Advantages and disadvantages of SMEs
Small and Medium-sized Enterprises (SMEs) do not have any formal hierarchy in place which slows down their processes of decision making. Hence, they can react rapidly to frequent market changes and challenge competitors by taking appropriate timely decisions without having to wait for the nod of the Board of Directors (Hill, n.d). Since the team is comparatively smaller compared to big enterprises, employees of SMEs have the opportunity of coming together often and work as a team. Unlike big enterprises that are less likely to pay interest to individual customers, SMEs have the advantage of having frequent interaction and rapport with their customers. Also SMEs can fine tune their policies and products as per the feedback from their customers. SMEs also do not require filing their statements on revenues and incomes periodically to someone outside the business except the tax department, which helps them keep their marketing strategies secret from competitors. Also SMEs qualify for many loan programs against big enterprises (Hill, n.d).
However, SMEs are ill-equipped to face immediate challenges since they may not have exclusive training departments. Besides, the availability of limited number of employees across departments makes their job description vague; employees may be compelled to take various responsibilities without adequate training. Career growth for employees also would be limited since the opportunities are limited, which leads young talents to leave the organizations. Because of resource scarcity in SMEs, organizations may not allocate funds adequately for establishing communication and IT facilities including allocation of cell phones and laptops to their employees. Lesser number of employees also would find it difficult to cope up during peak business seasons. Moreover, available employees in the HR department would have to carry extra workloads addressing grievances like harassment and discrimination apart from fulfilling statutory and other compliances with regard to the employees. SMEs also have no benefit of economies of scale unlike big companies that can reduce their costs because of the higher volumes they handle.
Reference:
Hill, B. The advantages of SMEs. Azcentral. Available at http://yourbusiness.azcentral. com/ advantages-smes-17194.html. [Accessed 1 July 2015].
