Management and Marketing in Small and Medium Enterprise - Essay Example

Management and Marketing in Small and medium Enterprise: A Case Study of WB Engineering limited (2006) INTRODUCTION The flexible nature of management of small and medium scale firm has made the management style in this structure of organization to be difficult. The structure and the size of resources available to small and medium scale organizations these have jointly constituted a factor that makes the management styles in small firms to be at variance with what is obtainable in large-scale organizations. In the view of Slatter (1992:159) cited Collins & Ram, 2003, “managing fast growth in entrepreneurial firms is one of the most difficult challenges that exists”. Owners often struggle to balance the flexibility required to keep pace with customers demands, with the stability needed to provide employees with a sense of continuity and security. Hence management essentially comprises a careful balancing act between strong leadership and decentralized task-oriented management; and processes involving organizational cohesion and those promoting individual responsibility (Collins & Ram, 2003). As a small and medium scaled firm expands and begin to transform into a large sized organization there is the need for such transformation to be commensurate to changes in management style that hitherto had being practiced; this need be done so that a lacuna would not be created and a lost of touch and proper control of the expanding resources. There is also the need to be awoken to current trend in our everyday dynamic business environment. The non-adherence to these little but significant facts has rendered many well to do but poorly managed organizations to die a premature death. This write up would be looking at those factors that had imposed the difficulty our case study (WB Engineering Limited) is passing through. And solutions on how to curtail these would be proffered. CONCEPTUALIZATION AND CHARACTERISTICS OF SMALL AND MEDIUM ORGANIZATION The term ‘small’ is a relative one it is not absolute. The line separating small from large is in a continuum and an issue that is inevitably arbitrary. According to Odaka & Sawai (1999), “small business is a generic concept. Being the antonym of big business, its social significance becomes clearer when placed in the historical context where the latter first appeared in the world economy”. Bolton 1971, cited in Bannock (2005), he identified three characteristics in its economic definitions of a small firm: A small market share, that is not large enough to influence national price or qualities (even though a village shop may be the only one, its prices cannot get too far out of line from those of major national retailers in the nearest town, even though people will pay something for local convenience) Managed in a personalized way: the owner actively participates in all aspects of the business unlike in a large firm where the shareholders and management are usually almost entirely separate. Independence or the exercise of ultimate management responsibility. A small subsidiary of a large firm, which has a head office to report to, does not share these characteristics. The above characteristics are usually identified with vast majority of business, which are inherently small in size. The study of small firms revolves around it five major features which include {1} Existence {2} Survival. {3} Success {4} Take-off {5} Resource maturity. And these are regarded as the five stages in small business growth (Churchill & Lewis, 1983). These five stages go a long way to influence and determine the success that trails the small business historical growth. ADDUCED REASONS LEADING TO THE FALL OF WB ENGINNEERING LIMITED Transition from a small or medium size of business organization to a large entity, it requires the need to restructure the organizational structure and also the organizational strategy should be enhanced to be in tune with the new status the organization is attaining. Managing a fast growing entrepreneurial firm as that of WB Engineering is a onerous task that requires adequate managerial dexterity in balancing the flexibility required to keep pace with customer demands, alongside with the stability needed to provide employees with a sense of continuity and security in the transitional organization. One w ay of doing this is through a strong leadership in the organization that provides a key role in overcoming the confusion that usually accompanies growth and is necessary to build and maintain the cohesiveness of the organization. According to Collins & Ram (2003), “management essentially comprises a careful balancing act between strong leadership and decentralized task- oriented management; and processes involving organizational cohesion and those promoting individual responsibility”. Looking at the case study, WB Engineering Limited had missed the mark in a cohesive management of its expanding business and the leadership style adopted had being one of a centralized and undemocratic. The WB Engineering organization started well as a small entrepreneurial firm that adequately managed its resources and put in that individual- centralized managerial skill required at this stage of the business. But as the organization expands and transforms into a conglomerate status; integrating on a vertical level and diversification of resources and operations level, it