Manufacturing enterprises and marketing planning in a mining area of the North West Province, South Africa: lessons for local business support centres

Abstract

This paper examines the extent to which manufacturing SMMEs (small, medium and micro enterprises) see marketing planning as important for their businesses in the area of the North West Province known as PKOSH (Potchefstroom, Klerksdorp, Orkney, Stilfontein and Hartbeesfontein). It identifies lessons for local business support centres, based on a case study of manufacturing businesses in this region. The literature suggests that appropriate marketing planning will increase profitability, but it was found that most manufacturing industries in this area do not plan their marketing appropriately. This is largely because of their close relationship with and dependence on the mining industry, which is at present extremely volatile, with mine closures imminent. Against this background, the authors argue that local business support centres should have a much better understanding of local business trends and should provide information to help businesses open up markets beyond their immediate environment.

1. Introduction

The SMME (small, medium and micro enterprise) economy is widely viewed as being an important contributor to job creation, poverty alleviation and development (Rogerson, 2001a). In South Africa, the post-apartheid government has emphasised the importance of the SMME economy through various national support programmes (DTI, 2004). However, there has been mixed reaction to these programmes. Typically, they are criticised for providing poor levels of data to assist in impact evaluation, while the SMME economy's contribution to job creation is limited, since most SMMEs do not grow much. The support programmes also tend to favour small and medium businesses over micro ones (Rogerson, 2004), and Berry et al. (2002: 38) argue that there is ‘general mistrust of external agencies among SMMEs on the one hand and the incapacity of support institutions to persuasively raise awareness about their existence and effectiveness on the other’.

The manufacturing sector has a more positive support base (Rogerson, 2004). Manufacturing advice centres have been created in this sector with a view to improving the South African manufacturing economy's local, national and international competitiveness. It is interesting to note that when evaluating small manufacturing businesses the advice centres do not reflect a great deal on the nature of the businesses they support, and whether spatial differences require different approaches, and Rogerson (2004) is of the opinion that the vast range of objectives for small business support has not helped develop a focused approach. For instance, the lack of markets is commonly cited as a problem these enterprises experience. However, very little is said about setting up a service to help SMMEs with marketing strategies, information and planning, or how such processes work in these types of businesses. Furthermore, the businesses need inputs specific to their location and the services need to be evenly distributed throughout the region. Berry et al. (2002: 38) confirm this in their analysis when they conclude that ‘there is no lack of support services as such, but there is an uneven spread of where, how and in which fields services are offered’. Intervention in areas experiencing mining decline should differ from intervention in areas with a well-established business environment. A number of researchers have already pointed out the potential impact of mine closure on mining areas, and specifically on SMMEs in the surrounding areas (Nel & Binns, 2002; Marais et al., 2005).

Against the above background, the paper assesses the lack of relevance of marketing strategies in the area of the North West Province known as PKOSH (Potchefstroom, Klerksdorp, Orkney, Stilfontein and Hartbeesfontein) and analyses the lessons this holds for business support programmes. Two main arguments are advanced. The first is that the region's heavy dependence on the mining industry has prevented manufacturing businesses from developing appropriate marketing plans. Literature on the topic suggests that businesses with such plans will have higher returns (Carson et al., 1995). However, no significant indication could be found that marketing planning helps businesses in the PKOSH area. In our opinion, this is because most of the manufacturing industries here are closely related to the mining industry. The second argument is that local business support centres should take note of the reality that mines will be closing down in future, and that some have already closed. They should play a much greater role in facilitating markets and helping manufacturers think beyond the mining industry when considering their current marketing plans. In addition, local business support centres in mining areas should play an active role in developing a framework for a post-mining economy. This framework has not received enough prominence in the strategies of currently existing business support structures.

The paper also aims to contribute to the literature available on SMME development outside South Africa's economically dominant provinces. According to Rogerson (2005), this literature is extremely limited. Although a number of contributions are available for Gauteng (Kaplinsky & Manning, 1998; Rogerson, 2001a) and the Western Cape (Rogerson, 2001b), contributions on other regions are limited. The PKOSH region that is the focus of this paper is heavily dependent on the gold-mining industry, which makes it highly vulnerable in the long term; however, this dependence currently provides manufacturers with an income.

