Small and medium-sized companies (MSMEs) make up 99.51 percent of the businesses that operate in the Philippines. However, they were employed by 62.66 percent of the workforce and contributed only 35.7 percent value-added by 2020. The data show that workers’ productivity in small businesses in America is very low.
Small business companies are known to be afflicted by two main disadvantages:
Access to the latest production technology and
The disadvantages of being small.
However, in the past few years, manufacturing technologies and industrial and business organization advancements have eliminated these issues, enabling MSMEs to almost double their operations.
Benefits of being small
Small-sized businesses have certain advantages over larger rivals:
Small businesses have logistical and marketing advantages over larger companies because they have a greater degree of specialized news in their business and focus on their clients’ requirements and the input suppliers’ specific abilities.
Small firms benefit from being more flexible and agile compared to larger companies and are more prepared and adept at embracing the latest technologies as they develop. In addition, unlike large-scale businesses, MSMEs do not invest heavily in current technologies and aren’t deterred from the high costs typically related to switching to more efficient and new production technology.
The most cutting-edge production technology and its numerous applications, like 3D printing, blockchain technology, robotics, and robotics, are available to small-scale businesses as they are too large. In the end, collaboration allows small businesses to benefit from larger-scale operations
The advantages of collaboration
Collaboration between them and other institutions allows small-scale businesses to create and distribute products and services more efficiently.
“The recent development in the business model that is digitally driven enables small-scale businesses to form their operations into expanded value chains (EVNs) where they can conduct business among themselves and share data using strong enabling technologies including blockchain, and a myriad of AI (artificial intelligence) applications. By forming themselves into large virtual companies, small enterprises can expand their operations via the internet, reap the benefits of mass production and benefit from network effects, and while remaining agile and adaptable to the rapid and unexpected changes in technology and markets.”
Collaboration also allows small and medium-sized enterprises to access resources at a lower cost. This is achieved through what is called integrative business models (IBMs), which are solutions that offer economic opportunities for communities with low incomes in a way that helps increase the viability of businesses and make them more long-term sustainable.
IBMs are implemented by the active collaboration between companies, multilateral agencies, government agencies, non-governmental organizations, and social institutions. These strategies allow the consortium’s institutions to create resources with lower prices for all participants while offering essential services to low-income people.
The following example illustrates how small businesses can contribute benefits to their communities within their general plans to achieve their long-term business goals.
Accenture Philippines is a multinational business that provides management consultation technology and outsourcing of business processes (BPO) services for corporate clients worldwide
To target the so-called “near hires,” those who do not have the necessary skills for employment are “trainable,” such as students who are not in school, disabled, and communities of indigenous origin. The company provides in-house training, personal growth, and other activities to prepare for a job.
Through partnering with training and colleges to offer language classes such as multi-cultural studies, BPO services such as medical transcription as well as financial reconciliation paralegal research, and tourism promotion –Accenture can transfer a significant portion of its recruiting as well as training and development costs to other organizations, and benefit from the advantages with other companies, including the majority of its rivals in the BPO market.
In addition, this process contributes to achieving the United Nations Sustainable Development Goals by creating employment and income opportunities for many young job seekers in poor communities.