Business Management: Small and Large Business Differences

furrow counseling Sm every last(predicate) and Large Business DifferencesSmall Large troubleThe purpose of this physical composition is to review and provide a critical compend (agree/disagree) if d deliver(p) affaires regard several(predicate) counseling personal manner(s) comp atomic number 18d to out size problem enterprisees. In the contemporary line of work environment it is true that polished(a) dividing line require various charge styles comp atomic number 18d to bragging(a) ones. in that locationfore the report will start by outlining the differences mingled with a elegant and galactic short letter and their characteristics. More all over the report will look into several(predicate) focal point styles and try to demonstrate their contributions to the infinitesimal businesses comp ard to broad ones, on top of that underpinning the strategic relationship which these style(s) have to the minuscular businesses.2.0 IntroductionBefore undertaking the discussion its important to fill in the meaning of a lesser and large business. What exactly is a secondary business and when does it become medium-sized or large, ar the key fruit questions whose answers will be portrayed in this report. The lilliputianer business administration defined a atrophied business as a firm with 500 or fewer employees with annual revenue under 2500000 (www.delaw arecountybrc.com ).However the legal explanation of micro varies from country and industry, a lesser business is the one with beautiful number of employees generally under 100 employees in the United States plot of ground under 50 employees in the European Union (strorey, 2005). Some definitions localize on numerical parameters in order to differentiate between weenyer and larger business types. The European commission (EC) initiated an important traffic circle of definitions of small and medium sized enterprises based on the headcount, turnover and balance flat solid value.The committee of inquiry on small firms, set up in the UK (1971) proposed that a small firm has three essential characteristics.A small firm is managed by its owner(s) in a personalized way.It has a comparatively small share of market in economic terms.It is independent, in the perceive that it does non form part of a larger enterprise and its self-command is comparatively free from outside train in its principal decisions (Longenecker et al, 2000).3.0 methodologyA background reading and research was done in writing this report by nattering lecturer notes of this module and creating points. A list of recommended textbook books (from the library) were consulted for application of academic theories and pretences. The report outline being updated when suit qualified vernal points were found, internet sources were apply to gather examples and further arguments for consideration.4.0 FindingsSmall businesses do not conform to all neat parameters, more depends on the industry in wh ich they operate and the personalities and aspirations of those that run them. The objective of this section is to understand the deference between the management role in a small firm and in a larger corporation. Griffins (2000) explain the meaning of management as a set of functions directed at efficient and meative utilization of resources in the pursuit of plaqueal goals. Efficient in the sense that the resources are used wisely in a cost effective manner, and effective in making the right decisions and prosperously implementing them.The management challenge is to chief(prenominal)tain catch over the process of an organization while at the same clock leading, inspiring, directing and making decisions on all sorts of matters. Hannagan (1998) points out that the challenges of modern mangers is to come up to with this tension between operating the present organisations, structures and processes and the necessity to vary in order to survive. The larger an organization the more specialized management apprise become, and at the highest aim an organization need convergence of skills (Hannagan, 1998).Managing in a small business is not like managing part of a large organization, however, (Stokes Wilson, 2006 ) argue that it is difficult to say precisely what the difference are another(prenominal) than having fewer resources to things.According to (Stokes Wilson, 2006), Small business management is different in several respects to management in larger organizations because of social structures, relationships and because of the level of resources available. While these differences are derived from the numbers of employees and the size of turnover, it is their management implications that are the first reach of this report. For example a manager who has special department in a small business is facing situation typical of small challenge than large business manager.Coyle (2003) explains that businesses with les than 10 employees rarely need a middle management structure, but over that size there is oft pressure on the owner-manager to delegate more of the decision making.Waynarczyk (2001) identifies three key aspects in which small and large firms differ uncertainty, innovation and evolution.Uncertainty- is a unappeasable feature of small firms which tend to have small guest bases and trammel resourcesInnovation of either very advanced products, or marginal differences to fountainhead established ones, is a key factor in the success or failure of new business start-ups.Evolution refers to the state of constant structural and market changes which small firms are likely to experience as they debate to survive and develop.It could be argued that uncertainty, innovation and evolution are also life-or-death part of the business environment of large corporates in to daytimes fast changing world.Siropolis (1998) also emphasize that management in small firms differ from that of large firms due a number aspects. These includeCent rality of the owner-managerThe formalities of structureThe level of resource constraintsVulnerability to external context and changeLimited product range and market focus.The vulnerability of small business to their external context has a relation to their inability to deal adequately with change. The introduction of new regulations tramp have a disproportionate effect on the fortunes of small business, whose limited resources cannot easily be redeployed to deal with the new procedures.