The paper is organised as follows. Section 2 discusses the importance of marketing and marketing plans in SMME development. Section 3 is an overview of the existing SMME support policy and the influence of mining areas on SMMEs. Section 4 describes the research methodology of the case study of marketing planning that was conducted among selected manufacturers in the PKOSH region, and Section 5 assesses the way businesses in this region think about their marketing. The paper concludes by making a number of policy recommendations.

2. The Importance of Marketing and Marketing Planning for Smme Development

Several problems make SMMEs' failure rate high. This section supplies background information on the reasons for this failure, discusses how SMMEs should go about establishing a sustainable competitive advantage in order to survive, and highlights the crucial role of marketing planning.

Kuratko and Hodgetts (1998: 364–6) distinguish three reasons for the failure of small businesses: product and market problems, financial problems, and management problems. Among these are product design problems, irrelevant distribution strategy, low sales, marketing communication problems, lack of management experience, and administrative problems. A lack of marketing planning is specifically mentioned by a number of researchers (Cook, 1993: xi; Matthews & Scott, 1995: 48; Hogarth-Scott et al., 1996). Hogarth-Scott et al. (1996) confirm previous studies in which it was found that among the most common problems experienced by small business enterprises are the marketing and sale of the product and the suitability of the premises. Creative marketing planning is therefore essential for the survival of any business (Perreault & McCarthy, 1999: 67). Accordingly, SMMEs should formulate integrated marketing plans that can serve as a basis for their activities (Brooksbank, 1996). However, limited resources hamper an enterprise's ability to follow alternative marketing strategies, constrain its execution of marketing tasks, make it hard for it to enter markets where it has insufficient resources to compete successfully, and prevent it acquiring specialised marketing expertise (Hogarth-Scott et al., 1996).

Competitive advantage means that a business offers a marketing mix that more effectively meets the needs of the target market than the mix offered by the competitors (Perreault & McCarthy, 1999: 63). The sources of competitive advantage in SMMEs can be found chiefly in strategic management and marketing management, and the plans generated by these management activities are interwoven. Carson et al. (1995: 86–7) explain that all businesses pursue growth and that marketing should thus be a priority. The unique culture of SMMEs necessitates a unique style of marketing. This style has certain advantages that can improve SMMEs' marketing performance and insulate them against direct competition from larger businesses. According to Carson et al. (1995: 87–8), SMMEs have the following competitive advantages in marketing: employee loyalty, the level of contact between the SMME and the consumer, flexibility, speed of response, opportunity-orientedness, and easy access to market information.

These advantages should all be taken into consideration in market planning for SMMEs. The SMMEs' unique, more informal environment means management can exercise a more direct influence on the employees, whose consequent loyalty, pride and commitment serve as a marketing advantage (Jennings & Beaver, 1997: 64). The close physical proximity of the SMMEs' target markets means shorter communication lines, individualised market presentation, consumer loyalty resulting from quality and personal service, higher levels of consumer satisfaction, and the easier determination of consumer needs (Evans & Berman, 1992: 711). The small size of SMMEs makes it possible for them to respond more promptly to consumer enquiries. Because they are close to the market, changes in marketing tendencies and consumer demand can be identified and adapted to more readily than is the case with large businesses (Cook, 1993: ix). The speed with which marketing decisions are made in smaller businesses, since the decision-making power is vested in one person, is a significant advantage. The SMMEs' proximity to both the market and the consumers helps them identify and exploit opportunities (Evans & Berman, 1992: 710), and their related ability to concentrate on profitable market niches enables them to serve segments that are less viable and profitable for the larger businesses. A further advantage of the SMMEs' closeness to the consumers, the markets and their staff, and their shorter communication lines, is that they can obtain information informally, usually by means of face-to-face communication.

