Comparison of the Small and Medium Enterprises in UK and Denmark

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Comparison of the Small and Medium Enterprises in UK and Denmark

In this study, the researcher has chosen two small and medium scale organisations, one from Denmark and one from UK. The researcher chose Creativ Company from Denmark, which is a small and medium scale retail organization, employing only 102 employees. It is under a private ownership. On the other hand, the researcher chose Actinic, which is also a small scale retail organization mostly dealing with online sales. It employs only 70 staff members and has offices located in France, Spain and Italy. Actinic UK is a unit of Oxatis group of companies, which was founded in 2001.

Actinic and Creativ Company both specialise in online sales of various products and services. Although the two companies are located in different countries, both companies are comparable due to their small size and use of ecommerce for online business. Since both SMEs are operating in a market dominated by giant retail stores, which also provide online services, it is difficult for them to capture a portion of their market share. In this respect both companies are only capable of providing services online.

In this section the researcher will compare the two small scale retail organisations and apply the concept of Porter's five force model.

Porter's Five Force Model

The industry structure analysis is used to determine the attractiveness of an industry. For this, the five components of the industry structure (i.e. the Five Forces) are analysed and evaluated. These include the Bargaining power of suppliers, bargaining power of customers, threat of new entrants, threat of substitute products, and intensity of competition in the industry (Howard, 2006, p. 73). The Porter's five force model provides an analytical framework with which the structure of an industry and the competitive situation can be systematically investigated. From the development of competition in an industry, it can be derived if this is attractive for the company and therefore feasible for a long-term profitable growth (Howard, 2006, p. 73).

Bargaining power of suppliers

The bargaining power of suppliers determines how to enforce them their interests in a business relationship with the company (Porter, 2008, p. 78). A high bargaining power of suppliers will usually lead to the fact that they can either charge higher prices or provide lower quality for the same price. The bargaining power of suppliers depends on the size of the firm, the vendor, the presence and relevance of substitute products purchased by the company, the incurring transportation costs when buying from other suppliers, the possibility of upstream integration from suppliers, the availability of adequate information by the company etc. (Porter, 2008, p. 78). Since, Actinic and Creativ Company are small scare retail companies; the bargaining power of suppliers highly affects their business. Competing in the industry of retail giants is not easy and small scale organizations like Actinic and Creativ Company may not be able to compete with retail giants like Tesco and Sainsbury etc.

Bargaining power of customers

As the bargaining power ...