Friday, August 23, 2019
Small and medium enterprises Essay Example | Topics and Well Written Essays - 2500 words
Small and medium enterprises - Essay Example An SME should give the primary importance to alliance and strategic partnerships at both local and global levels in order to increase the productivity. This will give a huge boost to the yield to cost ration which is the most decisive factor in any SME as they are required to fulfill some business rules and rules to survive in the emerging economic world of today (Nelson & Prescott, 2003). The paramount reason behind these success criteria is the fact that in the ever increasing global economic scale, the SME finds itself being in some tightened conditions thus experiencing jeopardy and limiting factors in the economic growth. Alliances with some partners will not only give them important horizons and resources to get a global exposure but it will also expand the business opportunities to increase the profit and lifetime of the business initiative. A very famous concept in business studies known as transaction-cost theory should be followed in order to increase the certainty level of the success of the partnership (Yasuda, 2005). This theory illustrates and suggests that the SME should make alliance with a partner that can minimize the sum of the fixed and continual costs throughout the business process. The famous example in this case can be taken that of Austria economy which enjoys almost 99 percent of the SME initiative which were at the start partnership based. (OECD, 2005). Similarly, the other success criteria are limited target marketing because e increasing the target market at the start.