Family Involvement in Small-to-medium Enterprise Management - Term Paper Example

FAMILY INVOLVEMENT IN SME MANAGEMENT By Location Introduction Management is an important aspect that every organization should be critical in evaluating and ascertaining on the exact groups of people that need to be acquainted the positions. Research indicates that the business environmental practices in the appointment of management teams are rooted to the past practices whereby business owners would only offer managerial positions to their relatives. Ideally, the practice is effective in reassuring SME owners of the continuity and growth of their firms holding on the fact that the appointed managers have the necessary ambition to devote their skills in ensuring that the businesses survives the threats of the environment to achieve growth and the overall maximisation of profits (Eisenhardt 2009, p. 78). The following discussion shall evaluate on the several aspects that SME owners evaluate to resolve on the appointment of family members to the management of the businesses as of importance. The integral business practices of the SMEs With the growing competition and the need to grow the segments of operations in order to yield and accrue the benefits born to economies of scale, SME owners acknowledge that managerial positions should be directed to family members since they have a stake in the businesses. Small microenterprise businesses contribute to the biggest percentage of all global businesses. Therefore, competition is evident for each of the business seeks to prosper in growth and profitability over other common and many other entities with similar production and market objectives (Habbershon, Williams, & MacMillan2003, p. 87). SME owners are knowledgeable of the fact that other similar businesses in their segment of operation may engage in unethical ways to amass relevant, but secret information that will serve for the benefit of the competitors. The practice of appointing learned family members to such positions is the fact that the owners are knowledgeable of the positive influences such individuals bear (Gomez-Meja, Nunez-Nickel, & Gutierrez 2011, p. 90). Notably, the appointment of family members following a certain protocol of tangible and intangible forms of incentives serve for the benefit of the organization since such managers realize the importance in ensuring successful outcomes and limited threats to their organisations (Martínez, Stöhr, & Quiroga, 2007, p. 90). Agreements signed entitle an individual to manage the SME as a family business and further as an honourable job position with its interest after some time without necessarily being physically active (Eisenhardt 2009, p. 88). This helps individual SME owners to extend the financial ventures, acquire new managerial skills in handling the environmental factors within the market, and helps the businesses to grow extensively. It is within the owners’ perceptions that despite the evolution of managerial styles, family members are the best managers for the privately owned business entities. Arguably, SME owners are confident of the fact that their choice for managers of the family is incremental to success since the members have knowledge of the past and the future perceptions of the organisation (Malhotra 2008, p. 86). SMEs are formed with an integral purpose of exploiting the market profitably through the sale of their products (Petrie, 2012, p. 141). Upon realizing on the unethical practices present in the environment, every micro enterprise owner seeks on the implementation of methods and techniques necessary to curb the threats. The most necessary resolution and accuracy is the involvement of family members in the management. The management is entitled to a fee from the direct owner, but the owners are knowledgeable of reduced reactions from the need for increased salaries bearing in mind that they hold a stake in the SMEs. Such business dealings are common in the United States, China, and Australia and thereby this triggers the innovation and reinvestment since every business seeks to increase the demand for its output and resolves to use reduced costs at the long run (Eisenhardt 2009, p. 89). The number of small micro enterprise businesses in the U.S. has consistently raised promoting the incomes and offering more jobs to the society. In SME programs, individuals are educated, and they assist in the funding of their projects. Therefore, managers chosen from the families owning SMEs serve for the growth of the organisations since they may resolve to fund some of the projects in the businesses. The principle of starting up business and engaging the family in management is a rewarding idea despite the imminent shortcomings that may overtake the beneficial prospects if the chosen management fails to deliver obligations necessary for growth. Owners to the SMEs derive an understanding that the practices shall deliver business skills and enhance the management both the internal aspects and external aspects of the businesses (Eisenhardt 2009, p. 98). These ventures always involve hence deserve a management structure that is within reach whenever the need arises. Despite the many advantages, enterprises are capable of monitoring the detrimental managerial practices since the owners are capable of ascertaining unethical practices on a timely basis. Essentially, one gets into a managerial position as a successor of an already set structure by other managers from his family hence exposing the SME to reduced risks and minimal drawbacks (Habbershon, Williams, & MacMillan2003, p. 12). Eventually, the SMEs accrue high profits as the reduced risks further reduce the overall costs. The individual’s ability to maintain the enterprise quality, speeded growth, and high profits assert for the demand of essential knowledge and skills of running the organisation. In times of economic crisis, individual efforts determine the returns and thereby integrating the need to balance between economies of scale necessary to survive the threats presented by the market segments and those presented by competitors. This