chapter 10: SMEs

Question 1

how do u detertmine whether a bus is small or medium sized

Answer 1

-no# of employees
- type of ownership
- sources of info
- sources of finance
- legal structure
- market share
- management structure

fewer than 200 employees

Question 2

what are some common characteristics of SMEs

Answer 2

• personalised sevrice
• non manufacturing companies
• local markets
• owner responsible for deicison making
• reliant on internal support services
• bulk of capital provided by owner
• locally based & local markets
• not dominant in industry
• closely controlled by owner/operator
• independently owned & operated

Question 3

what is the role of SMEs

Answer 3

• employ abt 70% of all the people working in the priv sector
• created 80% fo aus’s employment gains during past ten yrs
• produce approx 50% of all the products produced each year
• generate an increasing amount of our total exports
• account for 20% of all money spent on R&D
• wide rnage of products used by large bus
• earn more profits and pay more taxes than large bus

Question 4

define economy

Answer 4

system used to determine what to produce, how to produce and whom to distribute

SMEs contribute to 57% of aus’s GDP

Question 5

what are SMEs contribution to employment and balance of payemnts

Answer 5

employ around 7 million ppl 66% of total private sector employment

90% of exporters are SMEs and earn alomst 50% of export revenue

balance of payments (BOP) is a record of a country’s trade and financial transactions with the rest of the world over time
- one way of maintaining favourable BOP is to export more than import

Question 6

what are SMEs contribution to invention and innovation

Answer 6

smes are the main source of most inventions and innovations in aus as they generally display a consistent positive attitude towards innovation
over last ten yrs sme spending on R&D has trebled with 40% of smes engaged in some form of innovation

Question 7

how can smes enter the global market for long term growth

Answer 7

today over 90% of aus exporters are smes and earn 50% of export revenue cos easy entry thru trade agreements

e-bus has opened door for many smes to sell direct to customers across national borders

distributors provide buses local presence and benefit of established markets but minimal control over customer interaction & marketing

joint venture w/ local bus

thru a website is a simple, low-cost way of entering the global amrket

Question 8

what are some common keys to sme success

Answer 8

• entrepreneurial abilities: enthusiastic & motivated
• access to info: bare minimum should be info regarding profitability, quality, peformance fo employee and upt to date stuff
• flexibility: adapt quickly to changes in ecternal enviro as there are fewer lvls of management
• reputation: can develop enviable reputations for quality and sevrice

Question 9

when is an sme classified as a fialure

Answer 9

• unincorporated and decalred bankrupt - cant pay debts
• incorporated and either forced into liquidation orr voluntarily closes down as it cnat pay debts

Question 10

what are the sme failure rates

Answer 10

one in four bus will fail within the first yr of being established ie 80 000 smes a year

Question 11

what are some reasons for sme failure

Answer 11

• faillure to plan
• lack of info
• complacency
• incorrect marketing strats
• poor location
• lack of financial planning
• new competitiors
• new taxes
• eco dowwnturn
• insufficient capital
• lack of management exp
• failure to seek advice
• not enough sales
• staff difficulties
• being under-insured

many sme have a shoestring budget (undercapitalisation)
the msot common fault is lack of adequate financial reporting and evaluation