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SMEs are a significant source of job creation, economic development, creativity, and quality of work. This study started with a desire to examine the business model of the case industry and determine its validity in the emerging market. The research has been formulated to a basic level-for all KIBS enterprises and the business model structure used in this study to better support the situation of the KIBS businesses. In this analysis, the case firm plays a central role. The main purpose of this report is the development of its business and revenue model, issues faced by SME to conduct business internationally and the future development of such an enterprise.
Table of Contents
Issues faced by the SME with regards to conducting business internationally.
Brief explanation and justification of selected technology.
The primary driver of many business markets is small and medium-sized enterprises (SMEs) (Mittal, et al. 2018). SMEs serve significant responsibilities in offering jobs, leading to economic development, enhancing human service management, fostering an entrepreneurial community, and generating new business models (Chen, et al. 2015). Although there is no typically approved description of SMEs, parameters for defining small companies may include qualitative and statistical metrics such as profitability, resources, employment figures, and management features (G. Lee and McGuiggan 2008b). In contrast, many managers of small and medium-sized enterprises are involved with offering sufficient funding of their enterprise to promote development and stability (Binks and Ennew 1997a).
Matters concerning knowledge management have earned attention in modern research, being regarded as a topic of great interest in academic communities and the business atmosphere (Jordao and Novas 2017). They recognize the financial and social significance of small and medium-sized enterprises as the key drivers of opportunities and reflect more than 90 % of the world's enterprises. The business model is one of the principles or techniques helping enterprise leaders to create strategic decisions in this challenging environment. As per a study undertaken by Osterwalder et al., 2005, the concept business model utilized in research applies to two points of view, which are the approach an enterprise conducts business and a formulation of the manner a firm does business in order to lessen instability to a reasonable point. Knowledge-intensive business services (KIBS) are also seen as one of the essential factors of the knowledge-based economy that consists of enterprises that have developed to support several companies to cope with issues that require additional sources of awareness. KIBS favors the industrialization of the depth of knowledge of a country by using indefinable factors (understand-how, technology, investigations) (Figueiredo and Ferreira 2019). Edvardsson et al., 2020 describe KIBS as a service enterprise characterized by high intensity of information, which is primarily unpredictable. As per the investigations done by Figueiredo and Ferreira, 2019 in 71 small and medium enterprises, KIBS was split into p-KIBS (professional KIBS) and t-KIBS (technological KIBS).
This research is conducted with the preferences of the business Oy Integro Finland Ab, which is a knowledge-intensive service-based enterprise. Integro represents its clients by providing Groups and individuals successful productivity activities. The systems are focused on simple basic activities that are customized to meet the needs of the implementation processes of the customers. The concept is that efficiency can be improved by paying careful attention to reliable utilisation of human capital in methods of production. Peili Behavioural Profile and Peili Project Leadership Assessment are the two important tools of Integro.
This study aims to introduce the basic application to knowledge-based SMEs to create their business and revenue models, challenges, and technology impacts.
Toivonen, 2004 suggested that the business models of the enterprises must have modified along with the emergence of KIBS (Edvardsson et al. 2020). One of the biggest improvements in business models is the engagement with consumers that means that customers have become the focus of companies. These days, the initial step for enterprise growth is what unique benefits a company could give its consumers and how it could be done. Success in delivering benefits will lead the enterprise to competitive profitability and gain more income.
KIBS enterprises have to support their customers with creative business solutions, and networking is one of the activities that let businesses give their customers creative values (Figueiredo and Ferreira 2019). The enterprises develop an effective supply chain of demand by interaction with the network partners, which generates, preserves, and enhances performance in the production and delivery of the services. Thus, for the customers of KIBS enterprise networking activities and latest business models of KIBS business indicate that the KIBS sector is one of those collaboration members that deliver satisfaction to the customer (Mauborgne and Kim 1999).
The business model is a theoretical framework that transforms the company plan into action as per the Osterwalder, 2004. In research, there is not a precisely established theory of the business model (Mansfield and Fourie 2003). Among the most common business model problems is money-making. As far as business profitability is concerned, Afuah, 2004 argued that there are primarily two indicators of marketing profitability, that are economic factors and company-specific factors (positions, operations, and assets).
The business model of software is one of the essential enterprise model frameworks that Integro has been using is shown in figure 2. The factors comprise product formation, revenue theory, sales, and marketing framework, operation, and deployment model. The main service is to deliver its clients the product and related activities, and the manufacturer warranty relies strongly on the technical expertise of the case company. It helps the case firm to be seen as a knowledge-intensive business service enterprise. At the same moment, Software Company like Integro that provides its customers preparation and consulting is one of the most popular knowledge-intensive business service businesses.
It provides interconnections between such aspects and impacts each other in some way. The modification in one aspect may influence the other three factors. Sales of the evaluation elements are one of the main revenue drivers, as essential as it is for other businesses. The certification facilities can be seen as some kind of revenue addition that carries one more revenue asset. The certification program not only provides one more revenue opportunity, but it also impacts the case firm's promotional strategies. In some way, the certified instructors are the representative of the service of the case firm. The certification program appended revenue benefit, while at the same moment saving the expense of hiring instructors in the case firm, and also preventing certain marketing operation costs (Rajala, et al. 2001).
