|
美国essay写作-美国essay指导，Small Business – Size as a Chance or Handicap
The sector of small and medium sized businesses (SMEs) is an important factor in most economies. In Germany, for instance, there are 3.2 million SMEs (1999). These are 99.3 %of all enterprises subject to VAT. These SMEs generate 44.8 % of the total turnover subjectto VAT. SMEs carry out 46.0 % of gross investments; hence contribute significantly to totaldemand.
SMEs have a good reputation for their ability to innovate and for their close customerrelationships. Smaller businesses, however, have some disadvantages that make it difficultfor them to compete with the large players in their industry. This article analyses theadvantages and disadvantages that result from the smaller size of an organisation.
What is small?
In order to describe the strengths and weaknesses of SMEs, it is necessary to determine,what actually a small or medium sized business is.Literature, political and non-governmental institutions provide a wide range of definitions ofthe term “Small and Medium sized Enterprises” . Just the word “Small and Medium” indicates
that most definitions use the companies’ size to distinguish between SMEs and largercorporations. Amongst these quantitative elements is the number of employees the mostcommon one.
The following examples indicate the range of descriptions for the term SME.Most quantitative definitions refer to the number of employees; some also include size limitsby turnover and balance sheet total.
Definition by Micro Enterprise Small Enterprise Medium Enterprise
No. of employees
US Small Business Administration1 - 19 20 - 99 100 – 499
UK Department of
Trade and Industry
1 – 9 10 – 49 50 – 249
Eurostat 1 – 9 10 – 99 100 - 499
Definition by CriteriaSmall Enterprise Medium EnterpriseNo. of employees 50 250
Turnover in Mio ECU 7.0 40.0
European
Commission
Balance Sheet Total in Mio ECU 5.0 27.0
No. of employees 50 250
Turnover in Mio € 5.4 21.7
HGB
Balance Sheet Total in Mio € 2.7 10.7
IfM Bonn No. of employees 1 - 9 10 - 499
Turnover in Mio € 0.5 51.1
Figure 1 Examples of quantitative definitions of SMEs
All quantitative criteria should be used with care. It is especially important to take into
consideration industry-specific differences. A car dealer with 250 employees is large,compared to the average car dealer. A car manufacturer with 250 employees, however,would be considered a small player. The criteria of balance sheet total and annual turnovermight be useful for statistical reasons. Nevertheless they provide little information about the#p#分页标题#e#
- 2 -
© Dagmar Recklies, March 2001
financial power of the organisation. Nevertheless, it is especially the lack of financial power
that puts smaller businesses at disadvantage compared with their larger competitors. A moresuitable measure would be cash flow. This, however, is even more than balance sheet totaland turnover subject of individual accounting policies.
The qualitative definitions focus at special characteristics of SMEs that distinguish them fromlarger corporations. Similar to the quantitative definitions, a variety of qualitative definitionscan be found. The element that is common in most of them is the strong linkage betweenenterprise and owner. Examples of quantitative definitions are:
Committee for Economic Development (US):
A small business has at least two of the following features:
· Management is independent, since the manager usually owns the business.
· Capital is supplied and ownership is held by an individual or a few individuals
· The area of operations is primarily local, although the market isn’t necessarily local.
· The business is small in comparison with the larger competitors in its industry.
US Congress (Small Business Act 1953):
A small business is one that is independently owned and operated and is not dominant in its
field of operation.
(Both derived from Megginson et al,1997)
Hauser (2000) gives the following quantitative factors:
· the identity of ownership and personal responsibility for the enterprise’s activities
· the identity of ownership and personal liability for the entrepreneur’s and the enterprise’s
financial situation
· the personal responsibility for the enterprise’s success or failure and
· the personal relationship between employer and employees
The definition of the European Commission (1996) also includes the element of
independence. It states that an enterprise is an SME only if it is not owned by more than
25 % by a large enterprise.
In summary, the most common qualitative element in definitions for SMEs is the independent
ownership, mostly by an individual, a family or a small group of individuals. Other criteria as
non-dominance in its industry or relative size compared to other players in the industry can
be critiqued. They ignore that many successful SMEs are highly specialised niche players,
which often dominate their special niche of the market or their special industry segment.
