Posted at 10.07.2018
Keywords: small company assignment, sme management
The research of useful and effective procedure of a business is named management; this talk tends to verify the role of small and larger business in the framework of management. Various areas of business will be covered starting up with the key definition conditions of small and much larger businesses; management notion will be described in order to highlight its importance on this study. Furthermore with the aid of the management concept the discourse will oversee how small and much larger business are supervised through various styles though it is difficult to highlights precisely what the difference are, the knowledge of the difference between your role of the management in a little organization and in much larger company will be emphasized which will later lead our talk to various types of management that are located in small businesses or companies.
Small business a sector utilizes over fifty percent of the staff in the private sectors across UK, this analysis aims at figuring out how small businesses are managed looking at to the top businesses. Management of small company in the context of key resources such as premises and folks has been reviewed, furthermore the management of small company at its growth level using Churchill and Lewis model in addition has been covered.
Small businesses require a different management style to large ones, this assertion is agreeable, nonetheless it is necessary to examine the concept of management before going any more, Management as described by Kreitner (1999, p, 5) is the process of working with and through others to attain organisational aims in a changing environment. You will discover four basic management functions that make up a management process in a business, these regarding to Certo (2003, p. 6) include:
Planning, includes choosing the task that must definitely be performed to attain organisational goals, outlining how the duties must be performed and indicating when they must be performed. Planning activity targets attaining goals, professionals on the other hand undertaken the task, collect its plan and oversee it performed.
Organizing, the administrator after planning has the task of assigning it to various employees or staff within the organization. This is the second function of the management process, task are organized so that the output of people contributes to the success of departments, which in turn, plays a part in the success of divisions, which finally plays a part in the success of the whole business.
Influencing, this is term used in the management to refer to motivating, leading, directing or actuating, however the primarily concern because of this influencing function are the people within the same business or organisation. The goal of influencing in any firm doing business is to increase output.
Controlling, in this function the managers of the business enterprise get information that actions recent performance within the company, compare them with the previous one and make decision to if the company should be improved to meet re-established specifications.
So with the original understanding of the idea of management all together, we go further with our discussion and verify the concept of small company.
According to Scarborough & Zimmer (2007), the term small business identifies a company that is separately owned and controlled, is not dominant in its field of procedure, and satisfies certain benchmarks of size in conditions of employees or gross annual receipts. Nevertheless the term small business has no single definition, Storey (2002, p. 8) gives a good example the petrochemical industry in which he states that there is likely to have higher sales of capitalisation, sales and perhaps employment than a little business in the automobile repair trades. Nevertheless the understanding the tiny business should be considered using various factors such as number of employees, sales turnover, success, net worthy of, etc.
Bolton Committee (1971) in Storey (2002) described small organization or business by dividing it into two categories, financial and statistical meanings respectively. The economic category respect business as being small if indeed they got relatively small talk about of their market, they were handled by owners or part-owners in a personalized way rather than through the medium of the formalised management framework and also that these were indie, in the sense of not developing part of a sizable enterprise.
Statistical classification of small business by Bolton committee aimed at dealing with three issues first was to quantify the current size of the tiny firm sector and its contribution to economic aggregates such as gross home product, job, exports, invention, etc. Also the other factor is the extent to that your small firm sector has evolved its economic contribution as time passes and the last definition involves guidelines has to allow an evaluation to be made between the efforts of small companies in one country recover of other nations (Storey, 2002), relating to Siropolis(p. 6, 1998) he highlights the actual fact that small company is a essential force in North american economy, further proof this vitality being the fact that small business employs roughly half of the nation's workforce and produces 54% of the sales revenues and 40% of the gross nationwide product.
The various management styles, however the most three most common ones are democratic, autocratic and consultative. Small company do require different management style than larger ones because doing the correct style of management can result to greater determination and output in a company, however the selection of these style will be affected on the personalities and characteristics of individuals who manage the business (Torrington & Hall, 1991).