then requires that at this developmental and transitional level in the organization that a cohesive maintenance of the organization is adopted through a strong leadership that exhibit a decentralized and democratic leadership style. The focus here is that WB Engineering Limited failed to give room for experts trained in specific managerial skills to assist in managing the growth of the organization. This became visible when Adrian moved to Spain, Gary felt totally abandoned and helpless. Assuming there is a decentralized structure in place, the absence of Adrain would not have constituted a big effect. His absence would have being adequately covered. It thus invariably signifies that the management has being one that is centralized even in this assuming state of the expansion of the organization. This had helped in the collapse of the organization. The no cohesive management of the organization again is reflected in the disconnected and autonomous management of the specialised units within the company as a group of satellites. The uncoordinated nature of the management of the organization shows the lapses in management style; which is another factor that has contributed to the fall in WB Engineering Limited. The lapses in managerial style adopted by Gary and Adrain is the lack of consultation with specialist before embarking on projects and also the lack of proper forecasting and research before venturing into a new business environment. Though, the WB Engineering Limited spent a whooping sum (2million pounds) in consulting professional and legal fees, this was done after the deal has being signed and as a way of restructuring the organization, after the acquisition of ESR, to be floated as a public organization. Assuming a little part of the sum had being spent in managerial consultancy and proper forecasting and research work, prior to the time the deal of acquiring ESR, this would have enable WB Engineering Limited to foresee the possibility of the acquisition as a dead trap, and an alternative measure would have being taking to avert the impending consequences. It is seen that the management style of the WB Engineering Limited had failed to grow out of its old shell and imbibe current management techniques and adopting strategic planning for the transitional organization. As it is a noticeable fact, management style in small firms have been more on operational plan than strategic plan. While strategic plan is conceived as “a written long-range plan, which includes both a corporate mission statement and a statement of organizational objectives operating planning on the other hand is defined as the setting of short-term objectives for specific functional areas such as finance, marketing, and personnel” (Shrader, et al 1989). A strategic planning needs adequate forecasting and researching. The embarking on projects without proper forecasting and re searching on consequences and building alternatives plan had being the waterloo of WB Engineering Limited when it acquired ESR. According to Orpen, “strategic planning benefits small firms by causing them to explore new alternatives for increasing sales and improving their competitive advantages (ibid). The management of WB Engineering Limited failed to recognize the significance of business environment in influencing the outcome of business operation. The preference for racing car in the UK market is different from what is obtainable in the US market. First impression matters a lot. The first introduced model of racing car in ESR by WB Engineering Limited, with a lesser quality in comparison with its other produce had beclouded the mind of prospecting customer, even when a winning model was reengineered by the company best engineering hands; little was done to safeguard the already battered image of the immerging firm (WBE-ESR organization) in US. Another factor that had contributed to the fall of WB Engineering Limited is the lack of concentrating all its resources directly at the operation it is having an upper hand. The organization had no specialized operation area; it is thus becoming Jack of all trade and master of none. Since the organization had cut an ace for itself in technical expertise and project engineering skill to mainstream automotive market, it ought to have concentrated its resources in consolidating its operation around this area, rather than dabbling into other areas like owning a car racing team, and other project that is unrelated to it core area of operation. Concentrating and being specialized in a function makes the organization the master in such operation, hence competitive advantage over its rivals, even in this modern dynamic business world. From the given extract of WB Engineering Limited historical antecedents, it is observed that the organization ha a poor human relationship with its workers. They are not adequately informed and carried along in the organization scheme of operation. This is reflected where senior employees of the organization began to question the strategic direction of the organization. This shows that initially the senior employees were not partakers to the strategic planning. This also goes back to support the centralized and non consultative pattern which the management of the organization operates. The non involvement of workers especially the senior workers in the organization strategy planning, this had given them no sense of belonging in the