Such criteria would necessarily require defining the scope of the industry hence include more
subjective elements.
- 3 -
© Dagmar Recklies, March 2001
Small Business or Entrepreneurial Business?
The terms small business and entrepreneurial business are sometimes used
interchangeably. Although small and entrepreneurial businesses may be one and the same,#p#分页标题#e#
the terms stand for different concepts. Megginson at al (1997) distinguish as follows.
The principal objectives for an entrepreneurial business are profitability and growth. The
business is characterised by innovative strategic practices and/or products. The entrepreneur
starts and manages a business for reasons as achievement, rapid growth, immediate and
high profits and – partly – quick sell-outs.
A small business, which is not entrepreneurial, may never grow large. It expects normal
sales, profits and growth to stay in business. The owners often prefer a more relaxed and
less aggressive approach to running their business. Their principal purpose is furthering
personal goals.
In the result, SMEs may or may not be entrepreneurial, whereas entrepreneurial businesses
can be SMEs or large corporations. Hence, the degree of entrepreneurial sprit in an SME is
largely determined by the intentions of the owners. Bridge (1980) has grouped them into
three categories.
Life-style · Often run by an individual
· Facilitates and is part of the life-style the individual wants to have
· Frequently found in arts or crafts, where the owner lives to practice the
craft rather than practices the craft in order to live
· Basis of business is more important than the level of return it can
provide
Comfort Zone · Provides the owner with sufficient level of returns for the level of comfort
he wants in life
· Level of benefit the business can provide in return for a reasonable
amount of effort is more important than the basis of business
Growth · Owners wish to manage the business to maximise its earning potential,
especially for the future
Figure 2 Groups of SMEs according to owners’ intentions
Hence, those owners that have growth intentions for their businesses are more likely to
develop really entrepreneurial behaviour, which is characterised by the ability to create and
sustain competitiveness through innovation.
Strengths and Weaknesses of SMEs
In order to compete successfully with larger players, many SMEs have developed
characteristic competences as
· Close relationships with customers,
· Continuous innovation,
· A narrow market focus or niche strategies that allow them to specialise and excel in their
fields, and
· Selected and motivated employees.
- 4 -
© Dagmar Recklies, March 2001
The special strengths and weaknesses of SMEs that distinguish them from larger companies
are mainly determined by their typical characteristics. The most influential ones are
ownership, structures and size, which all have positive and negative effects.
Due to their size and number of employees many SMEs have simple structures and
systems. Mintzberg (1999) describes simple structures as follows: “… it has little or no staff,#p#分页标题#e#
a loose division of labour and a small managerial hierarchy. Little of its activity is formalised,
and it makes minimal use of planning procedures or training routines. … Power tends to
focus on the chief executive, who exercises a high formal profile. … The creation of strategy
is, of course, the responsibility of the chief executive, the process tending to be highly
intuitive.”
These simple centralised systems facilitate flexibility and shorter reaction times. They are the
basis for SMEs’ ability to adapt quickly to changes in their environment. However, these
systems are often based on the owner’s personal experience and less on objective reasons.
Hence they often remain unchanged, even if circumstances would require other structures
and systems. The whole strategic direction is often completely dependent from one individual
or a small group of individuals over a long period of time.
SMEs are defined as independently owned, mostly by families, individuals or small
groups of individuals. Kets de Vries (1993) states the following advantages and
disadvantages of family-owned businesses. Those are relevant to other individually owned
businesses as well.
Positive Aspects Negative Aspects
· Long-term perspective · Static thinking
· Dependable culture that encourages longlasting
relationships with all business
partners
· Managerial difficulties when family
objectives and business objectives are in
conflict
· Strong identification/commitment, stability · Less access to capital markets
· Knowing the business · Nepotism
· Family culture as a source of pride, greater
resilience in hard times
· Succession problems
Figure 3 Advantages and disadvantages of family owned businesses
The issue of nepotism indicates that the overall stable relationships small businesses
develop with their partners can turn into a weakness when they favour only relatives and
friends. This can make it very difficult for outsiders to come into the business, hence makes it
more difficult to attract outside expertise and professional management.
The relatively small size of SMEs often leads to disadvantages in economies of scale.
