Large Firm and Small Firm on Several Term Paper

  • Length: 10 pages
  • Subject: Business - Management
  • Type: Term Paper
  • Paper: #88638552

Excerpt from Term Paper :

large firm and small firm on several characteristics. A small firm usually consists of 50 to 200 employees, while a large firm can be considered consisting of more than 1000 employees. The firms with employees consisting of 200 to 1000 can be considered mid sized. For the research, I was able to find two firms: one large public sector firm, which deals with delinquency & crimes, referred to as the Bureau of Crime and Delinquency and one small firm employing 35 employees in a nearby store. This small firm sells local made furniture, including beds, chairs, tables, and other household wood products. In the following, we are going to compare these large and small businesses on several criteria as shown below:

Organization Structure and Management Style

Large firms and small firms are different in the sense that small businesses and large businesses face several of different problems. At the same time, in case of the common set of problems, it is very unlikely that these common problems are equally important and pressing for each of these businesses. It is certainly reasonable to believe that some problems cause greater difficulties for a small business than they do for large firms. For example, the limited resources of small firms compared to those of large organizations make them more susceptible to changes in the external environment.

In case of out chosen companies, I was able to find a clear pattern on management styles. The large firm, The Bureau of Crime and Delinquency, was less threatened by many of environmental, changes, so its management spent less time scanning the environment in an attempt to anticipate and adjust to this turbulence (Atuahene-Gima, 1996, 98). On the other hand, the management in the small local store was much more concerned about the environmental changes. This means that environmental events that represent serious threats to a small firm may be considered unimportant to a large one.

The other difference in the management style is reflected in the ways the attitudes and personal traits of executives are shaped in small businesses and large businesses. In small local firm, I found management taking personal interests and responsibility for meeting the objectives of the company. On the other hand, most of management responsibilities in the large firms, such as Bureau of Crime and Delinquency, are assigned to lower level employees so that they can carry out the objectives of the firm. Management's main task in this public organization is to initiate strategies and control lower level employees how they set the strategies.

Atuahene-Gima (1996, 96) contends that management styles are not the same for small firms and large firms. For example, in small business the personality characteristics such as the need for achievement and the need for control, as well as abilities such as promoting ideas, are believed to be critical in leading a robust management style, while in large firms, management style is mostly impersonal. Thus, in large firm, management plays a different role than it plays in the small firm. Similarly, because of their unique traits and characteristics and other attributes that managers in large organizations consider important are likely to be different from those small business executives. This was evident in my research as I found that management in the Bureau of Crime and Delinquency was less concerned about personally taking any responsibilities and changes, while the management in the local store was open to new ideas and usually spent time with other employees.

The other difference that lies in management style in small business and large business are based on the ways these businesses look at their competition: Management in small business can usually take quick actions to meet pressures and problems facing their businesses. On the other hand, management in large business is more confined in setting their internal strategies and structures.

With respect to organizational structure, small firms are more flexible and informal than the large firms (Burns and Stalker, 1961, 56). As in researching the Bureau of Crime and Delinquency and local small firm, I found that Bureau of Crime and Delinquency was vertically structured with a rigid pattern of roles and responsibilities, while the local small stores had an informal structure with roles and responsibilities.

As we found that it was very difficult to bring changes in Bureau of Crime and Delinquency, while in small firm management pushed for change and often carried several changes in its business procedures and methods. This often is attributed to the newness of the small organization and its need to respond to rapidly changing situations and conditions. Large firms have predefined sets of duties, policies, and division of work, while in small firms most of the contacts are personal and usually employees perform several tasks together. In other words, large firms are bureaucratic and management style is quite formal and impersonal, while small firms are flexible and management style is much more open and informal (Burns and Stalker, 1961, 46).

Use of Technology and Information Systems

The purchase of new technology and information systems was extensive in the Bureau of Crime and Delinquency, while in small local store, there was only one computer for handling customer orders and payments. The main reason for it can be based on the amount of money that these company had. For example, in large firms most of tasks are automated and the main purpose of technology is for the efficiency. In small firm, on the other hand, there is less amount of money to be spent on technology and information systems, therefore, small firms often try to meet the effectiveness criteria (Cohen and Klepper, 1992, 10).

Looking at the two organizations, I also found that Bureau of Crime and Delinquency made extensive use of information technology for e-mailing and contacting other members, while the local small store mostly used phone systems to contact the people.

A also observed that Bureau of Crime and Delinquency had a department that made most of the decisions on information systems for the company, while in small store, there was not any employee who decided on the purchasing of the computer systems.

Quality Management and Compliance Procedures

Quality management practices vary in large and small firms. As during my research I found that small firm did not take adequate preparation on quality management and compliance procedures, while the Bureau of Crime and Delinquency followed systematic procedures of compliance and quality management. The reasons for that are that the small firms do not possess enough resources, therefore, small businesses are likely to lag far behind the big companies in this respect. On the other hand, large companies have sufficient amount of resources for hiring people who deal with quality control and compliance issues.

The other reason for large companies to take an active role in quality management and compliance procedures is that these companies have a larger business scope in which that become liable to public scrutiny and state government agencies. Therefore, it becomes important for large businesses that management should pay close attention to quality programs and comply with government regulations to cut administrative costs of the operations. On the other hand, small firms compete locally, so they are not inclined fully to follow the significance of the quality management issues and compliance procedures.

Another reason that small firms lag in quality management and compliance procedures is that in small business, there is no set understanding in measuring the effectiveness of the quality programs. Since many of the quality management compliance procedures are based on the research for the large firms, therefore the criteria of such measures as the quality of the products and services, and costs of the goods to compare performance cannot be used. Besides, these criteria among small firms cannot be compared, because very few of the firms had already calculated their quality costs, and even those few had used different variables in their calculations (Buttner and Gryskiewicz, 1993, 24)

As for example, when I asked the management at the local small store, the management was not sure the objective of the quality management and compliance procedures. This is also evident in number of recent research studies in which researchers has found that for small firms, management attempts to add several number of variables in quality management. Some of these variables are sales, absenteeism, training, rate of customer complaints, labor productivity, production equipment productivity, ratio of defective products to total output, unit product cost, stock volume, profits and quality culture. While in paper this looks good, but small firms lack sufficient resources as to measure all of the above variables ((Buttner and Gryskiewicz, 1993, 25).

Another reason is that the small firm lacks a quality culture. Managers also point out the lack of resources available to them to develop a quality culture. The scarcest resource for these small firms is time. In order to implement the quality program properly, some members of staff have to leave their normal activities to concentrate on the program, and this causes considerable difficulties in…

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