Small and Medium Enterprises (SMEs) for Business Success
Explore the essentials of Small and Medium Enterprises (SMEs), including definitions, importance, characteristics, success and failure factors, and their role in economic development. Learn about the various criteria for defining SMEs, their impact on innovation, employment generation, and economic growth, along with the challenges and opportunities they face. Discover the integral role of SMEs in driving economic and social development, and how they contribute to a country's competitiveness and wealth.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
Dr Evri Lampadarios Leeds Trinity University 2ndMarch 2016
Introduction SMEs Definition(s)? Importance Characteristics Success / Failure factors Chemical distribution Rationale Definition Classification Services My research Operations Management perspective
No agreed upon definition .varies with country, no of employees and turnover UK Companies Act of 2006 SMEs must satisfy at least two of the following criteria: < 250 employees < 25.9m turnover < 12.9m annual balance sheet European Union (2003): < 250 employees < 50mEUR annual turnover < 43mEUR total annual balance sheet
The Big Business of Small https://www.youtube.com/watch?v=h3AkfuaMSE o The Big Business of Small Enterprises Enterprises: Obama on the Importance of Small Businesses https://www.youtube.com/watch?v=n-EIllwA0Ws Obama on the Importance of Small Businesses Small Business and the Economy https://www.youtube.com/watch?v=bQfjb530Ae w Small Business and the Economy
Integral to economic and social development and regeneration Promote economic growth and increase a country s competitiveness and wealth An engine of growth to stimulate recovery in the wake of recession Facilitate rapid industrialisation Key driver to innovation and R&D Above all employment generation Sources: Amoros et al., 2013; Dobbs and Hamilton, 2007; Cabinet Office, 2013; Halabi and Lussier, 2014; Simpson et al., 2012
Absence of complex formal structures Dominance of owner-managers Limited resources Environmental uncertainty Limited customer base Firefighting opposed to strategic planning But also.. Flexible Adaptable Close to customers Sources: Adams et al., 2012; Forsman, 2008; Storey and Greene, 2010; Unger et al., 2011
No single agreed upon definitions Success: survival, long term viability, growth (turnover, number of employees, market share) and profitability (profit, return on investment) Failure: firm closure, ceasing to trade, entrepreneurial exit, dissolution, deregistering, discontinuance, insolvency, liquidation, organizational mortality and bankruptcy etc
Rationale Definition Classification Services
Chemical distribution originates in the gap between producers who wish to sell large lots without regulatory or logistical complications and customers demanding small volumes and who have very specific needs on technical, regulatory and logistical level (Mortelmans and Reniers, 2012) In essence, chemical distributors allow their principals to profitably reach smaller customers in many industries and countries (Chemagility, 2012) However genuine chemical distributors add value through an extensive range of services to both customers and suppliers (Hornke, 2012)
No universally agreed definition.wide variety of functions and confusion with other types of trading in the industry Not logistics Not traders Not agents A company that takes title to bulk and/or non-bulk chemicals from a chemical manufacturer or supplier and re-sells the chemicals to an end-user (NACD, 2005)
By products Commodities Specialities Full range By geography / market coverage Regional / national multinational
Customers: broad product portfolio with complementary products; access to reputable suppliers; competitive (and stable) pricing; stock management and Just In Time (JIT) deliveries; competent and knowledgeable sales team; technical support and problem solving skills; product expertise for formulation purposes; value-added services, for instance, custom blending, repackaging); sample management; financing and credit in line with local terms; safety training and hazardous waste removal Suppliers: market share and penetration; logistics services including storage and packaging; in-depth market intelligence and assist with the implementation of marketing strategies; demand forecasting and planning; market development capabilities; new product approvals; conforming to local regulations and language; repackaging and relabelling; arrangement of import authorizations; trainable staff with good technical knowledge; modern IT infrastructure allowing automated information exchange Sources: BCG, 2013; Burns, 2010; Chemagility, 2008; Chemanager, 2013; Districonsult, 2009 and 2012; FECC, 2013; Hornke, 2012; Jung et al., 2014; Mortelmans and Reniers, 2012; NACD, 2005).
