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OPTIONS OPEN TO SMALL FIRMS Small firms constitute 90 per cent. of those engaged in manufacturing and distribution. Pressures of competition and the necessary reliance upon one or two key men cause many small firms to disappear without trace—others amalgamate or become absorbed into larger units as their very success draws attention to themselves and to their needs for the specialist knowledge available in the bigger unit. But as rapidly as small organisations disappear, others appear to take their place. New industries or new expressions of personal service frequently favour this. It may also be expected that the effects of Selective Employment Tax and the Training Board Levy, with their encouragement to existing organisations to divest themselves of labour, will create opportunities for small industrial units not hitherto directly favoured in this way. The major long‐term problem of the small organisation is most likely to be management or executive succession. Where, as is often the case, the driving force, the business skill, behind the company is one man, the problem of his replacement is likely to loom large to himself, his family, his colleagues (who recognise their own incapacity for this role), and those employees who depend upon the continuance of the firm for their livelihood.

History Asten Foundries Limited was established in a South Midlands industrial town in 1908. Its principal products are small castings in iron for the gas industry. It also undertakes general foundry work on a sub‐contract or jobbing basis, as well as some machining.

“The mayor and several other officials were all executives of one company. This ultimately led to charges that the company was trying to run the town.”

Somerbury Compounds Ltd.is a company in the rubber industry. In the past it has been, at least regionally, in the “top twenty” of its industry—its chairman or managing director has been a power in the land, and while the company has not considered itself a giant‐killer, it has rubbed shoulders comfortably with the giants. In this case study we shall see a picture of relative rather than absolute decline. We may ponder upon the future of a business whose short‐term prospects enable it to have confidence in its day‐to‐day activities, but whose longer‐term prospects have probably not been sufficiently thought about in the past and certainly do not make for comfort if considered now. This situation is one which must concern any company in the top twenty of its industry if the signs are that the size and significance of the leaders are growing while those lower down the league are falling behind.

Free competition is one of the much extolled virtues of any economy not altogether dominated by state monopoly: the supposed virtues need not be dwelt upon here, but the tactics and strategies necessary to be successful in competition perhaps deserve rather more attention than they receive. In the most competitive of all businesses—professional soccer—the rewards for success are extremely high, while the turn‐over of managers is also very high in the many competing clubs which necessarily are unable to achieve success. In more normal business activities, situations occur from time to time in which although a company may be efficient by local, regional, or even national standards no strategy of decision seems appropriate. This case explores such a situation and invites readers' comments. Where this case is used as part of a course on business policy students may be asked to develop a policy likely to avoid situations similar to those discussed or to develop a strategy to meet the present situation.

A QUESTION OF PRIORITIES WITH SMALLER COMPANIES The time has long since passed when it could be assumed that the fundamental problem of attaining profitability in business consisted simply of an ability to buy at a low price and market a large enough quantity of one's product at a sufficiently high price. Though, of course, it is indisputable that this relationship enters into the process of attaining profitability, the emergence of increasingly complex tax laws has meant that except in simple cases involving little or no investment the normal 'sense' of a situation has been made so complicated that managers may be forgiven if they sometimes feel that investment, and hence operating decisions, have the uncertainty of a lottery.

Following devaluation industrialists are urged to take advantage of the great opportunities facing them, but it is not always clear what these opportunities are in financial terms. Such difficulties apply particularly to a company which imports as well as exports and has based its price policy on anticipated volume of sales on a home market and its costs on a smaller annual rate of increase than now seems likely. Do two and two equal four in the complex arithmetic of devaluation? Not necessarily, as the following case of Barsok Brushes Ltd. (BBL) demonstrates. Although its scale of activities has been reduced to simplify discussion the question for consideration remains the same.

One of the rewards of success for the company director is that he is unlikely to be called upon to explain his policies publicly and that, consequent upon success, shareholders, whether large or small, are likely to accept uncritically any explanation of the company's activities which the chairman thinks appropriate. In fact, unlike cabinet ministers, who seldom refuse an opportunity of discussing their r6le, or their government's policies, members of boards of directors rarely make statements about company affairs. Even in the very unusual event of a resignation of a director being proffered or sought have those who voted his adoption in the first place any clear idea as to what differences of opinion, blunders, or stupidity may have led to the disappearance of the director. Furthermore, as the process of election or selection calls for none of the skills on the part of the new director associated with the hustings, most shareholders one suspects place their trust in men unknown, unheard and unrecognized. Business success and high profits seldom come to companies all the time and to many companies but rarely. The excuse proffered is that “things did not turn out as expected” or ‐ and currently much more common — “things would have turned out as expected if only Government policy, or the economic climate had been different”. Currently many chairmen have been able to explain away losses amounting to millions of pounds simply by claiming that the national economic position is unfavourable: shareholders appear to have become so bemused by the pessimism surrounding the economic situation that they confidently re‐elect boards of directors who promise nothing better than low sales, lower returns, and lowest profits. It is not surprising that explanations such as those outlined above were accepted occasionally, but in many cases the records of his annual statements show that the chairman has been able to claim the economic situation as being unfavourable as an excuse year after year. In such cases one can only suppose that a favourable economic situation would be one in which some magic National Finance Corporation automatically multiplied profits by two if they were large, by ten if they were small, and gave some special reward for a loss. Discussions recently surrounding a number of take‐over situations, as well as the examination of Lord Robens' thesis that the chairman of a nationalized undertaking must on principle proffer his resignation if serious public criticism is levelled against the corporation, make it worthwhile to re‐examine attitudes towards directors and chairmen of companies. The case that follows invites an examination of the role and responsibilities of directors in a particular situation.

The committee structure in public affairs is complex: is participation too time‐consuming for senior business management? Will loyalties conflict?

So far as the writer knows the product described in this case has yet to reach the national market—if it has done so, it certainly has not captured the imagination of the masses necessary for its success. Readers might like—perhaps profitably—to consider the merits and demerits of the product described and its marketing. Perhaps the most venturesome may be able to contribute a story of success (we hope!), or failure to these columns. As every reader knows, practically anything can be a Christmas “sell”. One can dress the most ordinary product in the gaudy tinsel or special Christmas pack, and even the prosaic filing cabinet is “the perfect Christmas gift” if your husband or wife happens to be secretary to the local village or town group. However, the case discussed here is about a product which could be the centrepiece of Christmas evenings—the Christmas cake; and yet this much admired and marketed product has not, as yet, received as much attention as might have been thought likely. After all, perhaps 10 m. or more cakes are made and sold each Christmas in the UK alone, and then there are export possibilities! But on with the case …