Small And Medium Enterprises And Larger Scale Businesses Commerce Essay

Sm altogether And Medium Enterprises And Larger Scale Businesses Commerce tasteFor this assignment I have done a lot of researches on the low-d have got and medium enterprise and doubler scale telephone circuites and sole trader. The first scruple on this assignment is distinguish between small and medium enterprise and pear-shaped scale stemmaes .Small and medium enterprise and large scale byplayes ar skillful and varies by their own factors. The U.S government defines the sizes of championshipes, such as the number of employees and number of revenues. Furtherto a greater extent, these enterprises be sized by employee size, features of small scale industries and characteristics argon successful small scale and medium scale vexation.The next question is interview a sole trader, identify the difficulties that he/she is facing and give suggestion on how to dominate the difficulties. A sole-trader or sole-proprietorship is a business that is owned (and usually ope ranged) by one person. It is the smallest form of business ownership and the easiest to start. For this question I learnt much close to a sole-trader. A sole trader a simplest form of business structure. It is also easy and inexpensive to maintain.SMALL AND metier ENTERPRISES ARE PLAYING A SIGNIFICANT ROLE IN OUR ECONOMY. DISTINGUISH BETWEEN SMALL AND MEDIUM ENTERPRISE AND LARGER SCALE BUSINESSES2.0 Small and Medium Enterprises and Larger scale Businesses2.1 comment of Small and Medium EnterprisesThe Small Business Administration (SBA) of US defines a small business as one which is independently owned and operated for profit and is not dominant in its field (Hughes, 2011). However in Malaysia, there is no common definition of small and medium enterprises (SMEs). Different agencies define SMEs based on their own criteria, usually benchmarking against annual sales turnover, and number of integral-time employees or sh areholders funds. In addition, present definitions focus mainly on SME s in the manufacturing sector.The following definitions are issued by National SME Development Council of MalaysiaPrimary AgricultureA small and medium enterprise in primary agriculture is an enterprise with full-time employees not exceeding 50 or annual sales turnover not exceeding RM5.0M.Manufacturing (including agro-based)A small and medium enterprise in manufacturing (including agro-based) is an enterprise with full employees not exceeding 150 or with annual sales turnover not exceeding RM25million.Services (including ICT)A small and medium enterprise in work is an enterprise with full-time employees of between 5 and 19 or with annual sales turnover of between RM200,000 and less than RM1.0million.The above definitions are and then divided into smaller entities, micro, small and medium. The following table summarizes the approved SME definitions based on number of full-time employeesSECTOR /SIZEPRIMARY AGRICULTUREMANUFACTURING (including agro-based) operate SECTOR(including ICT )MICROLess than 5 employeesLess than 5 employeesLess than 5 employeesSMALL5 19 employees5 50 employees5 19 employeesMEDIUM20 50 employees51 150 employees20 50 employeesSource National SME Development Council of MalaysiaThe table below summarises the approved SME definitions based on annual sales turnoverSECTOR /SIZEPRIMARY AGRICULTUREMANUFACTURING (including agro-based)SERVICES SECTOR(including ICT)MICROLess than RM200,000Less than RM250,000Less than RM200,000SMALLRM200,000 RM1.0millionRM250,000 RM10.0millionRM1.0million RM5.0millionMEDIUMRM1.0million RM5.0millionRM10.0million RM25millionRM1.0million RM5.0millionSource National SME Development Council of MalaysiaBank Negara Malaysia had conducted a number of case studies on successful SMEs in Malaysia to identify the key success factors of these SMEs. SMEs involved in the case study had been in operation for more than 10 years, and had been selected based on their financial performance and track record. The case studies demonstrated that although SMEs were from different industries, all the enterprises shared common critical success factors, namelySound management capability and integritysound business culture and entrepreneurial spirit discreet financial managementHigh quality harvest-tides and workGood programme for human resource developmentStrong support from financial institutions in ground of lending and advisory services andStrong marketing strategies, including good network with suppliers2.2 Definition of Large scale BusinessesLarge scale abide always be defined as a measurement (Hughes, 2011). Scale means a form of measurement and when it is referred to as large it means that you have a more than average amount on the measurement scale. Thus any industry that is large scale volition mean that products are produced at a amply volume. This in turn provides a higher capital.Large scale industry requires a huge amount of capital to be invested in the industry first. It lead provide many jobs for employees in order to offer a high output. This type of industry is found in places such as the USA, Germany, Japan, Russia, and Australia.All of these countries are big money makers and have large operations producing a variety of products. This is different from a small scale industry that