Strategies of the Development of Entrepreneurship and SME

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Federal funds, private capital, especially because of forthcoming winter Olympic Games inSochi. The criminal situation in the region is not so sharp as in its neighbouring countries butthe closeness of Chechnya makes especially international investors concerned about possiblelosses. Ukraine is right in the middle of two peers.Domestic demandThe growing number of rich people in the country, and primarily the size of the middleclass is the most critical issue to determine the influence of the demand conditions over theSME sector. Among the three countries Russia has the largest population and the long lastingtradition for people from its Northern territories to spend vacations on a Sea cost. The climateof Ukraine and Moldova is not as diverse as in Russia. The growth of savings of Russian peopleresults in the dramatic increase (especially during last 5 years) of demand. Ukraine isexperiencing a much lower increase of domestic demand for the services in the region, andnotably it depends on waves of political stability in the country. For Moldova the domesticdemand is quite low.Global demandWith dramatically growing influence of the global economic, social, political andtechnological factors over the countries’ life the global demand for the SME businesses productsand services in the Black Sea Region. The major interest in its development is represented bythe population of the neighbouring countries. Thus economic growth and increasing size of themiddle class in Russia is generating a source for the development of the entire region. Russiansare the often guests in Ukrainian, Azerbaijan’s and Turkish resorts as well. But the luxuryservices are usually sold primarily to EU citizens. The growth of the interest of Europeans inRussian and Ukrainian resorts creates a potential for the SME sector development. The onlyrequirement for that is the country’s economic and political stability. The image of the region isfar away from the desirable but Russia’s efforts for having Olympic Games hosted by Sochicould result in the boost of the interest of the foreign tourists in the whole region (Ukraine &Russia). Another argument should be taken in account as well – the European, and globalcommunity is getting more exposed to internationalization, to learning more about differentcountries, regions, cultures, and to travelling.Thus global demand could become a key for the incredible growth of SME economy inthe region.SME strategy, structure of the sector, and rivalryThe rivalry in the SME sector industries is generally considered to be one of the mainindicators of their developments. The most competitive industries attract the increased numberof startups.Porter’s industry analysis could be used here to get a clear understanding of the rivalryin the SME sector in each of the trio countries.The external strategic analysis requires the application of “Five Forces Model” introducedto the academic and practicing community of managers by Michael Porter as well (Porter,1979), and added by the six force (A. Grove, CEO of Intel) – complementary products andservices. The five forces are: bargaining power of suppliers; bargaining power of buyers; threatof substitutes; risk of entry by potential competitors; intensity of rivalry (Figure 2).All of the forces, except bargaining power of suppliers (since they again belong to theSME sector, which is represented by small number of firms), are weak. The scale of weaknessdiffers in Russia, Ukraine and Moldova, with the worst situation for the last one. In this case it72
is obvious that the SME sector is not even nearly this attractive as it should be in all of thesecountries.The rivalry in the industry or related industries (for the SME sector in Black Sea Regionwe agreed that the tourism related industries would be of the most interest) depends on1) industry competitive structure;2) cost conditions;3) demand conditions; and4) exit barriers.Exit barriers are different in tourism related industries but in majority of cases for SMEsector they are not high so that the company could switch to the other profitable activity fastenough to save the invested capital. As for the demand conditions, we found out earlier thatthe gradually growing domestic and exponentially increasing global demand are the drivingforces for the SME sector development in the region. As far as the cost conditions go, we wouldis a most critical negative factor for the improvements in the area. The fixed costs are veryhigh and the firms are not able to afford to cover them by selling their products to the citizensof the low-income countries. There is a hidden portion of the cost of the product paid as briberyto the governmental/municipal authorities, and representatives of the various banks,foundations, and insurance companies. The result could be the struggle of the SME companiesfor survival at a low profit. The structure of the industry is typically either fragmented orconsolidated. For the entire SME sector we could state that the structure in every tourismrelated industries is more likely underdeveloped, and does not have the completecharacteristics of even fragmented industry – large number of small companies, non of which isan a position to determine the price standards for the others. We would consider the SMEsectors in all of the targeted countries in the embryonic stage of its development. Thefragmentation characteristics would appear at the more advanced level of SME development.Again the most developed in regard to this indicator is Russia, the least is Moldova, withUkraine somewhere in the middle. The best scenario of the sector development should containthe important conditions for the increase of its attractiveness, and as a result, a competition.Below please find the summary of the factors and conditions negatively andpositively affecting the SME sector in Moldova, The Russian Federation and Ukraine.In following please find recommendations for further SME development.73