Goetsch (1993) describes successful SMMEs as those businesses that are marketing oriented and consumer focused and base their activities on an integrated marketing plan, and explains that an integrated marketing plan, and not a business plan, forms the basis of the activities of successful businesses. Crainer (1996: 164) also concludes that all business activities must be marketing oriented. Brooksbank (1996) maintains that successful businesses will distinguish themselves through effective marketing plans, which will enable them to react and adapt to market needs immediately. McDonald (1995: 22) stresses that a marketing plan is essential for management to identify competitive advantages. Hogarth-Scott et al. (1996) explain that knowing the marketing environment can reduce the risks for SMMEs and help them understand market needs better. Although marketing strategies may have to be implemented despite there being limited resources, and although many owner-managers of SMMEs regard marketing as an ‘unnecessary luxury’, the need for systematic planning and information increases as the enterprise grows (Hogarth-Scott et al., 1996). Given that the process of establishing a new business is market-driven, that identifying a good opportunity is difficult, yet critically important, and that business success depends on a strong consumer focus, one would expect the owner-managers of SMMEs to fully understand the need for marketing planning. However, marketing practices and problems differ from one SMME to another, as a result, for example, of inappropriate management techniques, decision making vested mostly in one person, or the fact that the owner-manager must attend to both strategic and operational management and is usually short of time (Hogarth-Scott et al., 1996).

Businesses with formal marketing planning systems are characterised by profitability, acceptance of the need for change and a clear understanding of priorities, better business control, and reduced vulnerability to unexpected developments (McDonald, 1995: 63). Marketing plans serve as a guideline for the business, requiring commitment but also offering the management a way to mobilise resources and energy proactively (Goetsch, 1993).

The literature thus makes it clear that marketing plans are essential for SMMEs and suggests that marketing planning considerably improves business viability. However, the findings of the case study from the PKOSH region, undertaken by the authors as part of this research, contrast with this conventional wisdom, and based on the findings the authors conclude that owner-managers of SMMEs in the PKOSH region do not consider marketing planning essential for the survival of their businesses. The following section provides a brief overview of the existing SMME policy, in conjunction with some reference to the impact of mine closure on the surrounding business environment.

3. Smme Support Policy and Mine Closure

When this paper was being written, the new national small business development policy was not yet available even though a number of drafts were circulating. The current policy is based on the 1995 White Paper on Small Business (DTI, 1995). In addition, the National Small Business Act was promulgated in 1996 (RSA, 1996), and these two policy documents provide an enabling environment for the development of a range of new support institutions and initiatives. Overall, the support provided to SMMEs had to contribute to three strategic objectives: employment promotion, redistribution, and improvement in global competitiveness. The draft of the new SMME policy to a large degree supports this (DTI, 2005).

The emphasis on job creation is extremely important, considering the pressure on it in South Africa since 1994 – mainly due to economic readmission to the global economy and the accompanying liberalisation of trade. In attaining these strategic objectives, three other strategic considerations also had to be achieved: ensuring the legitimacy of the SMME strategy, ensuring that the policy addresses the apartheid legacy of disempowerment of black business, and establishing institutional support to strengthen, coordinate and monitor the process.

Various support mechanisms have been put in place to boost SMMEs, one of the main ones being the establishment of local business support centres by the Ntsika Enterprise Promotion Agency. However, our case study suggests that far more attention should be given to local circumstances – especially in mining areas where possible mine closure could play a role.

International literature on the topic suggests that mine closure does have a severe impact on the surrounding areas. Nel and Binns (2002) relate the decline in small businesses directly to a decline in the mining industry of the Free State Goldfields. The example of Virginia demonstrates that businesses in general suffer from mine downscaling, to such an extent that they are rendered unsustainable (Seidman, 1993). Industries providing services to mine workers and their dependants (such as taxi transport) collapse completely after a mine closure (Thompson, 2003: 14). Manufacturers, taxis, hawkers, spaza shops and small and micro-enterprises are negatively affected by mine closure, since the loss of a fixed income and consequent emigration result in the consumer base being destroyed and the purchasing power of the community being reduced (Sowetan, 1991: 4; Seidman, 1993: 17).

