Smes Case

1.1 Background of the study

Developing as well as developed countries acknowledge the role and importance of SMEs in generating employment, stimulating growth and creating social cohesion. Moreover, interest in SMEs also seems to have been further revived in the face of globalization, which is increasingly becoming an influential force in world trade. Because of their flexibility and quick adaptability to change, SMEs are viewed as instruments capable of responding to globalization. While it is true that globalization creates opportunities for SMEs to be effectively involved in global markets, it also poses numerous challenges and problems. While their flexibility and adaptability promise their success in global trade, SMEs can achieve that if only they are competitive in terms of price, quality of goods and are able to meet delivery requirements. The contribution of small and medium-sized enterprises (SMEs) to employment, growth and sustainable development is now widely acknowledged. Their development can strengthen the economy and foster competitiveness. It can also help achieve a more equitable distribution of the benefits of economic growth and thereby help alleviate some of the problems associated with uneven income distribution.

Given the inherent difficulties of small enterprises in Zimbabwe, it is also quite clear that a dynamic SME sector cannot be established without external assistance from government and support institutions. In an environment where pursuit of open investment and trade policies is necessary as dictated by the new global economic environment, the government of Zimbabwe is failing to integrate measures aimed at SME development into their general industrial and economic policy. The combination of intensified competition and technological progress means that Zimbabwe has to examine how best to use its available scientific and educational resources to enhance domestic technological capabilities as an integral part of industrial policy, in a changed global context.

1.2 Statement of the Problem

While it is true that globalization creates opportunities for SMEs to be effectively involved in global markets, it also poses numerous challenges and problems. Whilst their flexibility and adaptability promise their success in global trade, SMEs can achieve that if only they are competitive in terms of price, quality of goods and are able to meet delivery requirements. It is against this background that this study sought to establish the level of SMEs competitiveness in the food and beverage industry.

1.3 Objectives of the Study

This study seeks to achieve the following:-

i. To identify the competitiveness interventions being employed by SMEs.

ii. To measure effectiveness of each intervention being employed by SMEs

iii. To evaluate the demand for SMES product in the retail stores

iv. To establish the factors that are affecting SMEs competitiveness in the Food and Beverages industry

v. To recommend effective ways in which SMEs can become competitive in the economy

1.6 Justification of the Study

To practice

The role played by SMEs in any society is undoubtedly important. This sector provides the basis for future industry and source of economic muscle. Any problems derailing the progress in this sector require urgent attention by all stakeholders of the economy. This study will be integral to the country's economic prosperity through the job creation potential of the sector and its contribution to the Gross Domestic Product.

To Theory

The study will provide insight and adequate knowledge on the importance of SMEs to the Zimbabwean economy and growth constraints facing the sector. It is hoped that the findings of this study will contribute to the already existing literature on SMEs importance to the economy and growth constraints that governments, SMEs, support institutions like SEDCO and academics can use. This study can also be a stepping stone for future research on the importance and constraints facing SMEs in developing countries.

2. Literature Review

2.1 Competitiveness

The term competitiveness can be described as the ability of an organization - whether public or private, profitable or not - to maintain and achieve systematic comparative advantages, to sustain and improve a certain position in the socio-economic environment (Porter, 2001). Competition plays a very important role in every company, as these must be different from its competitors. The competitive advantage of a company would be in his ability, resources, knowledge, attributes, and so on (Barney, 2001).

Competitiveness is not a product of causality nor arises unexpectedly: it is created and it is achieved through a long process of integration of new organizational routines and representative groups that shape the dynamics of organizational behaviour from customers, competition, and the market. Therefore, competitiveness is currently the characteristic or quality that enables an organization to survive in saturated markets; if a company is not competitive it is doomed to disappear (Porter, 2000).

There are many theories on competitiveness but there are seven patterns or principles on which most authors often coincide (Porter, 2001; Munch 2005:1, Munch, 2005:1 and Monteverde, 2002):

i. Stay on top of trends. Keep the company on the pulse of change.

ii. Become a supporter of change. To be physically and psychologically prepared for the reality of change. The perspective on the change will have a profound impact on the ways in which workers are experiencing.

iii. Recruit, reward and promote the best and brightest workers. The best employees will carry the company into the future. It should develop a human resources system to identify, train, promote and reward the best staff that exists both within the company and within the labour market.

iv. Think globally, act locally. Information technology is reducing the world, creating niche markets around the globe. Think about how products and services can satisfy the client somewhere else.

v. Innovate- what is currently done, how it should be done better, cheaper and faster. If you are not prepared to innovate, then have to be prepared to lose market share.

vi. Investment in technology, people, and training.