Small Business Management

Small Business Management

Cluster Assignment

“Electronic Market”

Instructor – Mr. Sultan Raza

Introduction

Our topic for cluster assignment was the Electronic Market of Karachi, which is popularly known as Saddar Electronic Market. However it encompasses the surrounding area and shops as well which are in its immediate vicinity. Some claim that the Naz Electronic Plaza is now also a part of the Electronic Market.

The electronic market comprises of shops which both sell as well as serve as a storage facility for larger shops that prefer having their stocks close by. The shops include merchandise revolving around Televisions, Refrigerators, Mobile Phones, Dvd Players, Washing Machines, Ovens and Stoves, electronic cables and dish systems and even computer repairers and peripherals providers comprise this cluster.

Our main contact was a local shop owner which is a direct contact of one of the group members. The owner is a family run small business and has two to three shops of his own and is running a successful and well established business in the electronic market. One shop is responsible for selling TV Dish systems along with cables and the other is retailing washing machines, ovens and fridges. The receiver business falls under the category of wholesale and the fridge and home appliances business falls under the retailer category. The supply chain includes a direct contact with the company for large items mainly and at times a very properly integrated and built distributor network system to ensure that timely delivery of new items is there along with up to date appliances. As in the case of receivers and cable products they are directly imported from China and even exports go to Dubai.

The set-up is quite a fine establishment, and the business owner is secure in terms of business and has reliable long term structure laid down. The Human resource policies undertaken by this small business is usually of hiring someone known and is on a trust basis. Both the shops have around 5 employees each. The finance dealings are such that credit period and payment is allowed though cash is the life blood of the business and credit period is often given to only proper established parties. When questioned about the marketing techniques they looked at us as if we cracked a joke and told us that they do not consider this important or useful at all. They believe in just word of mouth and reference base which they do not categorize as marketing. This according to our material in the course SBM is contradictory as these small business owners have a different perception and mindset of what marketing really is. They would be involved with a very close relationship with the customer and this is quite observed in this sector but they would not classify this as marketing. They said they have no such issues with the local authorities here and there are hardly any electricity woes. They have one shop on rent and the other they own it. In regards to a Union council or a regulatory body they said that yes there is a local council by the name of “KIDA” – they didn’t know the full name either and that they do not have much information about its activities are not so much involved with the council.

This was a basic background establishing as well as a local example to get us familiarize with the cluster and the electronic market in its entirety. The rest of the details about the analysis of the cluster are as follows.

HR handling techniques

Since the market that we have visited is mostly an informal one, so there are no proper HR managers and employees are selected mostly on some informal selection techniques. However there are also other big businesses that exist in the electronic market, which apply formal HR handling techniques.

The most part of the market, mainly 90% of the businesses, works on the HR recruitment, selection and management techniques. These businesses are very small in terms of their physical structure and size, but their actual turnovers are in crores. Their structure mainly consists of an owner or sometimes a manager appointed by the owner and two or three employees, so mainly the HR personnel here is the owner, who appoints the employees on his own. This appointment and management is done according to his experience and judgment ability. The employees mostly come to the owner by reference or may be through the community of the owner. As Saddar electronic market is mainly memon dominated, so they have a soft corner for their own community and they appoint mostly people from their own community due to factors such as trusting issues. Another type of employees that the owner keeps is people from the family, as these are mostly family businesses, so the owner tries to teach his brother or son about how his business works and for this he makes them work with him in the business. The firing of an employee happens mostly due to laziness of the employee, fraud by the employee or if any conflict occurs between the owner/manager and the employee.

The other 10% of the market contains businesses that are relatively of a bigger size but still land in the category of small family businesses. These rely on the formal HR management techniques, like these have formal HR managers, these are not paid much but they work mainly to gain experience here. Employees in this sector of the market are formally interviewed by both the manager and the owner, as this is a small business but relatively large, so in this sector employees vary from 15 to 100. In Saddar there are businesses like Audionic, Q mobile and Digicom. These also consist of service centers, where there are lots of employees, which are selected on the basis of communication skills, technical skills and management skills. Employees do have contracts here and are observed and appraised according to their performance. Firing is also done formally here.

Obtaining of Business Finance Techniques

The Shops in electronic market are majorly run in an informal manner, so the financial activity is usually held by the owner/manager or superior in the shops. There are 2 ways of the ownership of the shops. One the private ownership by the shop owner and second is shop given/taken on Rent.

Normally rented shop rates are from RS30000-70000 per month. The rent rates are low at the internal side of the market whereas rates increase at the front side of the road. Because of the football effect, they are able to capture greater visitors. When asked about such a high rent, the shopkeeper told that if they had their own shop, they could have made much more profits.