Environmental Analysis and the Role of SMEs

Launching small business is really an interesting matter for new businessmen who invest in the market. Such new investors as Ahmed have to learn about everything concerning the business he is going to open such as in which environment the business is going to be done. Small businesses' environment is what is going to be discussed and analyzed here referring to Kuwait as an example. STEEP analysis will be presented in this essay in addition to discussing entrepreneurship and small business benefits.

Question one (350 words, 35 marks)

Ahmed wanted to know more about environmental factors that affect business organization.   In this context,

Explain STEEP analysis and discuss the importance of analysing environmental factors (STEEP) for an organization.  Provide examples to support your answer.  (35 marks)

There are many tools for analyzing business external environment such as STEEP analysis which is used to address issues of factors that affect the small business in any country such as Technological factors, Sociological Factors, Environmental Factors, Economic factors and Political factors as Ahmed will use it to help him with his business. In Kuwait, Technological factors can represent the factors that have relations with modern technologies and updates programs of the internet and other tools of communication. The  revolutionary movement of technology in Kuwait can be seen in companies as Fast Telecom and Quality net that provide services of communication and internet widely and strongly. Companies as Zain and Wataniya are representing great communication services which enables small investors to communicate easily with any one around the world to make their business easier and more flexible. In Kuwait it is important for any business to look into sociological factors as work sorts, culture, language, religion, population and Arabic traditions of Kuwaiti population who is esteemed to be 3 millions in 2013. As environmental factors in Kuwait are reflected on stakeholders who are attracted to a business environment without any negative effects, this can be seen through Kuwait legislations, employees, pressure groups and customers. It is seen that Kuwait laws encourage small business and provide them with all investing chances as it is believed in Kuwait that small business supports the general business atmosphere. In Kuwait, economic factors reflects the all stable economy and the economical state that helps investors of small businesses work with eagerness and ambitious as with its Kuwaiti Dinar as a strong currency with its exchange rates that are always high everywhere worldwide. This also means that inflation rates off KD are low as according to 2013 statistics, they were 28% with a$165.8 billion as Kuwait GDP. (CIA Factbook Kuwait, 2014) Political factors in Kuwait reflect the Kuwait government policy of not forcing businessmen and investors to pay taxes which assist small investors who always worry of taxes in addition to the government tendency of supporting infrastructures projects and educational ones which provides a suitable climate for small investors to work freely.  

Question two (350 words, 35 marks)

Ahmed wants to start a small business initially and wants to expand it later.  In light of this statement:

Discuss briefly the benefits of small business and outline its role in general for the growth and development of a nation.  Support your answer with relevant examples. (35 marks)

To launch a small business is a matter that has many benefits such as providing chances of working in new job opportunities and helping in employing many persons who are in need for work as, for example, a business that depends on retailing will provide job opportunities for distributors, drivers for delivery, sales assistants, call center and many other jobs according to each business. This helps decrease and end unemployment rates in the country which promotes it as a whole nation. Small businesses also widen the range of services in the market as large companies may not save such simple services for customers. Due to the knowledge a small business has about areas it covers, each customer in the limited are will be thought of as a customer to whom good services is provided. Another benefit of small businesses is the innovation techniques they follow as bureaucracy has no place here which gives small businesses owners the chance to control the business freely, provide a variety of different activities and change functions easily according to what customers really need. Small businesses costs as not as high as the big businesses costs. Small businesses also share in developing the country and raise its growth rates. The country local infrastructure is also supported by the help of small businesses through attracting great investments depending on the trading movement that small businesses do. A small business provides a variety of available goods and needs of customers that can not be found in big businesses which makes the domestic product a unique one. Many great companies began as small ones such as Apple Company for computers and iPhones as this great company had a small and a simple start as Steve Jobs and Steve Wozniak began their business when they were university students by designing devices that can log on the call computers then began to sell such devices forming their company which now is one of the greatest businesses in the world. In spite of the limited resources they had, their love for technology and business enabled them to produce more devices as microcomputers and chips and others. They succeeded and achieved what they aspired for and more.  (Apple Investor Relations FAQ, 2014)

Question three (300 words, 30 marks)

Ahmed has been reading widely about the success stories of entrepreneurs.  He is interested to know the entrepreneurial qualities and traits thoroughly. In this context:

Define Entrepreneurship and explain briefly some the entrepreneurial qualities and traits with examples that Ahmed should have to get success in his ventures.  (30 marks)

The entrepreneurship refers to the work that entrepreneurs do of activities that launch new products, new services, new fields of business and also open new markets as well by using new and developed techniques of operate the business processes. Entrepreneurship has both traits and qualities such as performing the business in a very free method, achieving the business with large money amounts, achieving great success results due to getting into risks which are studied and meant to reach unexpected success, having no boss over the entrepreneurs which enables him to take decisions freely and be more respected by others and to control the business human resources well and properly by good leadership techniques and motivation tools which helps the business to succeed in addition to the ability of an entrepreneur to apply new innovation ideas and methods which raises the level of the business performance. Challenges that an entrepreneur faces enable him to work harder to raise the business level of competitive advantage in the market. (Long, 2014) In Kuwait, Lulu hypermarket is a big entrepreneur and a big business as his owner use risky techniques and ways for doing ideas that are innovated and updated as the business is decided to open new branches in KSA and other different Arab countries in addition to the branches opened already in some Arab countries as Qatar to present the different variety of products that come from everywhere around the world specially from India and Malaysia. The business is recruiting many human resources from salesmen, distributors, security, accountants and others who are being lead by strong and successful professional managers to provide the good team work that serves customers properly. The business is being widen and is receiving success from all people scales in Kuwait from all nationalities.

Conclusion

Kuwait represents a very good environment for launching a new small business such as Ahmed's experience as there are many factors that supports this idea including the government helpful attitudes, the people nature that loves shopping and making business, the political state, stability of its currency and other factors above mentioned. Entrepreneurship  provides many great opportunities for business success as being presented in this essay.

 References 

• "Apple Investor Relations FAQ". Apple Inc. Retrieved January 27 -10-2014.
• CIA Factbook Kuwait, 2014, at: https://www.cia.gov/library/publications/the-world-factbook/geos/ku.html, passed: 2014-10-27
• Long, 2014. 8 Entrepreneurial Qualities That Contribute to Success. http://www.entrepreneur.com/article/234583