FACTORS AFFECTING THE PERFORMANCE OF SMALL SCALE ENTERPRISES

IN KAWEMPE DIVISION, KAMPALA DISTRICT

BY
NAZZIWA JACQUELINE
08/U/8830/EKD/PD

A RESEARCH PROPOSAL SUBMITTED TO THE DEPARTMENT OF ECONOMICS

AND STATISTICS IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
THE AWARD OF A BACHELOR OF ARTS DEGREE IN ECONOMICS OF
KYAMBOGO UNIVERSITY
Objectives of the study
General objective
The main objective of the study is to find out the real factors which cause the failure of
the performance of small scale enterprises in Kawempe division

Specific objective
i. To find out the effect of the location of the businesses on failure of performance
of small scale enterprises.
ii. To determine how the shortage of funds affect the performance of small scale
enterprises.
iii. To find out the effect of drawings on the performance of small scale enterprises.
iv. To find out the effect of marketing on the small scale enterprises.

Research questions
This study is required tat finding solutions to the following research questions;

How has the location of businesses led to the continous failure in perfoming small
scale enterprises?
How do drawings affect the performance of small scale enterprises?
How does the shortage of funds affect the performance of small scale enterprises?
Is ther a relationship between marketing and the performance of small scale
enterprises?
 Scope of the study;

The study is expected to find out the factors affecting the performance of small scale
enterprises. The study will focus on retail businesses owned by people of Kawempe
division. With a large percentage of industries in this country falling within this
sector, the need to clearly define the scope and area of study becomes inevitable. The
study is therefore confined to small scale enterprises operating in Kawempe divisin
and yet it is easy to use the result to gain insight into the whole industry.
It will consider the following factors;
The poor location of small scale enterprises, the shortage of funds, drawings and
marketing.

Significance of the study

The significance of this research ion factors affecting the performance of small scale
enterprises in Kawempe division lies in the attempt to document the factors that are
truly critical to the performance of small scale enterprises but which have not been
appreciated, recognized, or factored into the various incentive schemes and in the
management of small scale enterprises.

This research is of immense benefit, not only to the government in terms of the
appreciation of the factors critical to small scale enterprises performance which have
been overlooked but also to industries. The study will introduce to knowledge and
enhance practices in the management of small scale enterprises in Kawempe division.

The research will equip both policy makers and industrialists with the strengths and
weaknesses of various shortages/ incentives and practices in the management of small
scale enterprises. This will make it easier to both government and industries to
combine the best management practices with appropriate mix of policies and
incentives to archive the objectives set for the small scale enterprises sub-sector.

Limitations of the study.

While carrying out this research, the researcher is most likely to meet the following
limitations;

a) Lack of enough funds.

During the research period, the researcher may fail to raise enough money to meet all the
costs involved in the research process. As such, he or she may run short of stationary and
thus fail to visit many places due to transport fares being limited.

b) Inadequate information
In case of oral English excercises and face to face interviews, the researcher may fail to
get enough information from the subjects. More so, the subjects may refuse deliberately
to release information and others might even feel shy!

c) Lack of fulfillment of research time table

The researcher might lack enough time for interviewing the respondents. At times present
observations may tend to tell us nothing about the past or future.
Some forms of behaviour can only be fully observed for over a long period of time.
In both commodity and products businessand non commodity businesses only to find, in
both types of businesses, a substantial positive relationship. High level of market
orientation was argued to lead to, among others, high customer satisfaction and high
repeat sales (Kohli and Jamorski, 1990)

In addition to market orientation, as stated previously, also superior resources may lesd to
great business performance , both market and financial.this is brought up byHunt and
Morgan, (2001) who argued that “a comparative advantage in resources ……can translate
into a position of competitive advantage in the market place and superior financial
performance.” This is why firms constantly struggle for resources that could give them
comparative and, consequently, competitive advantage(Hunt and Morgan, 2001).

Based on the early work of Kohli and Jaworski(1990) and Nerver and Slater(1990),
studies in different parts of the world have been conducted. They have developed and
refined research tools for assessing degrees of market orientation in firms and examining
its links with both market and financial performance. In general, market orientation is
found to positively relate to performance; in rather many studies, however, the
relationship has been found to be relatively wea, though significant. Typically, only less
than 20% of performance variations between firms are explained through differences in
market orientations alone (Hooley et al, 2002). In addition to positive relationships
between market orientation and business performance, also innovation orientation and
innovativeness have been shown to have positive relationships with competitive
advantage and related isolation mechanisms(Jooley and Greenlay, 2005)and financial
performance (Tuominen,2003).componentswithin strategic marketing relate to each
other, too. It is for example argued that due to focus on developing information on
markets, market oriented firms are sensitive to changing customer needs and therefore are
more to innovate successfully than other firms (Matsuno, Mentzer and Ozsomer, 2002).