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1. SME DECLARATION AND WORKING GROU
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While comparing the BSEC and EU doc
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cooperation with the United Nations
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GENERAL ASSESSMENT OF THE BSEC WG O
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“Armenia's new law introduces a n
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(iii)Share of the labor force of SM
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The following data represents some
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RankDocuments for export(number)Tra
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• Industrial zones/Business incub
Page 22 and 23: 3.1.4. FINANCING SMEsProf. Dr. Sela
Page 24 and 25: • the loan is secured with movabl
Page 26 and 27: 3.1.4.3. Mutual and loan guarantee
Page 28 and 29: introduction of e-signatures, only
Page 30 and 31: The Code of Conduct for Civil Serva
Page 32 and 33: Trading Across Borders Enforcing Co
Page 34 and 35: as with all non-governmental organi
Page 36 and 37: Bulgarian SMEs obtain additional ca
Page 38 and 39: • Project BG 2004/016-711.11.04 -
Page 40 and 41: usiness is not approaching them oft
Page 42 and 43: • Romanian citizens are recognize
Page 44 and 45: The preparatory project of the NDP
Page 46 and 47: • To support participation in eco
Page 48 and 49: In 2004, the National Institute of
Page 50 and 51: Incubators host on average 11 SME,
Page 52 and 53: Programs. The program is implemente
Page 54 and 55: development instrument is extremely
Page 56 and 57: accounting standards, including med
Page 58 and 59: corporations and open held corporat
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Page 62 and 63: • for unemployed (micro credit)
Page 64 and 65: are private pension funds, broker h
Page 66 and 67: very early steps of its democratic
Page 68 and 69: Another negative factor that is mor
Page 70 and 71: economy. The so called in the organ
Page 74 and 75: 4.3. MOLDOVATable 14.Dimensions Neg
Page 76 and 77: Related andsupportingindustriesDome
Page 78 and 79: Technological:Internetaccessibility
Page 80 and 81: Domesticdemand• Still not many pe
Page 82 and 83: international investments• Govern
Page 84 and 85: 3. Hamel, G., Prahalad, C.K. (1994)
Page 86 and 87: 5.2 DEVELOPMENT OF THE SME SECTOR I
Page 88 and 89: General Characteristic of SME Devel
Page 90 and 91: Index of SME Development in Armenia
Page 92 and 93: The same problem exists in getting
Page 94 and 95: SME support infrastructure in Armen
Page 96 and 97: 5 million was provided by UNDP and
Page 98 and 99: 5.3 DEVELOPMENT OF THE SME SECTOR I
Page 100 and 101: Diagram 1. The number of small ente
Page 102 and 103: The privatization process of object
Page 104 and 105: 13.Cabinet Provision on “Distribu
Page 106 and 107: 5.3.3. SME support infrastructure i
Page 108 and 109: The role of the state in technical
Page 110 and 111: General situation of credit marketT
Page 112 and 113: After creation and starting impleme
Page 114 and 115: At the meantime, small enterprise s
Page 116 and 117: Table. 32.Ease of businessDoingBusi
Page 118 and 119: people who start small businesses t
Page 120 and 121: are salaried and the medium - sized
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Technology Foresight in Greece 2001
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Greek VC market started to develop
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In the area of bankruptcy and restr
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enterprises. According to TURKSTAT,
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small size enterprise or micro ente
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industrial enterprises. Undersecret
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individuals, rather than well struc
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7. SUGGESTIONS FOR THE SME DEVELOPM
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Annex 1.MAP OF THE BLACK SEA COUNTR
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17-18 June 2005 1 st Moscow Interna
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ARMENIASTRENGTHS• Application of
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BULGARIASTRENGHT• Flexibility and
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GREECESTRENGHT• They have a vital
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ROMANIASTRENGHTWEAKNESS• Stabilis
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REPUBLIC OF SERBIASTRENGHT• Longe
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UKRAINESTRENGTHS• Well educated l
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In compliance with the Resolution m
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1. Please provide definition of SME
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7. Did you establish a dedicated bo
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11. Do you have any suggestions for
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Strategies of the Development of Entrepreneurship and SME

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