Growth of Small Scale Industries

The issues and challenges faced by the small scale tourism industries are the main aim of this essay in the essay it is critically analysed the difficulties and problems faced by the small scale industry and a lot of research is done on the small scale industries and it is discussed and argued in the essay. It is said that small scale industry is a very vital part of the tourism industry and economically it contributes a lot to the economy which is being talked about.Issues like innovative way of planning should be used by the small scale industries and also the effect of government policies on the small scale tourism is being discussed in the study. The aim of this essay is to critically explore the challenges and issues faced by the small tourism business.

As we all know that tourism industry has a very significant percussion upon societies, environment and economies (Cooper 2005).According to Cooper (2005) “tourism directly or indirectly generates and supports 195 million jobs globally. This is equivalent to 7. 6% of the world’s workforce and is forecast to raise over 250 million jobs in 2010. At the same time half of these jobs are in small or medium – sized enterprises (SMEs), the lifeblood of tourism”. According to Page and Conell (2006) the tourism industry generates more and more employees every year for the developing countries especially.Moreover it is defined as “Small and medium tourism enterprises comprise all businesses, which by their own definition, operate in the tourism industry and employ up to 100 employees and include sole operators not employing any staff. Specifically, micro businesses are those that employ between one and four workers, small businesses employ between five and 19 employees and medium businesses employ between 20 and 100 employees”(Breen, Seers, Jago and Carlsen 2005).

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It is a business in which there is no proper management structure and the services, facilities, market value and number of people working is generally small and it is run by a single owner or a group of people are the owner or owners of the business (Page , Forer & Lawton 1998). The challenges and issues faced by the small scale tourism industry are the change in policies regarding the business, a need in proper management structure, destination development and sustainability tourism development by the help of small scale business.According to Wanhil (2000) there are three types of business large scale business, medium scale business and small scale business, in the large scale business which are equal to the standard of international hotels and have 100 or more rooms, medium scale businesses are those in which there are small or low cost hotels and then the small scale business include people renting rooms for reasonable price, small and low priced eating outlets and souvenir shops.The large scale business was not the best option for the growth opportunities , infrastructure , production , rate of foreign exchange and other economic benefits such as increase in earnings but on the other hand the small scale industry or the small hotels dealt directly with the customer so promotion costs were low and the other costs were low as well because of the use of the local market and local demand and supply connections because of this the rate of return was more and better than any international hotel or large scale business.

For the past two decades the policy makers concern have been the emergence of the small scale business in tourism development. Small scale business has been the factor for slow growth and innovation but then it is also considered as the backbone of the economic factor in the tourism sector as it is a very good source of income.Small scale business is responsible for a lot of vital reasons as it helps us to know the importance of social benefit , lifestyles of people , helps in promoting sustainable tourism as it generates a lot of employment opportunities for the local people especially illiterate, it also enlightens the image of the destination or place. (Thomas, Shaw & Page 2011).According to Hohl and Tisdell (1995) the role of small and medium scale business in tourism planning is to generate more employment opportunities, there are other factors as well like developing the surrounding but the main factor is to create job opportunities for the local people like the policies of the European union and many other countries as well is to help the local economy by providing employment.

In many parts of the world the local, regional and national polices has been the subject of discussion in the case of small scale enterprises regarding tourism (Carlson & Getz 2005). Tourism government policies play a very important role in the growing or making of a new business , especially in small scale business the policies are designed in a way which help them to grow and survive in the market. European Union policies like structural funding initiative are good example and a way to promote and grow small scale business .According to Hall, Kirkpatrick,and Mitchel (2005) the small scale business are easy to operate than large business it is criticised because the service and supply is inappropriate and does not match with demand. Moreover other problems faced by the small scale business are the government policies of controlling and regulating the demand. The deciding of policies plays a very important role in the growth of small scale business as it makes or destroys the business.Developing and managing small scale business has been generally informal and much unsophisticated practice by the different tourism enterprises.

In a sector like small scale tourism there is always less problems to enter the business and there are times when the motivation to enter the business is not always financial. There is no proper management structure to manage a small scale business as it is run by individuals or small group of people and it is very important for any business to have a proper structured management structure for a smooth running of the business.Small scale business in many countries employee different number of people like in New Zeeland less than 10,whereas in European countries it is less than 10 when the business is micro small and according to them in a small scale business there should be people working in the range of 10 and 49 employees. Small scale industry has dominated the tourism industry and will still dominate the industry. Like firms in Ireland have 79% of people working in the industry with less than 15 employees.

Likewise in the UK from 1980 to 1990 the small tourism business increased from 1. million firms to 2. 8 million firms in which the maximum firms the staff was below 20. To characterise the small scale business there are three main points first being allot of money is invested by the owner or the owners, the second one being less knowledge of financial marketing skills and management due to dependence on the number of individuals and the third one is the dependence on the borrowing from internal and external sources related to the banks and other money lending institutions (Page, Forer and Lawton 1999).

Organisational structure and entrepreneurial characteristics in small scale business. CategoryEntrepreneurial characteristics Self-employedUse of family labour, little market stability, low levels of capital investment, tendency towards weekly management skills. Small employerUse of family and non family labour, less economically marginalized but shares other characteristics of self-employed group. Owner-controllersUse of non family labour, higher levels of capital investment, often formal system of management control but no separation of ownership and control.Owner-directorsSeparation of ownership and management functions, highest levels of capital investment. (Page, Forer & Lawton 1999) As we look at the above table which shows us the characteristics of the organisational structure which is generally followed by the small scale tourism industry in the case of self employed it’s mostly the family used and there is less market value and lack of management skills.

