Does Have Small And Medium-Sized Enterprises An Advantage?

Does Have Small And Medium-Sized Enterprises An Advantage? It is well known that small and medium-sized enterprises are an important catalyst for growth, development and diversity of the countries at all stages of development. Despite the established concept of 100K Factory Revolution entrepreneurship in the Gulf Cooperation Council and the large size of the sectors of small and medium-sized companies in the Gulf countries, but there is still the capabilities of a wonderful diversity and sustainable job creation has not been utilized yet. Dr. Stephen Hertog lecturer at the London School of Economics and Academic Director of the International Institute for Family Business addresses at length the challenges and trends in small and medium-sized companies in the Gulf Cooperation Council (GCC).

Family Businesses In Switzerland

Family Businesses In Switzerland

Describes an extensive study made from 2008 to 2010 in cooperation with the rooms of European trade, the Chamber of Commerce German Emirates and the Federation of Chambers of Commerce of the Gulf Cooperation Council [1] that small and medium-sized companies the Gulf often focus on low-profit activities and employ the proportion of foreign workers is even greater than those employed other private companies. To overcome the current limitations of 100K Factory Revolution there is a need to reconsider the government support policies and orientations as well as companies on human resources and corporate governance.

Small and medium-sized companies in the Gulf region: what we know and what we do not know about

Data on small and medium-sized companies in the Gulf Cooperation Council (GCC) are often on the total number and what it represents the percentage change in each sector and the total contribution to the labor market are limited. And are not available until now in the Gulf region in general, the 100K Factory information listed in the statistics of small and medium companies in the Organization for Economic Cooperation and Development (OECD) countries, such as profitability or continuity rate or capital cycle.

However, describes the general features that define the sectors of small and medium-sized companies in the Gulf that small and medium-sized companies comprising at least 90% of all companies in all countries of the region. A large percentage of small businesses in the trade sector as well as other important sectors such as small workshops, hotels and restaurants and construction work, while less importance in industry and other sectors that require possession of a large capital.

Small and medium-sized companies in the Gulf tend to be low-profit small activities and service activities. The division of these companies on various sectors in mature markets is more of diversity and balance.

It provides companies with 100 jobs to the proportion of employees between 40 and 63% of the private workforce official in the various GCC countries, compared with about 60% in the European Union. In the cases of the Gulf Cooperation Council, where we find small and medium enterprises and micro, it is clear that in spite of the numerical dominance -companies infinitely Alsgralta has 10 employees in the formal labor market rather modest – they provide between 10 and 30% of total official employment opportunities in various Gulf cooperation Council (GCC). When compared with their counterparts from the infinitely small European companies, we find that the rate of up to about one-third of all private sector jobs across the continent.

This is the GCC log Gulf weak in particular with respect to the employment of citizens, where it is estimated that 98% of the staff of small and medium-sized companies in Saudi Arabia are expatriates, while the arrivals in the private sector, the proportion of the whole in Saudi Arabia to nearly 90%.

The 100K Factory Revolution Bonus data on the contribution of small and very limited for small and medium-sized companies in the Gulf of the national economy. But because small and medium-sized companies pay, on average, lower wages and running in less profitable activities and less vulnerable to the heads of big money compared to large companies, the rate of contribution to the private economic activity lower than in private sector jobs, with potentially up to 30% and no more, It was much less than the contribution of their counterparts in the European Union, where the ratio is approaching 50%.

There is a lot of innovation and dazzling growth among small and medium-sized companies in the Gulf States stories. However there is no contribution to the total cross section of small and medium-sized companies are still in the diversification of activities and hire a few people to some extent. What are the factors that hinder the role of small and medium-sized companies in the Gulf modernize the economy?

Challenges

Are similar to many of the problems that hamper the development of small and medium-sized companies in the Gulf with those in developed countries and developing countries in general, while there are other things limited to the Gulf region alone.

Access to a single funding from the general problems Alshahyrh.ofaqa to a study by Dan and Bradstreet, the banks in the UAE in 2008 refused to about 50 to 70% of applications for loans from small and medium-sized companies due to the high risk and the failure of the applicants to meet the requirements for obtaining a loan . 55% of small and medium-sized companies can not get the loan that she needed. In contrast, in the EU and in spite of the recent economic crisis, more than 70% of the companies got all or part of the bank loan requested, while categorically refused to about 15% and this according to an extended study of the European Union included in 2009.

Aattabrohd reasons that may make local banks avoid lending to small and medium-sized companies is relatively large administrative effort when dealing with them. However, in many cases they are rejected loan applications for a strong justification: such as poor and primitive accounting skills of many managers of small and medium-sized companies; and there is often a lack of feasibility studies and business plans. Moreover, the implementation and collection of the guarantees in the local courts are sometimes slow procedures.

