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#Small vs big business professional#

Also, big businesses are more difficult to manage because they are often geographically spread across time zones, cultures and working styles. Large scale operations can mean that a firm encounters diseconomies of scale due to problems of control, coordination and communication. Managers, who run large companies, may want to expand since they will face lower unit costs as their organizations grow, hence higher profitability.

Difficulties with cost control. Large businesses are rather impossible to be managed and controlled only by their owners.

Because there is divorce between ownership and control – meaning that it is directors and managers, but not the owners who make important decisions – there are more opportunities for stakeholder conflict. In addition, it is more difficult to get to know each worker and many employees suffer from working for a large firm without ‘human-friendly’ atmosphere. Also, employees do not perform multiple roles but specialize only in a very small area of expertise. Many employees may not be well-motivated by the overload of procedures to follow every day. Corporate culture in large businesses is often formal.

Formalized and stiff corporate culture.

And thanks to that diversification, there are lower risks of negative impact of unpredictable changes in the external business environment.ĭisadvantages of being a small company include: Big firms are more likely to be able to afford Research and Development (R&D) into new products and processes.

Less risky. Large businesses are very well-diversified in several markets, countries and products, so that risks are spread.

Big companies such as, one of world’s largest online retailers that sells a huge range of consumer products on the Internet, can offer more choices comparing to a small local retail store. longer opening hours or interest-free credit instalments.

Greater choice for customers. Large businesses can offer more value-added services to their customers as they have ample resources to provide a wider range of services, e.g.

They may also be able to set lower prices than other firms on the market. Larger firms are also able to offer customers lower prices or greater price discounts through their ability to enjoy economies of scale, therefore achieve better profitability.

Many opportunities for economies of scale. Large businesses can benefit from the cost reductions associated with large-scale production.

Better branding leads to higher customer loyalty as customers are likely to remain loyal to the business and its products due to the perceived trust and value for money. Many firms are large and established enough to have global brand recognition and better brand reputation as they have positive brand image created through advertising to the mass market. High market powers. Large businesses have higher brand recognition and customers are more familiar with the brand which allows large firms to sell to a wider market.

#Small vs big business professional#

It is because large businesses can afford to employ specialist professional managers to run each business function. Better managed. The owners (shareholders) of big firms do not have to carry a large burden of daily responsibilities.It is also easier to raise capital at lower interest as big businesses borrow huge amounts of money at once. Easier to raise finance. Large businesses usually have better access to capital as they have access to several different sources of finance such as issuing debentures, sale of shares to the general public on the stock exchange or access to long-term bank loans.

Advantages of large businessesĪdvantages of being a large company include: According to the EU classification of business size, a large business hires over 250 employees, generates over EUR€50,000,000 in sales and owns capital employed over EUR€34,000,000. Large firms are usually huge multinational corporations employing hundreds of thousands of people in many different countries around the world such as McDonald’s or Walmart. FINAL ACCOUNTS – PROFIT AND LOSS ACCOUNTĭespite the benefits of being a small business, many large businesses are extremely successful and thrive for several important reasons.DIFFERENT TYPES OF BUSINESS ORGANIZATIONS.