may result in loss of competitors, thus accruing business profits due enhanced and cohesive managerial responsibilities. An SME, enterprise that deals with the supply of processed products must depend on the asserted managerial approaches argued upon in the organisation’s objectives as incremental in drawing it towards beneficial delivery (Trivedi 2012, p. 73). SME owners derive that the best managers of their business ventures should bear knowledge on the distribution, pricing, and market segments of the company. Further, they acknowledge on the vitality of every manager to be educated on the promotion methods. Eventually, the owners of these businesses assert that members of their families bear vast education on the marketing mix approaches of the SMEs. The SMEs aim to satisfy the various needs of their consumers (Habbershon, Williams, & MacMillan2003, p. 12). The idea was developed to deliver exceptional performances to the business entities in the short and long run periods. The combinations and a comfortable surrounding that prevail whenever the management shares multiple similarities over different prospects and in welcoming of their customers. Forming strong management teams with their families through dialogue and proper service-oriented incentives immensely contributes to their penetration deeper into the global market. By introducing new managers from their families, business owners attract more customers who need change and variety (Malhotra 2008, p. 80). They use innovative management practices shall engage the family owned business entities into a process of innovation and the establishment of new or improved products. The management is also capable of identifying the vitality of introducing new ingredients in the preparation of consumer products, and the integration services that will incline them to the appropriate market segments. The personnel chosen are quite relevant in offering services (James 2009, p. 189). They respond in a quick and efficient manner to their clients. Resources like time within the organization are properly utilized and thereby serving for the incremental benefits of the institution (Qiu 2013, p. 82). The small micro enterprise owner s’ believes that customers are their priorities draws them towards the appointment of managers from their families. Arguably, they denote that family-based management systems serve to propel growth in the delivery of valuable resolutions to both the organization and the society (Jensen & Meckling 2006, p. 389). Thereby, they consider the implementation of prosperous managerial practices and services to build the customers’ pride. Proper interactions with customers give an understanding between the two and thereby this gives the service provider of what the customer expects (Trivedi 2012, p. 09). Chatting between customers and the management or other groups of personnel is thereby an efficient strategy that can be used to identify a niche in the market of orientation. Individual passion in the preparation and execution of production strategies is necessary to enhance the quality of their products Shane 2003, p. 87). The supply of new products is born to the integrated management practices in forecasting on the tastes and preferences of their consumer groups (Dyer 2006, 90). Out of the varieties offered, a family-based management, network may serve to encourage customers to try out new tastes. Discussions and analysis Most of the SME owners are given management opportunities to the available family members holding on the concept of their effects in the market, whether they include the production and delivery of services or tangible products. They are analysed before individuals get the freedom to invest in such enterprises (Dyer 2009, p. 89). The management services offered are likely to receive recommendations from its customers crediting the services offered. The products derive the managerial practices offered in devotion to consumers, and this draws many clients in quest for the services (Gnan& Montemerlo 2006, p. 190). The experienced and well-trained family managers offer superb heights of success to the enterprises. Customers’ comments about the outstanding quality of managerial services aim at maximizing the need for the businesses to engage on the appointment of other similar people with relative characteristics (McConaughy, Matthews, & Fialko, 2011, p. 241). Family-based managers in identifying business opportunities SME owners at one point aim to generate the maximum profits possible and this can only be extended by increasing the market reach of the business. A large business opportunity builds the possibility to increase on profits earned and thereby extending the business reach to the greater society. The business needs to determine the target market, its availability, and its likelihood in enhancing on the business performance (Filbeck & Lee 2010, p. 90). The opportunities that they venture in should have attractive returns and rewarding to the distributor. Through the involvement of family managers, a business can get acquire new business opportunities from articles, internet sources, and through direct studies on the public to establish the preferable segments of operation with which to venture (Fama & Jensen 2003, p. 389). Varieties help family managers in making the most appropriate decisions and necessary considerations before getting involved in it (Dyer 2006, 93). There are different SMEs in the market that vary from the type of services and products they offer, to the products, and amounts of starting capital that is necessary (Malhotra 2008, p. 6). Some managers specialize in the innovating other production techniques to meet the demand variations and ensure globalization of the institutions to the many regions of the globe (Phisalaphong, 2004, p. 241). Individual SME owners who signed contracts have been able to earn their living (Portes 2006, p. 22). Through marketing and advertising businesses are able to get to the most profit rewarding business contracts. The signing of the agreement between the franchisee and the distributor also