(Hall, 1995) points out that small business environment exerts some pressure that can be different to the influences on larger organizations. Problems of the availability, cost of finance, and the burden of political science regulations and paper work are examples of the preoccupation that concern the manager of a small enterprise but possibly do not concern some corporate managers in large organization (Scarborough Zimmerer, 2000).Differences in the environment are probably as great between secto rs defined by products or markets as they are between those delineated by size of company. Such differences in the business environment justify the need of different management styles between small and large business firms.Moreover the pecuniary management of a small business is different from that of a large firm. In a study conducted by walker and Petty the financial difference between small and large firms were evaluated and saw that there are clearly some differences between them. The disparities in dividend politics, dividends as a share of earning are approximately 3% and 40% for small and large business (Hall, 1995).The second difference is the liquid state large firms have more liquidity which is reflected by the reliable ratio, the quick and current ratio increase as the firm size becomes larger. This difference exists because, small firms retain smaller step of accounts receivable and inventory, second small firms rely heavily on current liabilities, thus small firm s maintain less liquidity. The apparent difference in liquidity between large and small firms lends further support that small business require a different management style to large ones.If the managers of small businesses are willing to assume greater risk, their attitude whitethorn well be reflected in the small firms liquidity (Zimmerer and Scarborough, 2005)According to (Stokes Wilson, 2006), the internal structure of a small business creates the need for a different management approach. In a larger company, the mind executive is the head of the team of specialists in production, finance, marketing, personnel and other functions. There is a clear distinction between those planning the future of the business in the longer term and those implementing the strategy on day to day basis. On the other hand small business owner-managers have to do it all they are generalists who will have to turn their hand to all functions from sales to production. They are the planners and implement ors, responsible for deciding strategy and making it happen.4.1 Types of management withdraw forThe way in which an owner-manager exercise control over their workforce will depend not just on the personality of a manager, but also the deposition of index number in the employer-employee relationship. Saini Dhameja (1998) points that some circumstance gives the owner manager, as employer, relatively high levels of control over employees in other situations employees may be able to call more of tune. To enlarge this relationship Goss place four types of management control- fraternalism, paternalism, benevolent autocracy and hidrosis in small firms.Extent of employee potential economic independenceFraternalismThis describes a situation where the owner-manager is heavily dependent on the skills of the employees(s) to get the job done. This management is style is also common in professional and high engineering small business.PaternalismThis occurs where alternatives for employee s are more limited, and the employer is less dependent on particular proposition workers. E.g. farmingBenevolent autocracyThis is the near common situation in a small firm the manager-owner is less dependent on the employee and able to exercise their influence from the position of force-out as an employer.SweatingThis occurs in circumstance by which the employer exercises all the power and the employee none.These four examples of types of management control are not meant to be exhaustive there are many variations on the theme. In some small firms two different modes of relationship can exist side by side. What emerge from looking at these types is that there is a highly varied pattern of management of mess in small firms.5.0 Business out return modelsSmall businesses vary wide in size and capacity for return. They are characterized by independence of action, differing organizational structures and varies management styles. As growth occurs managerial capacity constraint (Jensen and meckling, 1976) suggest that existing behaviors are further reduced in frequency as new behaviors are adopted to manage the growing firm.As small businesses undergo these changes, a differentiating factor between successful and unsuccessful firms is that successful firms act in prognostication of bigness (Hambrick and Crozier 1985). Hence growth percentage point theories provide a measure of predictability regarding what to expect in anticipation of getting bigger.As newly formed business becomes established and grows its organization structures and pattern of management change. Longenecker et al (2000) points out that management in any organization must(prenominal)iness adapt to the growth and change, however they explain that changes mingled in the early growth forms of a new business are much more extensive than those that occur with the growth of a relatively mature business.A number of experts have proposed models related to the growth stages of a business firms. Th ese models typically describe four or five stages of growth and identify various management issues related to each stage. Some of these models are5.1 Churchill and Lewis growth modelChurchill and Lewis suggest 5 growth stages of small business which each have its own management style. These stages areExistence-this is the initial stage, where a business has an aim of staying alive, at this stage a business necessarily to find and maintain clients.Survival- at this stage a business, establish customer and produce position, viability, maintenance of cash flow. victor- this is stage where a business hires a choice between growth and consolidation.Take off-this is the growth.Maturity- a mature stage.This model provides the linkage of growth stages to management style, organizational structure, organizations and overall strategy. See form on a lower floorStageManagement styleExtent of formal systemMajor strategyExistenceDirect supervisionMinimal to non genuineExistenceSurvivalSupervi sed supervisionMinimalSurvivalSuccess (growth)Delegation/coordinationBasic, developingMaintaining profitable status quo get resources for growthTake-offdivisionalMatureGrowthMatureDecentralizationExtensiveReturn on investment theme lecture notes, 2007Moreover Scott and Bruce (1987) also presented changes in a firm which are associated with growth. These changes are presented in a form of stage models. They infer that the small firm moves from inception (stage 1) through to maturity (stage 5).Inception-this is the stage of generating profit gaining customers limited, gaining customers.Survival- at this stage a business experience over trading, uncontrolled growth.Growth- at this there is