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Along with the ending of the "golden growth phase" for large-scale heavy industry, the development of large enterprises met with resistance. At that time, the diversified industrial structure came into being and the small and medium enterprises take more living conditions. According to the opinion of U.S. futurist Alvin Toffler in "The Third Wave" (1980), it is imperative to develop a large number of small and medium enterprises for adapting to the future third trend. He believes that the second wave is characterized by a long-term production of millions of items of the same standard products, while the third wave is produced by short-term, individual and completely customized product. In conclusion, the management of small business is a result of the market economic development and environmental upheaval. In 1973, a book, "small is beautiful", written by the British scholar Schumacher was published and quickly caused a stir. Schumacher believed that the developing path would be small to make society "sustainable" development.
However, the fast development of small business is not diametrically opposed to the improvement of large enterprises. To some extent, the small business is the cradle of entrepreneurs who are prerequisite for huge companies. The skills and experience managing small business are valuable in the future. Regarding to the art of management in those two different kinds business, there are many differences and similarities. This essay will firstly discuss the similarities. Following this, there is a presentation in the second part. Finally, a personal conclusion will be given about the relationship of skills between the small business and large enterprises.
1 The Similarities in Management
In today's increasingly competitive market, effective business management methods which usually have been operated in great companies should be put into practice in small business to survive and develop. Only if increasing the risk and emergency response capacity, a profound foundation will be created for further development. The similarities will be shown from 6 different aspects (Gérald ï¼†Muldowney 1988): Cost management, human resource management, financial management, marketing management, risk management and strategic management.
The Cost Management
In the fiercely competitive market economy, small enterprises should establish a system of cost management philosophy from the overall height just like large enterprises.
In theory, there are a lot methods of cost control for choose in small businesses, such as the traditional value control and the non-value-control means (Mohan ï¼†George 2006). In fact, there is no fixed pattern in cost management strategy. And a determination can be made after completely taking into account of the actual situation, the organizational structure, the organizational culture and the productions in enterprises. Of course, according to the reality needs, small businesses can reform their own actual conditions, such as the reconstruction of the organizational structures, recreating a new organizational culture and so on. Meanwhile, small businesses owner should also be fully aware that the traditional standard cost, liability cost, budget control, cost control methods are not mutually contradictory with the modern costing method, the operating cost management and other methods. On the contrary, they can be used together in certain conditions. For example, the traditional standard cost control method and the modern cost control technique can be carried out together in a small business. The corporate cost control is divided into the existing product cost control and the cost control of future new products. The target of existing products cost control is to maintain and reduce the current cost level, and the goal of new product cost control is a dynamic production and management cost savings meting market needs.
In addition, the constraints and incentives mechanism which often depends on the implementation of external punishment or reward should be changed in small business. The full self-management in employees is not only a cost management at a lower price, but also the most effective approach to reduce management cost. Therefore, the small business operators should pay attention to the full enterprise management in cost under the guidance of scientific theory which often is seen in large firms.
1.2 The Human Resource Management
In essence, the enterprise competition is the talent competition no matter for large or small enterprises. Since the vulnerability of small businesses, the talents even are more important for small businesses. Although the human resources management strategy in small business should be business-oriented and goal-oriented, a good team building is indeed particularly significant. Just as in the development of large enterprises, it also must pay attention to the building of enterprise culture to attract the best talent, combine the core team and support the long-term development.
With the deepening of economic globalization, the pressure to survive facing small businesses is increasing more and more series. The talent has become a key for small business to get competitive advantages and grasp opportunities for development (Bitsch ï¼†Olynk 2008). The people-oriented concept has been accepted by the majority of enterprises. In practice, small businesses should constantly improve and perfect the corresponding talent strategy based on the actual situation of internal and external environment. The human resources management is not just attention to people, but to understand the dependencies between people. The purpose of the existence and management of business is to deal with such dependencies. This is the so-called corporate state, not the business mentality. The individual's ability is limited, but the ability of enterprises is unlimited. The Honda founder Soichiro Honda is holding this concept and only spent just a few decades making Honda becoming one of the world-class companies (Mair 1999).
