The SME is a small firm with an independent business managed by its owners/part owners having a small market share. The abbreviation SME is commonly used in the European Union and by different international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO) (Kaufmann, Friedrich., 1995).
Small and Medium Enterprises (SMEs) are business enterprises that maintain the number of employees below a certain standard with limited turnover and balance sheet. The size of an SME company depends on the industry in which the company competes. There are 3 different categories defined for Small and Medium Sized Enterprises:
- Medium Sized Enterprises employ less than 250 workers with an Annual Turnover not exceeding £ 41 million and a total of £ 35.2 million Balance Sheet.
- Small Sized Enterprises employ less than 50 workers with an Annual Turnover not exceeding £ 8.2 million and a total of £ 8.2 million Balance Sheet.
- Micro Sized Enterprises employ less than 10 workers with an Annual Turnover not exceeding £ 1.7 million and a total of £ 1.7 million Balance Sheet.
(Gerstenfeld, Agneta, and Hewitt Roberts., 2000)
- Current Research;
Small and medium sized businesses play a vital role in local economies and communities. Small business owners use a strategic approach in order to make a considerable contribution to the economy. The operations of an SME aim to regulate a region’s impact on key social issues, as well as making the industry more sustainable and profitable (Dalrymple, John F., and Peter John Bryar.).
Investors play a vital role in the operation of an SME to fund the projects. Competition in the sector is aggravating because of innovation and economic influences such as unemployment among the citizens, labor productivity and development of economic power (Dainty, Andrew RJ, Stephen G. Ison, and Geoffrey H. Briscoe., 2005).
At present, the economic reliance on the sector in UK from various dimensions can be well assumed with a review of the illustrated statistics' of 2013;
- There were an estimated 4.9 million businesses in the UK which employed 24.3 million people, and had a combined turnover of £3,300 billion
- SMEs accounted for 99.9 percent of all private sector businesses in the UK, 59.3 per cent of private sector employment and 48.1 per cent of private sector turnover
- SMEs employed 14.4 million people and had a combined turnover of £1,600 billion
- Small businesses alone accounted for 47 per cent of private sector employment and 33.1 per cent of turnover
- Of all businesses, 62.6 per cent (3.1 million) were sole proprietorships, 28.5 per cent (1.4 million) were companies and 8.9 per cent (434,000) partnerships
- There were 891,000 businesses operating in the construction sector - nearly a fifth of all businesses
- In the finance and insurance sector, only 27.5 per cent of employment was in SMEs. However, in the agriculture, forestry and fishing sector virtually all employment (95.4 per cent) was in SMEs
- Only 22.5 per cent of private sector turnover was in the arts, entertainment and recreational activities, while 92.7 per cent was in the agriculture, forestry and fishing sector- With 841,000 private sector business, London had more firms than any other region in the UK. The south east had the second largest number of businesses with 791,000. Together these regions account for almost a third of all firms.
(Rezgui, Yacine, and John Miles., 2009)
Some business organization societies of SME sector are active with an aim to respond to the business cycle in ways that provide the best possible outcomes for their members, whatever the circumstances. These business organizations aim to regulate SME practices toward a pattern, leading to higher earning income (Moen, Øystein, and Per Servais., 2002). Various investigations and research studies are being conducted by the business regulatory authorities, to instill smart business rules and provide a friendly working environment for the small business organizations. UK along with other countries such as Singapore, Hong Kong SAR, China, New Zealand, the United States, Denmark, Norway etc. are thought to be the beholder of the economy, with most friendly working enviroment and regulations (Rothwell, Roy, and Mark Dodgson., 1991). In the presented research a UK based local SME’s within the Southern England region is presented in the investigation.
