SME Management: Lorraine Electronics Case Study Report

This report provides a comprehensive analysis of managing Small and Medium Enterprises (SMEs), using Lorraine Electronics, a UK-based electronics importer, as a case study. It explores the characteristics of SMEs, including limited resources, informal management styles, and flexibility. The report delves into the entrepreneurial process, covering decision-making, business environment scanning, product selection, location, technology, project assessment, and financial considerations. It examines Lorraine Electronics' business concept, competitive advantages, and strategies for navigating the competitive environment, including direct competitors, regulatory demands, and technological trends. The report also addresses the challenges faced by SMEs, such as client dependence and financial constraints, providing insights into business growth, market research, and monitoring. The report highlights the importance of business planning, competitive advantage, and effective management for SME success.

Managing small and
medium sized
enterprise

Table of Contents
INTRODUCTION...........................................................................................................................1
Findings............................................................................................................................................1
Conclusion................................................................................................................................10
Recommendation...........................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
The concept of medium and small size enterprises can be described in various ways.
These are the independent firms which directly affect the economy across the world. That’s why
few business industries and entrepreneurs has taken these SMEs as an goodwill of the business
which helps them in earning more profits and accomplish their requirements in a effective way.
These are based on the number of employees and turnover of the company as they have (Ali, N.
S. H. M. and Babiker, 2017). These are the part of economic environment wherein, it develops
countries in an appropriate manner. SMEs and entrepreneurs firms are the crucial segment and
driver for various national economies. These firms also focuses on the different types of business
people who can run their goods and services in a effective way so that, SMEs can easily sustain
the market are for long duration of time. In order to increase their market SMEs are always one
of the remarkable subjects for the investigators. Therefore, it can be define from the larger
companies through the huge number of characteristics. In this, the researcher have prepared few
characteristics for better understanding of this topic which is, limited resource- SMEs basically
has limited availability of resources that means, they did not have lot of fund to invest in
purchasing of machinery and hiring the workers. Next is informal management style: for SMEs
the management activities of functions usually informal. According to this owner has to do
everything because there is no clear division of task. It has another characteristics that is
flexibility in which SMEs has more flexibility to adopt few changes in the environment due to its
size and informal structure. Lastly it depends upon the individual decision makers, wherein,
SMEs firms are managers and operates by the owner. In this entrepreneur of the enterprise leads
the company and employees or employer plays a vital role. The growth of the firm is also
explained through the company owner and decision making is also done by the owner.
Therefore, it is also necessary to develop in enterprise environment within the market. In this
present report, Lorraine Electronics has been selected as an organization which is situated in
London UK. This is a small and medium sized enterprise which does the import electronics items
from China. It also concentrates on the good quality of electronics items with affordable price to
its customers (Chauma, 2017). Along with this, report will discuss the meaning and
entrepreneurial process with the nature, characteristics and variety of small business. This report
will also highlight the growth and consolidation of the entrepreneurial venture with finance and
small business with lot challenges in the business market. At last, macro-economic environment
and enterprises policy or government intervention in order to becoming an entrepreneur or
running small business topics will get covered in entire case.
Findings
Small and medium enterprise organizations are those companies which do not have big
businesses. They do not trade in foreign markets. The setting up of small scale firm is not a
difficult task. It requires effective strategy and planning to grow and develop business. The

procedure for making small scale firms successful and profitable is more easier than procedures
for a large organization. The growth and development of small scale firm also help in growth of
economy of the country (Cojoacă., 2017). From the analysis of the small electronic firm,
Lorraine Electronics it is concluded that setting up of successful business is possible. A small
scale business has a fixed amount of financial investment. It is lease base ownership or hire
purchase ownership. A small scale firm includes small profits. It consists of local units which
operate in small regions. Small enterprises are beneficial for countries where there is scarcity of
capital and there is surplus supply of labor. Small scale business are independent businesses that
are helpful in providing success to a developing entrepreneur. In larger businesses, there is
requirement of extensive planning and overhead expense but in small scale firms all this is
eliminated. There are various steps followed by Lorraine Electronics for developing business in
the marketplace. These steps are described below-
Decision making- The small firm entrepreneurs have to take several decisions for setting up
their corporation or partnership (Durst, S., Yip, and Lee, 2015). The entrepreneurs analyses their
strength and weaknesses before entering into business activities. This analysis helps in knowing
the size and type of business. Lorraine Enterprises does special analysis for making effective
decisions for business profits and expansion.
Scanning of Business Environment – The environment of the business is an important factor
while setting up of the business. It is advisable to organizations for setting up the firm and
making profits for business. The entrepreneurs should understand the prevailing business
environment in which they are operating. Lorraine Electronics is a firm that is dealing with
security electronic systems, switches, small electric equipments. So the company is advised to
know various industrial policy, economic policy, licensing policy, legal environment, and
technological environment.
Product selection- The products or services of the company should be good enough so that
customers will to buy them. A market research is conducted for knowing about various
competition prevailing in the marketplace. Lorraine electronics has done research for knowing
the competitive issues and challenges in expanding stores and shops for increasing work and
efforts for achieving success in business.
Location- Location is very important for determining profitability of business and knowing what
factors are affecting sales of the company (El-Rafei, and et. Al, 2017). In the Lorraine
electronics, several factors are considered which are evaluated before establishing business. The
small firms evaluates factors like materials, labor, infrastructural facility. The location of
Lorraine Electronics is appropriate in accordance with reach to customers and clients.
Technology- Technology is the main factor that makes any organization competitive. There are
several companies which produces the electronic items and sell them in the market. The
advantage of Lorraine Electronics is that it imports electric wires and products from China. They

