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Masters Theses
Identifying risk management strategies of small, medium and micro enterprises in retail and manufacturing industries in UMhlathuze Municipality
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Abstract :Small, Medium and Micro Enterprises are usually seen as an important tool for improving living
standard. Considering the importance of SMMEs to economic growth, job creation and poverty
alleviation, there is a need to train small business owners and managers and to expose them to risk
management strategies that will promote businesses and reduce high failure rate. SMMEs are
lacking when it comes to risk management knowledge and skills, which contributes to their high
failure rate. In addition, South African education system is lacking when it comes to educating and
training SMMEs on how to run their businesses successfully, especially exposing small business
to risk management strategies for them to be able to respond to different kinds of risks. Given this
background, this study sought to identify risks management strategies for SMMEs in retail and
manufacturing industry focusing on uMhlathuze Municipality. The researcher used primary data
for this study. The study adopted a qualitative method approach where data was collected through
semi-structured interviews. Purposive sampling was used to select 12 SMMEs of uMhlathuze
Municipality: 6 from the manufacturing and 6 from the retail industry. Data collected from the
participants was coded and analysed using themes and content analyses
The results from the study showed that the risks faced by SMMEs negatively impact daily activities
of small businesses and it also results in poor performance on SMMEs. Such risks include financial
risk, resource risk, credit risk, reputation risk, inflation risk, and corona virus. Therefore, there is
a need to assist SMMEs and improve their growth, as it was found that the strategies, they used to
be inadequate in mitigating the identified risks. Whilst all SMMEs involved in this study reported
to be faced with risks, not all of them had specific risk management strategies in place to deal with
such. However, it was found that among the risk’s management strategies used by some SMMEs
to fight risks are publicity and re-organizing. Use of private security, alerting customers about the
price increase to ensure that they don’t get a shock or prices when purchases, insisting on deposit
payments and sticking to cash transactions were some of the strategies used. Fewer SMMEs have
insurance for their assets. Additionally, some of the selected SMMEs attribute their survival to
getting sponsorship from government and private sector, and access to credit markets through short
term loans. Sequel to the findings of the study, it is recommended that SMMEs should be given
more assistance in education and training in terms of the different kinds of risks they are facing.
Also, they need to be assisted with proper and quality strategies capable of keeping businesses
protected and secured from risks, that will reduce risks.
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