Democratic management style identifies the method whereby a director or business proprietor chooses to delegate power to his/her employees, providing them with responsibility to get the job done which was given to them. According to Boyd (2005) these employees will tend to complete the task utilizing their own techniques or methods but within allocated time. The primary idea on this style is the idea that the business owner or manager involves his/her employees in the process of decision making this provides you with them a sense of belonging and motivating individuals. Even as mentioned earlier that the characteristics and personalities of any manager will effect the style adopted, thus motivating the employees and the work or creation improves.
Autocratic management style, varies from the prior mentioned style due to the fact the director or business proprietor doesn't have the decision to make process with his/her employees and in return makes decisions independently and is employed to dictate orders. This management style when employed helps the achievement of tasks on time, however the employees working in a certain business organization may grow fatigued and be demotivated as it shows that staff aren't appreciated and their point of view.
Consultative management style, in this style the business owner may have a tendency to incorporate both autocratic and democratic style he/she may want for the opinion and recommendations.
Laissez Faire management style, is the main one where employees are given freedom to undertake task the way they see fit, however the administrator/business owner may be involved at certain minimum point, the role of the director in this style is to do something as an expert, coach or consultant is he/she is there to oversee the way the task is carried out and offer assistance whenever needed, however this might effect for the employees to loose the sense of way and not concluding the task within allocated time.
Small businesses can be initiated at a very low cost and on a part time basis. It must be grasped that small business is also well suited to internet marketing since it is very workable to serve a distinct segment, something that could have never been possible prior to explosion in internet activity(www. answer. com, 2007) nevertheless the point to be aware is the fact like many large ones, small company has to adapt to change, usually missing bureaucratic inertia can often react to business operators have a tendency to be intimate with their customers, thus resulting in increased accountability and responsiveness.
While managing small company, there are several problems that could be found on the way, managing of a tiny business requires marketing skills as well amongst others. Longenecker, Moore & Petty (2000) agree that marketing skills are requirements to a little business owner hoping to control his/her business in a distinctive style, nonetheless they point out the actual fact that common small company must include networking, customers recommendations, word of mouth, television, radio, yellowish pages directory, internet, print out etc.
According to Storey (2002) small business find the internet market affordable, for small business or internet marketers online marketing such as using eBay could become more affordable, using area of interest websites to market can also be effective, this is a way of handling business by focussing or responding to a dependence on a product or service that's not being tackled by many providers, this is however narrowing a defined group of prospective customers.
There are five phases in the life span of small company. Of these different stages, companies use different strategies, have different goals, proceed through different marketing phases and even bring on different resources. The impact these stages have on the business can be utilized as advantage and help organize the businesses' management style in the foreseeable future.
Stages of growth include inception whereby activities carried out include generating income, administration, getting customers, management (however you like), cash technology negative, single products and limited distribution channels
Survival stages in the life of a tiny business include over trading, uncontrolled development, increasing distribution intricacy, information needs, profits, management style entrepreneurial, simplest structure and break even situation.
Growth stage activities include how to manage growth, enough resourcing, pressure from large challengers, new markets, management less hands-on, moving toward coordination and delegation, company set ups develop and retained revenue and cash generating.
Expansion deals with activities such as financial expansion, maintaining control, concentration externally on environment and market shifts, market research, lengthened product range etc.
Maturity is the previous stage that deals with controlling of expenditures, productivity, controlling of niche market segments, price competition, increased product development etc.
The way small company is maintained is total different from a larger one, by using total management in their day to day activities of working its business. Regarding to Stokes & Wilson (2006, p. 346) managing of key resources such as premises is one of main activities in the life of small organization; it requires decision on locations, physical and environmental features and types of lease or purchase.
When owning a business through key resources there some common problems and affects, these are such as potential autocratic control by owner or manager (as discussed previously), limited leverage in obtaining resources required including financing in addition to a limited research and control of the business environment. These affects relate direct to insufficient specialist management in the organization or business.