are sold at a higher price to local customers. The entrepreneurs of the organization gather
information about the needs of people and clients and implement them in providing good
services and products.
Project- The project means assessing of various activities involved in accomplishing goals of the
firm. It is the technique for analysis of enterprise and it is evaluated on various factors like
social, economical, political, technical, social and market. Lorraine electronics undergoes several
analysis before selling products.
Finance- This is the main challenge of any small shop or company. It is important for these
firms to have less liabilities in the initial stage of business (Javaid,. and Iqbal,., 2017). It is
advisable for small enterprises to keep few loans in order to work under limited pressure for
making profits under risk of liabilities. It is good for company to have few liabilities and assets in
order to maintain balance. Lorraine enterprise is a shop of electronics that has limited liabilities
and assets, loans for which it has to perform well and increase profit of the company. Lorraine
Electronics has proper balance of assets and liabilities.
Production management- This is the management of production. This involves allocation of
space for performing various activities and operations of store. Lorraine Electronics are involved
in hiring few employees but productive employees. Employees are the major assets of any
organization.
Market research- There is need of market research in the business environment for analyzing
needs and knowing the areas of modification and growth. An effective market research helps is
important for Lorraine Electronics to know about new trends of electric gadgets required or
demanded by customers.
Monitoring- The monitoring and evaluation of markets at regular interval of time is necessary to
keep track of market scenario (Ludmila,. and Stanislava, 2015.). The success of any firm is
determined by monitoring of quality, production and profitability (Nowotarski, and Paslawski,,
2015). Continuous monitoring helps in identifying growth in future. Planning is required to
implement good management of any firm. In Lorraine Electronics, a proper plan is made and
monitored for improvement.
Business concept and any source of competitive advantage
A business concept is defined as the idea of business which includes general information
like product or service, unique selling proposition, target demographic that helps a company to
have advantage over it’s competitors. The business concept includes development of new
products for marketing and delivering an existing product. It context with Lorraine Electronics
the business concept is to enhance the number of shops from one to five in specified time frame.
This company wants to provide services and product to clients by importing them from China.
Competitive advantage is the condition of business or company to produce or sell products or

services at lower prices. Such conditions creates generation of more sales than competitive rival
in market (O’Connor and Kelly, 2017). There are several factors which attributes to competitive
advantage like branding, cost cutting, quality of products, cost structure, customer service,
intellectual property and distribution network. Competitive advantages help in generating greater
value of the firm and shareholders because of the condition of business and certain strength.
There are basically two types of competitive advantage i.e. differential advantage and
comparative advantage (Nowotarski, and Paslawski., 2015). A comparative advantage is defined
as the ability of firm to produce a service or product more effectively than the competitors. This
leads to increase greater profits and this creates a comparative advantage. Thus, Lorraine
Electronics is a firm that is using various strategies to expand the business and increase sales.
The current level of demand and the competitive environment
There is a part in business plan of small enterprise to analyze the competitive
environment. The competitive environment includes various external factors that are competitive
(Parkin, Fielder. and Ashby, 2016). The proper analyzing of these factors is important for
making effective decisions The major element that are in competitive environment are
competitors of business. On the other hand, other sources are indirect competitors, regulatory
sources, technological changes and social changes. All the above effects on the business
performance. They are described below-
Effect of Direct Competitors- The competitive environment consists of direct competitors. In the
scenario of competitive environment, business that offer same services and products are in direct
competition. For e.g. a firm that sells electronics electronic items is a direct competitor with
other dealers of electronics.
Regulatory and Licensing demands- The business environment in a small business is affected
by government regulations and demands of professional license. For e.g. an electronic company
has particular rules and regulations which are made on the basis of government policies and
regulations.
Social and technological Trends- The competitive environment of a small firm is affected by
change in technology. Lorraine Electronics follows various social and technological factors that
improve the condition of services and products offered by the firm.
The growth and development of the business to date
The small business enterprise are organizations which focuses more on profits of the
firm. Growth and development are important for success of these firms (Skolud, and et. al.,
2016). Lorraine Electronics monitors and check it’s performance at regular intervals. This helps
in keeping an eye on the quality of service and products. The sales information can also be
determined by this assessment.