- Company Info;
Nationcrest PLC is a private construction company established before 40 years. The company profile offers a selective programme of development in the areas of Surrey, Berkshire, Buckinghamshire and Hertfordshire (Nationcrest.co.UK, 2013). The company renders individual attention in the construction of each project with professional architects and engineers to offer customize house. The material consumed in development traditional materials of brick, tile and stone by Nationcrest and specialist subcontractors. The quality standards are the core concern of the company with a determined standard of specification and finish internally, externally and in the detailed landscaping of the development. The company is also enviroment friendly that preserved mature trees as a priority (Nationcrest.co.UK/, 2013). Moreover, substitute trees are planted as a measure for the Eco friendly program. An over view of the company Profile from the insight of SWOT analysis will further assist to preview market position of the company.
3.1 SWOT Analysis;
- Investigation;
In a country like the UK, where strong support is being provided by the government to the local SME, the chances of small business growth are likely. Keeping in view the business profile of the selected company, the observation of operational plan for optimum customer service is assumed to support growth of the company in the long term. The construction business in the broad spectrum caters residential, commercial and industrial property.
4.1 Business Layout
Nationcrest PLC incorporated on 02 May 1973, is a private construction company located in Bucks. It is renowned for its finest quality individual and beautifully designed homes. It has a classic reputation in house building business for over 40 years (www.construction.co.uk, 2013). It offers various selective development programmes in locations like Surrey, Berkshire, Buckinghamshire and Hertfordshire. Nationcrest offers a customized service to design and build a new home on a plot of land according to the specifications mentioned by the client.
4.2 Business Management / sectors
The construction and rental business of Nationcrest PLC incorporate the work agenda with good business skills to develop their clientele. The company plans and decide their own marketing strategy to carry the business independently. The company management is in charge of business activities, taking strategical yet cost-effective decisions. The company business combines a perfection oriented approach with a superior work ethic, resulting in incredible rewards which can lead to unlimited growth. Furthermore, the optimistic approach also gives rise to brilliant client services which yield future rewards. The past Clients come yet again and helps the business to grow further. However, the latter is possible only if the services and products meet sustainable quality and perfection. The company works in five departments under the illustrated hierarchy.
4.3 Company Approach;
The homes designed by Nationcrest are for the selective buyers who appreciate luxury, spacious accommodation, security and state-of-the-art technology. Nationcrest always give priority to the specifications mentioned by the client. The houses are furnished internally and externally with respect to the clients requirements. The main mission is to act rapidly and professionally to plan a proposal for the client’s consideration and its implementation in the form of a comfortable house. Pertaining to the fact that the company upholds the complete responsibility of the client's capital, the company needs to have a strong hold over the operations and management of services. Only the efficient amalgamation of the two elements can eliminate any chance of compromise on quality and services.
- Issue & Consequences;
Recently, a customer of Nationcrest PLC raised concern for a delay in the work progress in the middle of the project without any notification or satisfactory response.The customer launched the complaint stating that the delay in the project has rendered financial burden on the client. He further elaborated that the project of delay was responded as an error of raw material shortage by one of the agents / contractor. However, the consequent delay of schedule ended in a delay of 6 months. The customer pointed that he intended to shift in the house from the rented place, he was living at that time. Thus, the extra monthly rate of the place and interest were the other additional financial burden on the customer.
The issue was forwarded to the management of the company which was a serious consideration, pertaining to the fact that the complaint may end into a claim. In such a case the company has to work with clients to fill out a number of legally required forms. Any error or mistake that causes financial damages to a client or third-party could activate a lawsuit. The company in such a situation is prone to face risks for lawsuits based on the significance of the property. The personal assets of management could also be at risk, if the business is sued for negligence, fraud, injury or damages. Moreover, Legal issues may come into play when investors become owners of property as well. Once the property is owned, the company becomes liable for damages to others who come onto the property. Precisely, the reported situation could be devastating for the business in a number of ways.
