Creativity and Innovation of FRACINO


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Operations of a new venture. Under entrepreneurship, a major focus is given on developing Entrepreneurship is a practice for setting a new business with objective to earn profit and financial revenues. Innovative and creative ideas are used for starting new products, identifying new market areas and assessing new ways for selling products and services of entity (Anderson, Potočnik and Zhou, 2014). Innovations and creativity supports for creating demand for commodities and services in market. Present report is based on FRANICO which is a large coffee machine manufacturing company of Britain. The report describes about factors that impact the growth and development of SME's. Methods through which innovation and creativity can help in overcoming the challenges imposed by external and internal factors has been mentioned.


Entrepreneurship is explained as procedure adopted for carrying out activities for launching operations of a new business. It requires that a systematic approach should be followed for starting a small new enterprise. Person who is involved in the process of manufacturing, offering, selling and distributing products is known as an entrepreneur. Entrepreneurship is about launching a new business with objective to earn profit and financial revenue (Bridge and O'Neill, 2012). A new business is developed by the willingness and desire of an entrepreneur and all the operations of business are managed by an entrepreneur.

Opportunities available in market are grabbed under entrepreneurship and advantage of market conditions is taken for developing new products and services. A new business is started, managed and run by entrepreneur and risk associated with business are also faced by the person who starts the business (Hatten, 2015). A new business is started with a new idea and new concept and innovations are made for rendering better services and products to consumers. Various resources are needed for executing operational activities of entity and it includes financial resources, human resources, raw material and some other necessary resources (Baden-Fuller and Haefliger, 2013). All the resources are needed to exploit the business opportunity that is available for the business. Leadership provided by entrepreneur supports for carrying out business functions in effectual and productive way. Entrepreneurship is all about setting a small business and generating wealth by selling product and commodities in a new market area. An income stream is generated by entrepreneur by starting a new venture and substantial wealth is created and profits are generated through business activities. Moreover, wealth can be created at faster speed by expanding existing operational activities of enterprise. There are some risks that are associated with starting operations of a new business and entrepreneur needs to make effective strategies for meeting challenges that are imposed by external and internal business environment.

It is vital that strategic vision should be set for starting a new business and it provides directions for running business functions. FRACINO is a leading British manufacturer of coffee machines and management of company is planning for expanding its business operations in the European market. SMEs have contributed for growth and of UK economy and infrastructure of nation has been developed due to it. SME's have played a significant role in doing social and economic development of country and these organizations are backbone that are driving growth of nation. Employment opportunities are created for people and wide variety of products and services are made available in market for people (Davenport, 2013). Expansion in operational activities of SME's aids in opening new market and enhancing competition in market area. Taxes and revenues provided by SME's supports in increasing funding of government which is spent on providing better public services to people. Small business enterprise helps in the proper contribution of the products and services as it helps in the proper contribution to the community in the different ways by which they can facilitate the job opportunities.

There are some external and internal factors that gives impact on the growth and development of Local Small Medium Enterprise's. These factors are as mentioned :-

Internal Factors:-

1. Managerial capacities and leadership provided by managers:- Top management of FRACINO provides directions and instructions to subordinates and it supports in giving better directions to subordinates. It leadership provided by management will not be good than it will due to it difficulties will be faced in executing day to day operations of business. Managerial skills shown by managers plays a significant role in rendering better instructions and commands to subordinates (Carland and Carland, 2015). Growth and development of enterprise gets affected when there is lack of proper leadership and it affects activities of enterprise.

Managerial capacities of top management is associated with the growth patterns and due to that overall success of enterprise gets affected. If there will be lack of core competence and managerial skills than due to that proper commands will not be given to subordinates. If subordinates will not get proper commands and instructions than daily functioning of entity will get affected (Simons, 2013). Managerial skills are a significant factor that gives impact on the growth and success of SME's. Positive support shown by leaders aids in enhancing morale and motivational level of staff members. However, if managers will not be providing proper commands and orders to subordinates than enthusiasm of employees will decrease and they will show less effectiveness towards completing their work.

It is assertive that managers should render better and effective leadership to subordinates so that required function of entity can be completed on due time. Proper leadership provided by managers enhances quality of work procedures and desired functions are completed on due time with great efficiency (Johnston and Bate, 2013). Motivation provided by managers enhances morale of staff members and they complete their assigned task in more effective way.

