The management of a small business is really the same as the management of a large one. Discuss with examples.
The management of a small business is really the same as the management of a large one. Discuss with examples.
Management is extremely important in any type of an organisation whether small, medium or large. By achieving good and effective management it is therefore possible for an organisation to meet its objectives and become well established. In order to differentiate between the management of a small business and the management of a large business many issues need to be taken in to consideration such as the role of a manager, leadership skill, communication flow, different styles of managements, organisation's structure, cultures and so on. This essay will explore the factors, which affect a manager illustrating whether or not the management of a small business is really the same as the management of a large one.
The success of a business will rely largely on the managerial skills of the owner or management. Management consists of five main factors; planning, organizing, staffing, directing and controlling.1 Firstly a manager must set goals, sub goals and strategies for the business irrespective of the size. Secondly one must organize, this may include deciding on tasks, delegating tasks to employees and purchasing products etc. Managers need to employ, train, promote, demote and deploy his/her employees; therefore one must also consider individual differences. An important function in management is directing your employees; supervising and motivating them, in the aim of achieving a high standard of performance, reducing costs and the achievement of organisational goals. Lastly a manager needs to evaluate and analyse the work being done by the employees, measuring whether or not the set goals have been met in order to be in control. "These are necessary for success in an increasingly complex and volatile business environment."2
There have been different developments in the theory of management, ranging from classical theorist like Henri Fayol and F W Taylor; both had laid the foundations about organisation of people at work and work itself. On the other hand Max Weber had developed a new theory called bureaucracy, based on authority structures and hierarchy in organisations. However these theorists are dated as they evolved around 1910, and a modern approach to management had developed. In the past organisation and effectiveness had been the main emphasis in management, whereas modern approaches to management is concerned with more than just efficiency, including developing strategic missions, promoting total quality management and incorporating organisational values and culture and so on.
The business organisations concerning this essay range in size from a one-man business or sole trader through to large public or private limited companies employing staff in a variety of locations. Sole traders or owner managers do not see the great importance of planning in the long run because of the small number of people involved in the business. However in a large business organisation planning is essential for the potential success of a company. The main directors make up the board of directors acting as an executive management group planning for the success of the company, making profit rather than losses.
When people think of leadership, they assume it's being "the first, the best and the most powerful."3 However being a leader can also be interpreted as setting a direction for people to follow. Leadership skills are quite important nowadays whether you're a manager or an employee of a lower level. Many people recognize the role of a manager as being associated with leadership, there is some truth in this, as managers need to be assertive, influence others, set goals and solve problems. On the other hand many suggest that leaders and managers are not equal positions, involving separate and distinct behaviours and activities, for example leadership comes from the heart and management comes from the head4 as stated by Capo ski.
Managers and leaders have different traits, the former directs their energies towards goals, resources, determining problems which are to be solved, and organisation structure, whereas the latter direct themselves to guiding people towards practical solutions. Managers often use their knowledge and experience to finish tasks and solve problems whereas leaders often jump to conclusions without any facts and figures. An opposing view states that leadership is just one of the aspects of what a manager does5. Whichever type of style of leadership adopted, it is needed in both small and large businesses, as it is linked with behaviour ...
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Managers and leaders have different traits, the former directs their energies towards goals, resources, determining problems which are to be solved, and organisation structure, whereas the latter direct themselves to guiding people towards practical solutions. Managers often use their knowledge and experience to finish tasks and solve problems whereas leaders often jump to conclusions without any facts and figures. An opposing view states that leadership is just one of the aspects of what a manager does5. Whichever type of style of leadership adopted, it is needed in both small and large businesses, as it is linked with behaviour and is a major determinant of group cohesiveness.
Communication in any business organisation has great importance although very problematic; it is the exchange of information through swapping coded messages.6 Whatever the structure of the organisation, it has to ensure that information can flow in all directions; vertical and horizontal, communication is a fundamental skill without which survival and success would be impossible. It is surprising how often businesses fail to nurture communication. Employees, shareholders, customers, suppliers and advisors require effective communication for an organisation to succeed. Successful organisations need good upwards and downwards communication, which is difficult to achieve in large companies. The downward communication is achieved by the management chain including plans, information and instructions whereas the work group meetings consisting of complaint, comments, suggestions and ideas achieve the upward communication. There is no one network which can be effective for a range of problems, a successful manager is one who can adopt the appropriate communication network for a given task or problem, such networks can vary from the wheel, to the circle or chain network etc. With larger businesses it is harder for the communication networks to function properly due to the scale of people, and there may be a great deal of uncertainty as the grapevine is a very popular means of communication. In large business organisations the communication may not flow as the sender and receiver may have different vocabularies therefore not fully understanding each other. Other issues for the lack of communication flow are the cultural differences between management and the work force, causing misunderstandings and backlog in work and pressures of time not allowing for effective performance.