assists in marketing the structure in various market contexts (Habbershon, Williams, & MacMillan 2003, p. 12). The SME owners realize that they can accrue such benefits through the establishment of management systems that comprise of the relatives (Litz 2005, p. 291). They can also expand the markets by using print sources, social media, and broadcasting media to enhance public awareness on the existence of the business. SME owners’ choices to appoint family-based managers to counter environmental drawbacks The analytical framework on PESTEL is used by SMEs for the determination of the market strategy that the family-based managers help to provide as analysis to the owners. The approach defines different matters within the environment (Gnan & Montemerlo 2006, p. 67). The performances in small micro enterprises affect the factors within and outside its structure needs proper planning (Miller & Le Breton-Miller 2006, p. 339). The PESTEL analysis is used to measure on the several external factors in the core of every SME’s encounter in the marketplace. It is used to back up the managerial of the enterprise by preparing and strategizing ways to face external inhibitors to the business performances (Le Breton-Miller, Miller, & Steier, 2004, p. 250). This strategy also influences the governments influence over economic transactions by either political distractions or policies implemented (Dyer 2006, 97). The strong framework builds family-oriented management systems necessary for the preparation and handling some of the political factors like government instabilities, which may raise chaos affecting the business progress and other financial transactions (Lu & Beamish 2011, p. 69). Social policies and trade regulations by the governments affect the involvement of people to invest with the SMEs (Gersick, et al 2007, p. 120). Despite the threat of taxation policies that may hinder the entries SMEs in the market, the choice of family-based managers bars the high taxation rates deterring the long-term performances (Dyer 2009, p. 187). Thereby, this affects the economic progress in the state (McNulty, et al 2012, p. 310). In the external environment, there exist social factors that consist of the demographic structures, literacy levels, and the people’s lifestyle in the area. The SME owners acknowledge that they can only succeed there is a need for analysing the population structure in order to plan on the marketing strategy and products to produce extensively (Lauterbach & Vaninsky 2008, p. 361). Considering that, the population consists of many aged individuals, and then the organization’s products. Family-based management embraces the technological innovations and obsolescence in its structure to help enhance global communications (Dyer 2006, 199). Through these technologies, SMEs grow extensively over their competitors in the markets. They also help in buying newly developed equipments for use in the businesses (Lansberg 2013, p. 241). Family-based managers are knowledgeable of the local and foreign market practices. The economic structures of the external environment also influence the internal transactions within the SMEs. Income levels affect the buying abilities while waste disposal affects the operating environment and the energy consumption regulations affect the set up of new enterprises (Habbershon, Williams, & MacMillan2003, p. 12). To help ensure that such factors negligibly affect the operations of SMEs, the enterprise owners embark on the use of environmentally friendly packages, proper waste disposal plans, and involvement in activities perceived as important to the immediate societies, and ensuring that they stick to the state’s environmental laws (Gallo, Tapies, & Cappuyns 2004, p. 107). SME enterprises seek the value of managers in the laying of strategies (Dyer 2006, 299). SME owners contract family-based managers through the legal manner and ensured that they met the legal requirements for the better of their operations (Miller & Rice 2008, p. 240). They include product regulations, competition in the market, and employment regulations for safety of both consumers and customers (Filatotchev & Piesse 2005, p. 97). The business managers at SMEs have effectively managed to balance the existence of the businesses in the environment due to proper planning. Other factors that affect SME management include climatic changes, which affect the distribution, production, and relocations of franchise branches. By the proper balance between the different external factors, SME owners appoint managers who are able to pursue its economic progresses and quality services to its customers (Habbershon, Williams, & MacMillan2003, p. 12). Thereby, the firm’s decisions and set preferences affect the business success. The insights gained by businesses in pursuing their goals, enhance the businesses potential (Malhotra, 2008, p. 104). Conclusion The location of a business determines its access to the targeted market and determines the possibility for the business to attain its goals. The advantage of a business managed by family members is that such businesses are capable of learning of their environments. Further, the management enables the businesses to identify its market over its competitors and maximize the profits while still enhancing its survival in the future (Trivedi 2012, p. 217). Therefore, family managers are crucial in the identification of the appropriate locations of the businesses (Parsons 2005, p. 289). Some other factors that the management considers include the presentation of the enterprise, including the sales, customer services to promote close interactions (Jehn 2007, P. 109). The presentations should also appear to be creative and should use individuals to give the business opportunities and insights on how to overcome the existing challenges. Bibliography Dyer, JG 2009,Integrating professional management into a family-owned business. Family Business Review 2, (3), 221–235. Dyer, JG 2006, Examining the“family effect”on firm performance, Family Business Review, 19 (4),253–273. 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