SME In Singapore Case Study

Introduction

1.1 Characteristics of SMEs in Singapore

Small Medium Enterprises (SMEs) in Singapore are categorized in terms of organizational size, which comprises of the number of employees, total assets, as well as financial turnover within a certain limit imposed by the government. After the change in new limits since April 2011, the employment size has to be less than 200 employees or company annual sales turnover are not to be more than S$100 million with a minimum of 30% local shareholding. 1.2 Importance of SME to Singapore economy?

SMEs sector is an important enabler to Singapore economy, which made up 99% of Singapore companies, hire 70% of the nation’s workforce and contribute 50% to the Gross Domestic Product (GDP) of Singapore.

If one can withstand the vigour competition in its own country such as Singapore, it is most likely to be able to succeed overseas.

3. Constraints of SMEs in Singapore

3.1 Lack of financing

The main reason for the lack of financing is that SMEs financial are limited. They are deemed as higher risk investments as compared to large firms, thus making them harder to obtain loans from banks .

Moreover, SMEs have limited cash flows. With the high in operating cost in Singapore, it results in a lower profit margin. Therefore, it impedes the business growth and opportunities for market expansion. 3.2 Cost of production

Cost of production is the total cost of materials and labour needed to produce a product. An increase in the cost of production subsequently leads to a fall in supply which causes the supply curve to shift leftwards.

With the high standard of living in Singapore, employees demand for higher wage, thus causing an increase in labour cost, which result to a higher cost of production. These effects trigger SMEs to set a higher selling price for a product line leading to the fall in

Besides that, subsidised fibre broadband subscription plans are also provided to SMEs to minimize the costs of newly signed up plans. 5. The future prospects of SMEs in Singapore

5.1 Adopting globalisation

Globalisation refers to the extension of investments, international trade, and borrowing and lending. This brings about higher production and creates more job opportunities to the public, which will in turn increase the employment rate in Singapore. It is in self interest of the multinational firms that produce low cost region and selling high-price region. Parkin, M. (2014): Economics (11th Edition), Country: Publisher 5.2 Promote women-own business

Through the promotion of women business proprietors, utilization of skills and competencies of highly educated and trained women who may have previously been blocked as a result of inflexibility will now be allowed. This increased in flexibility enables women to contribute to household disposable income while at the same time balance their jobs and family