A manager's behaviour and their style of management have great influence on the way in which employees perform. There is no one particular style of management for a small business and another for a large business. Blake and Mouton have stated that managers may switch from different styles of management or a combination of styles.7 However it was also found that managers have one dominant style which is used more than the other styles unless in any particular situation their styles doesn't work they switch to their backup style. Team management is the ideal style for a small and large business organisation, these managers have great concern for both the people and production, motivating employees to reach their highest level of performance and understanding the need for change, however this may be the ideal management style it is quite hard to achieve all this in a large business. In practice this type of management works better in small businesses as it has been proven that smaller businesses are more effective than larger companies by about 25 percent by training8. Authority and obedience management is a style which is more likely to be seen in large business organisations, managers are greatly concerned with production and not so much with the people desiring tight control to get tasks done efficiently and at high level of performance. There are many issues, which can influence the type of management styles, for example a manager may be inexperienced and therefore adopting either a very lenient or rigid style. A managers personal values and beliefs concerning the way employees should be treated, and the way tasks should be carried out will also have an effect on the managerial style.
Organisational structure is a means of improving organisational performance. A more direct and simple structure is more efficient allowing less change and confusion. It is more effective to have a flatter organisation structure because all the additional levels distorts objectives, increases stress, tasks and goals are easily misunderstood etc. The flatter organisation structure is in great demand as it encourages a more participative style of management, more involvement of staff and the development of IT. Flatter structures are reducing costs and improving the communication skills between the top and bottom of the hierarchical pyramid, as there are fewer levels therefore the communication can flow easily. However with such structures the mangers workload is increased as the middle management and supervisors are removed. Such a structure can be seen in restaurants, hairdressers, corner shops etc. The owner manager deals with all the advertising, pricing, promotion, hiring and firing employees etc.
Another type of a structure is the scalar chain; there are different levels, a more hierarchical chain of command. In this type of a structure everyone knows his/her position, what and whom he/she need to report to. The structure represents authority and responsibility in and organisation. In a company such as Amazon.com it has been recognized that their organisational structure is more hierarchical, with a number of corporate officers. When they started in 1995 they were a small dot-com now seven years later Amazon.com is the leading online shopping site, however this would not have been possible without effective management. Amazon.com has a scalar chain structure with senior vice presidents in many departments such as, human resources, worldwide operations and customer service, retail and marketing etc. In small businesses a flat structure seems to be more effective as there is a smaller number of employees, whereas the large businesses need the scalar chain for there are many departments such as marketing, accounting, finance, product development etc therefore each department would have a manager and a team.
Many issues can affect the behaviour and actions of a manager, for example organisational culture. Organisational culture is intangible; it is not something that can be touch, rather a description of the working environment and the organisation. Charles Handy differentiated between four different types of cultures; role culture, task culture, power culture and person culture.9 Role culture is significant of the traditional hierarchical structure, being based around the job rather than the people, much the same as the authority and obedience management style. Person culture may be found in small areas of large companies, this culture is of educated articulate persons such as solicitors, consultants etc focusing solely on the individual. Task culture is mostly centred around the tasks performed therefore power and respect comes form the knowledge rather than rank and position. Power is therefore influenced by various positions depending upon tasks performed. Power culture relies its strength on a central figure; the communication skills are relatively good as it is considered like a spider web.10 Large business organisations tend to perceive a role culture, as it illustrates a rigid culture, which corresponds to the scalar chain structure. Power cultures are usually found in small businesses, which grow into large businesses, the culture of the organisation usually changes with its size.
The management of a small business and the management of a large business have some overlapping factors, however the stronger factors are very different. Small businesses have better communication skills mainly because of the scale of people in the organisation therefore less information is distorted. In larger business organisations there is a lack of good communication due to factors like the hierarchical structure. However managers are currently noticing the importance of good staff and management relationships, as it enhances the performance of employees when they feel more at ease with an organisation.
Many events can happen which can affect a business, however large business organisations often employ full time risk managers to identify possible exposures to loss and liability. Such a manager then would follow another route to overcome problems and protect the firm from accidental and preventable loss etc. However most small businesses cannot afford to employ a full time or even part time risk manager adding another task for the owner manager or sole trader to take on. There is a great amount of pressure in the managers of a small business, having the added pressure of no risk manager, solicitors in the firm, accountants etc therefore the owner of a small business needs to outsource a lot more than the managers of a large business, which can be costly. The pressures on senior management in a large firm is not as great as the small companies because there is a possibility to delegate work to the members of staff below.
Most large companies like Vodafone have a hierarchical structure. They tend to have presidents and senior managers etc which whom all have their department of expertise. Many of the larger organisations tend to be more formal such as, IBM however it is quite rare but there are a few informal organisations such as Apple Mackintosh, where the employees do not need to dress in suit and there is a more laissez-faire approach. This structure is very different to the structure of most small businesses in which there is a flatter chain of command. The less people there are in the business the more effective the management can be although the workload and pressure will increase.
The styles of management differ in a small and large company. Team management seems to be a style adopted by small organisations whereas the larger organisation tends to follow the authority and obedience style. This is can also be illustrated by managements planning. Small companies do not see the need to plan for the long term for example in 5 years time because they might not be in business by then, therefore their approach is more focused on day to day operations. However the managers of a large business organisation find it extremely important to plan, and are very focused on strategic planning. Managers in both small and large businesses need to have leadership skill, the need to direct employees in the right direction therefore the tasks are performed at very high standards. It can therefore be concluded that the management of a small business is not really the same as the management of a large business.
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