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The market structure as a dynamic system helps the business compete effectively in an environment. The business’ state of systems limits its flexibility in the market. Several environmental conditions would thus force companies that supply a certain industry or business organization to either charge more or raise the overhead costs. Consequently, organizations such as MESO, Mercy, and PSU are facing global economic conditions as well as the local events such as competitive environment.
Accordingly, not many non profit making organizations are often located in one area. As such MESO having developed and gone through the learning curve in its first few years of development, other competitors joining much later would also be forced to go through the same process of developing their custom approach to small business and entrepreneurship mentoring. True competitors would be forced to imitate MESO’s unique profile of services and programs and have the capability to build relationships necessary to tailor each individual client’s needs. Late entrants to the competitive environment will have the desire to help their clients by giving them hands on holistic approach together with a strong background of expertise similar to that of the MESO team. Additionally, the new entrants will be forced to face strict requirements in order obtain funding from funders like SBA.
Buyer Power – Low
MESO’s buyers are the clients who participate in their outreach programs acquire loans and pay for services offered. Micro lenders on the other hand would traditionally provide loans the poor, the underserved, those who lack business knowledge, people who have no or have bad credit history, and are unable to access traditional bank loans. The buyers in this case lack power and leverage thus leaving them at the mercy of lenders such as MESO and other similar groups. Seeking the services of micro lenders is often considered a last resort thus the field has moderate number of customers. The buyer power in this field is low, accordingly, MESO’s interest rates are low compared to other micro lenders such as Mercy, cooperatives, and OMEN that charge 12%. This would result in a long wait list for MESO’s financial services.
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On the other hand, the PSU business outreach program's helps local small businesses such as the emerging entrepreneurs, minority and women-owned businesses. They help these groups achieve and reach their potential while at the same time providing its learners with the opportunity for community based learning within the locality, service providers, and small businesses (Plunkett, 87). PSU provides its serves to the inner North and Northeast Portland. Mercy organization similarly offers a range of services to aspiring entrepreneurs and small businesses. Its clients are working harder to achieve their objectives and thus the potential to success. Mercy’s clients lack bank credits or the assets needed to build their business. This makes it possible for mercy to serve the needs. Currently, majority of the clients live slightly above or at the federal poverty line.
Threat of Substitutes – Medium
MESO has a number of substitutes in its holistic client program services that could be sourced through a number of the region’s biggest micro enterprises and micro finance organizations. In Oregon where MESO is situated there are a number of primary organizations such as Mercy Corps, the Hispanic Metropolitan Chamber, Oregon Association of Minority Entrepreneurs (OAME), Oregon Micro Enterprise Network (OMEN), PSU, and the Small Business Development Center (SBDC). There are other substitutes that are increasingly growing in prominence in the area and they include returning to school to complete educational equivalencies and traditional employment. Due to the recession recovery phase of the nation, many people pursue better chances in job market and thus, are seeking education opportunities. From 2010 to 2012 levels, unemployment figures are seen to have dropped by 1.2%.
MESO is a non profit organization and being a lending institution, the company has no entry barrier but it is governed by exit barriers. Clients working with the company must commit themselves to the company for three years. Lack of entry barriers enables easy access and effective competition in a competitive environment. . MESO has been able to grow gradually since its inception five years ago. Since then, it has made tremendous strides to become a vital microenterprise non profit centered organization in Poland. It is strategically located and has acquired own offices. This reduces the operation cost which previously was high because they operated in rental premises. MESO is supplied by the public, the private sector, and respective board funders that source and allocate grants and loan capital to nonprofit organizations. Currently, MESO’s supplier power is considered high due to the high demand for funding in relationship to the amount of funding available. Suppliers often provide funds out at their own will and discretion thus organizations like Mercy and MESO have an essential obligation of relationship building. Consequently, MESO prefers to develop relationships with suppliers. At the same time, it targets suppliers with similar goals and visions for success. It also targets companies or groups that are personally vested in the geographic region.