Seminars and conferences can be organized for top management people so that their managerial capacity and capabilities can be enhanced. In addition to this management games and role playing sessions can be organized in entity so that leadership skills of managers can be developed. All the methods will support for developing leadership skills and managers will become capable for rendering better directions to subordinates.

2. Human Resource:- Employees are most significant stakeholders that supports for accomplishing set targets of SME's by rendering their positive support. All the strategies and action plans formulated by top management are executed and implemented by effectiveness shown by staff members of FRACINO. If employees in the entity will not be skilled and experienced than they wont be able to complete their assigned task in proper way.

It is assertive that workers should have capabilities and competence for completing their assigned task in productive way. Well educated and skilled workforce supports for meeting the desired goals of entity in successful manner. Positive effect is shown on growth and success of the firm by effective and productive work shown by staff members. Training and development program organized in enterprise helps in imparting necessary skills and capabilities to staff members (KonstiLaakso, Pihkala and Kraus, 2012). They become capable for performing their assigned work in more effective and better way and daily operational activities of enterprise gets executed in productive manner. Innovative abilities and capabilities of staff members increases when conductive work environment is provided to them. If workers will lack sufficient technical and other required skills than they will face difficulty and trouble in performing their assigned task. Significant initiatives can be taken by top management for imparting required skills to employees. Training and development programs can be organized so that staff members should acquire required skills. In addition to this online learning material can also be provided to employees so that they can learn new knowledge and capabilities.

External Factors:-

Economic factors are the biggest factor of the external factors which affect the business. By this factor, market fluctuates, and it is based on the politics, wars, the attack which is done by terrorist and the devaluation of currency so that they can attain the success in the competitive market. It affects the consumer buyer behaviour and also affect the environment. At the time of recession employees facing a problem of unemployment and by that consumers can not purchase the products (Anderson, Potočnik and Zhou, J., 2014). This factor is related to the changes which include cost and price of products and the exchange rates along with the rate of inflation. This affects the ability of the business so that they can generate the profits and need close monitoring. Inflation and deflation situations in country also gives impact on growth and success of FRACINO. At the time of inflation purchasing power of people decreases and due to that business of SME's gets affected. On the other hand at the time of Inflation purchasing power of people enhances and they give more preferences for purchasing products that are of higher quality and it enhances business of SME's. Changes in taxation policy of government also gives impact on the growth and success of enterprise and due to that total financial revenues of entity gets affected.

Legal factor:- Rules, regulations, policies and norms formed by government also gives impact on the growth and success of SME's. It is assertive that guidelines given by government should be followed while carrying out business activities. The company members have to do the changes in the laws, policies and this having a direct impact on the business. These factors are included in the external factors which effect the law affects the way by which they can operate the business and the behaviour of the consumers. It includes the product transportation and profit margin so that the company members can increase the productivity and proficiency and by that, they can attain the success. The staff members of FRACINO have to follow the proper rules and regulations. If not than then they affect the performance of the entity in the competitive market (West and Bogers, 2014).

It is assertive that all the business functions should be executed in proper way so that no unlawful activities should be performed in enterprise. If there will be unlawful working environment than negative impact will be observed on overall performance of entity. Taxation policy, environmental protection law and other Regulatory mechanism are needed to be followed while carrying business functions. Assistance from a legal professional can be taken for carrying out business activities in legal and lawful manner. Moreover, a legal advisor can be hired in enterprise for taking advice on various legal matters. All the methods will support for executing all the business functions in legal and lawful manner and impact of legal factors on growth and success of SME's can be reduced by adopting this strategy.

Innovation and Creativity:- Innovation refers to implimenting the idea in to the reality form creative process. Creativity can played a significant role in the innovation. It can be useful for the developing SME sector which can be beneficial for both firms and the economy as well. For example, an creative idean can help to FRACINO to managing finance for convcerting these ideas in to reality. Another important thing in innovation is that the rate of return which can be invested in to an idea. Therefore, it is important for the gorwth of SME sector to careful analyse their idea in terms of monatery value. Creativity is the tendency by which staff members of FRACINO have to generate and recognise the ideas and the possibilities which will help in solving the problems as well as proper communication with the others. Creativity has three components which include creation of knowledge, sharing of knowledge and reuse of knowledge (Davenport, 2013). The company members can use the theory of creativity which includes four phases:-

  • Preparation– In this, they have to define the issue and observation.
  • Incubation– In this laying the issue aside for a time.
  • Illumination– The company members can use the new idea for making the better products.
  • Verification– In this last step they have to verify all the ideas so that they can do furthers process, and by that, they can attain the success (Hatten, 2015).