Developing the certification program has broadened the service range of the case company, lowered the expense of work (did not hire the instructors), lowered certain marketing expenses, preserved adequate resources concentrated on product expansion. The case firm minimized direct sales to the end-users of the evaluation assets with the trained instructors.
But on the other side, the trained instructors are the advocate of the evaluation tools of the case firm, which are more competent and faithful than the case firm's sales workers. The case firm has taken care of the task of creating an evaluation for the end-user. A further key service is the training of possible trainers, which requires that the case firm create the training content and plan the certificate program.
The case entity primarily has two sources of revenue. The first is to approve instructors to utilize the resources of the case firm in training or support services offered by the instructor, as shown in figure 3. The case firm certifies instructors, mentors, and HR experts for the application of Peili resources in different business and human resource improvement sectors. The facilitators will spend for the training and the authority to use Peili tools.
Initially, the person buys workshops from a Peili trainer, and during the courses, the trainer aims to include Peili tools. After that, the instructor will demand some numbers of Peili tools from the case company, the case company will obtain the request, and the Peili components will be manufactured for the user. Consequently, the case firm will submit the receipt to the instructor, and the instructor will submit the receipt to the user (involves training cost and Peili tools charge). Finally, the instructor is paid by the client, and the charge for Peili services is paid to the case firm.
As decided among the case industry and the Peili trainer, the instructor will receive some percentage of commission fees for each of the Peili tools the instructor has delivered to the ultimate user. In certain cases, if Peili training and Peili items are directly ordered from the case company by the client, the case firm will typically suggest an appropriate Peili instructor to manage the sessions.
Challenges are defined as those variables that hinder the development of enterprises that want to expand. Many developed countries experience common difficulties such as restricted access to financial resources, fragile economic infrastructure, strong rivalry, and failure to recruit qualified workers, bad private-sector policies, inconsistent or restrictive business climate, badly structured and implemented contract rules, and private ownership policies (Benzing et al. 2009). . One of the case firm's primary strategies is to extend its business to other country, but the existing business model does not appear to be well adapted to the international market.
The problems facing small and medium-sized enterprises in Africa are also large such as lack of financial and business resources, poor infrastructure, lack of effective governance, and lack of funding for enterprises in training and education (Biggs and Shah 2006).
Challenges faced by companies such as Integro comprised variables such as cultural, legal, and financial variations between countries, variations in the preferences of customers, the complexities of international-market development, and the nature of global expansion (Hutchinson et al. 2006). The technology comprises of issues such as lack of experience and resources, obsolete technologies, weak strategic planning, issues with operations, lack of focus, and lack of imagination and creativity. It may also entail a shortage of risk resources, inadequate loan protection, inadequate technological growth management skills, operations, and promotional planning (Herzog and Heldge 1998). Furthermore, international obstacles entail complexities in transactions with international clients, global business clients, and rivals of companies, governmental regulations that limit outsourcing and industrializing (Kazimoto 2014). The technology business model system has not focused too much on the consumer standpoint in this case company. Fariza, 2012 recommended that governments should continuously update the business climate to enable SMEs to improve and expand.
Company Incubations are crucial factors of social and financial growth in developing countries like Asia. With rising understanding around the globe, policy experts and other investors gradually perceive business incubation as an effective tool for creating sustainable jobs (60%) to foster creativity and entrepreneurship (96%). It also succeeds by exhibiting effectiveness of 90% in the youth sector and 82% in the technology sector (Al-Mubaraki and Busler 2012b).
The important elements of business incubators are promoting creativity, reducing unemployment, and spreading technology (Al-Mubaraki and Busler 2012c). For enterprise development, companies depend on:
1) Clear incubator targets,
2) Incubator income level,
3) Customer and graduate proportions, and
4) Employment rates.
The research in this report will be focused primarily on the basis of the business strategy which was primarily designed for a software company (Rajala et al. 2001). One of the most commonly used approaches of business model research is to undertake surveys with the case firm's leaders with their network partners and clients. Since one of the case firm's most significant strategies is to extend its business from the European market to the Chinese market, its tool's authenticity in China should be checked.
The study justifies accompanying the investigation using an incubator. The information retained in the survey tool has been evaluated using the statistical application SPSS (rebranded as PASW – Predictive Analytics Software from 2009). Thus this analysis included a survey to perform a quantitative study on the reliability of the tool of the case firm, which is considered one of the core aspects for the case company. Many development enterprises follow such steps of including incubation facilities for the transition of such latest technologies to the marketplace.
Such a research is undertaken with the desires of the case firm Oy Integro Finland Ab, which is a knowledge-intensive service-based business. It focuses on explaining the evolution of the case firm's business model. It was concluded that Integro helps the other firms in the related business field to conclude the performance to a wider degree. From the study of SPSS statistical software and viewpoints of Chinese academics, applicants, and others, it can be inferred that there should be no fundamental improvement in the Peili structure. There are, however, still some concerns that should be addressed to suit the international environment and culture.
The recommendations made to the case firm about its evaluation tool are as follows. First, throughout workshops or conversations, find mutual appreciation for the highly subjective viewpoints. Second, the arrangement of a workshop can be done between the international market and Peili instructors, as well as case company suppliers.
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