On the other hand, Mercy Corps on the other hand is an organization whose main aim is to eliminate poverty, oppression, and suffering. It does this by helping people develop, become productive, and secure in their own communities. The corporation has not exit barriers since it focuses only on individual empowerment. The Corp. also has a broader range of services such as education programs and farming. These alternate program options allows for a broader range of clients which gives Mercy Corp. the more substantial supplier power. It is a relatively large organization since it has been in this business for a long time. It receives government support of nearly half their input.
PSU is also a significantly large organization. It has market advantage as it operates for a significantly long period of time. It helps groups achieve and reach their potential while at the same time providing its learners with the opportunity for community based learning within the locality, service providers, and small businesses. The institution has a significantly large capital base for its operations and has thus developed to accommodate learners and also support research processes for the learners. PSU is slightly supported by the government because it has a large pool of capital that it significantly receives from students and well wishers.
Competitor Rivalry – Medium
Competition within such organizations primarily exists within the scramble for the limited funding and clients. Competition also arises from pulling from the same pool as rival organizations. In this field, the competitors are often friendly towards one another and when one is unable to supply a needed service, they will refer to competitors as worthy alternatives. In this manner, the non supportive business environment becomes quite supportive. However, the number of competitors is not likely to reduce in future because there are provided exit barriers within the industry. There are high exit barriers to the industry due to the length and complexity of counseling services, training programs, and loan repayment terms that all demand a long term time horizon. Naturally therefore, competitors are unable to decide when they want to exit the business and demand back all the money back that had been loaned out. The majority of competitors therefore operate on the same long term time horizon. Thus, primary competition for survival takes shape at this point as the hunt for sustained funding sources becomes a priority than the competition for clients.
Complements – Medium High
The opportunity for complements to MESO’s services is quite high. It is strategically located to be an easy connector between clients with needs and also provides additional service covering areas beyond MESO’s scope. MESO has the power to use the position it already has to build a network of partners such as non-profits and other service providers in order to share similar goals that ultimately serve clients better. The organization is better recognized among peers, and it often attracts or engages new board members. MESO’s opportunities for service complements includes partnering with accounting services, legal support, family services, health providers, local businesses, and civic organizations in order to create more value for clients and their families.
PSU on the other hand provides relevant mentoring, knowledge and technical assistance to small entrepreneurs in order to help these individuals or groups and micro-entrepreneurs achieve their potential. Their program reduces the high risk of failure for these small businesses by assisting to improve their profitability and survival ability of the businesses. Classes at PSU brings together students from a cross section of business majors such as finance, accounting, management and human resources, marketing, and supply and logistics management in order to develop a business plan for clients who may need to expand, raise money, market their new product, or improve sales (Pennsylvania State University et al. 415). These students from diverse fields in business form a team that provides the client with diverse viewpoints. The come together for a detailed business analysis and finally give realistic recommendations as can be done in a typical business. PSU therefore strives to find sustainable, socially, and ethical issues and responsible solutions to emerging business challenges
Entry / Exit Barrier Buyer / Supplier Power, Substitutes, Rivalry
Mercy organization chose to relinquish its fame in Oregon because of a number of reasons. The most crucial being, considered to be its desire to leave behind any negative feeling that it might have acquired over the years. Additionally, it aims to target consumers who are becoming increasingly business conscious over time (Leslie). Many of these outreach programs should implement components to their relationship scorecard in order to track progress with their client’s important executives. They should adopt the global delivery systems in order to be quicker in assigning resources to businesses in a timely manner.
Most of these corporations have built their firms on client focused strategy of working to provide a range of business solutions to clients. They have mostly evolved from providing skilled labor services in providing consulting services and offering long term loans to clients. Alternative partners in this field recognize opportunities to grow and develop transactional clients into wide range business firms (Plunkett, 100). The overall aim therefore is to get clients to adopt, practice, and maintain the relationship scorecard.
Advantages and Market Share
The companies have been known for their values since their inceptions. Their employees believe that they must build and maintain trust with communities in which they operate. This encourages longevity as well as maintaining the competitive advantage over the others. As corporations that receive grants every year, employees contribute to betterment of the business culture, education and skills. The corporations (MESO, Mercy and PSU) emphasizes in commitment to investors through strict corporate governance. The companies have accredited accounting principles and business ideas (Erika and Brenda, 210). This also allows for competitive advantage. With consultants from different fields in business, these three companies have built enduring value systems based on fairness, transparency, openness and honesty. These qualities have earned them the desired confidence and trust from clients.