Hauser (2000) points out that this small size leads to one of the SMEs greatest strengths –
their ability to offer customised and specialised goods and services. This, however, implies
that many SMEs cannot make use of cost advantages in mass production. Furthermore,
some types of costs are not variable in relationship with company size. Examples are
devices for environmental protection (e.g. gas cleaning equipment), which are often underutilised
in smaller companies, or R&D costs. R&D as the basis for SMEs’ strength in
innovation and flexibility has to be undertaken on a certain minimum scale in order to lead to#p#分页标题#e#
- 5 -
© Dagmar Recklies, March 2001
results. In the result of lower sales and not down-sizable costs, SMEs often incur a higher
proportion of fixed costs compared to larger corporations.
The sum of issues illustrated above leads to a major problem for many SMEs: a lack of
resources. This comprises financial and personnel resources.
SMEs have limited access to capital markets, due to owner-preferences and minimum
requirements of capital markets. Hence they are heavily reliant on bank loans and the – often
limited – financial means of their owners. In addition, Hauser (2000) notices, that although
smaller companies tend to have a higher turnover yield, larger corporations are in a better
position to cover temporary losses. They normally have much higher financial and nonoperational
incomes and a better equity capitalisation. In the result, SMEs tend to have more
difficulties to finance investments or R&D projects.
Limitations in personnel resources are relevant to management and functional experts. In
both areas, SMEs often lack the financial resources to hire experienced specialists. Often
companies are too small to fully utilise a person solely employed for marketing or IT etc.
Hence, other members of staff have to take over these functions, although they are not
necessarily qualified for this. The simple, less fixed structures facilitate such cross-functional
working. The result is not only a lack of experience but also a lack of capacity in manpower,
especially for one-off projects. A special problem for owner-managed enterprises is to get
outside management expertise into the company. Even if the owner is willing to share tasks
with outsiders, such functions are often not attractive due to the dominance of the owner. In
the result many companies rely solely on the owners knowledge and vision, which might be
limited to his experience.
Many SMEs are very much focused on the person of the owner. The businesses’ success
and market position depend on the vision and the entrepreneurial talent of these persons. A
well managed small or medium sized business may be able to overcome size-specific
problems of resources by implementing and intelligent outsourcing strategy, by focussing on
few core competencies and by developing a motivating corporate culture.
Summary
There is no doubt that SMEs face some special problems that are not an issue for larger
organisations. Small size, however, is not necessary equal to disadvantages and problems.
Many SMEs are much more flexible than their large counterparts, which have to meet a great
variety of expectations and interests from various stakeholders when it comes to changes.
Simple structures and few levels of hierarchy encourage a motivating community-like culture
and a steady knowledge transfer between all members of the organisation. The stable#p#分页标题#e#
relationships with suppliers and customers that many SMEs have developed over years,
provide a degree of continuity. Small businesses can form ad hoc partnerships, cooperations
and networks with other businesses in order to work on a particular project.
- 6 -
© Dagmar Recklies, March 2001
Moreover, SMEs are famous for their successful niche strategies. Businesses with such a
strategy operate in particular market segments. Due to this specialisation the business can
perfectly serve this market. However, due to the limited market volume, these segments are
fairly unattractive for larger players. In the result, the small niche player does not face a
significant competition. http://www.ukassignment.org/mgessaydx/
Thus it obvious that the special characteristics of small and medium sized enterprises do not
only cause problems, but also a variety of opportunities. The most important precondition for
successful exploitation of these opportunities is a qualified management. It is the
managements task to make the best out of the strengths in order to overcome the
weaknesses.
Literature / References
Bridge, S. 1980. Understanding Enterprise, Entrepreneurship and Small Business. London:
MacMillan Business.
Hauser, H.-E. 2000. SMEs in Germany. Facts and Figures 2000. IfM Institut für
Mittelstandsforschung Bonn, available under www.ifm-bonn.de/ergebnis/sme.zip.
Kets de Vries, M.F.R. 1993. The dynamics of family controlled firms: The good and the bad
news. Organisational Dynamics. 21(3) S. 59 ff.
Mintzberg, H. 1999. The entrepreneurial organisation. In: Mintzberg, H., Quinn J.B.,
美国essay写作-美国essay指导Ghosshal S. (Hrsg.). The strategy process. London: Prentice Hall.
|
