Issues in global business - Essay Example

Advantages and Disadvantages of Small and Medium Enterprise Small and Medium Enterprise (SME) are the term given to organizations which have small tomedium infrastructure, with minimum number of employees. European Union states that an organization can be considered SME if it has 50-250 employees. (Recklies 2010). The main advantage of SME is that, as they can be established in various places from villages, towns to cities, it often integrates into the society and work at the ground level. This ground level integration provides employment opportunities to many people, better than large organizations.

The other advantage is, as they will have only minimal customers, they will be able to build close relationships with them. Small number of employees in SME can be cared and motivated optimally, leading to effective performance from all of them. However, the disadvantage is, in SMEs the leader or founder will have maximum influence from top to bottom, without any organizational structure horizontally or vertically. The problem with it is, when something goes wrong there will not be any management teams to point out the mistakes.

Also, SMEs with their limited resources will not be able to provide quality products or services, when compared to large companies. Employees and Government supportAs pointed out by, SMEs provide employment to basic sections of the societies, as they integrate well with it. SMEs will be mainly established not separate from the towns or cities, but within the by lanes and streets in a particular locality. So, it can provide employment to many of the unemployed living in that locality. This way, it can give employment to maximum people, elevating their lives and also contributing to the local economy, thereby national economy.

Because of this, SMEs are regarded as the most important ‘engines’ for economic growth by the governments. So, to further encourage SMEs, governments will allocate land, power, water, etc at subsidized rates, will also impose lesser taxes, etc. This way, SMEs can come up in many places benefiting many people.ReferencesRecklies, D 2010, Small Business – Size as a Chance or Handicap, viewed on December 9, 2010http://www.themanager.org/resources/Small%20Business.htm