1.3 The Financial Management
As the relatively low level of small business credit in start-up period, it is difficult to obtain bank financing (Allen, Scott Frame ï¼†Miller 2005). So, in general, the venture capital investment are mainly from the entrepreneur's personal asserts. However, it does not mean that there is no way to gain more financial supports.
Correspond with the strategies taken by large company for monopolizing the market, there are a lot of method for the small business to get founds, such as establishing stakeholder alliances, attracting extender investment and so on. Once more, the Small enterprises should strengthen financial management and improve the conservation awareness of all employees. The financial management concepts should be applied to each part of the enterprise. Actually, the custom of saving is equally important for huge enterprises and the effect will be more apparent in real life. Finally, many small businesses fall into the shortage of working founds in the early days, it is very important solutions to strengthen the management of inventories and accounts.
1.4 The Marketing Management
For small business, the key is to open the sales market. Small businesses can choose their own products directly into the market or cooperate with other products to enter the market. For gain high profits like huge firms in the market, the small business can pay more efforts in the following areas (Jiraporn 2010):
Firstly, a good product name is a prerequisite for businesses before its products accepted by consumers. It will bring with satisfaction and produce loyalty eventually. At the start, there should be a name which is easy to convey the product, position service and propagate fast. Secondly, propaganda is an effective low-cost communication strategy which has many advantages that other forms of communication cannot be achieved. It plays a significant role in promoting the image of a corporate and brand awareness. In addition, public information will also help deal with the public relations between business and government, public, community and business organizations. As the feature of reproducing and broadcasting, it can further expand the propagation effects. Finally, when the supply and demand in the market is saturated, the marketing difficulties of products will become more prominent and the market segmentation is also more challenging. As a result, it is becoming grimmer for small business to stand out from the whole industry environment. At this point, small business operators should explore new ideas and marketing innovation just as entrepreneurs.
1.5 The Risk Management
Compared with large enterprises, on the one hand, SMEs are weaker and more vulnerable in the capital, technology, marketing, and management. On the other hand, the risk-bearing capacity of SMEs is weaker as well. Once the serious risk coming, it is difficult to resolve in time easily. What is worse, it sometimes even leads to insolvency. Therefore, the result of risk in small enterprises is often very serious. The practice has proved that the mortality rate of SMEs is very high. According to the study (Rebecca ï¼†Eileen 1997) about small enterprises offered by the scholars in U.S., about 68% of businesses are failures in the first five years in all the small and medium enterprises. Therefore, risk management is more important for small businesses compared to large enterprises.
Relatively speaking, the risk of small business is easier to control. So if a small business owner has a risk management awareness of entrepreneurs, the risk in small business will be minimized finally (Mark ï¼†Chitru 2008). Owning a scientific system of risk management process is of great significance to prevent and reduce business risk. As emphasis on risk management, a large number of large enterprises, especially international enterprises have accumulated a more systematic and scientific methods in risk management processes. However, since the specific operation is relatively complex and cumbersome, it is difficult to achieve without risk management expert guidance and professional risk management operations. However, it is indeed very important to learn from these experiences and find their own path in risk management.
1.6 The Strategic Management
Michael Porter (1996) believes that strategy is a combination of many target companies fighting for and the ways the company choosing to achieve. Currently, most companies in the world regarded developing and implementing strategies as the primary issues. Unfortunately, people usually think that small businesses do not need long-term strategy. In fact, it is a misleading. For example, Japan's Canon Company (Drakopoulos & Karayiannis 1999) is a very small company in a dozen years ago. But just as the Canon development strategy, defeating the Xerox, it was gradually developing into the world's leading large enterprises.
