1. SME’s AND GLOBALIZATION

2. INTRODUCTION

3. Definition of Small Medium
Enterprises
SMEs are a heterogeneous population
of firms whose contributions to the
innovation system are wide ranging
and include not only based on the new
products and services, but also
improved designs and processes and
the adoption of new technologies.

4. Definition of Globalization
 Globalization refers to all the
economic activity around the world.
 Globalization is a fact of life for
virtually all manufacturing firms in
Northeast Asia. Either firms have new,
potentially profitable opportunities in
foreign markets or they face new
competition from foreign firms in their
home markets.

5. IMPORTANCE OF SMEs
TOWARD GLOBALIZATION

6. Providing technical innovation
 Innovation invention and are part of the basics
of our economy. Studies show that the incidents
of innovation among SMEs workers are
significantly greater than among workers in large
businesses.
 Small firms produce two and a half times as
many innovation as large firm relative to the
number of person employed.
 According to the U.S office of Management and
Budget, more than half the major technological
advances of the twentieth century originated
with individual inventors and small companies.

7. Providing Employment
 Small firms have added more than their
proportional share of new jobs to the
economy.
 Small firms hire a larger proportion of
employees who are older worker, younger
workers, woman, or workers who prefer to
work at part time. Furthermore, SME
provide 67% of workers with their first jobs
on the job training in basic skills.

8. Providing competition
 SMEs businesses challenge
higher, established firms in many
ways, causing them to become more
effective and more alert to consumer
needs.
 Nowadays, SMEs can compete with a
large firms in all respects. But a small
number of enterprises, each competing
in its own particular area and its own
particular way, together have desire
competitive effects.
 Thus, several small enterprises together
add up to reasonable competition for the
no longer small ServiceMaster.

9. Filling Needs Of Society And
Other Business
 By their countryside, huge firms must work
on a large scale. Many may be reluctant or
unable to meet the special needs of
smaller groups of consumers.
 Such groups create almost perfect
markets for small companies, which can
adapt their products to these groups and
fill their needs profitably.

10. Importance to Big Business
 Most of the products made by big
manufacturer are sold to consumers by
SMEs. Small businesses provide big
businesses supplies and raw materials
they needwith many of the services.
 Similarly, MCDonalds’s depend on heavily
on small agricultural distributors, bakeries
and wholesalers to supply many of the
ingredients that it needs to make BigMacs.
It also hires local maintenance contractors
to services its electrical signs and clean its
parking lights.

11. Importance to Big Business
 Small firms also offer a variety of goods and
services to each other and to much larger firms.
General Motors relies on more than 32 000
companies for parts and supplies and depends on
more than 11 000 independent dealers to sell its
automobiles and trucks.
 For example, Sears , Roebuck purchases
merchandise from approximately 12 000 suppliers
and most of them are small businesses.
 Large firms normally buy parts and assemblies
from smaller firms for one very good reason: It is
less expensive than manufacturing that part in
their own factories. This lower cost eventually is
reflected in the price that consumers pay for their
products.

12. CONSTRAINTS OF SMEs

13. Financial Constraints
 The Census of Establishment and
Enterprise 2005 stated that only 16%
of SMEs respondents indicated a
dependence on financing from
financial institutions that is banking
and development financial institutions.
 The study highlight that the main
obstacles faced by SMEs when
seeking financing from banking
institutions

14.  Figure 1 shows the responses of SMEs on the constraints to
accessing financing from financial institutions.
Constraints of SMEs in Accessing Financing from
Financial Institutions
5.90% 5.30%
9.80%
Fls deem business plan
as not viable
Lack of collateral
10.70%
Insufficient document to
support loan application
No financial track
record
Long loan processing
13.10% 55.20%time
Others

15. Technological Constraints
 In year 2001, Bank Negara Malaysia’s
SME conduct a survey which shows that
only 5% of the SMEs had fully automated
their operations, while 45% were still labor
intensive. In addition, the SMEs reported
that 48 % low usage of computers in their
daily work.
 SMEs technological constraints lead to
low efficiency and production quality. Their
capabilities to monitor and respond to new
environment and development has been
hinders.

