ENVIRONMENT AND THE LIFE-CYCLE GROWTH AND
5. BUSINESS ENVIRONMENT
Competence in controlling strategic assets enhances firm profitability. It will generate competitive pressures from new entrants or industry compet- itors that eventually lead to the dissipation of excess profits and a return to competitive conditions. Polish family businesses have been operating in in- creasingly competitive conditions since the economic and political reforms were implemented. Controlling strategic assets has been mentioned as more important at the earlier stages of growth and development. Skills developed in exploiting market situations that limit the extent of price competition, restrict entry, or raise the price of switching to substitute products provide long-term advantages to the family firms that possess them.
The specific sets of competencies that are necessary for success vary widely across Polish family businesses and are difficult to know prior to entry due to the nature of the tourism and hospitality industry. A new family business can be successful with largely industry-specific competencies at the time of initial entry, but it will require organizational and marketing capabilities to grow and prosper.
The gradual installation of new telecommunications resources and the advent of increased competition between domestic and foreign banks have resulted in services becoming increasingly more user-friendly and efficient.
But according to our respondents, the banks have still been inefficient in their transfer of money into and out of Poland. Regulation of the banking system has also been unsatisfactory. The government’s credit policy has not been able to help the private sector. Faced with an inflation rate that re- mained relatively high, the government maintained high nominal interest rates. The high level of nominal interest rates combined with instability in the real interest rate discouraged private borrowing.
Restructuring the tourist and hospitality industry itself took place during the first years of the economic reforms. At that time, a concentration in the sector and the emergence of international hotel chains came under control of a few tourist operators who previously had controlled a significant part of the international market. These operators still continue to dominate the hotel accommodation market as well as the tourist transport market. By a com- bination of various opportunities and by using the modern information and communication technology, they have been in a position to control large
Table 5. Environmental Evaluation.
Received (%) Desired (%) Non-financial environment
Information technology/communication networks 8 90
Small business management training 5 87
Technical and financial assistance 14 83
Incubator centers/industrial parks 10 80
Social and entrepreneurial networks 12 76
Trade fairs and industry shows 7 72
Presence of a mentor 2 68
Information technology/communication networks 10 56
Support from friends and family 25 56
Presence of role models 20 34
Educational background 25 32
Financial environment
Borrowing from friends/family 25 30
Short-term credit 24 40
Foreign investor/venture capital 8 22
Project financing 2 34
Tax allowance and credits 4 88
Preferential loans to small businesses – 98
Low-cost, long-term loan – 67
parts of the travel agency market and the transport market for international tourists. As a consequence, small tourist carriers, hotel owners, and other tourist and hospitality service providers tend to become increasingly depend- ent on a group of large operators. This situation raises the question of how small businesses in tourism and hospitality can exploit the opportunities of the modern information and communication sector in such an environment.
Respondents were asked to rate their satisfaction with the items identified as policies and procedures for success of their entrepreneurial activities.
Table 6 presents data on the respondents’ perceptions of environmental conditions for their tourism and hospitality activities. The highest positive ratings were observed on licensing and registration requirements (M¼3.03) and business training programs (M¼2.48). The lowest levels of satisfaction were reported on credit terms and finance, taxation incentives and exemp- tions, and competition among businesses within their industry.
During the early years of the operations, macroeconomic problems, par- ticularly high inflation, held back business development. Those who survived realized that the product quality and the strategy of the firm were of par- amount importance. Today, these businesses offer high quality, unique products, such as educational, horseback riding, eco-tourism, or pilgrimage tours. The businesses also concentrate on providing products and services with cost advantages. The reduction in costs is achieved by taking advantage of economies of scale that are derived from the integrated operating methods of businesses in the industry. The product or service is no longer considered as a set of individual services but rather as a system with vertical integration among the productive activities that play a role in the final consumption of services and a system with horizontal integration among tourist operators in the region. Those firms that are unable to deal with these processes through
Table 6. Evaluation of Environmental Factors.
Small Business Conditions Satisfaction Ratings (1–4) Mean
(1) (%) (2) (%) (3) (%) (4) (%)
Licensing/registration requirements – 35 27 38 3.03
Business training programs 15 22 63 – 2.48
Laws and regulations 20 24 56 – 2.36
Small network/information availability 25 45 30 – 2.05
Competition within industry 35 45 20 – 1.85
Taxation/incentives/exemptions 33 42 25 – 1.92
Credit terms/finance 75 20 5 – 1.30
Rating scale: 1¼must be improved; 2¼fair, 3¼average, and 4¼good.
vertical integration strategies must adopt a strategy involving product quality and relational links among the other small businesses of the region. Suc- cessful businesses became market oriented, were willing to seek out custom- ers, were concerned with delivering a high-quality product, and were always looking for opportunities to improve their performance.