Recent years have brought minority-owned businesses
in the United States unprecedented opportunities as well as new and significant
risks. Civil rights activists have long argued that one of the principal reasons
why Blacks, Hispanics, and other minority groups have difficulty establishing
themselves in business is that they lack access to the sizable orders and
subcontracts that are generated by large companies. Now Congress, in apparent
agreement, has required by law that businesses awarded federal contracts of more
than $ 500, 000 do their best to find minority subcontractors and record their
efforts to do so on forms filed with the government. Indeed, (some federal and
local agencies) have gone so far as to set specific percentage goals for
apportioning part of public works contracts to minority enterprises.
Corporate response appears to have been substantial. (According to
figures collected in 1977, the total of corporate contracts with minority
businesses rose from $ 77 million in 1972 to $1.1 billion in 1977. ) The
projected total of corporate contracts with minority businesses for the early
1980s is estimated to be over $ 3 billion per year with no letup anticipated in
the next decade. Promising as it is for minority businesses,
this increased patronage poses dangers for them, too. First, minority firms risk
expanding too fast and overextending themselves financially, since most are
small concerns and, unlike large businesses, they often need to make
substantial investments in new plants, staff, equipment, and the like in order
to perform work subcontracted to them. If, thereafter, their subcontracts are
for some reason reduced, such firms can face potentially crippling fixed
expenses. The world of corporate purchasing can be frustrating for small
entrepreneurs who get requests for elaborate formal estimates and bids. Both
consume valuable time and resources, and a small company’s efforts must soon
result in orders, or both the morale and the financial health of the business
will suffer. A second risk is that White-owned companies may
seek to cash in on the increasing apportionments through formation of joint
ventures with minority-owned concerns. Of course, in many instances there are
legitimate reasons for joint ventures; clearly, White and minority enterprises
can team up to acquire business that neither could acquire alone. But civil
rights groups and minority business owners have complained to Congress about
minorities being set up as "fronts" with White backing, rather than being
accepted as full partners in legitimate joint ventures. Third,
a minority enterprise that secures the business of one large corporate customer
often run the danger of becoming and remaining dependent. Even in the best of
circumstances, fierce competition from larger, more established companies makes
it difficult for small concerns to broaden their customer bases: when such firms
have nearly guaranteed orders from a single corporate benefactor, they may truly
have to struggle against complacency arising from their current success. The author implies that a minority-owned concern that does the greater
part of its business with one large corporate customer should ______.
A. avoid competition with larger, more established concerns by not
expanding
B. concentrate on securing even more business from that corporation
C. try to expand its customer base to avoid becoming dependent on the
corporation
D. use its influence with the corporation to promote subcontracting with
other minority concerns