management organisation exam
AA-
Managementofsmallandmediumsizedentrerprises2020.PP.pptx
MANAGEMENT OF ORGANIZATIONS management of small and medium sized firms
Prof. Tadeusz oleksyn, maY 2020
INTRODUCTION
Micro, small and medium – sized enterprises (SMEs) constitute as much as 99% of all enterprises in almost all countries. Private entrepreneurs and their firms are the base of the economy. This sector is a school of entrepreneurship for the whole society. They are also a bastion of the middle class and civil society. They ensure the economic independence of citizens from the state and power. They are a bastion of the freedom.
People, who set up their own business are brave, active, creative and positive thinking. We can talk here about very positive human capital.
Many of largest and most outsanding entrepreneurs in the first his ownworld have started from their own micro -firms in very modest conditions. Japanese Konosuke Matsushita started with an electric workshop producing bicicle accessories, founded in his own apartment of 17 square metres, where he lived with large family. He introduced three workers to this apartment. It’s hard even to imagine. Years later, he was the owner of one of the largest electrical and electronics concerns of the world, whose plants employed 250,000 employees. His good known products there were Panasonic, Technics, National.
Steve Jobs first his own computers designed and produced - with colleague Steve Woźniak - in the garage of his foster (second) parents. Over time, he created one of the best and largest companies in the world – Apple.
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DEFINITIONS OF MICRO, SMALL AND MEDIUM - SIZED ENTERPRISES
Division (split) into enterprises micro, small, medium – sized and large is very controversial, but generally accepted.
In the European Union, the microenterprise employ up to 10 emplooes (together with an owner) and the annual turnover not exceed EUR 2 milion, excluding VAT.* The small enterprise employ since 10 to 49 employees and its annual turnover is between 2 milion and 10 milion EUR (excluding VAT). A medium – sized enterprise employs between 50 and 249 people and its annual turnover does not EUR 50 milion (excluding VAT). A big enterprise employed more than 250 people and has annual turnover more than 50 mililion EUR.
There is the third indicator yet – all assets on the balance of enterprise. It is an alternative to annual turnover.
We will not discuss it here.
In Poland we have the same criteria as in UE.
An enterprise can have the status of: an independent entity, a patner, an afiliated entity.
* VAT –tax on goods and services sold
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DEFINITIONS OF MICRO, SMALL AND MEDIUM - SIZED ENTERPRISES (2)
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In the United States, the term small and medium – sized enterprises not exist. There is the term small business, used for entities employing no more than 500 people, including the owners.
There were 5,6 million such enterprises in the US in 2016. They constituted until 99,7 % of all enterprises in
this country.
In Japan, criteria determing the division (split) of companies into micro, midium – sized and large enterprises are different for different areas of economy / branches / industries. This is more logical, then exscesively unified criteria in UE. For example, a car manufacturing plant employing a staff of 300 persons would be considered extremely small in its business, while a law office (court office) or a hairdressing saloon with the same numer of employees would be a giant.
The role of small and medium firms in the european union
In the EU, over 22 milion small and medium – sized enterprises (SME) employ 67% of all employees in the private sector and create near 80% of all new jobs / workplaces. The SME sector generates 60% of GDP.
The Europen Commission for Industry and Entrepreneurship strives to create a more business – friendly environment in Europe and ancourage citizens to establish their own companies. It is thought that the state of the European economy is based on small and medium - sized enterprises and this potential isn’t fully used.
45% of all Europeans would like to became their own boss if their could.
But only 10 % are self – employed today. If we could raise this percentage,
we could have millions of new innovative and creative enterprises.
Antonio Tajani, Italian politician,
Commisioner for Industry and Entrepreneurship
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THE NUMBER OF SMe PER 1,000 CITIZENS IN UE (Eurostat, 2018)
Czech Republic - 96
Portugal - 79
Slovakia - 77
Sveden - 69
Italy - 64
…………
Poland - 40
………….
United Kingdom - 27
Germany - 26
Romania - 20
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ADVANTAGES AND WEAKNESS OF SME
ADVANTAGES
Generally very good knowledge about the market, customer expectations, products and competition. Flexibility.
Great commitment and association with the company, as most SMEs are family businesses. Willingness to sacrifice for company survival.
Low tendency to take excessive risk. Greater prudence and caution in making decisions.
High resistance to crises.
WEAKNESS
Often insufficjent funds for research and development, small investment.
Duration rather than expansion.
