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Introduction of changing commercial environment
With the changing environment of the business market, there are
different changes and diversification in the systems of organizations. Over
time, the requirement or full control companies become more innovative and
advance to produce and manufacture the product. According to the customers
desired. The organization can take many steps to produces several ways to work
in advance and innovative world of production. All business organizations are
not working on large unit; there are some small and medium enterprises that are
working in the economies. Small and medium enterprises are special
consideration in the importance of the transition of the business structure.
Small and medium enterprises can provide economic benefits to the in the
boundary of the country in terms of experimentation, learning, and adaptability.
Diversification elements are very important in the economic growth and
development in a specific country. Other than it, there is the most common
important point in the transition of the business
How Change Impacted SMEs of changing commercial environment
Small and medium enterprises structure was largely neglected by the
large enterprises and financial institutions that give loan to the large scale
business. The basic purpose of this question is to answer the different method
to explore several ways of transition in the business structure and
diversification of the business plan to gain the objective. The transitional
context could be defined as the process of change is centrally planned of
functions in the market-oriented system or other aspects to deal with the
market. Transition is not about the institutional information or transformation
of the role of the state. It particularly depends upon the economic and
financial and legal institution in the underpinning the market economy
The changing environment could allocate and rate the goods and resources
into the proper way so that productivity could be certain in the manufacturing
process. Changing the environment may also be regarded as the ultimate
objective to attain the goals that are defined by the management. There are
different stages of the changing environment that are only available in the
international indicators such as GDP level and the corruption perception of the
index from transparency. There is only indicated that covered the changing
environment of the transition business is called in the EBRD transition
indicator. EBRD indicator is the first at the initial phase of changing
environment dominated by the structure and communities system of the
organization. The main features of this include the preservation of assets in
the small companies and the liberalization of the market for foreign exchange
and trade
Structure & Changes of SMEs
As concerned with the SME’s environment with the change of environment
of the companies, the main focus of the analysis is on the SMEs development
that could face some barriers. Small and medium enterprises are different in
the different countries according to context and the structure. The most common
classifications are considered upon the standards that in small enterprise,
there must be less than 50 employees, and in case of a medium enterprise, there
must be less than 250 employees are standard in the definition of small and
medium enterprises. Changing environment could impact a small and medium enterprise
in formal and informal ways or such other Economic with
The impact could be divided into different categories and forms of the
analysis. For example, policy instability, and changes in the classification of
formal barriers is also very closely related to the official works of the
industry. One of the main problems is found that the ability is different in
different barriers. With the changing environment, the small and medium enterprise
could face the difficulty of finances. As with the changing environment, the
uncertainty of productivity or profit could be changed and minimized the risk
of loss. It is because there is a training environment as it may be improved or
develop Strategy to improve the work of small and medium enterprises. Due to these
companies found difficulty to gain the loan and finance is to invest in the
further project. As far as related to positive change, positive impacts, small
and medium enterprises would make advance their methods of productivity with
the help of a changing environment. With the changing environment, small and
medium enterprises could enhance the productivity and capability of working in
the market. Small and medium enterprises could have the business environment to
change the Bulking style of the business and to gain productivity and higher
profit in the market. It gives wide scope to analyze for small and medium
enterprise development that could be distinctive in the changing environment.
Changing the environment could be negative but there is the most impact
on the small and medium enterprises are positive. As small and medium
enterprises are working traditionally with limited resources that would never
allow the resources to grow positively and productively. The changing condition
could assign and rate the merchandise and assets into the correct way with the
goal that the profitability could be sure in the assembling procedure. Changing
condition may likewise be viewed as an extreme goal to accomplish the
objectives that are characterized by the administration. There are various
phases of the change condition changing condition that are just accessible in
the worldwide markets, for example, GDP level and the defilement view of record
from straightforwardness. With the change condition, little and medium
undertakings could improve the efficiency and capacity of the working in the
market. Diversification components are significant in the monetary development
and advancement in explicit nation. Other than it, there is most regular a
significant point in the change of the business.
Conclusion of changing
commercial environment
It can be concluded in the end that the change in the commercial environment
of the companies is mainly due to variation in the external and internal
elements. The external elements are law, technology, competition, trends and
the media role. The internal environmental elements are physical assets,
management, business culture, cash flow, and the skills and knowledge of the
workers
Question 2
Discuss the advantages and disadvantages of
starting and developing a family business.
Introduction of advantages and
disadvantages of starting and developing a family business
Before considering initiating family business, there are several
considerations to think about it. A family business is often benefited by the
involvement of family members. The success rate of businesses is won/win. They
benefit the owners at the local and global economy in a manifold. However, the
true conditions are fewer than 10% to survive in the market. 10% of the owners
are financially independent of the business. Family firms face several unique
challenges and advantages. To get success in the market, the comparison must
show that advantages can be capitalized upon the investment and the business setup
is capable to overcome the challenges
Although, the family business can be an exciting challenge before
dealing with several issues that can pop up in the family business. Before starting
the business, the must do the thing is to define how the business shares will
be allocated between the partners and family members. The business decisions
must be out of family matter and the roles and responsibilities differ for
family members as compared to the shareholders who are active in the business. The
reward distribution must be fair, and the relation of family members must be
strong to cope with conflicts. The optional information can be performed by
effective duties and family finances are not solely dependent on the business
Advantages of the family business of
advantages and disadvantages of starting and developing a family business
The stability is often high as compared to the other business. The
family business is typically based on, who will lead the business and the
results of the longevity in the leadership. The results show overall strong
stability and the leaders are supported by the position for many years until
the retirement, illness, and death results
In the family business, no one is entitled to deny the responsibilities
by considering the work as out of the field. The members of a family are often
willing to wear multiple hats and do different tasks for the survival of their
business. Since the business is bread and butter of all family members
therefore, all of them are committed to present the best version of them.
