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Contribution of small and medium enterprise to the economic development of Rwanda

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par Valens NYANDWI
Universite Nationale du Rwanda - Licence 2013

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2.6. Factors needed for development of small and medium enterprises

Greater flexibility: small firms are typically more flexible than large firms.

For example, they can adopt their plans quickly in response to environmental changes. Large firms, which many layers of management, cannot respond as quickly.

More personal attention to customers and employees: small business owners have more direct contact with their customers and have a better feel for what they want than very large business. They can often respond sooner to changes in customers preferences as well as offer more personal service.

The relationship between the owners of small business and their employees is also often more direct and personal than in many large business, where management tends to communicate with employees though labor and management representatives.

Lower fixed costs: small companies often have lower fixed costs than large firms.

Fixed costs are costs that do not vary as the volume of business changes. Thus the small firm might be able to sell its product at lower price than a large competitor with high fixed costs.

Greater entrepreneurial and innovative fervor: an entrepreneur is a risk taker who starts and operates a business in hope of making a profit. The hired managers who run big corporations seldom hold any significant ownership in them. They have less to gain by taking the risk, for example, of developing new products. As result, they may tend to be overly conservative in running the corporations.

Greater motivation of the owners, hired managers generally do not have a significant ownership stake in their corporations. Small business owners do, and this in itself can motivate them to work harder.

In addition, the desire to be independent and act as one's owner boss is a powerful motivator (NORMAN M. Scarborough, 1999 p. 103 up to 106).

2.6.1. Ten good things ISO standards can do for small and medium enterprises

o Standards help you compete on a level playing field with bigger enterprises

o Standards open up export markets for your products and services

o Standards help you discover best business practices

o Standards drive efficiency in your business operations

o Standards add credibility and confidence for your customers Standards open new business opportunities and sales

o Standards give you the competitive edge

o Standards make your brand name internationally recognized

o Standards help your company grow

o Standards enable a common « language » to be used across an industry sector

2.6.2. Principles of good regulation for Small and Medium Enterprises

ü Proportionality

· The impact of regulation on small business is identified, establishing an appropriate balance between risk and cost.

· Needless demands are not placed on regulated small business.

ü Transparency

· Policy objectives, including the need for regulation, are clearly defined and effectively communicated to those involved.

· Those being regulated understand their obligations and know what to expect from the enforcing authorities.

ü Accountability

· Proposals are published and all those affected are consulted before decisions are taken.

ü Consistency

· New regulations are consistent with existing regulations.

· Regulations are applied consistently across the country.

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