C2 Ch.3 Small and Medium Enterprises

Question 1

What is small and medium enterprises in general?

Answer 1

SMEs are firms that are independently owned and operated, and are not dominant in their markets.

Question 2

What is SME defined as in Hong Kong?

Answer 2

1. A manufacturing enterprise which employs fewer than 100 persons.
2. A non-manufacturing enterprise which employs fewer than 50 persons.

Question 3

What are some figures of SMEs in Hong Kong?

Answer 3

As at March 2021, there were over 340,000 SMEs in Hong Kong. They account for over 98% of local business establishments and employ about 45% of the total working population, excluding civil servants.

Question 4

What are the characteristics of SMEs in Hong Kong?

Answer 4

1. Usually managed by owners. They may lack experience and management skills. Some owners also allow their family members to take part in management.
2. Limited resources and capital. They have limited resources and capital to finance their operations and expand their business. For most SMEs, the owners themselves are the major source of capital. It may be difficult for them to obtain loans from banks because of their small size.
3. Focus on narrow markets. Compared with large companies, SMEs generally have lower operating costs due to their small size. They can still earn a profit by serving narrow markets.
4. Greater flexibility. Since SME owners usually make decisions by themselves, they can make decisions quickly. Since flexible operations enable SMEs to respond rapidly to market changes.

Question 5

What are the contributions of SMEs to the Hong Kong economy?

Answer 5

1. Providing specialised goods and services to meet customers’ need.
2. Providing job opportunities.
3. Introducing innovative goods and services.
4. Supporting large companies.

Question 6

What are entrepreneurs?

Answer 6

Entrepreneurs are people who take risks to start a business for the purpose of making a profit.

Question 7

What is the importances of entrepreneurship to business development?

Answer 7

1. Encouraging innovation. This can widen the variety of goods and services and benefit customers.
2. Promoting market competition. In other to compete with them, other businesses may try to operate more efficiently. They may also introduce new products and provide goods with better quality.
3. Promote economic growth.