Management is approximately using resources effectively to be able to meet up with the goals of the business or business. It must be considered a person managing a tiny organization or business should have ability to follow opportunities without regards to the resources that are handled and also to make decisions about how to obtain and use those resources. Taking care of a small business unlike the bigger one involve a director makes decision regarding resources such as the type that are needed, when they result from and how they will be used.
As we stated earlier premise management is one of key factors for a tiny business that fall under the resources category, when initiating or growing business, a concern should be taken into consideration that costs will have to be incurred such as lease and rates.
When managing small business or firm the legal and financial implications are usually the most crucial factors in choosing the sort of premises, for example dealing with a lease is often a major commitment for a little business proprietor who in return has to give out a personal promise, this means that she or he has to pay rents and rates etc.
As described in Longenecker, Moore & Petty(2000) the premises available to small business include option such as home, whereby many businesses operate successful from home as this is low priced and convenient, while its cons include controlling work and home life, tax complications and appointment clients. Further options are as stated below
Flexible lease, is also available available premises, almost all of which can be found with flexibility often with a three months break classed. Such set up allows an owner to get freedom to improve premises as needs come up, although the rentals costs are usually greater than similar property on longer terms leases.
Traditional lease, this is whereby a building contemporary society or financial assistance is given for an interval of 5 years or more and therefore presenting a little business or strong security of tenure and lower costs. For a recognised viable business ready to spend money on infrastructure and fitted out of premises, this is a popular option.
Another key activity in the management of small company is the purchasing of materials and equipments especially in a small business whereby the nature of business for example will involve making and retailing. The advantage of a good management when controlling purchasing materials and machines can be looked at in lots of ways, this include allowing the choice for right materials for the job.
Insurance in a little business is extreme important and aims at minimizing the impacts of mishaps. It really is grasped that small businesses are particularly susceptible to disasters. Managing this type of your business is not the same as large business and requires appropriate plans to mitigate the result of misfortune, and in the case of UK, small businesses or firms appreciates that insurance is obligatory for employees' liability such as employees' says on injuries, specified agreements etc.
According to Storey(2002) and Hall (1995) small business in the united kingdom utilizing up to 50 business take into account more than half of all private sector businesses, and pointed out the fact that small business management is different from owning a larger one due to its social structures, marriage and since we mentioned before the amount of resources available. People or employees are the primary resource plus they play an important role in regulate how the business enterprise is run in small company. It must be noted that the small business can make use of even a one person who would be the owner- supervisor, this person might take the business through various stages and pieces it grow, however one downside for many smaller businesses is usually that the owner-managers are lacking managerial experience as they tend to set up themselves first so that as the business grows they have a tendency to employ people who have skills and know-how to attempt their responsibilities.
Through various stages the style of management in a little organisation the owner-manager exercises control over the business enterprise using his/her personality but in some occasion the employees may contain the control in an enterprise for example when the business requires skilled labour who are in a nutshell of supply the owner-manager may well not have large say in their work while in other occasions if their had been a need of unskilled labour the owner-manager would have control depending on his/her personality.
Unlike in large organisation, in a small business there are known to are present four types of management styles you can use to control the workforce, they are paternalism, benevolent autocracy, fraternalism and sweating (Stokes & Wilson, 2006)
Fraternalism is the sort of management employed in the small organisation whereby the owner or manager will depend on the abilities provided by the employees to get the task done. For the reason that sense these employees do not be based upon the small business as their skills are in great demand someplace else, however the character of the work undertaken is based on the mutual contract between the one who manages the tiny firm and those skilled employees or labours. Fraternalism can be said to be within many business for example in the automobile Repairing Business, the dog owner or administrator may have the capital to get started on that business but lack the abilities for undertaking the job, in that sense someone who works as a technician may as well have control over the task, and your choice made is dependant on the contract of the two. It also must be observed that in this kind of management style there is no hierarchy for decision making.
