Challenges in the Business Environment

Topics: Economics

The challenges and opportunities that these markets face in a changing environment will be discussed. A corporate communication strategy to address some of the issues facing will also be developed which will identify the stakeholders and the appropriate channels of communicating the message. The business environment Businesses are affected by the environment and world around it. Businesses cannot exist in isolation therefore a business exists in an environment which is dynamic and this can have a major impact on business. A business environment can be divided into 2 components.

The micro and the external environment. The environment which is close to business and affects its capacity to work are known as Micro or Operating Environment(Booth, 201 2:10) It consists of Suppliers, Customers, Market Intermediaries, Competitors and the Public is made up of the micro environment). The external environment is comprised of the macro environment and this refers to factors that creates opportunities or poses threats to the business. The African craft market made up of sculptures, metal work, bead work, mask, textiles and pottery.

The market plays an important role in the economic sector as 40 000 people work in the craft sector and contributes to two billion a year to the economy. (Overtaken,201 2). However there are many challenges that face them daily, whether it be a roadside wire artist, a women creating beautiful beaded jewelry or a potter who owns a well-designed studio, these craft producers do not have all the necessary skills to maintain a successful business in a changing business environment. African art is often made by individuals who reside in the rural areas where there are little resources and lack of skills.

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Their craft is sold to locals as well as tourist as it orators true South African heritage and demonstrates the creativity, vibrancy and diversity of our nation. African Craft market operates on a small scale yet it contributes to quite a portion to the country economy as many of the products are exported internationally. Challenges in the African Craft Market There are many challenges in this industry which it makes it difficult for entrepreneurs to succeed in their business and seeking a worthwhile profit.

One of the major challenges is low levels of literacy and innumeracy which makes it difficult to understand what running a business entails. Some of the practical business skills such as pricing, costing, marketing, sourcing, supplies and financial assistance as well as how to manage their finances is not comprehended, (south African craft report, 1998)This will hinder entrepreneurs as they might not have a fixed cost price and can’t deduce their profit margin or how to save for their next batch of stock.

There is also very little critical thinking skills this means that they do not understand the market in which they produce their goods and for whom they producing thus they cannot improve their range of products in the marketplace or have efficient knowledge about who are their target market and what exactly appeals to them. (south African craft report, 1998)Grafters also need a constant flow of capital and therefore require financial assistance to assist their small business as they struggle to build up sufficient level of capital as their revenue is seasonal.

If there isn’t enough capital, this will result in minimal products for purchase and less profit. There is also an on-going challenge which affects many, how to gain direct access to the markets as entrepreneurs have to travel hundreds of kilometers to sell their products which incurs high transport cost and often keeps them away from their families. (south African craft report, 1998) There is also no set venue or location, for example a wire artist selling his products on the roadside. This may change in time, demand or according to season. There is also lack of resources (grass, wood, clay etc. As many metal work and beaded products require natural or recycled items and there may be a lack Of access to them. Product finishing is a challenge as some may not have the correct skills of how to add finishing touches as to make the product of good quality and ease the standards of their produce so that it may last longer. (south African craft report, 1998) Opportunities in the African Craft Market As mentioned above there are many challenges hindering entrepreneurs on a daily basis yet at the same time there are equal number of opportunities to take advantage of which will long term benefit the business.

There is a huge variety of cultures in our country because of our diverse nation which contributes greatly to a strong foundation upon which the hands made good are inspired by. There is also presence of other markets which support and intuition to strengthen the craft industry. These markets are namely the the local, domestic, tourism and international market. (south African craft report, 1998)The stores in urban centers also contribute to the demand and allow entrepreneurs to operate not only on a local scale but with the correct plans, budgeting and assistance these markets provide a platform to market their products on a larger scale.

There are also low levels of entry to start and operate a small business in this sector especially if residing in rural areas. (south African craft report, 1 998) Opportunity is slowly arising for more reduces as there is an increasing level Of competition. More products can be produced and off better quality and more can be charged for it, ensuring a higher profit. There are a wide variety of entrepreneurs who can gain access to the market in response to demand thus there are less rules, regulation and restrictions in this sector. As easily as an entrepreneur starts a business, it can be just as easy to close in response to levels of demand.

Corporate strategy Since there are many challenges facing the African craft market? A corporate strategy will be developed to eradicate those problems. The challenges faced y the African craft market, objectives of the strategy, stakeholder and the channels of communication will be discussed. An institute for arts and crafts will be developed in rural areas to ensure skills are developed where there are needed most. The challenges that will be focused on are low levels of literacy and innumeracy, business skills, critical thinking, knowledge about markets and niches, financing and finishing of production.

Since this will be a non-profit organization, funding will be needed from the government, as well as small business assistance from seed (small enterprise development agency) which aims to strengthen small businesses and give them access to finance, expand market opportunities ad drive and instill growth and training and provide infrastructure OBJECTIVES The institute that will be set up aims to have 4 main programmer that will address the challenges mentioned up categorically.

Programmer are namely, product support, business support, market support and financing. The objectives of product support will be to ensure that there is an environment in which entrepreneurs can further develop their products, have access to the accessory tool and equipment and gain advice and crucial information about starting production to the finishing products in the classes. Overtaken,B , 2012).

The second programmer is business support which aims to offer training and learner’s to entrepreneurs which will develop skills and gain knowledge in business management, marketing, sourcing raw materials. This will ensure that entrepreneurs know how to cost their products, budget and how much to invest for more stock or materials. ( Overtaken,B (2012). Thirdly, Market support aims to assist grafters on how to target different markets wrought appropriate channels and get their message across which will gain sufficient coverage.

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Challenges in the Business Environment
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