2.5. Popular types of small
and medium enterprises
Small business exist in every type of industry, agriculture,
forestry, and fishing, mining , construction, manufacturing, transportation ,
communication, and utilities, wholesale trade, retail trade, finance,
insurance, and real estate, and services. In order of importance, however, they
are most important in retail trade, services, construction, wholesale trade,
and manufacturing.
Retail businesses sell their products directly to consumers.
But they are tens of thousands of small retail enterprises, such as bakery,
greeting card, record, apparel, jewelry and numerous other types of shops and
stores.
v Characteristics of the SME Sector
This study noted that the small business segment of the
economy is heterogeneous with businesses ranging in size from micro-enterprises
to relatively large firms. Small businesses are very diverse and have different
needs. They operate in the formal and informal economies. Some are simply
survivalist whereas others are run by people with an entrepreneurial flair.
Some are start ups; some are growing rapidly; others are experienced and highly
sophisticated. They operate in different markets, local, national and global
(Wikipedia, October 2007).
No single policy can cover all these businesses, formal and
informal, operating in different industrial sectors and with many sector
specific challenges. Thus, data categories should be sufficiently
differentiated to provide detailed and nuanced information to support targeted
policy approaches and practical interventions. It is worth reconsidering
whether SMEs should be considered as «one group» as the acronym
infers. For policy purposes, a one- size-fits-all approach certainly will not
work.
Table 2 Difference between
SMEs and Large Company
|
CATEGORY
|
SMEs
|
LARGE COMPANY
|
|
Management
|
· Proprietor entrepreneurship
· Functions-linked personality
|
· Manager-entrepreneurship
· Division of labor by subject matters
|
|
Personnel
|
· Lack of university graduates
· All- round knowledge
|
· Dominance of university graduates
· Specialization
|
|
Organization
Sales
Buyer's relationship
Production
Research development
|
· Highly personalized contacts
· Competitive position not defined and uncertain
· Unstable
· Labor intensive
· Following the market, intuitive approach
|
· Highly formalized communication
· Strong competitive position
·Based on long- -term contracts
· Capital intensive, economies of scale
· Institutionalized
|
|
Finance
|
· Role of family funds, self financing
|
· Diversified ownership structure,
access to anonymous capital market
|
Source: P.M. Hamuranek, C.F. Lettonayr, J.H. Picher, Title,
Manual for small industrial business. (UNIDO, Vienna, 1994) Page 7 and
14.
The abbreviation "SME" occurs commonly in the European Union
(EU) and in international organizations such as the World Bank (WB), the United
Nations (UN) and the World Trade Organization (WTO). The term "small and medium
businesses" or "SMBs" is predominantly used in the USA. In Rwanda the term is
«SMEs» for small, and medium enterprises, and elsewhere in Africa,
MSME is used for micro, small and medium enterprises.
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