Does Size Matter

DoesSize Matter

DoesSize Matter: Thought 1

Ina situation such as this, where money is not an issue, size stillmatters. Large businesses are large for a reason. They have peoplewho know how to handle risks, no matter what they are. A largebusiness also means, more heads working together. It is not a one manshow, so to speak.

Whenmultiple people are involved, more ideas are shared. That means, alot more people are involved in making sure that the available,abundant investment is spent properly. When this comes into thepicture, the risk attitude does not matter. The size of the businessnullifies any extreme risk prone investments, and ensures that thesizable business continues to be sizeable. (Lawrence &amp Chad,2010).

DoesSize Matter: Thought 2

Whenit comes to day to day management, size is a problem. Small firms flyunder the radar of the public imagination. For instance, if a largecorporation such as Microsoft or IBM botch up a product launch, theywill find themselves in a bad spot. They become part of theheadlines, social network discussions and everyday chit chats. Thiseventually ends up affecting their stock price, which may neverrecover even if the large corporation in question fixes any issues itcreated.

Smallfirms are equally at risk of making mistakes with everyday businessactivities. However, the news about these mistakes never reachespeople who might influence their business. In a small company, newsabout risk and results reaches the decision makers really fastbecause of the shorter corporate ladder length. (Lawrence &amp Chad,2010). In big corporations, it takes a long time for the bad news toreach the decision makers. By then, it might be too late.

DoesSize Matter: Thought 3

Basedon the concept of risks discussed here, it is clear that there is aconnection between size and risk. Investment either comes fromindividuals, fund organizations and of course banks. Irrespective ofwho is the source, they look at the size of the company they aredealing with.

Thereis a tendency of governments across the world to save largecorporations. When the automobile industry was about to kill itself,the governments bailed them out. Same goes to banks, and almost anycompany that is too big to fall. With this in perspective, it couldbe argued that size does make it easier when it comes to takingrisks. On the other hand, small organizations will have no one butthemselves to depend on when things go wrong.

Nogovernment or bank is going to rescue a small and medium sizedcompany. In fact, they would be lining up to take care of postclosure asset sales.

DoesSize Matter: Thought 4

Herethe topic of focus is recovering from the effects of a risk that hasbeen taken, and the results have gone bad. Any business, irrespectiveof size, needs two things to recover from a disaster. They are timeand money. (Ken, 2012). All businesses usually have some time torecover, but depending on the size, the amount of money also varies.

Smallbusinesses, will have little or no reserves. Thanks to their size,they cannot get funding either, when they are on the downturn. Thatmeans, no matter how good the management is, the chances of themrecovering is very low. A large business, on the other hand, wouldhave huge cash reserves. Further, large companies have a tendency todiversify. When they are recovering from a risk related loss, otherbusiness divisions make up for the loss of revenue. Of course, thecash reserves help too.

References

LawrenceJ. Gitman and Chad J. Zutter (2010). TheFinancial Market Environment.Principles of Managerial Finance, 13thEdition.

KenTysiac (2012). Fraudcontrols lacking at organizations with fewer than 100 employees.

Smallbusiness, big risk. Retrieved fromhttp://www.journalofaccountancy.com/Issues/2012/Aug/20125707.htm