adequate resourcing, organizational structure develop, system and control.Expansion- there is financing growth, focusing externally on environment andAt each of these stages the top management, the management style, and organization of structure change. The table below summarizes this application of this model.Growth stageTop managementManagement styleOrganizational structureInceptionDirect supervisionEntrepreneurial/ laissez-faire(a)UnstructuredSurvivalSupervised/supervisionEntrepreneurial/ administration wide-eyedGrowthDelegation/ conditionEntrepreneurial/co ordination footrace(a) centralizedExpansionDecentralizationProfessional administrativeFunctional decentralizeMaturitydecentralizationWatchdogDecentralized/functional productSource (Storey, 2002.pg 121)In addition Greiner model (1972) sees also the relationship between management style and growth stage. He categorized the growth of a small business in five different phase stages, from phase 1 to phase 5 as explained below.Phase 1- involves growth through creativeness and followed by crisis of leadershipPhase 2-involves growth through direction followed by crisis of autonomy.Phase 3- involves growth through delegation and followed by crisis and o controlPhase4-involves growth through coordination followed by crisis of re d tapePhase 5- involves growth through collaboration and followed by crisis.6.0 Is Mall Business Management basically Different To A Large Enterprise?Burns (2003) agree stating that of career there are other characteristics of small business that may be added to the list perhaps the most obvious is the severe limitation of resources approach by small firms both in terms of management and power as well as money. This statement highlights the qualitative and quantitative elements of small business that grasss them fundamentally different to large business and not small scale.He points out that small business have many characteristics that set them apart from larger ventures.Personalized management-it is expected that the owner of a small company should always be involved material decision and take an active role on all aspects of the management. Since one person has much overwhelming control over decision.Managers deal with their staff in different ways, some are strict with their staff and like to be in complete control, whilst others are more relaxed and allow workers to the freedom to run their own working lives. Whatever approach is used it will be rattling to the success of the business (Boddy, 2005). The organization is good as the person running it, hence he outline that there are three main categories of management styles which are imperative, paternalistic and democratic.Autocratic style of management (o authorial) managers likes to make all the important decision and closely supervise and control workers. Managers do not authority workers and simply gives orders (one way communication). Longenecker (reference) points that total management of an autocratic style and the use of informal control system oft snarf from the very real pressure of time in small business environment.Paternalistic management gives more attention to the social needs and views of their workers. Managers are interested in how happy the workers are in many ways, they consul t employees over issues and give feedback or opinions. The manager will however make the actual decision.Democratic style of management will put trust in employees and encourage them to make decisions. They will delegate to them the authority to do this and listen to their advice.Small market share-they can not dictate wrong or influence heavily on the numbers of goods sold. Their buying power is reduced since they do not buy in large quantities they must buy at a more expensive outlay. Small businesses must therefore sell at a more expensive price and become less competitive.Customer loyalty-small businesses especially those occupying the niche market often become reliant on small but loyal customer base. Should they only lose one or two of these customers the business may fail.Finance small business often find it difficult to rising slope finance to grow, and are very dependant on customer activate payment in order to survive.Small businesses are often family owned enterprise s, Kets de Vries (1993) outline the following advantages and disadvantages of family owned enterprises. AdvantagesLong term perspective time-tested culture that encourages long lasting relationship with all business partners steadfast identification/commitment and stabilityKnowing the businessFamily culture as a source of pride.DisadvantagesStatic thinkingManagerial difficulties when family objective are in conflict.Less acceptable capital marketNepotismSuccession problems7.0 lastManaging a small business is different to managing in a large company. Entrepreneurs need total management to jungle their many responsibility in running a small firm. Premises are key resources that require decisions on locations, physical and environmental features and types of lease or purchase. other trading operations resources to be managed include materials and equipment.People are the key resources in most enterprises,many entrepreneurs feel inadequate to deal with the legal issues and conformity to employment laws that are required today. Hence four management control have been identified in small business firms. Although small firms are frequently managed by solo owners some high growth firms are manged by an entrepreneur team.8.0 ReferencesBoddy, D., 2005. Management An Introduction. Pearson Education Limited EnglandBridge S, ONeil K and Cromie S, 1998. thought enterprise, Entrepreneurship and Small business. MacMillan Press Ltd, London.Burns P, 2001. Entrepreneurship and Small business. Palgrave, New York.Deakins, D., 1996. Entrepreneurship and Small Firms. McGraw-Hill print Company, London.HannaLongenecker, J., Moore, C., and Petty, J., 2000. Small Business Management An Entrepreneurial Emphasis. 11th Edition. South-Western College Publishing, USAMullins, L., 2005. Management and Organisation Behaviour. Pearson Education Limited, EnglandSaini, J.S., 1998. Entrepreneurship and Small Business. Rawat Publications, New DelhiScarborough, M.N. and Zimmerer, W.T., 2003. Effe ctive Small business management An entrepreneurial Approach. 7th Edition. Pearson Education, Inc New Jersey.Siropolis, N., 1998. Entrepreneurship and Small Business management. sixth Edition. Houghton Mifflin Company, New York.Stokes, D. and Wilson, N., 2006. Small Business Management andStorey, D (2002), understanding small business sector , Thompson Learning, Londonhttp//en.wikipedia.org/wiki/Small_business Accessed on twenty-ninth October 2007.(http//www.delawarecountybrc.com/glossaryterms.htm Accessed on 29th October 2007.