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Firm Size Changing Reasons Analysis Report

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Updated: Sep 3rd, 2021

A firm is defined as any company, business or partnership, which consists of a certain number of people. The word firm in a stricter manner is usually used to refer to a business, which consists of a group of professional working together towards a specific goal. The ideal firm size is the most effective number of employees working in a firm in the given time, which could produce ideally the highest net profit. The size of the firm changes overtime and demand, it depends on the economic conditions, as well as, the capital available in the firm.

For example , the architecture society will have a small firm since their economy is limited , their firm will take a shape of small firm with a limited number of employees where as an industrial society will have the resources and will plan to setup a large firm. More precisely the size of the firm determines the limit of its boundaries and profit. The firms are usually classified as small firms, medium firms and large firms based on the number of employees and the amount of capital invested (Todd, 1971).

A small firm is defined as a firm with a small number of workers or employees. The exact or the legal definition of small firm depends or varies in different countries and industries. In the United States, it is usually limited to 100 workers and in the European Union; fewer than 50 workers are incorporated in a small firm, particularly, for the architecture firms. These types of firms or businesses are privately owned as partnerships or corporations. Depending on the economic system of a country, these small firms are in operation in many countries worldwide. These small firms are independently run and some very common examples include stores, architecture firms, building firms, manufacturing on small scale, electronics etc (Hall, 1997).

The basic advantage of a small firm and particularly, architecture firm is that it can be initiated with a very low cost and it could be kept at temporary basis. Architecture firms need a small number of employees so paying the wages is not a very big issued when it comes to architecture firms. Small firms or small architecture businesses are also very appropriate for internet marketing, because they are easy to manage to serve the right and wanted purpose which is something that was hardly thought about in 1990 where there was no internet marketing. Small architecture firms are not in contract or association with the bureaucratic side so it is really easy for them to adapt to changes and to respond to the changes in the market trends as soon as possible which gets them more popularity and appreciation amongst their competitors in the market. The small architecture firm holders are on intimate terms with their clients and customers, which wins them appreciation resulting in more business, credulity and better response (Gibb, 1989).

A number of companies and internet sites provide help and guidance for a setup of small architecture firms. There has been an evident increase in such organizations that are willing to help the small firms to grow because of their efficiency and effective teamwork. The small firms are also easy to market; they could be marketed through words of mouth, billboards, client referrals, directories, internet etc. In this regard, great publicity behavior has been observed in the marketing of architecture firms. Another advantage of small architecture firm is the franchise business. These firms owner can associate itself with a strong brand name, their investment is also affordable, and the popularity gain is even stronger in a short period. The small firms are the major source of jobs in most of the economies (Todd, 1971).

Small architecture firms do have their disadvantages. They also face a number of disastrous events that are related to their size. A usual case of bankruptcy is their lack of funding and money, which is a result of poor planning. Economic conditions of the people involved could be a possible reason as well. In addition to the availability of the required capital, the small firm owners should have a tactful mind with enough mental acumen to handle all types of critical situations and circumstances. When they launch their firm or product at the start out price, they should have the ability to take the firm to the maximum capacity using all of their capacity.

The UK government has also made changes in the tax administration for the encouragement of small architecture firms particularly. For instance, ten percent rate of corporation tax has been widened by the government. Furthermore, taxable turnovers of hundred thousand pounds have been provided with an optional flat rate of VAT by the government. In addition, capital gains tax has been reduced by the government, which has encouraged the new investors in the small and medium enterprises and in the architecture sector significantly (Gibb, 1989).

Medium firms are firms that have a greater number of employees as compare to the smaller architecture firms and their turnover is between certain limits. There are almost 500 workers in the medium architecture firms. Certain limits related to the annual turnover or the number of employees have been defined and described in every country, in order to identify the definition of the medium architecture enterprises. A limit of two hundred fifty employees has bounded the UK firms, in order to describe them as a small and medium enterprise. Moreover, annual turnover of eleven million pounds should not exceeded by these firms, and thirdly, assets of five million should not be exceeding in these firms (Todd, 1971).

It has been observed that the economy of the United Kingdom has been contributed by the medium business architecture firms significantly. Particularly, products, services, and new ideas and concepts have been provided to the economy by these architecture firms. In addition, thousands of jobs have been created due to these firms, which have reduced the rate of unemployment in the country, and have strengthened the economy of the country. According to a survey, it was noted that approximately 3.7 million small and medium business enterprises have been established in the United Kingdom since last two decades, and GDP of the country is contributed by forty percent due to these small firms. Moreover, the study also evaluated that one trillion pounds of turnover was reported annually by the small business sector.

The advantages of a medium or small architecture firm are not static.These types of firms are mostly beneficial for poor people.These firms are important in the rural areas where they can provide a flexible diversity of income. They are proved beneficial for people who want to switch from labor to share holding. The small or medium firms commonly known as SME’s enjoy a good relationship with their customers, they share closeness and strong ties with their customers. These benefits allow women to take interest and partnership in business as well as their homes. They can indulge themselves in business activities as well as take care of their children and homes at the same time (Hall, 1997).

In other kinds of jobs, it becomes difficult for women to take out time for themselves and their families as a result these factors turns out to be a major discouragement for women and they quit working. The 50% of any country comprises of women, so small or medium firms enable a country to utilize this fifty percent of their population in business and help towards the growth of their economy. In addition, the economy of the United Kingdom has been contributed appreciably by the women employers, as well as, employees.

