Assessment of The Local Business Environment In Arbaminch Town (The Case of Small And Micro Enterprises Operating In Associations
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Date
2008-11
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Addis Ababauniversity
Abstract
The study was conducted to assess the internal and external business environment of the associations
operating in Arba Minch town. The areas of internal business environment of the associations include
organizational structure and management, internal resources, working premises, line of businesses
and marketing activities, and the firms' business concepts. The external environmental factors
investigated are linkages of the firms, government-related factors, finance, supply and market factors.
Whereas multi-stage sampling design was used, structured interviews with the chairpersons of the
firms, unstructured interviews with key informants, and personal observations of the researcher were
employed to collect primary data. For secondary data; reports, proclamation and policy documents
from SMEs development desk, Omo MFI, and A1MlTlTllnlT offices were consulted. To analyze data,
descriptive research method was employed. Due to the creation of associations, employment
opportunities were created for many unemployed and poor residents of the town. According ly, their
socio-economic status Goint actions and benefits, employment and income), and the income of the
locality have changed. However; poor organizational structures; inadequate finance, working premises
and tools of production; poor record keeping, and poor promotion activities are the major internal
problems. The constraints from the external environment are absence of inter-firm associations, poor
linkages of the firms with medium and large business firms; inadequate training and BOSs from the
local government due to poor implementation capacity (shortage of human, financial and material
resources), bureaucracies and inequitable focus of government authorities for business sectors; poor
quality, high cost and few alternative sources of raw materials; confinement to the local market ,
dearness of cost of life in the locality and under-optimal supplies of infrastructural facilities. In
conclusion, those shortfalls can end up in the under-capacity operations of the firms and under-optimal
income generating capacity of the entrepreneurs. Specifically, overlapping of tasks and therefore
distrusts and conflicts among the team members; poor resource management, and limited marketing
efforts of the firms; lack of inter-firm associations, poor implementation capacity of the local authority
and discriminatory supports and focuses of the local government for business sectors and activities are
the major problems. Therefore, the under-capacity operations of the SMEs should be capacitated by
addressing the financial, business premises, supply of inputs, and tools of production needs of the
enterprises. Stabilizing the rising costs of items in the market place and strengthening the purchasing
power of the community have to be capitalized on. Demand-driven productions are also
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recommendable. The marketing scope of the firms should be promoted beyond the locality and they
should not be limited to government organizations but their linkages with NGOs, other SMEs, private
organizations and other government organizations in and outside the area have to be promoted.
Creating fair and equitable market opportunities for the competing firms is also important factor.
Promotion, distribution; new products, markets, and new business lines development are the other
efforts of the firms need to be strengthened. Besides, undertaking training need assessment, and
capacitating local institutional infrastructure are the other important inputs. The regulatory provisions to
privilege associations need to be revised in a way other business ownerships are promoted; the
associations become self reliant, income of the local authority is optimized, and income contribution
cultures of the entrepreneurs to the locality are stimulated. Lastly, the implementation capacity of the
local authority should be strengthened
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Keywords
Micro Enterprises Operating In Associations