EFFECT OF POOR MANAGEMENT

The financial impact of poor management is staggering. Greed drives it from the top in an
attempt to cut costs and generate profits for share holders leaving the middle managers to
work with a tight budget. Even if in these tough economic times, an excellent leader is
able to rally his tribe conversely, a poor manager will flounder. His tribe is the first to
feel the negative effects followed by the customers. Listed below is a closer look at the
negative effects of poor management:

Poor customer service

The manager is responsible for setting the atmosphere in the building. A bland generic
experience is the manager fault, she may look to cast the blame on the employee, but the
buck stops with her. If she decides to allow poor service to be tolerated it will permeate
through the organization, over time some customers will leave, others will stay but
complain and some will grin and bear it. You will not find raving fans under poor
management. If team member performance is not addressed a loss of productivity will
soon follow.

Loss of productivity

Team members will test the limits and once they realize that a manager is not going to
address customer service issues head on, productivity will suffer. A decline in
productivity cost organizations additional payroll dollars in overtime adding a burden on
those team members who are performing. Over time high performing team members
morale will be impacted, because the manager is not addressing performance issues.

Low morale

Low morale is fertile ground for internal theft to grow. Excessive sick calls will ensue
and pretty soon a poor manager is dealing with a dysfunctional team. A poor manager
will start to act like a dog chasing his tail and feel like a fire man who is always putting
out fires. The enormous stress that he feels is then transferred to his team members as he
attempts to regain control of the sinking ship.

Increased stress

Working under stress causes illness and as result increased health care cost. Coming to
work is no longer fun; it is only a means to an end. The high performers will soon look
for greener pastures and the poor manager may finally terminate some of the low
performers.

High turnover

Companies spend an inordinate amount of money each year as a result of poor

management and the cost attached to training new employees. Good leaders higher the
best and set them up success within the organization and build a strong pipeline in the
process.

The sooner companies move away from the management of people of as a mentality, the
sooner they will see increased profits, highly productive teams, increase morale, less
stressful environments, and more satisfied customers.
CHAPTER THREE

METHODOLOGY

Area of sampling.

The research is to be carried out in Kawempe division simply because the place will be
more conveniently close to the researcher’s place of stay. The research will be carried out
during business hours so as to get the subjects in their places of work.

Research designs.

The subjects will be chosen at random from specifically retail traders in Kawempe
division.

Research instruments (tools)

The reseach will use questionnaires, oral interviews or observations.

Questionnaires.

Questinnaires will be formulated and distributed by the researcher among all the subjects
chosen and the same or the standard questionnaires will be set. Some questionnaires will
be structural, others will require a “yes” or “no” answers. Objective questions will also be
included in the questionnaire.

Oral interviews.

Subjects will be chosen randomly; some questions will be asked by the researcher and
answered by the subjects chosen.

Observations

With observations, although it may seem a weak instrument, it will be used in data
collection. Some data will be obtained through observing the system of operating in
various businesses.

Investigation procedure.

The researcher will visit the area of sampling for introductory purposes and will ask for
permissions from the respective business owners to carry out the research at their places
of work.
The investigator will design questinnaires and distribute them among the selected groups
for filling. Later, interviews will be given to selected groups and answers that will be
received will be used in writing the final reports.
Finally, the researcher will collect the filled questionnaires; these will be statistically
annalysed and interpreted to make a valid conclusion in the final analysis.

Intervening(extraneous) variables.

The intervening variables will be a number of subjects and groups to control. These will
be a number of subjects in chosen groups and the people or subjects that will be taken
from each category will be the same. A specific number of people will be used in each
group.

Presentations and analysis of data

Data will be presented in the form of frequency tables. It will be analysed using
qualitative analysis.

Qualitative analysis.
The data will be continuously analysed data collection sub-themes will be confirmed and
if confirmed, categorized in codes and assembled in simple percentages.
APPENDIX A

RESEARCH QUESTIONNAIRE FOR SMALL BUSINESS MEN.

Dear respondent,

The questionnaire below is to be answered by business men as to factors affecting the

performance of small scale enterprises. This study is for academic purposes only and the
data obtained from you will be kept strictly confidential.

The researcher requests you kindly to answer the questions frankly and genuinely. Your
name is not required. Please put a tick in the appropriate bracket(s) and state briefly in the
spaces provided.

1. What business are you operating?

Shop proprietor [ ] Market vendor [ ] Partnership [ ]
2. What is your business experience?
1 -3 years [ ] 4 - 6 years [ ] 5 – 10 years [ ]
3. Does location affect your business?
Yes [ ] No [ ]
4 If yes, how?
e.g. in terms of sales [ ] Accessibility [ ]

5. Do you withdraw money and goods for personal needs?

Yes [ ] No [ ]

6. Does it affect your business?

Yes [ ] No [ ]

7. If yes, how?
………………………………………………………………………………………
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8. Do you have any problem in marketing your product?

Yes [ ] No [ ]

9. If yes, state.
………………………………………………………………………………………
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……………
10. How did you start your business?

With borrowed money [ ] With capital [ ]

11. If borrowed money, is there any way it has affected your business?

Yes [ ] No [ ]

If yes, state.
……………………………………………………………………………………………
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……………………………………………………………………………………………
………

What factors do you think have affected you in the operation of your business?
……………………………………………………………………………………………
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