Application of Gis in Small and Medium Enterprises

By Metha, Sanjay S.; Leipnik, Mark et al. | Journal of Business and Entrepreneurship, October 1999 | Go to article overview
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Application of Gis in Small and Medium Enterprises


Metha, Sanjay S., Leipnik, Mark, Maniam, Balasundram, Journal of Business and Entrepreneurship


ABSTRACT

Geographic Information Systems (GIS) is a powerful technology that allows for spatial and statistical analysis of many issues that pertain to Small and Medium Enterprises (SMEs). In particular, GIS can facilitate unit location in relation to local and regional demographics, allocation of sales territories given a spatially distributed client or customer base, and optimal location of distribution facilities or delivery routes. With respect to competition between potential units and existing units of the same or competing companies, GIS is being incorporated into the decision making process by many retailers. This paper discusses the ways in which GIS can be used by SMEs and discusses current and potential methods and their strengths and limitations. Sources of additional information related to GIS are also provided. Overall, GIS offers SMEs a powerful analytical tool. Increasing use of this technology is to be expected and dissemination of information related to GIS is desirable to promote adoption and appropriate use of GIS by the business community.

INTRODUCTION

Geographic Information Systems (GIS) is a term applied to a suite of computer programs designed to facilitate input, storage, manipulation, and analysis of spatial data and related attribute data (Burough, 1986). GIS have been in use since the mid 1960's (Tomlinson, Calkins, & Marble, 1976). The most common applications of this technology have been in natural resource management (by forestry and water resources management agencies), in infrastructure and facilities management, in land records management, and by property appraisal districts. More recently, many public utilities and municipal governments have embraced the technology (Goodchild, 1991; Estes, 1995). GIS is being applied in thousands of disparate ways, from mapping crime incident locations to tracking nuclear submarines (GIS World, 1996).

Applications in business decision making and market research have been a more recent phenomenon. According to Goodchild (1991, p. 3), "Given the importance of location in marketing, it is perhaps surprising that there has been so little discussion of GIS in the market research literature." With the assistance of this technology, marketers can practice micromarketing (i.e., develop marketing programs targeted to consumers in small geographic regions). Much of the analysis is conducted by large organizations and specialized consulting firms, which developed the speciality term geodemographics (i.e., combining geographic and demographic analysis for market research). The availability of lower cost software and more powerful and inexpensive hardware has prompted increased application of GIS by smaller firms worldwide. In the U.S., these factors, coupled with availability of standardized nationwide data, have led to a proliferation of GIS use in business applications. The availability of the 1990 census of the Topologically Integrated Geographic Encoding and Referencing (TIGER) system data set, developed by the U.S. Census Bureau, has been a particularly important factor (Martin, 1996). TIGER data is used with commercial PC-based GIS packages, such as Mapinfo and ARCVTEW, in business location analysis, in territory allocation studies, in efforts to identify target populations for market segmentation, in advertising, and in direct mail (ESRI, 1997; Francica, 1997). These PC-based GIS packages, some of which cost as little as $250, along with easy to access data of Metropolitan Statistical Areas (MSAs) or counties on CD-ROMs, low cost plotters, and computers, have rendered GIS-based spatial analysis a financially feasible approach for any size business.

For the purpose of this paper, we will use the government's classification of small, medium, and large enterprises (Hodgetts & Kuratko, 1998). The Office of Management and Budget uses number of employees as the unit of measure to segregate business into small (1-99) , medium (100-499), and large (>500).

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