Innovation is the process by which company members can create or modify the ideas so that they can develop the process, products and services so that they can manufacture the new product. Innovation is classified into three parts which include product, process and market innovation. The employees of FRACINO have to improve the products. In the process innovation, company members have to change the process of making the products, or they have to change the technology by which they produce the products which will help the entity in attaining the success. In market innovation, they are concerned with the mix of products and have to serve the best products in the market so that they can achieve the targets (Johnston and Bate, 2013).

Innovation and creativity can help in overcoming the identified 4 external and internal factors that gives impact on the success and performence of FRANICO. Managerial skills of top maangement people needs to be effective so that better directions and instructions should be rendered to subordinates. New creative idaes can be adopted for making modifications in existing leadership skills and capabilities of subordinates. Management games can be organized in company in which all staff members should be invited to take part (West and Bogers, 2014). Role playing sessions can also be organized so that managers should develop better understanding with subordinates .

It will help in enhancing cooperation and co-ordination with staff members and due to that positive relations will be developed among top maangement people and employees. Some innovative idaes can also be used for developing managerial skills of maangers and seminars and conferences can be organized and motivational speakers can be invited for giving better understanding to managers for how to give orders and commands to juniors. Secong internal factor that affects growth and performence of FRACINO is Human Resource capabilities. If workers will not be having required skills to perform their assigned task than it will lead towards failure of enterprise (Kuratko, 2016). On the job and off the job training can be provided to staff members and training and development programs can be organized for making modification in their weak performing areas. Recommendations and suggesstions can be taken from staff members for how to make improvements in their existing skills and capabilities and they can be encouraged towrads self learning.

A small library can be opened so that employees can read books, magazines, journals and other study material and make significant improvements in their existing skills. Innovation and creativity can also be used for overcoming impact of leagl factors on operational activities of entity. An open discussion sessions can be organized and staff members can be made awrae about their rights. Attractive pamplets can be designed in which various rules and regulations needed to be followed by staff members can be mentioned. It will support in rendering legal information to staff members in innovative and creative way and they will understand it in impelling manner (Davenport, 2013). Some innovative concepts can be used for meeting the challenges that are imposed by economical factors. Risk assessment process can be conducted for assessing the thretas that are imposed by economical factors. It will aid in overcoming the challenges that are created for business by diverse range of economical factors and growth and success of entity can be ensured.

Innovations and creativity that can be adopted in FRACINO :- There are so many challenges which are facing by the entity in the global business environment which includes energy and environmental security. In this company, members have to provide the proper security to their consumers which help FRACINO to achieve long-term success in the economic, national security so that they can do the proper improvements on technology so that they can manufacture the proper products so that they can attain the success in the markets. Another challenge is conflict. In this staff members of FRACINO have to do the proper communication so that conflicts can not occur.

When entity has to start the new business in the new market for that, they have to bring about the new products and services which help in attaining the success and achieving the leading position in the competitive market. If they are facing the conflicts, then they have to use the proper policies so that they can resolve the conflicts which help the entity in attaining the success for the long term. Another is high competition in the market. They have to manufacture the products and services by which they can attain the success in the high competition. Along with this these challenges having an impact on the strength and weakness of entity and for that they have to improve the weakness (Wilson and Post, 2013). By these challenges entity can do the proper operations and functions along with this, they can provide the best services to their consumers by that they can attain the leading position and by that, they can improve the productivity and attain the sustainability in the market. They have to provide the best solutions to the consumers if they are facing the problems. Along with this, the managers of FRACINO have to provide the motivation or encouragement to staff members so that they can do the best work and attain the success in the competitive market.

There are various global challenges which having a great impact on the SME sectors. Political stability is one of the key factor which can impact of the SME. Because there are various political decisions like import and export duties on various machinery part can affects the business operations and profitability of FRACINO. Apart from that issues regarding the tax can also affect on the business. For example if government can increase tax on SME, it can affects their return on investment and revenues. Therefore, government can try to provide tax benefit to SME sectors which can help to provide more leverage.


From the above carried out analysis, it has been observed that FRACINO have to use the new and innovative technology so that they can attain the leading position in the competitive market. Small scale enterprise play an important role in the economy as it helps in making right decisions with the proper utilisation of resources. Further, small ad medium sized industry helps in enhancing growth and in this sector entity having a limited number of staff members as it is helpful in maintaining the relationship with the consumers and by that FRACINO attains the success in the competitive market.


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