4. Methodological Overview

The case study was based mainly on a survey of businesses in the PKOSH region. Structured questionnaires were completed during personal interviews with owner-managers of manufacturing businesses in selected cities and towns in this region. The information was obtained by asking closed-ended questions (structured questions with structured responses), as well as Likert-type questions, where the respondents had to indicate the current and ideal situation with regard to the steps of the marketing planning process. The statistical analyses of these statements are discussed by referring to the a-values for the current application of the principles, and the b-values for the ideal application of these principles. The questionnaires were completed in the period 25 February 2002 to 8 March 2002.

An industrial register was obtained from the Bureau of Market Research at the University of South Africa (UNISA) in 1999. This register lists 377 manufacturing businesses in the North West Province, 50 large, 105 medium-sized and 222 small. The large businesses constitute approximately 13 per cent of the population, and were also included in this study for purposes of comparison. The businesses are classified according to the National Small Business Act (RSA, 1996). The southern region of the North West Province includes towns and cities such as Fochville, Potchefstroom, Klerksdorp, Stilfontein, Orkney, Hartbeesfontein, Ottosdal, Wolmaransstad, Bloemhof and Christiana. One hundred and ten of the manufacturing businesses on the industrial register are situated in these towns and cities, 78 of them in the PKOSH region. Since long distances had to be travelled to reach relatively few businesses, it was decided not to cover the entire southern region of the North West Province in this study but only to include the businesses in the most concentrated region, the PKOSH. The entire population was involved in this study, and no sample was taken. It should be noted that since random sampling was not performed, the conclusions of this study are valid only for the group respondents in the PKOSH region. Inferential statistics were thus not used. Eighteen of the 78 identified businesses in the PKOSH region were not willing to participate in the study. The fieldworkers were able to complete 61 questionnaires, which amounts to a response rate of approximately 78 per cent. In some cases respondents did not complete the entire questionnaire.

The statistical analyses for this study were performed using the SAS System for Windows, Release 6.12 (1996) computer program. Cohen's effect sizes (1977: 25, 26) were used to indicate the practical significance of statements. This value, called the d-value, can be interpreted according to a variety of guidelines. In cases where the differences between the average values are used, the following guidelines are used:

• If d = 0.2, this value indicates a small effect. In this case, either the research can be repeated to determine whether the effect actually exists, or the result can be regarded as non-significant. When the results are presented in tabular form, a small d-value is indicated by∗.

• If d = 0.5, this value indicates a medium effect, which may suggest significance. A medium d-value is indicated by ∗∗.

• If d = 0.8, this value indicates a large effect and means that the results are of practical significance. A large d-value is indicated by ∗∗∗.

According to Cohen (1977: 227), when relationships are drawn between nominal variables, the effect sizes (in this case called the Phi coefficient) are interpreted as follows:

• If d = 0.1, the effect is small.

• If d = 0.3, the effect is medium.

• If d = 0.5, the effect is large and is of practical significance.

The above values are merely guidelines for the interpretation of effect sizes, and are not rigid cut-off points.

5. The Importance of Marketing Plans for Businesses in The Pkosh Region

This section discusses the relationship between the businesses and the mining sector and the importance the businesses attach to the availability of marketing plans, and presents a statistical analysis of marketing planning, as explained in Section 4.

5.1 The relationship between the businesses and the mining industry

During the empirical survey, the owner-managers of the manufacturing businesses in the PKOSH region were asked to identify their primary outputs. Using the Standard Industrial Classification, most of the respondents classified their businesses as delivering outputs in the category basic metals, fabricated metal products, machinery and office equipment, and accounting and computing machinery. Since the businesses forming part of the study population are situated in a mining area, these outputs are mainly needed by the mines in that area. The businesses' trade names confirm their trade ties with the mining industry, including words such as hydraulic, mining, engineering, steel, crankshaft, building, concrete lining, mining supplies, mining timber and bearings, among others.

