SME 's are mainly different from large size organization based on the investment and sales turnover they make. Even within SME's , there are further classication as micro, small and medium size organization.
Recently Govt of India proposed to redefine SME's based on their annual sales turnover, replacing the current definition that relies on self declared investment on plant and machinery
According to the government’s new definition, businesses with revenue of as much as Rs5 crore will be called a micro enterprise, those with sales between Rs5 crore and Rs75 crore will be deemed as small and those with revenue between Rs75 crore and Rs250 crore will be classified as medium-sized enterprises.
The above classification clealrly differentiates large size organization from SME's from turnover point of view.
However, apart from sales turnover, there are some other charactersitisc distingusihes the SME's from large size organization.
1. Most of the SME's are supplying to large size organization either as Tier 1 or Tier 2 vendor
2. Adding value to product with partial manufacturing content or assembly
3. Mostly scope is limited to manufacturing only
4. No banddwidth to design / development / procuring material at own identified source or reengineering on product design and material selection
5. Not much bargaining power on pricing
6. Not much affordability to get the right talent and developmental efforts
Given the above context of SME's, the business transformational efforts are mainly on
1. Ensuring profitability or sustaining profitability through business process reengineering
2. Helping to stabilise the organization for sustainable growth by twisting business model and people engagement initiatives
Recently Govt of India proposed to redefine SME's based on their annual sales turnover, replacing the current definition that relies on self declared investment on plant and machinery
According to the government’s new definition, businesses with revenue of as much as Rs5 crore will be called a micro enterprise, those with sales between Rs5 crore and Rs75 crore will be deemed as small and those with revenue between Rs75 crore and Rs250 crore will be classified as medium-sized enterprises.
The above classification clealrly differentiates large size organization from SME's from turnover point of view.
However, apart from sales turnover, there are some other charactersitisc distingusihes the SME's from large size organization.
1. Most of the SME's are supplying to large size organization either as Tier 1 or Tier 2 vendor
2. Adding value to product with partial manufacturing content or assembly
3. Mostly scope is limited to manufacturing only
4. No banddwidth to design / development / procuring material at own identified source or reengineering on product design and material selection
5. Not much bargaining power on pricing
6. Not much affordability to get the right talent and developmental efforts
Given the above context of SME's, the business transformational efforts are mainly on
1. Ensuring profitability or sustaining profitability through business process reengineering
2. Helping to stabilise the organization for sustainable growth by twisting business model and people engagement initiatives
