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Small Business Management

The following extract is taken from an essay produced on the topic of Small Business Management


There is agreement in the relevant literature that there cannot be a common definition for what constitutes a small firm throughout the different industries. For what is supposed to be regarded “small” in a car manufacturing industry can be very different with a parcel delivery company. Clancey and Maquaid (2000) argue that apart from using quantitative factors to determine what is “small” we can also use qualitative factors. In this sense, a branch of a large global firm can hardy be termed a small enterprise despite employing only a few people and has a low turnover (Clansey and Maquaid 2000). The criteria, therefore, by which we determine what constitutes a small firm, should not be limited only to the physical size of the company, the quantity size of its production or the number of employees.

One of the advantages of small firms can be seen in terms of their organisational structure. Larger firms, have a different management structure because of their size and number of employees. The larger the organisation the more the various layers between its management are necessary in order to ensure the proper function of tasks/projects. This however, can have a negative effect on the flexibility of the firm to adjust to changes in the environment but also in terms of the transparency of communication within its different layers. Operating in a constant changing environment, the communication, formulation and implementation of new ideas, is a key characteristic of success.

In the relevant literature, it is recognised how organisations try to reduce their management layers even though this causes agitations in employees that have been under the traditional model for many years (Venkaaraman and Van de Ven 1998; Smith 1998; Esperanza et al. 2003). Therefore, flexibility, in terms of, adopting to external market demands becomes a source of competitive advantage among their agility to develop, in shorter time, new products and services that meet specific demands. Bureaucracy and formality in larger firms can become an unavoidable obstacle not only to their growth but also to their remaining in the market (Scott and Bruce 1987).