does not require as a good deal capital or as many workers.Given these definitions, a large scale industry can be just about anything from plait to the auto trade. Wal-Mart for example is a company in a large scale industry as they offer plenty of jobs and products to the consumers of the world. Size will content when it comes to industry. Small companies employ about 60% of the work force in the USA due to the 30 million existing companies.Unfortunately, these companies have a cut back survival rate meaning that they usually run for basketball team to ten years and then end.2.3 Differences between a small and medium enterprise and large entitiesThere are many differences between a small and medium enterprise and large entities, namely speed of decision-making, attitude towards risk, allocation of resources, understanding of business models and management of business models, and differing definitions of innovation.Decision-Making ProcessLarge enterprises, in view of the different bureaucratic levels, will frequently require recollectiveer time to make decisions. This can be very frustrating especially when a decision needs to made immediately. Delay in decision-making may hinder the progress of the company. In this way, SMEs are better-off as more often than not, decisions can be made at the point of urgency. This helps the SMEs top grow more rapidly compared to a large-scaled enterprise.Attitude Towards put on the lineLarge-scale enterprises can afford to take a bigger risk in running the operations of their businesses. This is mainly due to the fact that their capital is bigger and there is buffer to absorb any uncertainties. Large size firm, such as Si me Darby and Petronas can afford to invest in foreign countries and earn much more net income compared to other SMEs. However, SMEs need to be wary of the negative consequences should their investments does not bring back the desired returns which may affect their operations in totality.Allocation of ResourcesIn small businesses, every ringgit counts. Resources can be scarce and are allotted based almost solely on whether they will throw out the bottom line. This bottom line focus may not be so distinct in a larger corporation. With more abundant resources at least in comparison to smaller companies people in large enterprises may be relatively free spenders.Understanding of Business ModelsA large enterprise understands the business models in a wider perspective as compared to SMEs. Large enterprises have the resources to conduct in-house instructs or sent their employees (especially management executives) to overseas countries to attend training programme. Such programmes woul d provide a bigger horizon to its employees who are then able to strategies their activities towards achieving the companys goals and missions. This normally lacks in SMEs.InnovationCompetition in the business purlieu is getting more violent with more and more business entering the market due to a more relax rules and regulations in setting up business entities. In order for a company to remain competitive and applicable in the industry, huge investments need to be made on the product or services. Consumers have the choice of choosing the goods in the market. Large enterprises have the capacity to investment in such innovations compared to SMEs. For example, recently Malaysian Airlines Systems (MAS) purchased new planes (A380 series) to remain relevant in the airline industries. SMEs will have limitation due its limited financial resources.2.4 ConclusionsEven though SMEs and large-scale enterprises have differing characteristics, both plays a pivotal role in Malaysias gross domes tics products (GDP). Both institutions provides employment opportunity, contribution in the form of taxes, corporate social responsibility activities and many more. No business had emerged in large entity automatically. Every business needs to start up from a small and medium entity before moving to a larger enterprise.BIBLIOGRAPHYDanks, S. Business Studies (1st edition), 2009, DP Publications, London, UKHughes, Pride Kapoor, Business Foundation (3rd edition), 2011, South-Western Cengace Learning, AustraliaMubarak Ishak, Structure of Business (2nd edition), 2008, S.S.Mubarak Bros (Pte) Ltd, SingaporeSusan H, Business Studies (3rd Edition), 2008), Longman Publication, Australiawww.bnm.gov.my/sme assessed on 19/7/2012www.sme.gov.my assessed on 19/7/2012APPENDIX 1Members of the National SME Development Council of MalaysiaI. The Prime take care (Chairman)II. Minister of International Trade and IndustryIII. Minister of Domestic Trade and Consumer AffairsIV. Minister of Entrepreneur an d cooperative DevelopmentV. Minister of Agriculture and Agro-Based IndustriesVI. Minister of Human ResourceVII. Minister of Finance IIVIII. Minister of Energy, Water and CommunicationsIX. Minister of Plantation Industries and CommoditiesX. Minister of Science, Technology and InnovationsXI. Minister of TourismXII. Minister of Rural and Regional DevelopmentXIII. Minister of EducationXIV. Minister of Higher EducationXV. Minister of Housing and local anaesthetic GovernmentXVI. Minister in The Prime Ministers DepartmentXVII. Governor of Bank Negara MalaysiaAPPENDIX 2CLASSIFICATION OF ECONOMIC ACTIVITIES ACROSS SECTORSI. Primary Agriculture Agriculture, hunt