For instance, twenty-five percent of the architecture businesses in the United Kingdom have been owned by the women, and it has been observed that service sector of the UK has been greatly facilitated by the women involvement and empowerment in the country. The small and medium architecture firms enable people in the struggling phase to grow and attain financial freedom in the end. Moreover, such economic environment of any country plays a vital role in the strengthening of its economy, as investments are encouraged in a stable environment.

Thus, it has been evaluated by most of the experts that the provision of a stable architecture business environment to the investors will result in the increase of small business firms in the United Kingdom. In other words, small businesspersons will be encouraged to take risks by investing in different business and service sectors of the UK. Furthermore, culture of a country is another major constituent that encouraged or discourages the businesses in the country. In this regard, business culture of the UK should be incorporated in such a manner that entrepreneurship should be encouraged, and new capitalists should be welcomed in the country (Gibb, 1989).

However, a major disadvantage faced by the medium and small architecture firms is that there is a lot of input in this type of business and the output is generally low and limited. Medium firms tend to associate themselves with other larger names, which prove to be disastrous in their own favor. The larger firms grasp all the money earned providing the medium and small firms with very little amount of money. Some medium and small firms suffer from terrible incidents of gender discrimination, labor problems and environmental effects. Due to the rapid social change, the true essence of community has evaporated.

One of the other problems that are being faced by the small and medium architecture business enterprises is the problem of cash flow, or capital that is required at the commencement of the firm, or during the different business functions that require a substantial amount of money, which is not available to several firms. In the result, it has been observed that around three and a half years is the average life of a small business firm. Thus, jobs are lost by the employees, firms are closed, and sometimes, it does affect the economy of the country. However, the UK Government has encouraged the formation and establishment of new small business enterprises, which has been responding well, and therefore, economy of the United Kingdom is not being affected significantly by the closing of these firms.

In addition, economy of any country can be more strengthened by the expansion of small and medium firms. In this regard, persons with age of over fifty years should be encouraged to establish a small architecture business firm as their second careers, and this culture and civilization should be encouraged by the government by the facilitation of resources and financial facilities to these aged, but experienced businesspersons.

Big firms or big business is concerned with bigger and huge transaction of money done on a very large scale. This term came into use after the American civil war. In this regard, a number of architecture corporations fall into this category and have worldwide recognition. Some of the examples of these companies have incorporated themselves with international organizations related to the architecture promotion. These firms include industries of all the types namely stone, ceramic, marble, etc. The big firms consist of a proper structure and management system, which includes professionals from high level to the low level, which encompasses labor, managers, workers, etc (Hall, 1997).

A company is referred as large because of the extent it is able to influence the market in trade. Many banks are considered as large not because of their size of resources but because of the influence the have on their members in the market. The public companies and the railroad system was termed as large mainly because the size and distribution of their fixed investments and gross income. However, Industrial companies are, suppose to be considered large as reference to the size of their assets and in comparison to the size of their assets as compared to their competitors.

The major development in the large firm industry was seen after world war II , namely in the field of electronics and computers, the development of integrated chips with the expanding use of radio and television provided the business developers to develop new chances of success Corporations like SONY, TEXAS Instruments came into being. After the war, computers became common and came in use almost by everyone, names like IBM and Microsoft became popular (Gibb, 1989).

The larger firms have large advantage because of their economic conditions because of which they enjoy many advantages over small firms only for this reason. The large firms buy things in bulk for their production purpose because they have enough or more than enough cash flow to buy things easily as use as much as they want. As they have a huge amount of money or capital so they do not limit their buying to one good, they can produce or buy more than one type of good that increases their business.

The products are bought, processed and packed and money is used for every type of good so when these are bought in huge amount the money is distributed among different types and the cost goes down so buying in bulk proves extremely beneficial. Another advantage that comes with larger firms is that a greater number of managerial jobs are available for unemployed but qualified professionals. Most of the technological development is fostered by the growth of large firms and many people have gained financial independence and freedom from their financial worries by the boom of the large firms

The power in the hands of the people that control or own the big firms are immense.There is a great deal of effect on the labor, working classes and investors. Various attempts have been made by people to criticize the big firms. The biggest disadvantage that a big architecture firm goes through is the lack of connection between the customers, which results in the loss of credulity and appreciation by the clients. The investors or the owners are considered as capitalists in the big firms and they are claimed to enjoy the benefits of their firm while the labor is paid limited wages no matter how big is the profit earned by the firm.

The large architecture firms are also considered to include corruption in their mode of working because of their greed for money and fame, which includes exploitation of the working classes. The influence of the large firm could be immense on the government too regarding the area of tax, trade policy and labor issue. The large firms can gain a lot of power in the developed countries.

As we have already discussed the three types of architecture firms, small, medium, and large, their structures, advantages, as well as, their disadvantages in terms of staffing, services and their efficiency have also been discussed in the paper. We have seen that every organization, be it small or large has its own pros and cons, a small architecture firm deals with different types of issues like unavailability or lack of capital where as a large firm is confronted with different issues like social consequences and corruption. Hence, we conclude that the advantages and disadvantages vary from firm to firm.

Works Cited

  1. Chris Hall. (1997). Globalization and Small and Medium Enterprises. OECD Online Bookshop.
  2. Douglas Todd. (1971). the Relative Efficiency of Small and Large Firms. H. M. Stationary Office.
  3. John Michel Gibb. (1989). Partnership between Small and Large Firms. Graham & Trotman.
  4. Tamir Agmon. (1994). Small Firms in Global Competition. Oxford University Press.
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