Introduction
Following the industrial revolution, advancements in production capacity and infrastructure led to an increase in the economy's share of industrial activities. As a result, metropolitan areas are now where the economy is concentrated. The organization and content of urban economic activity have also undergone a significant alteration. A new type of social life and interaction was spawned by this new economic system in urban areas. Cities have developed into populated areas with higher densities than ever. Inequalities, social unrest, and substandard living circumstances have resulted from this. These unfavorable ideas have begun to define the word "city." To improve the quality of life in cities, governments and politicians have devised new arrangements and urban initiatives. A new area of politics and science is urbanization. The small and medium firm are played
important role for urbanization of innovation, the construction and development of cities.
Advantage (SME)
They are nearer to their clients
One of the most obvious benefits is this one. Small and medium-sized firms, in particular, will be able to communicate with their clients directly, better understand their needs, provide more specialized services, and even forge relationships with their clients. The client's connection with the SME will frequently be simpler than with a large corporation once you understand the industry.
They can be more flexible
They will be more adaptable to changes due to their small and more basic structure. They will also benefit from being nearer to their clients, which will enable them to be the first to learn about changes in the market. For instance, they will be better able to limit their supply during periods of low demand.
They are better able to identify and capitalize on specialized markets
A large company may or may not detect, or will not have an interest in covering, very specific customer needs. As long as your eyes are wide open, a SME will have a greater capability to detect and satisfy these needs than a large company may or may not detect, or will not have an interest in covering.
They are quicker at making decisions
In SMEs, decision-making typically rests with one individual or a small group. In comparison to huge corporations, whose decisions frequently necessitate complex decision-making systems involving numerous people and teams, this will make them significantly more nimble.
Linking the workforce to the business is simpler
The ability to emotionally link a worker with the company's goals will be made simpler by closer proximity to management and a more expansive view of the business (in large organizations, each employee's work is less comprehensive and more specialized). Your motivation will typically rise as a result, boosting your output.
Everyone is acquainted
It is simpler to establish relationships and get to know people in a small or medium-sized business. This can be utilized to boost productivity and strengthen collaboration. Additionally, it will be much simpler to divide up the jobs in some circumstances, such as issue solving, among those who are more knowledgeable or better prepared to handle them.
Speaking will be simpler
The many employees of the organization will be better able to speak with one another thanks to their proximity. This will make it possible to generate fresh ideas and work together to solve challenges.
Challenge faced (SME)
Their funding search is more challenging
SMEs typically lack the financial clout that huge corporations do. Due to their inability to utilize the financial tools provided to major firms, such as capital increases and listing on stock exchanges, they will typically require external financing, which will also be more constrained and in harsher terms.
Gaining the trust of a sizable consumer base may be challenging
An SME may have a very difficult time contacting its target audience. Due to their size and financial resources, big businesses can advertise in the media to spread their message, but small and medium-sized businesses may have to put in years of work to reach a sizable client base. Additionally, SMEs could have a harder time explaining to their consumers the security that a huge firm can provide them because they are less well-known than their larger competitors.
The price is greater
It will be extremely difficult for SMEs to take advantage of economies of scale, which will raise costs in some industries and make it harder to modify pricing for customers.
Being in a crisis for an extended period of time is difficult
Despite being more adaptable to change, a SME that is obliged to undergo protracted periods of crisis may face serious issues due to a lack of financial resources. Because of this, many small and medium-sized businesses close during economic downturns because they find it extremely difficult to exist.
Low ability to negotiate with clients and suppliers
When dealing with suppliers and consumers, having a large company that generates a lot of business gives you a position of power. An SME finds it considerably harder to obtain favorable conditions and is frequently compelled to make more concessions than they would prefer.
access to employees with less expertise
It will be harder to recruit smart and qualified personnel who will often be more tempted to develop their talents in a large firm due to the larger constraints that a SME typically offers to establish a career (there will be fewer opportunities for progression). An SME can still recruit talent, but they frequently need to provide additional incentives.
They will find it more challenging to use technology
Unfortunately, and once more for financial reasons, a SME will find it harder to keep up with technology advancements, which may cause obsolescence. However, SMEs have access to some extremely intriguing technical options.
After seeing some of the benefits and drawbacks of being a SME, the following query arises: Are you familiar with Integria IMS? A software called Integria IMS includes a variety of capabilities that can keep your business from falling behind. Find out what Integria IMS has to offer.
The financial Institutions (Banks)
MSE. make up the majority of the workforce in many low-income nations, but their survival may be jeopardized by a lack of access to risk-management tools like credit, insurance, and savings. Their development is frequently impeded by the lack of access to services for payments, equity, and credit
Therefore, having access to financial services can improve investments in human capital, increase income, decrease vulnerability, and boost job creation. MSMEs make up a sizeable portion of employment and GDP globally, but when they have limited access to financing, the economy is negatively impacted in a number of ways: social and economic opportunities are constrained, business creation and growth are constrained, households and enterprises are more vulnerable to threats, and payments are more expensive and less secure.
According to the World Bank Enterprise Survey, smaller businesses are less likely to have access to financing, which limits their ability to expand and improve productivity. Additionally, they are more prone to rely on shady sources of funding, which is frequently detrimental to business performance and growth. Smaller businesses in least developed countries (LDCs) have disproportionately difficult access to financing; 41% of SMEs in LDCs cite this as a major barrier to their growth and development, compared to 30% in middle-income countries (MICs) and only 15% in high-income countries (HICs).
The majority of the literature claims that variations in financial institution structure and lending infrastructure have an impact on how readily available capital is for SMEs (A.N, Berger & G.F Udell, 2004). By affecting the viability with which financial institutions may employ the various lending technologies (be it transaction lending or relationship lending) in which they have comparative advantage to provide funding to various businesses, these differences may have a significant impact on the availability of funds to SMEs. The foundation of transaction financing technology is "hard" quantitative data, such as financial ratios derived from verified audited financial statements and other similar metrics. On the other hand, relationship financing is based on "soft" qualitative data accumulated over time through engagement with SMEs. The owner of the SME's character and dependability may be included in this soft information depending
UtilizingInformationforSMEs
It is conceivable for national governments to provide close mentorship type support to SMEs and small firms in each region, functioning as "primary care doctors," through the countrywide municipalities, or through societies of commerce and industry and chambers of commerce and industry.
In order to further reinforce the support system for SMEs and small businesses, the Japanese government intended for Small and Medium Enterprises Comprehensive Support Centers to be created in 47 prefectures countrywide beginning in April 2013.
These facilities do the following three tasks: I providing comprehensive and cutting-edge business counsel that can't be fully handled by current support organizations, (ii) provide assistance by assembling professional teams that are optimised
Conclusion
they must overcome. But due to issues associated to their small scale, the potential of many SMEs is frequently not completely realized: lacking resources (money, technology, skilled personnel, market access, and market knowledge); lacking economies of scale and scope; having greater transaction costs than large businesses; and lacking networks
the inability to compete against larger companies in terms of R&D expenditure and innovation (product, process, and organization), being subject to increased market competition and concentration from large multinational enterprises brought on by globalization and economic integration, and many other factors.