Advantages and Disadvantages That Large Firms over Small Firms

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Enterprise Essay
CB 613
Number of words: 1202

a) Explain the advantages and disadvantages that large firms have over smaller firms and vice-versa, in the pursuit of entrepreneurial activity.

As an enterprise can be defined as private business, it can thus be separated into two main categories which are small firms and large firms. Within many countries and many industries there are normally a large number of small firms and a smaller number of large firms as can be seen in the United Kingdom where there are only a few thousand large firms and over 4 500 000 small to medium sized firms according to the BERR. This essay will look at both of these categories of firms and will provide information on the factors which set them apart from one another. These factors will play a big a part in setting out the advantages a large company may have against a small company and vice-versa. Furthermore, this essay will look at how these factors will affect their pursuit of entrepreneurial activity. A small firm is one that has a relatively small market share and is managed by its owners in a personalised way and not through the medium of a formalised management structure (Beaver, 2002). Statistically speaking small firms have a number of 0 to 200 employees and a turnover figure of roughly £50,000. These features of a small firm will highly contribute to the advantages and disadvantages one such firm may bring to a market. A small firm is much more flexible than a large firm with the ability to have a more hands on approach. There is a limited hierarchy which means that decisions can be reached quickly as there is a smaller number of people involved in decision-making. This also means there will be an ease of communication and thus more ease in retaining skilled staff. In the same time there are a number of disadvantages to being a small firm. As according to Beaver (2002) small firms will be heavily reliant on small number of customer in a single market and the...
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