Problems with trusting employees and giving them freedom of action. Controlling all the details – what discourages people.
Not all entrepreneurs and employers have grown up to these roles. It’ s normal.
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THE STRUCTURE OF MSE IN POLAND AND UE (Eurostat, 2018)
Type of enterprise in Poland in the UE
Microenterprises 95,9% 92,6 %
Small enterprises 3,2 % 6,3 %
Medium – sized 0,9 % 1,1 %
SMEs in total 100,0 % 100,0 %
Type of activity in Poland in the UE
Services 30,3% 40,9%
Industry 29,1 % 24,6 %
Trade 28,7 % 22,4 %
Construction 11,4% 12,1 %
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ABOUT MICROENTERPRISES AND THEIR OWNERS IN POLAND
29% microenterprises do not employ anyone. They are one man firm; an owner is a man – orchestra: he is manager and worker and driver and accountant and IT specialist and provider and dealer and cleaner and runner, ect. It’s very tiring and does not allow him to focus of what is most important. It is inefficient. Most of things this one man is doing wrong. „When I am alone, I am in a bad company”. Alexsandr Dumas (father), a famous French writer.
40% entrepreneurs have a single employee, 23% - between 2 and 4 employees, and only 8% have between 5 and 9 employees.
Most microenterprises operate in services (43%), trade (36%), and production (21%).
Sources of financing of starts - up:
- own savings - 79% - grant / subsidy - 2%
- bank loan - 18 % - business partner loan - 2%
- family and friends savings – 15 % note: the numbers do not add up to 100 %; people use various forms of help
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ABOUT MICROENTERPRISES AND THEIR OWNERS IN POLAND (2)
Why near 30% entrepreneurs employed nobody? It is mainly a matter of distrust of yourself and others. Many people are afraid of assuming the employer’s duties and responsebilities. Not everyone has confidence in others, too. Losses because of this are colossal.
Why do people set up companies, including one – man companies?
- because they want to be „one’s own boss” – 45 % (most important reason);
- hope for financial success – 30 % (not very high!)
- inheritance, succesion mainly from parents – 16 %;
- others – 9%.
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ASSISTANCE IN THE EU TO THE SME SECTOR
In UE egzists an Enterprise Europe Network in UE, which provides various assistance to SMEs – in it:
- different aid founds – for start – ups, young people, unemployed persons starting their own business
activity
- loan guaranee schems;
- entrepreneurial education and consulting for entrepreneurs, especially for for new entrepreneurs;
- improving cooperation between European banks and SMEs;
- combating late payments; financial suport to near 300.000 enterprises.
Important form of help for SMEs is simplify legal regulations as well as reducing the time and costs of establishing new companies in the EU countries. Large effects have been achieved in this field.
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SPECIfics AND CONDITIONS OF MSE MANAGEMENT IN GERMANY
The industrialization of Germany began 75 years later than in England and 50 years after the USA. In the mid 19th century German states were still lagerly feudal and economically backward – with the exception of Prussia, where the industrial class and financial markets were already present. The state of Germany was established in 1871, folowing a succesful war against France. From the beginning the Germany economy was associated with nacionalism, which was danger for all neighbors of Germany.
German sector SMEs account 3,6 milion enterprises. This includes companies with an annual turnover above EUR 50m and employing fewer than 500 people. SMEs provide jobs 70 % of all employees. Near all of the enterprises are headed by their owners. It meanss, that owner and manager is the same person. Family businesses account for as much as 95 % of all German enterprises.
Features of German SMEs sector: orientation on the international market, a high degree of specialization, they are able to take adventage. They are often European leaders of business
Tom Peers said, that „the Germans are training fanatics”.
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SPECIfics AND CONDITIONS OF MSE MANAGEMENT IN GERMANY (2)
Every year over a milion workers participate in three year courses. Education is focused on developing practical skills. Geman managers built an economy of high qualifications and high wages. Thanks to that relations between owners and managers on the one hand and trade unions on the other are quite good. They prefere cooperation, no war, respect good customs. German managers are professional, competent, realistic and efficient.
Germany is the first country, which introduce the idea of „learning organization”. A learning organization is that, in which everyone is permanent learning and developing professionaly. If you want to keep working, you need to updating and expanding your knowledge and practical skills.
In Germany there are different forms of suport SMEs. Enterprises, whose annual income don’t exceeds EUR 245 000 have reduced taxes. In small companies, where the annual income is lower than EUR 59.000, lower added tax rates are used.
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