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  • MGT 604 Tutorial 5

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    This document discusses key criteria for defining small businesses and their economic significance. It provides both qualitative and quantitative criteria for small businesses, such as being independently owned, having a small market share, number of employees, annual turnover, and asset value. Small businesses are described as playing an important role in the Asia-Pacific region by creating jobs, encouraging entrepreneurship and innovation, and supporting big businesses. The main differences between small and large businesses are that small businesses tend to have fewer qualifications, employees, operating hours, and use of formal management methods. The document also defines the difference between a business exit and business failure.

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    This document discusses key criteria for defining small businesses and their economic significance. It provides both qualitative and quantitative criteria for small businesses, such as being independently owned, having a small market share, number of employees, annual turnover, and asset value. Small businesses are described as playing an important role in the Asia-Pacific region by creating jobs, encouraging entrepreneurship and innovation, and supporting big businesses. The main differences between small and large businesses are that small businesses tend to have fewer qualifications, employees, operating hours, and use of formal management methods. The document also defines the difference between a business exit and business failure.

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    8 views4 pages

    MGT 604 Tutorial 5

    Uploaded by

    daniel
    This document discusses key criteria for defining small businesses and their economic significance. It provides both qualitative and quantitative criteria for small businesses, such as being independently owned, having a small market share, number of employees, annual turnover, and asset value. Small businesses are described as playing an important role in the Asia-Pacific region by creating jobs, encouraging entrepreneurship and innovation, and supporting big businesses. The main differences between small and large businesses are that small businesses tend to have fewer qualifications, employees, operating hours, and use of formal management methods. The document also defines the difference between a business exit and business failure.

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    of 4

    Tutorial Topic 5

    CASE STUDY

    Read and answer the two questions that follow.

    Review Questions

    1. List the main qualitative and quantitative criteria used to define a small business.
    Qualitative Criteria
    • Independently owned and operated
    (not part of a larger corporation)
    • The owners contribute most, or all, of the operating capital (i.e. they bear the risk and are
    entitled to the profits)
    • The owners make most decisions and are not answerable to anyone else (owner-
    managers)
    • The business has a small market share
    Quantitative Criteria

    • the number of staff


    • wages and salaries expenditure
    • legal structure
    • total annual turnover (sales revenue)
    • value of firm assets
    • share of ownership that is held by the owner/manager(s)

    2. Outline the economic significance of SMEs in the Asia-Pacific region.

    • Create employment opportunities


    • Lead to the next generation of large firms
    • Encourage competition and innovation
    • An outlet for entrepreneurial activity
    • Encourage export trade
    • Provide specialised products and services
    • Can support big business
    • Encourage decentralisation, economic flexibility
    3. How does a small business differ from a large one?
    Small business has more:
    • Have more female owner/managers
    • Have managers with fewer qualifications
    • Have fewer unionized employees
    • Operate for fewer hours each week
    • Less likely to use formal management methods

    4. What is a business exit and how does it differ from the concept of business failure?
    Business exit and concept of failures are different depending on different business owners. A
    business exit is when a business is sold after reaching success of failure and the concept of
    business failure is when business fail either due to the many reasons such as poor human
    resource management, financial management, marketing strategies, production house and many
    more.
    5. List the general characteristics of a small business.

    • Usually only one or two owners

    • Financing provided by the owner

    • Business has limited market share

    • Often has a limited life span

    • Sometimes run on a part-time basis

    • Low level of net profit

    • Limited product or service offering

    • Is frequently a home-based business

    • Geographically limited

    • Often a family-based business

    • Only located in the private sector


    Avishek Anish Chand
    A00210446

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