Paternalism, is the kind of management style whereby the owner or manager doesn't have to be based upon the employees, paternalism is contrary of the fraternalism. In this style the difference between the owner and employees can be naturally be viewed, nevertheless the company acknowledges that the business needs the dedication from its employees and for that reason tend to set up a relationship between management and employees in an effort to stimulate and encourage in their work. An example of paternalism are available in small organisations that work as temporary job agency, whereby the method of employment is made on non permanent basis, however the agency acknowledge the importance of temporary employees although they do not be based upon them.
Benevolent autocracy can be found in many small organizations in today's world of business, the employer or supervisor may sometimes tend to show their electricity by on employees. In this type of management the employees are said not be cost-effective dependent and for that reason they tending to forge the relationship between them and the employers. That is however the marriage that will not exceed beyond the work time. Small IT companies have a tendency to treat their employees in the form benevolent autocracy scheduled the introduction of technology and high way to obtain labour compares to the careers available.
Sweating, is a different type of management whereby the staff are exploited by the owners or manager to keep the operating cost low and have flexible service. As mentioned earlier the work agency that utilize students, migrants and other people as temporary employees have a tendency to do so in order to keep the their working cost low and have flexible service by having workers work only when they are simply needed and get paid for that one time. Insufficient skills makes most of the employees in this category susceptible to exploitation.
Some organisation may have two or more of the above mentioned types in their daily activities. There's a highly variance in the concept of handling people in small company, nevertheless the owner or a administrator in charge is the one who with regards to his/her personal styles will be conditioned by the external forces prevalent in the industry (Hall, 1995)
Small business go through five stages as mentioned earlier, these levels have their own management style.
Existence is the stage whereby the tiny firm is on its own and is easy with the main idea or goal is never to cease existing, the marketplace research on customers can be regarded as necessary phase to undergo, then to develop if it's possible. The management is purely under owners' supervision; nevertheless the company is susceptible to are unsuccessful in this stage if there is lack of management skills.
Survival is the level whereby there is satisfaction in management style to due the first market research. The small organization has managed to find enough customers to remain active. Furthermore at this stage more attention is made towards cashflow, profitability and belongings. The owners of the business still tend to supervise the current management, just to ensure that their passions are met, desire to at this time is to survive and expand.
Success, the business reaching this level tends to enjoy profits and balance times as the customer needs are protected and the penetration on the market is satisfactory. Within this stage the expansion of the business is appealing, also owners of the business commence to trust the management and their styles and they choose to delegate responsibility. Financially the business enterprise is more secure then if was before and in a position to grow, however there's a need to increase the management style and also take a look at organisation composition.
Take off, is the stage whereby the management of rapid growth and the way to financing its resources, if all goes well the future of the business appears even brighter, nevertheless the business at this point may be subjected to failure if its growth end up being the fast and the business enterprise in exchange may run out of the account on attempt to achieve that growth the management of the business enterprise at this time is total under manager's control.
Maturity is the previous stage where the business is on the maturity level, and so the management styles and skills will be the key in controlling the business enterprise and control the profits.
It is agreeable that handling a small business is different to taking care of in a sizable company. We've discussed what are small businesses and the concept of the management as a whole.
Furthermore we've recognized that premises are a key resource that require decisions on location, physical and environmental features and types of rent and purchase, also we've seen how people can be supervised within a little firm whereby four types of management where discovered we were holding fraternalism, paternalism, benevolent autocracy and sweating, although small companies are under management of single owner we have seen that it is possible for the business enterprise to be managed by the team, this is verified by discovering various management styles that could be found on the Churchill and Lewis model, they were all linked to management styles, organisational constructions, systems and overall strategy.
Finally, the final outcome that can be seen from our discourse is usually that the managing of a little business is different then managing a bigger one, which is has also come to your attention that it's not possible to identify every difference but managing a little business depends on how much resource to be supervised are available.
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