Delegated managers expatriates to do the daily operational processes dropped, especially in the smaller Gulf states and in the front-Financial resources leads to a reduction of innovation and the acquisition of skills among owners of small and medium-sized companies. As long as there is the possibility of achieving a steady flow of income through a few activities profitability and a little effort on the part of the owner, it will continue to be an aversion to innovation and risk aversion prevalent in small businesses.

The business model in the Gulf tend to the individual clearly, where there is little cooperation among small and medium-sized companies with regard to procurement and supply chain and marketing. And it could mean a lack of business planning and low profit margins as well as limited access to skilled labor. SMEs often suffered low wages to its employees with the absence of plans for professional advancement or expectations in the long term.

As small and medium-sized corporate governance continue to exert a lot of effort in dealing with local bureaucracies While become investment easier for big investors in the GCC environment, it is still often burdensome for smaller companies, and this is what makes it more difficult Altenbabaloamal and thus undermines term investment opportunities run. A study conducted by the Riyadh Chamber of Commerce that the bureaucracy is the most important obstacle to the development of small and medium-sized companies in Saudi Arabia:

The most important obstacle to the development of medium and small companies, according to the study of the Riyadh Chamber of Commerce and Industry

Governments have undertaken the task of developing small and medium-sized companies, it has appeared several support programs during the past decade. However, these programs are still far apart and unrelated studies and follow-up operations and the systematic evaluation of the results of policies are rare and few. It was possible to innovative models for business services and custody services developed in the emergence of some regional institutions look better if the preparation of such reports.

One can criticize the idea that a lot of software continues to provide direct financial support to fund the projects, whether they are viable or not, without distinction between them, and each provides services easier it will be provided through private business services companies.

Small and medium-sized family companies as companies

It considers almost all small and medium-sized companies in the Gulf Cooperation Council (GCC) are family businesses, and therefore the challenges of small and medium-sized companies become challenges for family businesses as well. And the opposite is true, as faced by small and medium-sized companies the usual problems in family businesses, such as the distinction between ownership and management and prepare succession plans and the separation of the family for the company’s financial hand things and many others.

It may make it difficult family dominance of attracting qualified managers from outside the process, and the focus of the authorities in many family businesses may pay as well as family members of people with talent to leave the company, which will aggravate the position of human resources for small and medium-sized companies.

The existence of structures and systems are not fixed low-profit company usually means that there is not a lot to be handed over to the next generation. Family links provide confidence, but when you think it might replace formal governance systems, usually the result is the deterioration of the company’s once changed family circumstances. The average age of small and medium-sized companies in Saudi Arabia is 7 years, reflecting in turn decrease the continuity of these companies rate. It is recommended that governance reforms in the Gulf of small and medium companies, not only to transform them into productive businesses with higher value added, but to preserve the wealth of the family as well.

The need for higher value-added

The challenge is not for the sectors of small and medium-sized companies in the Gulf region in the quantitative growth overall, and that has been achieved through continuous fetch foreign labor process, which had a relatively small return in the long run for the citizens. But a challenge is the qualitative growth of the shift to the technical and administrative sectors of the most complex and sophisticated allow the diversity of products, and wages and profits large enough that the staff needed from citizens. To achieve this goal, we must overcome the current model for small and medium companies, which is based on the provision of all companies for the same service and low-profit products.

This change should stem from within companies, but on some levels to help governments can, for example:

Use of leading national bodies to coordinate and evaluate the support of small and medium-sized companies policies and collect the information available and then merge them available to the public.
Limiting the concentration of support on the sub-sectors with higher value added, and that can provide employment opportunities for the citizens policies.
Direct support for small and medium-sized software companies to provide the environment that allows for the growth of these companies instead of relying on subsidized loans and business support services free.
Strengthen cooperative systems between small and medium-sized companies in marketing and purchases and share infrastructure and business services.
Measure the performance of the existing support programs through monitoring tests and publish the results.
The establishment of outlets dedicated to supporting small and medium-sized companies and governmental bodies.
Under the right circumstances, can the GCC family businesses and small to become a primary catalyst to provide job opportunities for citizens and diversity on a large and comprehensive framework. In Europe, companies that have 250 contributed to an employee of increasing employment by 85% from 2002 to 2007, is necessary to the existence of an enlightened policy of small and medium-sized enterprises to overcome the social and economic challenges that young people and the unemployed in the GCC countries will face in the coming years.

Summary
Review Date
Reviewed Item
Does Have Small And Medium-Sized Enterprises An Advantage?
Author Rating
51star1star1star1star1star