Small Business Case Study

Examine the nature of the distinctive managerial, organizational and developmental characteristics of small businesses vis-à-vis well resourced large companies. What are the implications of such distinctiveness for small businesses attempting to achieve sustained growth?

INTRODUCTION

The European commission defines a small business as an organization employing fewer than 50 people. It also has a turnover of less than 50 million Euros and an annual balance sheet total of 43 million Euros. Apart from size, another important defining characteristic of a small business is its market influence. A small firm has a small share of the market. Therefore it is not large enough to influence the prices or national quantities of the goods and services it provides. Furthermore, a small firm is independent in the sense that it does not form part of a larger enterprise and that the owner-managers are free from outside control in taking their principal decisions.

A large business on the other hand, is an organization employing 250 or more people. The turnover is greater than 50 million Euros and an annual balance sheet over 43 million Euros.

Over the years, there has been an increase in the growth of number and importance of small firms. One explanation of this growth is by Marxist theory. Marxist theory predicts that capitalism will degenerate into economies dominated by a small number of large firms and society will polarise between those that own them and those that work in them. To a Marxist, the rise of small firms is just another, subtler way for this trend to manifest itself. However, Fritz Schumacher (1974) argues that the growth of small firms is part of a social trend towards a more democratic...

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...ork, adopting a marketing interface with customers and completing the necessary administration and financial management duties necessary to keep the business ticking over and moving forward. Eventually however, some owner managers find that the business has outgrown his or her abilities- and an unwillingness to identify and recruit the necessary skills and capabilities to underpin growth of the business can severely constrain, or even destroy, the firm.

It is now important to identify the ways a small firm can achieve and sustain growth. To achieve growth, a small firm should build on its strengths and core competencies, shore up its weaknesses and develop a marketing strategy for each product/ market offering. To do so, it has four options: stay with existing products and existing markets and customers, product development, market development or diversification.