down and Related Service Activities Forestry, Logging and Related Service Activities Fishing, Operation of Fish Hatcheries and Fish Farms Service Activities serial to Fishingii. Manufacturing (including Agro-Based) Manufacture of food products and beverages Manufacture of baccy products Manufacture of textiles Manufacture of weari ng apparel Dressing and dyeing of fur Tanning and dressing of leather Manufacture of luggage, handbags, saddlery, harness andfootwear Manufacture of woods and products of wood and cork, overleap furniture Manufacture of articles ofstraw and plaiting materials Manufacture of paper and paper products Publishing, printing and reproduction of recorded media Manufacture of coke, refined petroleum products and thermonuclear fuel Manufacture of chemicals and chemical products Manufacture of rubber and plastic products Manufacture of other non- admixturelic mineral products Manufacture of basic metals Manufacture of fabricated metal products, except machinery and equipment Manufacture of machinery and equipment n.e.c. Manufacture of government agency, accounting and computing machinery Manufacture of electrical machinery and apparatus n.e.c. Manufacture of radio, television and communication equipment and apparatus Manufacture of medical, precision and optical instruments, watches and clock Manufacture of motor vehicles, trailers and semi-trailers Manufacture of other transport equipment Manufacture of furniture Manufacturing n.e.c. recycleiii. Manufacturing Related Services (based on 5-digit MSIC 2000 codes) 73101 seek experimental development services on physical sciences 73102 Research experimental development services on chemistry and biology 73103 Research experimental development services on plan and technology 73104 Research experimental development services on agricultural sciences 73105 Research experimental development services on medical sciences and pharmacy 73109 Research experimental development services on other natural sciences 60212 Factory bus services 60230 pack transport by road 60300 Transport via pipelines 61102 Freight transportation by sea-going coastal water vessels 61202 Inland water freight transport services 62109 another(prenominal) scheduled air transport (e.g. helicopter services) n.e.c. 62209 Other non-scheduled air tra nsport n.e.c. 63011 Stevedoring services 63020 Storage and warehousing services 63091 Activities of freight forwarding / forwarding agencies 63099 Activities of other transport agencies n.e.c. 74950 Packaging services on a fee or contract basis 74300 Advertising 74130 Market research and public opinion polling 74142 General management consultancy services 74143 Public relations consultancy services 74149 Other business consultancy and management consultancy services n.e.c. 92201 Printed news supply services 92209 Other news agency services 22190 Other publishing 71230 Rental of office machinery and equipment (including computers) 71302 Rental of furniture 90003 Industrial waste collection and disposal services 37101 Recycling of tin 37109 Recycling of other metal waste and scrap 37201 Recycling of textile fiber 37202 Recycling of rubber 37209 Recycling of non-metal waste and scrap 74212 Engineering consultancy services 27310 Casting of iron steel 27320 Casting of non-ferrous metal 28910 Forging, pressing, stamping and roll-forming metal powder metallurgy 28920 Treatment and coating of metals, general mechanical engineering on a fee orcontract basis 28999 Manufacture of other fabricated metal products n.e.c. 29220 Manufacture of machine tools 74220 Technical testing and analysisiv. Services Electricity, Gas and Water Supply Wholesale and Retail Trade Repair of locomote Vehicles, Motorcycles and Personal andHousehold Goods Hotels and Restaurants Transport, Storage and Communications Financial Intermediation Real Estate, Renting and Business Activities Education Health and social Work Other Community, Social and Personal Service Activitiesv. Mining and Quarrying Mining of Coal and Lignite Extraction of Peat Extraction of Crude Oil and Natural Gas Service Activities Incidental to Crude Oil and NaturalGas Extraction Excluding Surveying Mining of Uranium and Thorium Ores Mining of Metal Ores Other Mining Quarryingvi. twisting ConstructionInterview a sole trader , identify the difficulties that he/she is facing and give suggestion on how to overcome the difficulties.3.0 Sole-TraderA sole-trader or sole-proprietorship is a business that is owned (and usually operated) by one person (Hughes, 2011). It is the smallest form of business ownership and the easiest to start. Looking back at the history of business, some of the giant players in todays market, for example Walmart and Procter Gamble, started their operations as a small entity, i.e. sole-traders.This type of business organization is most commonly established in the construction, retailing, hairdressing, car-servicing and catering trades (Stimpson, 2008).3.1 About a Sole TraderIn order to fulfill the requirements of this assignment, I had interviewed Mr Raman, the proprietor of Raman Supermarket in Cheras, Kuala Lumpur.Mr Raman, 48, had started to venture into business in 2000. Initially, he was operating a assorted shop in front of his house at Jalan Loke Yew. However, as business gre w, he decided to