Share, , Google Plus, Pinterest,

Posted in:

Big business: friend or foe for South African small business

With a large majority of formalised businesses in South Africa being small to medium sized enterprises, they are gaining the attention of big business. But is big business a friend or foe for small to medium sized enterprises (SMEs) in South Africa. There are two sides to the coin.

Firstly, big businesses hold a monopoly on many industries in South Africa, some industries have cartels which regulate the pricing in their industry. This in turn creates an environment which makes it hard for small businesses to enter the market. But in recent years South Africa has created the Competition Act which is enforced by the Competition commission. This commission helps to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy. By having this Act in place South African small businesses have a better chance to compete with big business.

But big business does not always have to be the enemy. SMEs and big business can benefit from a mutually beneficial partnership. Many small businesses offer services or products which big business go on to sell or use in the manufacture of their final products. In addition, big business may find research and development of new ideas cumbersome and will look to small business who have fresh ideas to partner with or even buy their technology outright. Small business help big business by developing the talent of employees who may look for jobs at big businesses. Small businesses are also some of the top clients of big business as they use their products for resale or to create the small business’ final product. With these points in mind, we can see why it is important for small and big business to involved in the economic environment of a country. Small businesses also encourage competition with big business which helps to develop the economy.

Another initiative which the government has launched to encourage the partnerships of small and big business is enterprise development. Big business is encouraged to fund or mentor small business and in the end they get a kickback on their taxes for the benefit which they have provided to the small businesses. This initiative has encouraged big businesses in the mining and energy industry to create enterprise development programs to support development. Furthermore, the big businesses are encouraged to fund industries which they are not necessarily the chief players in.

If small businesses, choose to work with big businesses instead of treat them as the enemy then they will benefit greatly. They will be able to reach a larger market and they may also receive mentoring from the big business. This will assist them in future to become the big business they always dreamed of being.

Proudly brought to you by the NSBC.