The other category of self employer shows us that there maybe use of family labour and it’s very similar to the self employed.These two categories are mainly used in small scale business as the main factor is capital investment is low which is shared by these two categories. Now we will do a comparison between management differences between small and large firms. Small FirmsLarge Firms Short-term planning horizon. Long-term planning horizon.

React to the environment. Develop environmental strategy. Limited knowledge of the environment. Environmental assessments. Personalized company objectives. Corporate strategy. Communication informal.

Formal and structured communication. Informal control systemsFormalized control system.Loose and informal task structure. Job descriptions. Wide range of management skills. High Specialist/technical skills demanded. Income directly at risk in decision making. Income derived from wider performance base.

Personal motivations directly affect company performance. Broader based company performance. (Page, Forer & Lawton 1999) As we see the above table which shows us the difference between the small and large management structure this table helps us to know the problems and issues the small scale industry faces because of a very in unorganised management structure.Small scale business has a very short term planning vision they don’t have a proper objective of the business.

They have very less knowledge of the environment and its factors as mostly small scale business owners are illiterate. They don’t have a proper strategy in mind they just think about their personal objectives to be completed in time. To summarize the management structure in small scale business needs allot of development as it’s not formal and allot of work is needed to improve and to build it.The major problem is the lack of finances the small firms has they have poor management style of working they do not how to invest at the right time (Soundarapandian 2002). Small firms do not put their focus on quality of the product and it is very difficult for them to get a good customer flow this is because they do not have a permanent life as they stay and go and that effects the loyalty of the customers this is a big issue for them to retain their business in the market (Jones and Tang 2005).As the buying power of the small firms are very low it is very tough for them to increase in production and also maintain inventory they don’t have the capacity to buy large amount of products and store them this makes their profits margin very low as they have to buy material at regular intervals (Morrison, Getz & Carlsen 2004). According to Harvie & Lee (2008) to maintain high turnover rate of employees is also a major threat for the small scale business as there is very difficult to recruit skilled and efficient labour and especially in the case of small scale business it is very tough because of the capital nvested in the business is very less and its very tough to train and recruit new employees at regular intervals and also manage the operating cost of the business at the same time.

So small business looks like getting work done at cheap and low labour cost but in reality it’s not as it’s very tough to maintain the business with such low finances (Thomas 1998). The quality of standards is also major issue with small scale business, they are said to maintain the culture and job employment but the reality is due to lack of management, not clear aims and objectives of the firm it is very un true and is there but for a very small time.As we all know there is allot of competition is the market as there is a huge amount of small scale firms competing with each other every day so a proper plan and management is required for its survival and growth (Moltz & Mccray 2012). We all know that tourism is a very big industry and for some countries it is the bread and butter for the economy and small business is entirely based on innovation, creativity and growth opportunities (Ross & Lashley 2012).But this looks good from outside but the statement contradicts because these firms are not at all developed there was a time when the bread and breakfast system was a major industry but now days these type of industry are towards extinction (Cecil 2006). Big companies in the hospitality sector especially branded companies are also coming in up with bed and breakfast and taking over the small scale business opportunities , these companies are offering good prices with better facilities and with a better location and they are making it very difficult for the small scale business to survive in the market (Telfer and Sharpley 2008).

To make importance to the economy the small scale industry needs proper motivation and creativity to grow and contribute towards the economy (Pfister and Tierney 2008). But the small scale industries are not developing at a good pace they don’t follow a proper plan to reach their goals and they follow a very improper working style which takes them nowhere and it makes life tougher for them to survive.Small scale industries have to try building up a proper plan and be more innovative in a way that they can develop products at cheaper costs and sell them to tourists as not losing the cultural integration, all they need a proper planning and simple strategy with patience they can do wonders in the industry (Brebbia 2010) In sum it has been observed that small scale tourism industries are facing issues like government policies, improper management structure, labour turnover etc these are the main challenges or threat which is faced by the tourism industry.

But we have seen and read in the above essay that small scale industries are a very important part of the tourism sector and they are the backbone or lifeblood of the tourism sector. They have to face allot of issues and challenges by government as there is no interest and no investment by the government if there is then it’s not suitable for the small scale industries as they don’t know how and what to invest in the right place and on right time because they lack of management and planning skills. Moreover there is a need of improvement in making their vision and planning proper.They have to have a proper set of rules and goals to follow which can help them to survive in such a competitive economic market.

On the other hand if see the small scale industries like we say they are the backbone of the tourism economy it is somewhere true as well because they contribute allot to employment generation in the country and which leads to sustainable tourism (Harris, Williams & Griffin 2012) & (Swarbrooke 1999). Small scale industries also play a very major role in protecting the cultures as well as they introduce the culture of the country to the tourists from the other part of the worlds.Still there are problems faced by the small scale industries like shown in the table above the differentiation of the large and small scale tourism that how systematic the large scale industries work and how improper structure the small scale industries have, the style of working is very different and that’s a major concern for the small scale industry.

They need to work out that how to control finances and how to control labour turnover as allot of money is being wasted in acquiring skilled labour it seems its cheap but it’s not easy to train and recruit new employees .The government should try to help them with financial and other needs and they should promote more small scale tourism industries. If they improve on working with a proper strategy and method they can impact and rule the economy of any country on the basis of tourism sector. In the end they are like the heart and soul of the tourism industry as they are a source of food to a big number of people working in these industries and especially people who are illiterate and poor. References Breen, J. , Seers, S. , Jago, L. , & Carlsen.

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