What is Small and Medium-sized Enterprises (SME) : Definition and Examples
(SME) Small and Midsize Enterprise Market Definition:
Small and Medium-Sized Enterprises (smes) are defined as a segment comprising a small business with 30 to 250 employees. These are businesses that fall within certain size thresholds, usually in terms of revenue, assets, or number of employees. International groups like the World Bank, the OECD, the European Union, the United Nations, and the World Trade Organization use the term SME. It play a crucial role in the economy, contributing significantly to employment, innovation, and economic growth.
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Characteristics of Small and Medium Enterprises :
- Size Criteria: SMEs are typically classified based on factors such as revenue, number of employees, or assets. These criteria vary by region and industry.
- Economic Contribution: Despite their size, importance of sme in economic development, often being key drivers of innovation and job creation.
- Adaptability: The role of SME in entrepreneurship development is it's ability to adapt quickly to market changes due to their smaller size and flexibility compared to larger corporations.
- Diversity: The Small and Medium-sized Enterprises market encompasses a wide array of industries and sectors, ranging from technology startups to local family-owned businesses.
Importance of the SME Market:
Small and medium-sized enterprises purpose is to focus on making new products or services so they can adjust quickly to the changing market needs. Here are some points to be noted:
- Employment Generation: SMEs contribute to employment, creating job opportunities and contributing to reducing unemployment rates.
- Innovation Hub: They often serve as hubs for innovation, fostering creativity and new ideas within various industries.
- Economic Growth: SMEs contribute to the overall economic growth of a region or country by bolstering competition and diversifying markets.
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Small and Medium-Sized Enterprises Examples
Consider a region where small software development companies, local manufacturing units, and family-owned retail stores operate. These businesses, falling under specific size thresholds, collectively represent the Small and Medium-sized Enterprises (SME) market in that area.
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