PSU has built one of the largest corporate education centers in Oregon. This center provides graduates in different fields in business. The students in turn provide technical assistance to the clients.
Microfinance is generally considered as a social service thus the institutions that offer microfinance programs do so as a part of social service. They are staffed with employees with strong social sector backgrounds and with good research and educational background. The product portfolios of such companies are very limited and have no diversification. This is because they are aimed at assisting the rising business entrepreneurs into self sustainable businessmen (Pennsylvania State University et al, 415). Currently, there are very few microfinance providers and this lowers the stiff competition that would arise in a specific region. Borrowers in essence therefore have few alternatives thus the dropout rate has been found to be low. Outreach and sustainability in business are the major challenges for such programs. The literature on microfinance organizations reveal various causes of low outreach and financial sustainability. The causes here are inefficient operations and inappropriate pricing policies and improper organizational design, low repayment rate, low interest rates, low deposit rates and inefficiency of the clients. Most of the clients also lack of market orientation. Market orientation of the business outreach programs has been argued to provide an organizational culture that provides sustainable competitive advantage through client’s satisfaction. Their enjoyed long term relationship with satisfied customers enables the organizations to be more profitable and achieve growth.
Profile Key Competitors
Mercy supports communities by providing designs, planning and implementing the natural resource initiative such as identifying relevant local technical expertise and organizing substantive seminars on economic issues for clients. They also provide technical support for businesses in a competitive environment. It monitors, evaluates, advises and facilitates business led research. Mercy helps in promoting business enabling environment by identifying, building and managing relationships which is its main concern with the local business leaders and associations in the area. The company provides technical input into indentifying and analyzing economic costs that help to facilitate advocacy activities. The corporate team under mercy is expected to support all efforts generated towards accountability (Leslie). This is often suggested to clients according to the international standards guiding international development work. Mercy works directly with the Nigeria operations, finance, relevant Mercy Corps headquarters units as necessary, DM&E and program, and various administrative or financial units.
The PSU Business Outreach Program has been involved with more than 400 small businesses throughout Portland. The businesses include the minority, the emerging, and women-owned businesses to reach their potential while at the same time providing students with opportunities for community-based learning. The company has had clients ranging from DiPrima Dolce, AJ Java, Ground Kontrol, Roasting Ruby, and Jewel Treats. The school Program has also provided hands-on learning experiences to business students, who then carry out programs by providing services to clients of the PSU under the guidance of professional management Lecturers and administrators. The services offered by the students include marketing plan development, business plan development, pro bono legal services by partnering with Davis Wright Tremaine LLP, operations assistance, human resource support, business assessment, product cost analysis, student consulting teams and accounting system set-up and training (Leslie). This outreach organization receives monetary support from the city of Portland, Portland State University, private donations from corporations and individuals, and the Portland Development Commission.
Market orientation of MESO appears as an important factor that has enabled it become superior in the services it offers to small businesses. With this in mind, market oriented firms often likely to achieve long-term profit when the continuously provide their services of superior value to clients by identifying their current and future needs. The corporation also helps them know their strengths, weaknesses, and plans of competitors (Plunkett, 101). They in turn discuss and respond to issues in a coordinated manner. The potential of markets like that of MESO achieves superior performance (Erika and Brenda, 211). It has been examined and found by a number of researchers to be empowering the community and thus lowering poverty levels. Based on this linkage between market orientation and institutional performance in the outreach program, providers like the MESO, PSU and mercy achieve high performance. Their market structure helps them business compete effectively in their respective environment.
The business’ state of systems limits organizational flexibility in the market. Several environmental conditions would force business outreach companies to either charge more interest or raise the overhead costs. The MESO, Mercy and PSU companies have been known for their values since their inceptions. Their employees believe that they must build and maintain trust with communities in which they operate. This encourages longevity as well as maintaining the competitive advantage over the others. As corporations that receive grants every year while employees contribute to betterment of the business culture, education and skills. The corporations emphasizes in commitment to investors through strict corporate governance.