- Resolution;
Hence, the issue was dug in deep for resolution and the establishment of a long term solution. Pertaining to the fact that the company is on a fast growth track with an established reputation, the staff and management should necessarily meet the challenges covering legal and client service spectrum. Hence, the development of a standard procedure is one of the measures to be undertaken by the company. Yet, the other most important task is to investigate and eliminate the root causes of the issue. In this reference, the prime factor evident in this case is the lack of expertise and awareness of legal aspects in operational fields. The solution could be as simple to access and register with a legal consultant. In case, the company intends to secure business information, a part time resource for legal issues consideration could be another option,. The resource of legal department can further assist in the development of standard procedures along with creating awareness of the legal implications amongst the staff.
The other resolution of handling the top management lacking of legal aspects of business related knowledge is the other aspect of focus. These limitations demand a proper strategic plan to overcome the shortcomings. Strategic planning is a crucial function of senior management in any SME construction based firm. The main objective in strategic planning is to create and articulate the strategy, and make resource allocation decisions to guide the whole company during the strategy cycle. Secondary objectives include setting goals, managing learning and feedback, and measuring and rewarding results.
- Solution approach
A sub business plan or strategy is to be established which acts as the benchmark for the forthcoming activities. The main focus should be on the prevailing activities that are in progress and also on the long term future activities. This approach should be applied through a modified Standard procedure with an access to the on-going activities. This procedure should be analyzed critically and establish the weak areas that need to take corrective measures through effective action plans. The action plan of the procedure should be accelerated, pro-active and effective, identifying the critical path along with the solution for the negative slack. These action plans should be given top priority so that they can not only retain the existing customers but also attract new buyers.
The proposed procedure should cover the various dimensions for effective handling of issues. The issues in this reference could be aroused from an over optimistic view of time and cost that can add additional burden to company performance. Likewise, a higher projection of the estimates could also lead to problems. The most important aspect to be addressed in the procedure are the concerns of the system of incorporation of project changes. The reevaluation of the project in such a case is essential to point added activities for time allocation and client approval. Likewise, concise steps for schedule control are also the other necessary aspect of observation. These include regular evaluation of project plan for testing and inspections to assure performance, quality, reliability and compliance. Likewise, a clear communication plan to avoid and overcome conflicts with a resolution and negotiations.
Finally, comprehensive evaluation of delays, there reason, response to precautionary measures with time measurement are other essential aspects to be addressed in the procedures in order to establish a critical path analysis approach.
- Recommendation;
The Key influences on the future market for new homes include the nature of demographic demand, attitudes towards owner-occupation, the restructuring of the economy and labor markets, and the growth of new uses for the home.Nationcrest House builders need to understand the changing market segmentation and anticipate its geographical pattern. They also need to provide demonstrable improvements in the quality and functionality of new homes with innovation and technological modifications. Nationcrest could exercise more radical changes by providing higher levels of customization with green approach. This will meet the growing demand for Eco friendly individually designed homes. Nationcrest can also consider the prospect of customization and open building offer market opportunities for mortgage lenders, who may be able to offer differentiated financial products, with separate loans for the building structure and land, its services, and its internal fit-out.
Furthermore, Nationcrest should also make sure that the compliance with building regulations from a legal perspective is achieved. The building work in new and altered buildings should be administered carefully to make them safe and accessible. The construction work limit waste and environmental damage should also be avoided. The company should also take efforts to Eco friendly approach as the company take measure of preserving huge trees and replant further trees wherever possible in the landscape of the development area. Building practices, technology and construction techniques are constantly evolving. It is essential to make sure that building regulations of the company are fair, efficient, up to date and effective. Nationcrest should also strive to improve the overall quality of buildings and improve the effectiveness of the building regulation system. Also there is place of improvement in the monitoring of the key inputs which needs due attention– a lack of land for development, problems in the speed with which the planning process operates and severe shortages in skilled labor. Precisely, it can be concluded that Nationcrest is undergoing a sustained effort to reduce construction costs and improve delivery times and quality. Improving supply chains, the construction process and customer focus are all immediate requirements for a modernized house building firm.
References;
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DALRYMPLE, John F., and Peter John Bryar. "SME construction industry subcontractors performance measurement and improvement." 20th ANZAM (Australian New Zealand Academy of Management).
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