It should also be noted that at the time of the survey the rand–dollar exchange rate favoured exports. However, according to available statistics, the Gross Value Added produced by mines in the PKOSH area declined by more than 40 per cent between 2000 and 2004 (Global Insight Southern Africa, 2006). These figures suggest that, at the time of the survey, the mining economy was at a peak and, as we shall later suggest, played a significant role in minimising the relevance of marketing plans for the manufacturing enterprises in the area. It should also be noted that the existing literature has already suggested that a declining mining industry leads to a decline in manufacturing in and around the area (Nel & Binns, 2002).

5.2 A broad overview of the importance of marketing plans in the PKOSH region

Overall, all the businesses had some kind of marketing plan available. Yet 31 per cent acknowledged that they seldom executed the marketing plan as envisaged, 32 per cent were of the opinion that the marketing plan had no influence on their business' performance, and 31 per cent reported that having a marketing plan did not increase their sales. Only 51 per cent believed a marketing plan actually increased their share of the market. At the same time, 44 per cent said they had not realised bigger profits as a result of having a marketing plan.

As reasons why marketing plans were not executed, 28 per cent of the enterprises cited time constraints, 17 per cent a lack of skills, 50 per cent the ever-changing external environment, and 44 per cent the costs. Interestingly enough, the most important source of competitiveness cited was a reputation for quality products. In 55 per cent of cases the owner-manager was responsible for the business' marketing plans, and only 29 per cent of the businesses had an appointed marketing manager.

5.3 Assessing the importance of marketing plans in the PKOSH area

5.3.1 The role of the marketing plan in providing direction

The respondents were asked to evaluate the current and ideal situation regarding the following statement: ‘The marketing plan provides focus and direction in the business.’ The averages of the response to the a-part (current situation) and the b-part (ideal situation) of the statement were 2.78 and 3.61 respectively. A large d-value (0.97) was calculated, which means there is a practically significant difference between the way the marketing plan currently provides focus and direction in the business and the way the respondents think it should do this. Thus, the marketing plan should play a more substantial role in providing direction in the manufacturing businesses in the PKOSH region. The authors are of the opinion that short-term gains linked to the mining industry are probably responsible for this situation, and that business support centres should play a crucial role in reducing this risk. This is discussed further in the concluding comments.

5.3.2 The relationship between the marketing plan and growth in business income since the previous year

Business performance can be measured in various ways. In this study, business income and business profitability (when cost factors are also considered) were used as measures. When the performance of marketing planning and the presence of a marketing plan were related to the growth in business income since the previous year, an effect size of 0.23 was obtained (see Table 1).

Table 1: The relationship between the existence of a marketing plan and income and profitability since the previous year

	N	Average	Std dev	d-value
Growth in business income if marketing plan exists	23	3.78	1.59
Growth in business income if marketing plan does not exist	12	3.33	1.92	0.23∗
Growth in business profitability since the previous year if marketing plan exists	27	2.22	0.8
Growth in business profitability since the previous year if marketing plan does not exist	15	2.67	1.11	0.41∗∗
∗ small d-value, ∗∗ medium d-value.

The d-value (0.23) in Table 1 is not practically significant. Therefore, the existence of an annual, written marketing plan did not result in an increase in business income compared with the previous year. Once again, this suggests an over-reliance on one sector – in this case, the mining sector.

5.3.3 The relationship between the existence of a marketing plan and business profitability since the previous year

When the performance of marketing planning and the presence of a marketing plan were related to the growth in business income since the previous year, an effect size of 0.41 was obtained (see Table 1). Since the guide value for a medium effect is 0.5 and the difference between 0.41 and 0.5 is relatively small, a d-value of 0.5 was accepted here. It was therefore concluded that the existence of an annual, written marketing plan could result in an increasing trend in business profitability compared with the previous year. However, this is still not sufficiently convincing to suggest that marketing plans should be considered important to the manufacturing industry in the PKOSH area.