Considering the advantage of flexibility, Estee Lauder is the most famous
family business. The owner was interviewed once, and she said that I have never
worked a day in my life without selling the items
No family firms think about hitting the goals because they consider
their goals for years and decades. This
long term outlook provides several plus points to the business owners. Michael
Otto was second-generation CEO of Hamburg Germany and he said that we don't
have to come up with the good stories for the investors and press in every
quarter. The decreased cost condition induces unlike impact on the business
because opposite to the typical workers, the family members are always willing
to contribute in their finances and even they spend more time on the business
as compared to the others. The family members contribute to ensuring long term
success of the organization. The contribution can be in a particular direction
and handy to overcome the challenging times. Consider the economic downturns
that are necessary for the person to suffer and it requires skills to overcome
and for the survival of business
Disadvantages of the family business of
advantages and disadvantages of starting and developing a family business
It is often observed that the family members have different interest and
lack of interest in business can result in unengaged and apathetic employees.
In the public sector, the employees that can be categorized as having no
interest in the business can be fired but it is not such simple when dealing
with the family business. Conflict is a common issue that is bound to happen in
any firm, and it has long histories that issues in the family can adversely
affect the business. Long-lasting bitter fights, deep-seated issues and
quarrels can induce an impact on every single person in the firm and they can
draw divisive lines in the business. Since in the conflicts, the family members
and loved ones are involved it becomes more difficult to solve the issues and
results can be a long ending. The best example of dispute in the family that
damaged the business is the famous dispute between the sons of Dhirubhai Ambani
in 2005 and they were the owner of Reliance industries. The dispute resulted in
a division of India's largest petrochemical manufacturers. One of them, Mukesh
Ambani retained the control of the petrochemical business while another son of
the owner, Anil took control of Reliance communication, Reliance capital, and
Reliance Energy
The governance issues can lead to business division because the issues
include rules and internal hierarchies related problems. Governance is often
not able to follow and adhere to other external corporate laws. The business is
considered less seriously in such type of situations. The level of trust in the
family firm is often suffered a lot. Consider the example of Samsung Group, Lee
Kun Hee, chairman, was forced to resign from his position in 2008 after the
indicated tax evasion and some other criminal breaches that lead to trust
issues. The issue was dragged to the court and he was sentenced for three-year
suspension and a fine of approximately $109 million. In such situations, little
governance is suffered the most and sometimes gone a long way
One of the major issues of having a family business is Nepotism. Some
family businesses prefer to have their trustworthy workers and they never let
the outsiders reach the open positions. The decision-makers prefer their family
members and they are often less educated limited experience and lack of skills
or interest. The issues are far-reaching that reduce the chances of success of
the company. It becomes difficult to retain good talented and skilled workers
in the business. The creative ideas, innovation, and upgradition become the
limited and less focused condition of the business. Nepotism affects the growth
and strategically actions for certain positions
Conclusion of advantages and disadvantages
of starting and developing a family business
Very often, the family business lacks the succession plans and leaders
never have the desire to admit it. At this point, it is necessary to find a
close relationship and long histories. The business heads need to make a strong
succession plan. Different risk associated conditions are due to lack of
leadership, quarrels, and legal troubles in the business. Consider founder of
Hyundai motor, Chung Ju Yung named his son as successor and one year later in
2000 he defied his father's orders to step down
References of advantages and
disadvantages of starting and developing a family business
Achtenhagen, L., Melin, L.,
& Naldi., L. (2013). Dynamics of business models–strategizing, critical
capabilities and activities for sustained value creation. Long range
planning2013, 46(6), 427-442.
Ates, A., & Bititci., U.
(2011). Change process: a key enabler for building resilient SMEs. International
Journal of Production Research,, 49(18), 5601-5618.
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(2014). The advantages and disadvantages of a family business .
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Machek, O., & Votavová,
P. (2020). Advantages and Disadvantages of Family Entrepreneurship and How to
Prevent Distress: Evidence from the Czech Republic. Mathematical Models and
Computational Methods I, 4(166), 350-354.
Müller, J. M., Buliga, O.,
& Voigt, K.-I. (2018). Fortune favors the prepared: How SMEs approach
business model innovations in Industry 4.0. Technological Forecasting and
Social Change, 132, 2-17.
Nibusinessinfo. co. uk.
(2020). Family-run businesses. Retrieved from www.nibusinessinfo.co.uk:
https://www.nibusinessinfo.co.uk/content/key-things-consider-when-setting-family-business
Ramadani, V., & Hoy, F.
(2019). Family businesses in transition economies: Management, succession
and internationalization. Springer .
Sherman, F., & Seidel, M. (2019). The Effects of a Change in Business Environment on Strategic Planning. Retrieved from smallbusiness.chron.com: https://smallbusiness.chron.com/effects-change-business-environment-strategic-planning-4708.html
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