4.5. Strategies used to improve the competitiveness of SMMEs 102
4.5.3. Facilitating access to markets for SMMEs 113
According to the RoS (2002), innovation should be taken to mean continuous enhancement to products, services and processes within enterprises. In recent years, survival has been the main issue for many of Serbia’s enterprises and resources have not been generally available for reinvestment in product and services development and upgrading. Existing facilities for assisting enterprises in developing and testing new products or improving current products will be identified in Serbia and assessed and a programme will be devised for the development and implementation of innovations for SMMEs (RoS, 2002).
There are a wide range of technologies that exist and that could be employed for each business type for the purposes of improving operations. An example of appropriate technology development was the marketing of the treadle pump in Bangladesh Finnegan (1999) identified.
The treadle pump was designed by a Non Government Organisation (NGO) in the early 1980s.
Although it was sold commercially, there was also significant subsidised distribution by NGOs.
The International Development Enterprises (IDE) became involved when the design had been finalised. Finnegan (1999) indicated that the IDE set about changing the existing approach to transferring the technology, arguing that this should not be a subsidised process and that the most effective way of reaching the largest number of people was a self-sufficient, private network of manufacturers and retailers. Finnegan (1999) further indicated that eventually, after resistance from the charitable instincts of some NGOs, this view prevailed. The IDE then set about a process of selecting village dealers and agreeing on terms with them (among which was a requirement that they had to set up a demonstration pump), training village well dealers and advertising through a variety of means, including village theatre and a film. The result of this effort has been that over 1 million pumps have been sold - around 4 times the initial target - and according to an external evaluation the ratio of benefits to costs is over 40:1.
foreign markets, in addition to developing designs in line with market demand and packaging materials. Finnegan (1999) stated that marketing services may be categorised according to different phases, either the input phase (product development and design and raw material supply) or the output phase (quality control, packaging and transport).
Another method of promoting access to markets, according to the SMME strategy of the EM (2007b), is through the creation of business linkages. Business linkages encompass various activities or business transactions conducted between large and small businesses. These activities include subcontracting, franchising, outsourcing, unbundling, partnership agreements, joint ventures and technological inputs. According to this strategy, business linkages are theoretically characterised by high levels of cooperation and are profit motive driven, which is mutually advantageous between enterprises (EM, 2007b). Such linkages, as pointed out by the strategy, are a result of positive market forces that encourage enterprises to seek the most proficient way of acquiring or sourcing the components or part of the services that make up the products or services they sell, rather than doing such services in-house (EM, 2007b). Business linkages therefore result in specialisation of businesses, diversification of activities, widely distributed benefits and widespread economic competence as it allows enterprises, whether sellers or buyers in the market to focus on their core activities in which they have the comparative advantage and rely on commercial dealings to help in the areas where they relatively lack proficiency but where other enterprises have the comparative advantage (EM, 2007b).
Finnegan (1999) also highlighted the fact that networks or associations of SMMEs also provide a wide range of services to their members including training, loans, information and, in some cases, some form of social protection. Finnegan (1999) pointed out that wholesalers or exporters deal only with huge orders and they may require certain conditions in terms of quality control, timely delivery of the goods (etc). It is also preferable for them to deal with a single client rather than a large number of small producers, and it is under these circumstances that networks or associations of SMMEs can play an integral role of a liaison between wholesalers or exporters and their members. They usually assume ultimate liability for the well-timed conveyance of the goods and for quality control. In addition, according to Finnegan (1999), such networks and associations also assist their members by facilitating access to cheaper and better quality materials and intermediate inputs through bulk purchases at reduced prices.
Exposing SMMEs to fairs and exhibitions contributes significantly to providing them with opportunities to gain access to markets. An exhibition or fair, according to the DTI (2007), can be one of the most effective marketing tools available where customers can come to the SMME, in large numbers and be able to view the product face to face. Fairs and exhibitions thus also become a product research opportunity for SMME as they test the demand for their products and identify areas of improvement in order to increase their market share. From impact studies on previous exhibitions Bob et al (2005a) conducted, it was discovered that SMMEs do need market opportunities, and that exhibitions do provide a marketing platform, create business linkages and networking opportunities. They also assist, to an extent, in informing SMMEs about their products as they get an opportunity to interact with many potential buyers and members of the public.
Another critical strategy employed to increase SMMEs access to markets has been the promotion of the BEE policy, particularly in South Africa. Since the early years of democracy, the government has highlighted the link between SMMEs and BEE. According to Sanchez (2006), it has only been in recent years that the importance of small businesses for transformation has been emphasised. Sanchez (2006) highlighted the fact that the SMME and BEE frameworks have been better aligned recently. He further highlighted the fact that the strategy for Broad Based-BEE highlights the importance of SMMEs in the transformation process, on the one hand and on the other, the national strategy for the development and promotion of small business identifies the creation of new Black-owned and Black controlled enterprises as a key issue. It is evident that the interactions between the two frameworks have become clearer throughout the years.
Sanchez (2006) pointed out that policies and institutions have been aligned to better serve the needs of SMMEs within the transformation process and to advance the goals of empowerment through the active participation of the smaller enterprises. Yet, implementation of BEE remains a challenge for many small businesses and their potential contribution to economic growth remains untapped. Sanchez (2006) also looked at an overview of the BEE scorecard and illustrates some of the existing links between the two frameworks and some of the positive and negative effects of transformation on SMMEs. On the positive side, implementation of the scorecard stimulated the transfer of ownership to Black entrepreneurs and, through procurement policies, created
business opportunities that did not exist before (Sanchez, 2006). Sanchez (2006) indicated that subcontracting practices provided opportunities for the development and transfer of managerial and technical skills. He further indicated that through the scorecard elements of enterprise development and Corporate Social Investment, government and private companies were encouraged to invest in the development of smaller businesses. Sanchez (2006) argued that it seems that BEE has served to encourage several private and public enterprises either to start to implement or strengthen existing initiatives supporting small businesses. The activities of companies like Electricity Supply Commission (ESKOM), Amalgamated Bank of South Africa (ABSA), South African Brewery (SAB) Miller and others serve to highlight these initiatives.
The ESKOM Development Foundation assists many promising new businesses with grants and also offers mentoring provided by its own staff (Business Day, 17 October 2005). The ABSA Business Centre in Pimville provides access to small businesses including informal traders and spaza shop owners in Soweto with the aim of bringing the informal business sector into the formal economy and into the banking system (Sanchez, 2006). The whole notion of BEE has to some extent achieved the objective of increasing access of SMMEs to markets. It is evident, according to Sanchez (2006), that despite the good intentions of the BEE policy; in most cases it served primarily the interest of the Black elite as opposed to the redistribution of wealth as it was originally intentioned.