Montenegrin Journal of Economics

New Economy And Global Challenge: Winning Model Of Successful Small Business Organizations

Mirjana Radović Marković

2007, vol. 3, no. 6, p. 121-130

The old principles no longer work in the age of Globalization. Businesses have reached the old model's limits with respect to complexity and speed. The real problem is a ruinously dysfunctional mismatch between today's business environment and the classic business model. Namely, the wrong model may transform a company into the vehicle of its own death. Great shifts - genuine and radical transformation- have been shaping the economy and business environment in recent decades. Technology, especially information and communication one, has radically altered the requirements for building and managing a successful business. In this new business climate, although the basic command-and-control business model has survived, it has lost its effectiveness significantly. The successful companies in the future will be ones wise enough to harness the full potential of the entire organization in the rapidly changing business environment. The world is going to be too tough and competitors too ingenious as companies are shaken loose from traditional ways of conducting business. The winners will be the unbridled firms that are responsive to challenges and adroit in both creating and capturing opportunities. To match a business environment that is more networked within and among companies, the ability to manufacture value will have to be distributed across the company to much a greater extent than in the past. Additionally, learning is the key competency required by any organization that wants to survive and thrive in the new knowledge economy. Market champions keep asking learning questions, keep learning how to do things better, and keep spreading that knowledge throughout their organization. Learning provides the catalyst and the intellectual resource to create a sustainable competitive advantage. Knowledge organizations obtain competitive advantage from continuous learning, both individual and collective. In organizations with a well established knowledge management system, learning by the people within an organization becomes learning by the organization itself. In other words,managers need to transform themselves. In order to get a complete picture how educational level of managers and entrepreneurs affect business success, author stresses that it is necessary to determine general personal knowledge and education, then expert knowledge or various specializations in certain areas and lastly to identify their skills. In total, all this is necessary in order, apart from other (provided financial means, location, equipment, partners and business associates, market and other), to make a final decision for starting a business and define how to manage it. Many scientists think that knowledge is the most important requirement for business success and therefore it is the factor to which the most attention is being paid to. Recent researches in the USA show that business owners who were not educated enough for the business in which they were engaged, were not successful (80% of their businesses failed during the first year of its existence). On the opposite, those entrepreneurs who were educated and who showed constant interest for improvement have increased their business success for 60% after the completion of the basic training programs for entrepreneurship and management.Therefore the author pinted out that the more highly skilled workforce should be beneficial to organisations. Additionally the human capital approach reflects the view that the market value of the firm increasingly depends on intangible rather than tangible resources. The three main components of human capital are described as a) early ability ,b) qualifications and knowledge acquired through education and c) skills competencies and expertise through on and off the job training. This would suggest that individual capability is enhanced by greater qualifications and higher skill levels. If this can be accessed and used to good effect in the firm then better human capital should, ceteris paribus, enhance organisational performance. Better organisational performance should, in turn, translate into better national performance.

suggested citation:

Mirjana Radović Marković. "New Economy And Global Challenge: Winning Model Of Successful Small Business Organizations." Montenegrin Journal of Economics. vol. 3, no. 6, 2007, p. 121-130

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