organization, hence the lack of zeal to pursue the organizations objectives and goals. According to Marlow & Patton (1993), “the effective management of employees is also emerging as a key variable in the survival of mall firms”. The management of workers and non-consultation attitude of the management had contributed to the poor relationship of human resource in the organization with the management. CHANGES TO BE DONE IN ORDER TO IMPROVE THE ORGANIZATION EFFECTIVENESS The WB Engineering Limited need to adopt changes in ways it operates and the organizational structure for it to improve on its effectiveness. The under listed are ways the organization can achieve its effectiveness. First, there is a need that the organization restructures its management structure, which hitherto had been a centralized and undemocratic one. A decentralized organizational structure permits room for participation and workers contributing their innovative ideas in ways that would spur the organization ahead and make it compete vigorously with its rivals and attaining greater customer satisfaction. Thus, there is the need that the management of WB Engineering is decentralized, the strategic planning of the organization should not be left to only Adrain and Gary; workers involvement would go a long way to effect a positive change in the organization. Also, the need to adopt a formal structure in the organization would also aid in bringing an effective management structure where each worker knows who to report to and the responsibility expected of him. There is also the need for the organization to build a more beneficial relationship between the organization’s human resource and the management. Since the WB Engineering Limited is becoming vast in its operations, it should imbibe those strategic operations adopted by large organization; thus there is the need to carry out a strategic human resource management. According to Bacon et al (1996), cited in Wagar (1998), “small business managers are increasingly aware of new management ideas, and a number of organizations have implemented initiatives traditionally identified with large firm”. Thus the strategic human resource management has to do with the organization using its human resource in jointly drawing out strategies on which the organization would operate on. In modern times” firms were most likely to report sharing business information with employees and rapid change, keeping employees informed is important” (Wagar, 1998). The WB Engineering Limited should do more to incorporate more effective forecasting and consultative research prior to embarking on projects. This would not only safe the organization from engaging in wrong business and project deals, but also enable it know how to manage its resources in the most rewarding way. There is also the need for a well coordinated chain of the organization’s satellites businesses. This should be synchronized toward achieving same goal. The different group of satellites and other operational areas of the WB Engineering conglomerate should be coordinated in a fashion to jointly work towards achieving the goal of the organization. As earlier stated, the organization should concentrate its resources in the area of technical expertise and project engineering which over the years had being its major profit maximizing venture. It is also suggested that the acquired ESR in U.S. since this has being the waterloo and the immediate cause of the fall of WE Engineering Limited; this should be made to enter into a strategic alliance with other thriving organization in the United States. Instead of a full merger, the organization resources and managerial know-how can form an alliance with other effective organization in strategizing a way of moving the organization through a symbiotic relationship. This will give the organization the ability to take advantage of the environment in which it operates. Lastly, it is suggested that in this ever dynamic contemporary business world, the organization should follow the trend of the time and adapt to modern management techniques; such as strategic human resource management, Total Quality management (TQM), having competitive advantage through product differentiation. When these are adopted it would give the organization an edge over its rival and make the WB Engineering Limited regain its lost glory in the race car construction industry. REFRENCES Bannock, Graham (2005), The Economic and Management of Small Business: An International Perspective. New York: Routledge Publisher. Collins, L. & Ram, M. (2003), “Managing the Entrepreneurial Firm” Stream 9: Critical realist in Perspectives on Entrepreneurial Organization and Discourses. June http://www.mngt.waikato.ac.nz/ejrot/cmsconfrence/2003/proceedings/criticalrealist/collins.pdf (06/03/06) Neil C Churchhill and Lewis, V. L. (1983), the Five Stages of Small business Growth. Harvard Business Review, 61, 2-11 Shrader, C.B. et al (1989), “Strategic and Operational Planning, Uncertainty and Performance in Small Firms” in Journal of Small Business Management Vol. 27, No. 4 Odaka, K. & Sawai, M. (1999), Small Firms, Large Concerns, The development of Small Business in Comparative Perspective. Oxford: Oxford University Press. P1. Wagar, Terry H. 91998), “Determinants of Human Resource management Practices in Small Firms: Some evidences from Atlantic Canada” in Journal of Small Business Management Vol.36, No.2. Read More