how hard can it be??? https://www.youtube.com/watch?v=noImfr7p vPE
Aim: Identify CSFs for SMEs in the UK Chemical distribution industry Methodology: Mixed methods-Questionnaires- Census Target group: SMEs as defined by the European Union; located in the UK; not part of a another organization or belonging to a larger corporation; no manufacturing activity and capability. Population: 180 Key informants: Owners and Senior managers (CEOs, MD, Directors)
Twenty two (22) factors critical to small business success identified and their impact is investigated. Categorised in: entrepreneurial (relating to the personal characteristics of the owner/manager) enterprise (relating to the firm) and business environment (external) factors Positivistic philosophy, deductive approach, uses a concurrent embedded mixed methodology and utilises a survey strategy involving the use of self-administered questionnaires. Response rate 65.5%.
Entrepreneurial Factors Enterprise Factors Business Environment Age Education Level Entrepreneurial Orientation Gender Personality Prior Work Experience and Management Skills Age and size of company Business Networks Customer Relations Management Financial resources Internationalisation Human Capital Market and Product Development Marketing Strategic Planning Political Economic Socio-cultural Technological Legal and Regulatory Ecological and Environmental
Enterprise factors: Enterprise factors: Customer relations management (MR: 2028) Market and product development (MR: 1938) Human capital (MR: 1800) Strategic planning (MR: 1643) Entrepreneurial factors: Entrepreneurial orientation (MR: 2036) Prior work experience and management skills (MR: 1812) Entrepreneurial factors: Business Environment: Regulatory compliance (MR: 2047) Economic (MR: 1651) Business Environment: SMEs Success UK chemical distribution SMEs Success UK chemical distribution
Entrepreneurial factors Entrepreneurial Orientation Prior Work Experience and Management skills Enterprise factors Customer Relations Management Market and Product development Human Capital Strategic Planning Business Environment factors Regulatory compliance Economic environment
remember distributors do not manufacture products Significant part of CRM and MPD, HR and SP Suppliers / Principals key to success Suppliers need to be treated as best customers Input in NPD and R&D Providing resources: technical expertise, training, product knowledge, applications etc Integral part of strategic planning
Quality Speed Flexibility Dependability Cost
There is no capacity in distributors only inventory Types of inventory: Finished goods inventory completed and waiting shipment Goods in transit to warehouses and customers Inventory: to stock or not to stock? Distinction between commodities and specialty products Takes up working capital and space Out of shelf life products / damaged Customer do not give forecasts Price fluctuations / Spot vs Quarterly Depends on country of origin and lead/transit times
Slack et al. identify the following key questions: Why should an organization take a total supply network perspective? What is involved in configuring a supply network? Where should an operation be located?
Operations network for a plastic homeware company Second tier suppliers Operations network for a plastic homeware company Second tier customers First tier customers First tier suppliers Chemical company Wholesaler Retailer Plastic stockist Plastic homeware manufacturer Cardboard company Retailer Packaging supplier Ink supplier Direct supply Information
Can you draw the operations network for a SMEs chemical distributor?
Way to survive and solve issues? Customer Manufacturer Distributor Manufacturer Distributor Raw materials supplier Warehousing / Logistics Distributor Distributor Final customer
Way to survive and solve issues? Main functions to outsource: Logistics Warehousing Sampling Accounting
Where would you base your offices / warehousing? Criteria: Infrastructure Access Customer base Suppliers
Suppliers Selection Single or multiple sourcing? / Exclusivity or not? Global sourcing / internet Market based or relationship supply relationships? Customers Expectations / Do they know what they really want? Internal issues Manufacturing delays Shutdowns: planned and unplanned / FM Inventory / Warehousing Logistics / Transportation Changes in demand? Seasonality / environment / trends?