5.3.4 The relationship between business performance and the existence of a business plan and a marketing plan

The marketing plan should be derived from the business plan. Therefore, the relationship between both these plans and business performance should be examined. In both cases, contingency tables were drawn up and analyses were made by cross-tabulation. The effect size was calculated to determine whether a practically significant relationship exists between the variables. The effect size is an absolute value. This effect size or d-value, in the case of analysis by cross-tabulation, is known as the Phi coefficient. An analysis was performed by cross-tabulation of the relationship between marketing planning and business performance and the existence of a business plan. An effect size of 0.07 was calculated, which is a small value. This result is not practically significant, which indicates that the existence of a business plan in manufacturing businesses in the PKOSH region cannot be related to business performance.

An analysis was performed by cross-tabulation, and it was deduced that marketing planning relates to business performance and the existence of a marketing plan. An effect size of 0.3 was calculated, which indicates a medium effect. From the contingency table, it can be deduced that approximately 60 per cent of the respondents are of the opinion that the existence of a marketing plan (arising from the marketing planning process) relates to business performance. It can therefore be concluded that the existence of a marketing plan can be related to business performance.

5.3.5 The completeness of the marketing plan related to various business aspects

It was first necessary to determine which elements should be included in a marketing plan for it to be considered a complete marketing plan. Various elements are listed in the relevant literature but, according to Du Plessis et al. (2001: 371–2), the main ones are a situation analysis, marketing goals and objectives, market strategies, marketing strategies, and action plans for each strategy. For the purpose of this study, a marketing plan was therefore considered complete if it contained all these five elements. The respondents were then divided into two groups. Group 1, one-third of the 27 respondents, had a complete market plan, and Group 2, the other two-thirds, had an incomplete one (Table 2).

Table 2: The completeness of the marketing plan

	N	Percentage
Group 1 (has a complete marketing plan, since the plan contains the five required elements)	9	33.33
Group 2 (has an incomplete marketing plan, since all five elements are not included)	18	66.67

Dividing the respondents into two groups made it possible to relate the completeness of the marketing plan to aspects such as business turnover, gross asset value, growth in business income since the previous year, and growth in profitability since the previous year. The results are summarised in Table 3. To determine the significance of the difference between Group 1 and Group 2, d-values were calculated.

• The relationship between the completeness of the marketing plan and business turnover

Table 3: Comparison of the relationship between business aspects and the completeness of the marketing plan in Group 1 and Group 2

Business aspects	N	Average	Std dev	d-value
Turnover of Group 1	9	2.33	0.87
Turnover of Group 2	18	1.94	0.73	0.5∗∗
Gross asset value of Group 1	9	2	0.87
Gross asset value of Group 2	16	1.44	0.63	0.64∗∗
Growth in business income in Group 1	9	3.44	1.94
Growth in business income in Group 2	14	4	1.36	0.31∗
Growth in profitability since previous year in Group 1	9	2	1
Growth in profitability since previous year in Group 2	18	2.33	0.69	0.3∗
∗ small d-value; ∗∗ medium d-value.

When the completeness of the marketing plan was related to business turnover, a d-value of 0.5 was calculated, which indicates a medium effect (see Table 3). The question about turnover was an ordinal variable, with an ascending scale. The average of Group 1 is higher than that of Group 2, which means that the turnover of Group 1 was higher than that of Group 2. It can therefore be deduced that the group of respondents in the PKOSH region with a complete marketing plan may realise a higher business turnover than the group without a complete one.

• The relationship between the completeness of the marketing plan and the gross asset value of the business

When the completeness of the marketing plan was related to the gross asset value of the business, an effect size of 0.64 was obtained, which indicates a medium effect (see Table 3). The question about gross asset value was an ordinal variable with an ascending scale. Therefore, the higher average in Group 1 indicates that this group has a higher gross asset value than Group 2. It can therefore be deduced that the businesses in the PKOSH region with a complete marketing plan may have a higher gross asset value than those without a complete one.

• The relationship between the completeness of the marketing plan and growth in business income since the previous year

When the findings regarding the growth in business income since the previous year were related to the findings regarding the completeness of the marketing plan, a d-value of 0.31 was calculated (see Table 3). This small effect size (0.31) is an indication that the result is not practically significant. It can therefore be deduced that the completeness of a marketing plan would not necessarily affect the growth in terms of income for manufacturing businesses in the PKOSH region.