16. SME’s Constraint
Lack of Training High Cost
Infrastructure
 Operators are not willing
to release their staff for  The mainstreams of
more than ½ of 1 day for SMEs are still placed on
training or even benefit land not designated for
themselves of training industrial use.
opportunities, which is  The dispersed pattern of
they consider it as a SMEs has hindered the
waste of resource full realization of
because the can not synergies in the industry
readily trace the training clusters, and created
outcomes directly to the additional difficulties of
firm’s bottom line. providing common user
facilities, thus its affecting
the ability and the SMEs
capability to meet the
requirement of their

17. Lack of Access to Advisory
Services
 To improve their business capability, the SMEs
have highlighted that they require advice mostly
on marketing, finance business administration
and management, accounting,information
technology Advisory Services required by SMEs
7% 2% Others
23%
19% Marketing
A/C, Finance & Audit
Business Admin
IT
21%
28%
How to fill up loan
applications

18. IMPACT OF
GLOBALIZATION TOWARD
SMEs
•Advantages
•Disadvantages

19. Impact Of Globalization to
SMEs
 Globalization can give impacts on
SME’s and entrepreneurship and can
be regarded in a many different ways.
 The impact of globalization on small
and medium enterprises (SMEs)
received much attention in
international circles in the past few
years

20. Advantages of Globalization toward
SMEs
Greater employment
opportunities
Availability of Greater Variety of
Goods
Business Companies Access
to Wider Markets

21. Greater Employment
Opportunities
 Globalization involves businesses
which are carried out around the
world. To carry out the business, a
sufficient number of workers are
needed in every country the business
is carried out in.
 Therefore, this will open up more job
opportunities for people in the
respective countries.

22. Availability of Greater Variety of
Goods
 Certain countries provide goods which
are only available or mostly available
in the country itself only.
 The goods in different countries can
be distributed to other country which
does not have the specific goods. And
with this, everyone in the world would
have equal access for food, medicine
and others.

23. Business Companies Access to
Wider Markets
 With the business being spread out
through many different countries
around the world, the market of the
company would rise up.
 The more countries the business is
carried out in, the higher the market of
the company would increase.

24. Disadvantages of Globalization toward
SMEs
Larger countries take advantage
from lower wage rate and their
natural resources
Negative
Fast Food
implications for
Chains
Indian Women
Outsourced manufacturing and white
collar jobs

25. Larger countries take
Fast Food Chains advantage from lower
wage rate and their
natural resources
 Fast food chains like  Agricultural goods are
McDonald and KFC also usually the main export of
has a related to negative the poorer countries, but
effect of globalization as larger countries often
they are spreading fast in subsidize their farmers.
the developing world. The inequality in trade is
 People are consuming involved.
more junk food which has  In addition, reducing tax
an adverse impact in reducing tax sometime
their health. just bring the benefit for
rich countries than for
developing countries like
Vietnam.

26. Negative implications for Outsourced
Indian Women manufacturing and white
 Women that get their jobs
collar jobs
are always paid  Manufacturing work is
less, mentally and outsourced to give
physically profit to nation like
unhealthy, demeaning, or China where they
insecure. Women are provide lower cost for
suffering two fold. goods and wages.
 Their domestic
 Many employees has
responsibilities are not
lost their jobs due to
alleviated as women in
developing countries this outsourcing
more into the work force. especially
Women work two full time programmers, editors,
jobs. They are paid scientists and
almost to nothing when accountants because
working in a factory they outsources the
manufactures to

27. RECOMMENDATIONS
 Emphasized on providing more information and
knowledge to business.
 SMEs are encouraged to increase their
competitiveness in the global market by assimilating
IT and knowledge management in their business
efficiently and in order to be maintainable in the
knowledgebase economy.
 Government agencies should implement more
policies that encourage SMEs to be innovative in
their production and marketing of goods and
services.
 Supply chain activities should be perform more
efficiently by firms than their competitors in order to
bring more value to their customers and increase a

28. CONCLUSIONS
 SMEs attain considerable growth with the
help of government policies and support from
other country’s investors in terms of training
and funding.
 There are still many constraints facing the
sector, such as costly sources of
finance, global competition, quality issue an
difficulty in meeting international quality
standards, poor business knowledge, lack of
international marketing experiences, and
unfavorable attitude to training, and low R&D
activities