STUDY GUIDE

Topic 1:

BMSB5103

Small Business Management

Distinctive Characteristics of Small Business

Management

Learning Outcomes
By the end of this topic, you should be able to:
1.

State the importance of competitive advantage in small business;

2.

Explain why and how a small business must create competitive advantage
in the market;

3.

Develop a strategic plan for small business success;

4.

Describe the three general approaches entrepreneurs use to identify

opportunities;

5.

Identify the four environmental trends that are most instrumental in creating
business opportunities; and

6.

Define what constitutes a small business and identify key characteristics

that make small businesses different from other types of business
organisations.

Topic Overview
Developing a strategy for success is essential for entrepreneurs, both in small
and big businesses. Businesses that are strategically prepared can gain and
establish a competitive edge, sustain and further develop as well as make their
presence felt. Strategic management allows small businesses to create
innovative products or services with a competitive edge. Small businesses
lacking clear strategies may achieve some success but as competition increases,
they usually hit the wall and fold. Without a basis for differentiating itself, the
best a company can hope for is mediocrity but it might not last long. The four
components of a favourable opportunity (attractive, durable, timely and anchored
in a product, service or business that adds value) to sustain small businesses are
discussed. In addition, three primary ways that entrepreneurs discover
opportunities by studying environmental trends, solving a problem or finding
gaps are examined. These are ideally essential for a small business to
compete, sustain and grow in the marketplace. The topic ends by highlighting the
presence of small businesses, their characteristics and contributions that they
make to the economy as a whole.

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STUDY GUIDE

BMSB5103

Small Business Management

Focus Areas and Assigned Readings

Focus Areas
1.1

Assigned Readings

Competitive Edge of Small Business

Management

Moore et al. (2010). Chapter 1, pp 17-20.

Extra Readings:
Scarborough (2012). Chapter 2, pp 53-54;

1.2

Distinctive Characteristics of Small

Business Management

Moore et. Al (2010). Chapter 19, pp 500503

1.3

Identifying
Opportunities

Moore et al. (2010). Chapter 1, pp 6-8

and

Recognising

Extra Readings:
Barringer and Ireland (2010), Chapter 2,
pp 65-68; Scarborough (2012), Chapter 1,
pp 25-27.

1.4

Success in Small Business and

Success in Entrepreneurial Life

Moore et.al (2010) Chapter 1 pp23-25.

1.6

Small Business and Entrepreneurship

Moore et al. (2010). Chapter 1, pp 1-9 &

20-26
Extra Readings:
Scarborough (2012), Chapter 1, pp 43-45.

Other Sources
1.

Strategic management: New ventures

and small business
http://www.sciencedirect.com/science
/article/pii/0024630181900066

2.

Empirical
strategic
management
model for small businesses in the
Turkish Republic of Northern Cyprus
http://fbe.emu.edu.tr/journal/doc/34/3
4Article08.pdf

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STUDY GUIDE

BMSB5103

Small Business Management

3.

Small business strategies: refining

strategic management theory for the
entrepreneurial and small business
contexts
HTTP://PAPERS.SSRN.COM/SOL3/
PAPERS.CFM?ABSTRACT_ID=134
8632

4.

Strategic
management
and
entrepreneurship: Friends or foes?
http://www.business-andmanagement.org/library/2009/4_1-37-50-Kraus,Kauranen.pdf

5.

Looking ahead: Opportunities and

challenges for entrepreneurship and
small business owners
http://archive.sba.gov/advo/research
/rs332tot.pdf

6.

Focus on small business:

Opportunities abound for Engines of
Innovation
http://www.dhs.gov/xlibrary/assets/st
_focus_on_small_business.pdf

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STUDY GUIDE

BMSB5103

Small Business Management

Content Summary
1.1

Building a Competitive Edge for Small Business

x
x
x

1.2

The goal of developing a strategic plan is to create a competitive

advantage for a small company.
The key to business success is to develop a unique competitive
advantage and to create value for customers in a way that is difficult
for competitors to duplicate.
Entrepreneurs need to use creativity to win over competitors.

Distinctive Characteristics of Small Business

Professional-Level Management
(a)

Extremes of very unskilled and highly professional types of

management.