The challenges of managing and running a business
There are different challenges of a small firm that are faced in the implementation of the
business plan at initial stage or development stage . Entrepreneurs think that they have achieved
a great achievement by stating a new business. There are challenges faced by both large and
small firms in running a business. These include some issues like recruiting and hiring right
candidate, building loyalty and good customer relationship. There are several challenges that are
faced by small businesses. These are described below-
Client dependence- In a business context, if a single client is making half the income of owner
then owner becomes an independent contractor. It is important for growth of the business to
diversify the client base. In small businesses it is a good thing when customers are willing to pay
on time.
Money management- It is important for the small business to be able to pay all expenses on
time. The capital involved in the business should be sufficient. The owners of small medium
enterprise must be heavily capitalized (Stanciu, 2015). They should be able to take extra income
when there is a need in cash reserves. Small businesses are founded by people who work hard
and have strategies to control problems. Money management is important when there is inflow of
cash to the owner and business. Professional help is taken by the business owner for handling
business accounts and taxes.
Quality and growth – There are issues of growth which outweighs the benefits in case where
business is not depending on founder. Business sacrifices for scale. This means the small
business is not able to manage client relationship personally or inspecting every aspect carefully.
The level of personal attention and engagement with customers help in semi-success of business.
Small business owners should navigate the processes of company.
CONCLUSION
According to the above report it has been concluded that small and medium sized
enterprises or entrepreneurs who are running their business in a small scale sector plays a
necessary role in market which usually affects the economic conditions worldwide. In with
regards of Lorraine electronic, their business owners need to generate or develop good
relationships with China as this company imports some electronics items. This company deals in
different electronic items such as personal digital recording system GSM/GPS, RFD4 bug
detector and mini digital video recording system etc. Therefore, company focuses on the
consumers demand or requirement towards their products. As per the above discussion it is a
small enterprise which explained macro-economic environment and various tools and techniques
which is used to identify the proper utilisation of their items. That helps the consumers in order
to choose several items with lower price, so that this strategy of this company can maximise
customer satisfaction at higher level. Along with this report it also defined the main key factors

of small market industry with several characteristics and natures. This also focuses on financial
statements which are very helpful for making a budget plan of the firm with attractive sources, so
that company can spread their business at higher level. Therefore, product and services should be
delivered at the right time with right place for their consumer.
RECOMMENDATIONS
As per the above report it has been recommended that, Company should implement few
strategies for development in their business at higher level in small scale enterprises, there
strategies like Expansion: It is a very curial part of any firm which helps in increasing the
business at highest level in order to satisfied customers in effective manner. Diversification: it
helps in overcome the limitation of business growth by the Expansion. There are several
problems like poor capacity utilization, Inadequacy in Finance, unsystematic management etc.
which is faced by Lorraine Electronics so that it has been recommended that Company should
improve these problems in order to gain sustainability in the market. Along with this it has been
advised that small scale industries should take help from Government in order to collect lot of
funds for expansion their business in the competitive environment. Apart from this PESTEL
analysis is very helpful part for this organization which influences the internal or external
environmental factors on business enterprises. Whereas,
Political: It is related with SMEs firms that have positive impact on their growth and
sustainability. In this government plays a vital role in the form of planner, promoter and
regulator of business firms.
Economic: It refers to the overall economy of the country, that have impact on the industry
structure and profitability of the firm.
Social: It refers to the cultural dimensions of the environment in the form of consumers life style
and various values which is analyze the society in which business firms operates.
Technological: In this, company implements on various technologies in order to creating a
existing system which is helpful for future growth.
Environment: In this, company follow good environment for maximizing the customer
satisfaction in an appropriate way.

REFERENCES
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