2 The Difference in Management
In an increasingly competitive business world, the core changes in the performance also include the changes in the market and organizations in addition to capital changes (Rebecca ï¼†Eileen 1997). The changes in the market refers to the competitive market environment has changed, such as the competitive landscape changes, technological changes and environmental changes in customer demand. And the organizational change means the changes in corporate organizational structure, management level and business objectives with the market changes and business developments. For the disadvantaged small enterprises, survival is the most critical issues. Live is the last word. If the small businesses want to survive in the forest of big business, the key is operating in conjunction with the specific conditions of the enterprise. Once the company getting the full development of internal driving force, the operator should grasp the following management features:
2.1 The Key to Success is the Entrepreneur
For the fledgling small businesses, the entrepreneurs' personal qualities and abilities have a huge influence for the development of enterprises. Their ideas directly affect the development ambitions. For instance, the enterprises under the same conditions, due to the different managers, often choose a great contrast way in business development (Arshad ï¼†Manopichetwattana 1989). The reason is self-evident. Their personal behavior will affect the internal management style and the business outlook. Although the division of labor is not too clear, the abilities of collaboration are relatively strong.
Of course, it also put forward higher requirements for managers. In practice, most business managers are generalists and their work is integrated (James et al. 1984). They are not only versed in the legal and economic expertise, but also their personal values are quite well and their management capacity is also very outstanding. Certainly, only under such a wise leadership, the small businesses can grow from small to strong continuously.
2.2 The Core Strategy is the Business
The business activities of all small businesses should reflect a clear business orientation in the start-up period. The emphases are realizing the specific customer needs, actively developing new markets and quickly expanding market share. This is an effective way to improve the efficiency of enterprise management. Therefore, small businesses generally paid little attention to the functions of work.
In practice, for cycling faster and taking advantage in the market in the process of surviving, the business-oriented strategy has significant effects for the development of small business. In addition, because the lack of working founds, the inventory and lending are less and better.
2.3 Direct Management
Usually, the small business affairs are relatively simple. And the management level and the span of control are still not very broad. Therefore, most small companies take a direct management approach because of those specific characters (Wickert ï¼† Herschel 2001). Actually, during the beginning of small enterprise scale, the direct management is very effective.
However, along with the growing of small business, the standardization management usually operating in large organizations will be better for the future development. Therefore, it is safety to conclude that the direct managements are only expediency in the specific context.
2.4 Families-Business Model
The family business model is a better management in the phase of starting-up for small business. It can promote the healthy development of enterprises. In the initial stage of the enterprise, there are not too many managers, but also many good people to help. In this case, the family producing business model is inevitable.
The family kinship has a natural function joining force (Marianne & Antoinette 2006), which is called cohesion function. As this function is great exclusive, it will form an effective internal force. Therefore, there often is a very strong relationship in the family business. Small business founders and its closest family partners control most of the stakes. They retain the main decision-making power in high-level management, , especially in the financial policy, the resource allocation and the selection of high-level staff. Family businesses are still active economic subjects in today's society. In fact, the strong vitality of family businesses has made the clear reasons for their survival and social causes.
2.5 Focus on Practical Talents
Usually, the development and growth of small enterprises is a process of gradual development about the importance of talents. Enterprises cannot develop without people. Therefore, when the enterprises develop to a certain extent, it is necessary to pay more attention to the talents. Even in some small business, the talents play more important roles compared to the manager in the huge enterprises. However, in small businesses the talent cannot be compared with large enterprises in general. The small businesses are more focusing on the introduction of practical talents.
In real life, the practical talents are quiet more attractive for small business. Firstly, those talents can bring profits as soon as possible. Secondly, there is no need for small business to spend more time and capital to cultivate the employee. Finally, the experience and information of practical talents is very valuable for taking an advantage in the market.
The small businesses play an important role in national economic development (Christopher ï¼†Darren 2004). Firstly, it promotes market competition and becomes a basic strength of the market economy. Secondly, it is a major driving force of economic growth, especially in developing countries. Thirdly, it is also the main channel to increase employment and is an important force to keep the social stability. Finally, it is an important source of technological innovation as well. After the above comparative analysis, it is obvious that the similarities are more than the differences between the huge companies and the small firms in management. In essence, there is no absolute difference. To some extent, it can be safety to say that the small business is the mini of big business. Correspondingly, the small business is the cradle of entrepreneurs.
Although there are different characteristics between them respectively under a certain context, it does not influence on making a high evaluation of the point-a small business requires different skills, approaches and management styles from those required to operate large ones. In fact, this concept is imperative in today's small business operations. When only the managers have the concept of operations in large enterprises, it becomes possible to create and run a small business successfully.