Strategic Importance of Smes

Topics: Outsourcing, Business, Small business Pages: 8 (1935 words) Published: November 7, 2011
Strategic importance of SMEs

| |Parallel with ownership reform and privatization, the number of SMEs is increasing. The strategic importance of | | |SMEs is today acknowledged around the world for the following reasons: | | | | | |• small and medium-sized enterprises are contributing to employment growth at a higher rate than larger firms. In | | |the EU economy about 99.9 per cent of the enterprises are SMEs of which 92 per cent are micro enterprises. Read | |Number of SME’s |also “What is a small business?” | | | | | |• the private sector and in particular SMEs form the backbone of a market economy and for the transition | |Gross Value Added |economies in the long-term might provide most of the employment (as is the case in the EU countries). A World Bank| |(GVA) |sector policy paper shows that their labour intensity is from 4-10 times higher for small enterprises; | | | | | |• support for SMEs will help the restructuring of large enterprises by streamlining manufacturing complexes as | | |units with no direct relation to the primary activity are sold off separately. And through this process the | | |efficiency of the remaining enterprise might be increased as well; | |Outsourcing | | | |• they curb the monopoly of the large enterprises and offer them complementary services and absorb the fluctuation| | |of a modern economy; | | | | |Business cycle |• through inter-enterprise cooperation, they raise the level of skills with their flexible and innovative nature. | | |Thus SMEs can generate important benefits in terms of creating a skilled industrial base and industries, and | | |developing a well-prepared service sector capable of contributing to GDP trough higher value-added; | | | | | |• a characteristic of small industrial enterprises is that they produce predominantly for the domestic market, | |Clusters |drawing in general on national resources; | | | | | |• the structural shift from the former large state-owned enterprises to smaller and private SMEs will increase the| | |number of owners, a group that represents greater responsibility and commitment than in the former centrally | | |planned economies; | | |...
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