Essay: Factors affecting growth of SMEs

Sample Essay

The factors that have been discussed till now which can derive and influence growth for the smaller and micro firms in the future have been the internal factors that can be controlled by the businesses. However, there are external factors as well which are beyond the control of the businesses and can still influence the future growth of the companies.

A “dynamic and fast-changing environment may push small firms to go abroad, while it seems to be the experiences built up in the organization and a younger generation of CEOs that can explain why some small firms continue to expand their international activities” (Anderson et al, 2004) Moreover the demand and the current trends of the market and the industry in which the firm operates can result in the success of the company. An industry of rapidly obsolete service and products can not result in future growth in the firms operating in the industry. Additionally the role taken by the government to support or facilitate the fumes in the industry through market intervention can also affect the success of the firms in the future. Policies such as tax relief, direct subsidies as well as indirect subsidies and government based lending programs can influence the future growth of the firms. The assistance provided by the financial and banking sector in the future in terms of the SME based loans and leases can also further economic growth in the industry for the small and micro firms. Other external factors that can affect the small firms are the economic conditions and the political situation in the region of operation.

Conclusively it can be stated that internal factors as well as elements that are external to the company can affect the future growth of small and micro firms operating in an economy.

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