• The relationship between the completeness of the marketing plan and business profitability since the previous year

When business profitability was related to the completeness of the marketing plan, a result similar to the previous was obtained: again, a small d-value of 0.3, which is not practically significant (see Table 3). The completeness of marketing plans is therefore not regarded as a determining factor in increased business profitability since the previous year in manufacturing businesses in the PKOSH region.

5.4 Possible reasons for the findings, and policy implications

Overall, the statistical analysis above shows that business plans are either slightly or fairly significant to manufacturing businesses in the PKOSH region, but not of great and practical significance. Although a number of factors could potentially contribute to this lack of relevance in respect of marketing plans, two fundamental reasons could help explain these findings. The first is the favourable economic conditions before and during the study. The optimal economic conditions during the tax year 2001/02 could have led to the good results achieved by the businesses, irrespective of whether they had done marketing planning or not. The actual influence of marketing planning on business performance could possibly be determined more accurately in a less favourable economic climate. The second is the primary manufacturing outputs. On the basis of the Standard Industrial Classification, most of the respondents classified their businesses as delivering outputs in the category of basic metals, fabricated metal products, machinery and office equipment, and accounting and computing equipment. Since the businesses forming part of the study population are situated in a mining area, these outputs mainly supply the needs of the local mines. Consequently, most businesses are in a captive market, which implies that, when the mines benefit from the positive economic conditions, the manufacturing businesses in the PKOSH region benefit accordingly. The relevance of marketing planning under such circumstances is thus debatable.

What lessons can local business support centres learn from this case study? The first is that the centres should develop appropriate interactions for areas such as the PKOSH region, which is vulnerable to external economic fluctuations. This applies specifically to interventions in mining areas. Although local procurement is important to the mines, the long-term economic challenge is to create a post-mining economy. In general the lesson is that business support centres should be sensitive to both the locality and the sector – something which has not up to now been part of their approach. The second lesson, which goes hand in hand with the first, is that the centres should play a fundamental role in helping businesses develop a longer-term perspective. The case study, which was conducted during 2001 to 2002, a period when the mining industry was thriving as a result of the favourable rand–dollar exchange rate, is a typical example of business managers not considering the longer-term view. The third lesson is that business support centres should spend far more time facilitating processes that could open up market possibilities for these businesses beyond their immediate business environments. It should be noted that this is specifically mentioned in the new SMME policy (DTI, 2005). Assistance in this regard could vary from technical help with marketing plans to information about markets outside the immediate geographical area. The fourth lesson is that it is of pivotal importance that local business support centres should focus on areas outside the economic core of South Africa, since there is an increasing awareness of the importance of economic growth in these areas (see CDE, 2005).

6. Concluding Comments

The findings of this study suggest that manufacturing enterprises in the PKOSH region do not regard marketing plans as highly important, nor do they realise the value of such plans – this is in contrast to the conventional wisdom in this regard, as expressed in the literature. A number of factors contributed to these findings, and these are the very reasons why local business support centres (under the newly established SEDA – Small Business Development Agency) should in future consider support programmes. Essentially, our research findings suggest that local business support centres should help existing manufacturing enterprises develop longer-term views, in realising the importance of marketing plans, and thinking beyond the immediate geographical environment. A thorough assessment of the local business environment should provide local business support centres with adequate information to make such strategic decisions. Essentially, these centres should reflect on this matter and consider how value-added services can be provided. This will require the establishment, at these centres, of the capacity to determine the appropriateness and value of advice to businesses.

Additional information

Notes on contributors

Lochner Marais∗

∗ ∗Respectively, Senior Lecturer, Department of Business Management, University of the Free State, Bloemfontein; and Researcher, Centre for Development Support, University of the Free State, Bloemfontein.

Notes

^∗Respectively, Senior Lecturer, Department of Business Management, University of the Free State, Bloemfontein; and Researcher, Centre for Development Support, University of the Free State, Bloemfontein.