SMALL & MEDIUM ENTERPRISES

DEFINATION:

According to Small Business act 1934, a business which is independently owned and operated and not
dominant in its field´ is a Small Business.

Stoner, Freeman, & Gilbert, 1995, Small Business refers to business locally owned and managed, often
with very few employees working at a single location´

East Pakistan Small Industries Corporation Act of 1957

Small industry means an industrial establishment or unit which is rum mainly by hired labor and not
using mechanical motive power but does not normally employ more than 50 workmen and whose land,
building and machinery does not exceed Tk.150, 00,000 in value in either case.

PROPOSED DEFINITION OF THE GOVERNMENT OF BANGLADESH

Small Enterprise has less than 50 employees and / or less than 15 million Tk in Fixed Capital Investment

Medium Enterprise has 51-99 employees and / or Fixed Capital investments between 1.5 and 100
million Taka

BB REGULATIONS FOR SMALL ENTERPRISES

• Private entity with less than 60 employees for the Manufacturing Sector 30 employees for the
Service Sector 20 employees for the Trade Sector 1)
• Service Sector : Total Assets (excluding lands and buildings) between50,000 and 3 million Tk (800-
50,000 USD)
• Trade Sector : Total Assets (excluding lands and buildings) between50,000 and 5 million Tk (800-
80,000 USD)
• Manufacturing Sector : Total Assets (excluding lands and buildings)between 50,000 and 10 million Tk
(800-160,000 USD)

CHARACTERISTICS OF SMES:

There are many characteristics of small business. Some of which are described in the following
paragraph:

1. Unity of Individuals and the Organization

The strength of small business is that individual employees retain their personal identities, yet support
the unity of the organization. Employees understand and commit themselves to corporate objectives.

2. High Individual Motivation

Individuals are highly motivated for further exertion and organizational development. Though pay for
performance is a principal motivator in a small business, comfortable and social life related workplace
plays a role of the social motivator.

Dr. Mohammad Anisur Rahman, Associate Professor, Dept. of MIS, DU

SMALL & MEDIUM ENTERPRISES

3. Owners as Managers

In most of the small businesses, owners are responsible for managing the firm. The employees are hired
on owners’ discretion. Owners are responsible for taking any and all management decisions.

4. Streamlined Communication

With simple and petit structure of the organization, good and effective communication are maintained
with and among employees. This keeps the organization more susceptible to changes in the business
arena.

5. Supportive climate for Organizational Integration

Management including supervisors keeps close relations with subordinates. They offer training,
encouragement and counseling to subordinates for problem solving. Employees are provided with
challenging and enjoyable workplace.

Dr. Mohammad Anisur Rahman, Associate Professor, Dept. of MIS, DU