rent the current shoplot and expanded his business into a supermarket. He sells variety of groceries, which includes fish, vegetables, and other daily consumption goods.He is being assisted by his wife and two Indonesian workers to run the daily chores. His business operation is from 6.30 am to 11.00 pm.3.2 Problems set about By a Sole-TraderThe disadvantages of a sole-trader stem from the fact that these businesses are owned and often managed by one person (Hughes, 2011). Mr Raman had faced similar problems in running his business.Limited capital is the main issue faced by Mr Raman. Banks, suppliers, and other lenders are not willing to finance their business, mainly due to its business entity and low confidence on their repayment capabilities. Working capital is important for daily business operations. Non-granting of credit facilities by suppliers hampers the idea of Mr Raman in running his business in a larger scale. Tight cash flow leads to set about stocks a nd order-taking. Company is not able to earn a good discount rate from the suppliers.Continuity of the supermarket business or succession plan is another problem faced by Mr Raman. His three children are not interested in act his supermarket business. He is worried that the business will cease to exist should he give-up his business when he is old enough to retire.Unlimited liability is perhaps the biggest problems faced by Mr Raman. collect to the nature of the liability, Mr Raman faces the consequences of losing even his private properties should he fails in rejuvenating the business entity. This may lead to him being declared a bankrupt should his properties are insufficient to settle the debts. He can be sued either by the bankers or his suppliers. This is one of the worst disadvantages faced by sole-traders ,such as Mr Raman.Mr Raman also faces difficulties in getting workers for his daily operations. Locals are not willing to accept a low salary as compared to foreigners. Ho wever, foreigners have other social and cultural problems. Due to staff shortage, customer service is being compromised. Once he had a bad experience when one of his foreign workers ran off with RM800-00, being the days business proceeds. Currently, he is being assisted by his wife on a part-time basis. This makes it difficult for him to take leave or go for a long vacation as this will jeopardise his business proceeds and may also lead to losing his loyal customers. Mr Raman confessed that the last time his family went for a vacation was five years ago.Competition from bigger retailers is another major problem being faced by Mr Raman. The superstores are able to sell at a lower price due to their bulk purchase and higher discounts offered by the suppliers. Usage of credit / debit cards, which is not viable in Mr Ramans case, is another factor that leads the consumers to larger superstores, for example Jusco, MidValley and Giant, to name a few. Mr Raman is not able to offer similar service due to its limited and tight cash flow.3.3 Suggestions on how to overcome the difficultiesIn order to solve Mr Ramans problems, I would therefore propose to him to convert his sole-tradership into a partnership. The US Uniform Partnership Act defines a partnership as a voluntary association of two or more persons to act as co-owners of the business for profit (Hughes, 2011). Regardless of the number of people involved, a partnership often represents a pooling of special managerial skills and talents.In order to mitigate the disadvantage of limited capital, Mr Raman can request his family members or friends to become his partner. This additional capital will assists Mr Raman to scale up his business activities for a better profit. Banks and suppliers will be willing to provide additional financing as they will be more comfortable and confident of Mr Ramans repayment capability.Each partner is responsible for the well-being of the business entity. The pride of managing the sup ermarket and solving the daily operational problems will enhance the partners want to work harder to reap more business proceeds. Customers can be better served and eventually through word of mouth on the excellent services rendered at Ramans Supermarket will help to boost his business.Currently, Mr Raman is the only one actively running the daily operations of his supermarket. Partners often have complementary skills Mr Raman could manipulate of his partners specialization to progress enhance its services. Furthermore, should there be any problems or issues, the partners can discuss and arrive at a better decision synergy effect.The sharing of profits would also motivate the partners to work harder. Higher business turnover leads to higher profit-sharing among the partners. However, Mr Raman should document the methods of profit-sharing at the initial stage of the partnership deeds or agreements.At the same time, the liabilities are also shared by each of the partners and not b y the sole-trader alone. Losses are borne by each of the partners based on their shares.The level-headed requirements of setting up a partnership are minimal as compared to corporate entities. As long as the business is registered legally, it is good to go. However, Mr Raman should create his own Partnership Deeds in order to avoid any problems in the future.