Need for extra services Strong supplier relationships Focus on operations management
Adams, J. H, Khoja, F. M. and Kauffman, R. (2012) An Empirical Study of BuyerSupplier Relationships within Small Business Organizations, Journal of Small Business Management, Vol. 50, No. 1, pp. 20 40. Amor s, J. E., Bosma, N. S. and Levie, J. (2013) Ten Years of Global Entrepreneurship Monitor: Accomplishments and Prospects, International Journal of Entrepreneurial Venturing, Vol. 5, No. 2, pp. 120-152. Boston Consulting Group (2013) The Growing Opportunity for Chemical Distributors: Reducing complexity for producers through tailored service offerings, [online], Available at: https://www.bcgperspectives.com/content/articles/process_industries_supply_chain_manage ment_growing_opportunity_chemical_distributors/#chapter1, [Accessed 20 February 2014]. Burns, N. A. (2010) Chemical Distributors, [online], Available at http://www.neilaburns.com/2010/11/chemical-distributors, [accessed 15 December 2010]. Cabinet Office (2013) All public bodies to adopt SME-friendly business rules (Press Release), [online], Available at http://www.gov.uk/government/news/all-public-bodies-to-adopt- smefriendly-business-rules, [Accessed 20 February 2014]. Chemagility (2008) UK Chemical Distributor Market Report 008: Information, Insight and analysis of the UK Chemical distribution industry, Surrey: Chemagility. Chemanager (2013) Distribution & Logistics for the Chemical and Life Sciences Industries, [online], Available at: http://www.chemanager-online.com/sites/chemanager- online.com/files/printausgabe/epapers/SDL/SDL0113/blaetterkatalog/index.html, [Accessed 14 February 2014]. DistriConsult (2012) Chemical Distribution in 2012: What s next on the horizon? 6th Brazilian Congress of Chemicals and Petrochemical Distributors (EBDQUIM), Praia do Forte (Bahia), 16th March 2012, [online], Available at: http://www.associquim.org.br/ebdquim2012/palestras/Ebdquim2012_G%C3%BCentherEberhar d.pdf [Accessed 10th May 2013] Dobbs M. and Hamilton R. T. (2007) Small business growth: recent evidence and new directions, International Journal of Entrepreneurial Behaviour and Research, Vol. 13, No. 5, pp. 296 322.
FECC (2013) The Chemical distribution Sector in Europe [online] Fecc.org., Available at: http://www.fecc.org/fecc/about-fecc/the-chemical-distribution-sector-in-europe, [Accessed 9 March 2015]. Forsman, H. (2008) Business development success in SMEs: a case study approach, Journal of Small Business and Enterprise Development, Vol. 15, Iss. 3, pp. 606 622. Halab , C. E. and Lussier, R. N. (2014) A model for predicting small firm performance, Journal of Small Business and Enterprise Development, Vol. 21, Iss. 1, pp. 4-25. Honrke, M. (2013) The future of chemical distribution in Europe: Customer relations as key value lever, Journal of business Chemistry, Vol. 9, Iss. 2, pp. 65-66. Hornke, M. (2012) Chemical Distribution 2012, [online], Available at http://www.chemanager- online.com/file/track/11755/1, [Accessed 20 February 2014]. Jung, U., Wolleswinkel, R., Hoffmann, C. and Rothman, A. (2014) Specialty Chemical Distribution-Market Update, Boston Consulting Group, [online], Available at: https://www.bcgperspectives.com/content/articles/process_industries_go_to_market_strategy _specialty_chemical_distribution_market_update/?chapter=2, [Accessed: 17 April 2015]. Mortelmans, S. and Reniers, G. (2012) Chemical distribution in Belgium from 2007 to 2010: An empirical study, Journal of Business Chemistry, Vol. 9, Iss. 2, pp. 105-113. National Association of Chemical Distributors (NACD) (2005) The Chemical Distribution Industry & Its Focus on Security, [online], Available at: http://www.chemserv.com/pdf/NACD%20ChemicalSecurity.pdf, [Accessed 15 February 2015]. Simpson, M., Padmore, J. and Newman, N. (2012) Towards a new model of success and performance in SMEs, International Journal of Entrepreneurial Behaviour and Research, Vol. 18, Iss. 3, pp. 264-285. Storey, D. J. and Greene, F. J. (2010) Small Business and Entrepreneurship, London: Pearson Education Limited. Unger, J.M., Rauch, A., Frese, M. and Rosenbusch, N. (2011) Human capital and entrepreneurial success: A meta-analytical review, Journal of Business Venturing, Vol. 26, pp. 341-358.
