External Factors Of SME

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Almost every company in the world today started as a Small to Medium Enterprise (SME). Worldwide SMEs are known to provide considerable amount of goods and services to communities. There is a growing demand for goods and services since the population of the earth keeps increasing and this demand cannot be handled alone by the big companies hence SMEs are vital cater for some of these demand. As it stands there is no acknowledged worldwide definition of SMEs (Omar, Arokiasamy & Ismail, 2009; Hooi, 2006). Examining the definition of SME worldwide it can be seen that consideration is given to the country where is being defined and the individual or institution defining it. According to Garikai (2011) SMEs are defined by capital employed, number…show more content…
The lack of managerial skills, regulatory issues, technology and equipment, easy access to the international market and more notably finance are some of the factors that hinder SME development (Anheier and Seibel, 1987; Steel and Webster, 1991; Aryeetey et al, 1994; Gockel and Akoena, 2002). Constraints on SME development can be seen from lack of managerial know-how. Even though SMEs tend to attract motivated managers, they can hardly compete with larger firms. In the efforts to improve the management of SMEs; the lack of support services can be a hindrance to this effort, this is due to the fact that consulting firms are most often handicapped with management solutions that are cost-effective for SMEs. Moreover, in as much as there are a number of advisory services and institutions providing training, a skill gap still lies within the SME sector entirely (Kayanula and Quartey, 2000). Entrepreneurs can be complacent at times with the need to upgrade their managerial skills while other entrepreneurs can simply not afford the high cost of training the consulting firms offer. Some of the limitations that SMEs face have to do with technology. SMEs often find it difficult acquiring the right technology to help with their business operations (Aryeetey et al., 1994). SMEs tend to skew towards the international market in search of leasing technology or partnering with other companies. This is mostly due to cost factors or the inability to acquire patent in the home country. Even though SMEs search international market for technological help it is not always the case that they are to acquire that help. This is mostly as a result of the lack of antitrust legislation and lack of safeguards for property rights. These in turn restricts the access to foreign technologies by SMEs and

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