(b)

Professionals are analytical and systematic in dealing with

problems and issues.

(c)

Challenge is to develop professionalism while retaining the

entrepreneurial spirit of the enterprise.

Limitations of Founders as Managers

(a)

Founders are not always good organisation members

because they are creative, innovative and risk-taking people.

(b)

Entrepreneurs must
compensate for them.

recognise

their

limitations

and

Managerial Weakness in Small Business

(a)

Small enterprises seem vulnerable to poor management.

(b)

Problems may occur as the business begins to grow and

good management is more difficult for the entrepreneur.

Constraints that Hamper Management

(a)

Small bank accounts and limited staff.

(b)

Difficult to employ an adequate number of employees.

(c)

Typically lack adequate specialised professional staff.

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1.3

Firm Growth and Managerial Practices

(a)

Stage 1 One-person startup

(b)

Stage 2 Entrepreneur a player-coach

(c)

Stage 3 Intermediate level of supervision added

(d)

Stage 4 Formal managerial practices as growth requires

greater formality in planning and control

An opportunity is a favourable set of circumstances that creates a

need for a new product, service or business. An opportunity has four
essential qualities:
(a)

Attractive;

(b)

Durable;

(c)

Timely, and;

(d)

Anchored in a product, service or business that creates value for

its buyer or end user.

Success in Small Business and Success in Life

x
x

1.5

Small Business Management

Identifying and Recognising Opportunities

x

1.4

BMSB5103

Explain the concept of an entrepreneurial legacy and the challenges

involved in crafting a worthy legacy
Beginning with the end in mind
(a)

Establish goals for business

(b)

Evaluating accomplishments set criteria for assessment of

progress

(c)

Crafting a worthy legacy for business entity

Small Business and Entrepreneurship

x
x

What is a small business?

Characteristics and contributions of small business

What is entrepreneurship?

Discuss differences between a small business manager and an

entrepreneur of small business
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STUDY GUIDE

BMSB5103

Small Business Management

Definition of small business in selected countries

Source: Schaper et al. (2012), Chapter 4

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STUDY GUIDE

BMSB5103

Small Business Management

Study Questions
1.

What is competitive advantage? Why is it important for a small business?

2.

What are business strategies? Explain the three basic strategies which
small business entrepreneurs can use. Give an example of each strategy.

3.

How is the controlling process related to the planning process?

4.

What four environmental trends are most instrumental in creating business

opportunities? Provide an example of each environmental trend and the
type of business opportunity that it might help create.

5.

What is an opportunity? What are the qualities of an opportunity and why is

each quality important?

6.

Explain how solving a problem can create a business opportunity. Provide

an example not mentioned in the chapter of a business opportunity created
this way.

7.

Make a list of the three to five more compelling technological advances that
have occurred in Malaysia or the world since you entered college. Think of
at least two new product ideas that have emerged from each of these
advances. To what extent do you believe each of these advances will
continue to spawn new product ideas?

8.

How does a small business differ from a large one? Is there any meaningful
difference in the definitions of small business and entrepreneurship?

9.

Discuss the differences between a small business manager and an

entrepreneur of small business.

10.

Based on this case study, answer the questions that follow.

HASAN AND STEAK GRILL
Hasan, the founder of Steak Grill, a chain of nine steak restaurants in
Malaysia, is considering expanding his menu, which is currently
restricted to steak, hamburger, potatoes, and fries. He has just read a
book about entrepreneurship and learned that entrepreneurs should
study social trends to help identify new product opportunities.
(a)

List the social trends that might help Hasan choose items to add to his
menu.

(b)

Given the trends you listed, what items do you suggest Hasan add?
Justify your answer to him.

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STUDY GUIDE

11.

BMSB5103

Small Business Management

Based on this case study application, write a short description of the idea
and your assessment of its potential.
APPLICATION/DEMO ON PITCHING PRODUCT IDEAS
Go to DEMOs website at www.demo.com. Watch several Alumni
Videos, which are short videos of start-ups pitching their product ideas
to investors and other DEMO participants. Identify a start-up that is
pitching a business idea that solves a problem.

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