
processes, Current level of demand and competitive environment, Challenges and managing
the business. Further, report will analyse the government support schemes to the SMEs which
includes Home office Support, Raise investment for growth, Advice for growth and
Innovative for growth.
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