Venezuelan SMEs and Competitiveness

Overview, history and scope Venezuelan SMEs in this face in the current political and economic scene, serious problems that have affected its operation and competition, given that they operate in a very turbulent environment where the risk, uncertainty prevail and there is no incentive for investment, although there are opportunities that arise as a result of openness in foreign policy than the current government has started. Venezuelan SMEs mostly suffer from many weaknesses ranging from technology, financial resources, human as well as proactive leadership, enabling it to successfully face the competition. Competitiveness can be defined as the combined result of systematic actions implemented in an organization to gain a dominant position in one market, offering quality products and services at prices that meet customer expectations, (? Alvarez) It should be remembered that in the seventies, when demonstrated many development programs in the community were in vogue in the seventies was a central issue was environmentalist and communitarian as one of the major issues small is beautiful. For a long time, SMEs were associated with crafts, selling Creole sweet, little culture, ie with traditional production.

Take into account that there are various ways of measuring the size of a business: The most widespread is based on the number of employees, but also as an indicator indicates the amount of capital or assets. According to Decree No. 1547, November 9, 2001 (Law on the Promotion and Development of Small and Medium Industry SMI), Article 3 to the purposes of this Decree Law means: 1. Small Industries unit of economic exploitation by a legal person that it conducts industrial goods and related services within the following parameters: 1.1 Plant workers with an annual average of no less than eleven (11) fifty workers or May ( 50) workers. 1.2 Annual sales between nine thousand and one (9001) tax units and one hundred thousand (100,000) tax units.

2. Industry Median unit of economic exploitation by a legal person from engaging in industrial goods and related services within the following parameters: 2.1 Plant workers with an annual average of not less than fifty-one (51) nor more than workers hundred (100) workers. 2.2 Annual Sales hundred thousand one (100001) tax units and two hundred fifty thousand (250,000) tax units. In Venezuela, according to the Bureau of Statistics and Information Centers (OCEI), a small business has fewer than five employees, a small is between 5 and 20, a median between 21 and 100 employees and has over 100 large. The number of employees of a company reflects its production capacity or adding value to their products and services. Two micro can be equal in number of employees but are very different if one makes software and other tostones. Why some countries use different measures of firm size to the number of employees. It is very difficult to know how many companies there are in Venezuela, especially since many micro part of the informal economy and are no more than moonlighting. The number of people in the informal economy (four million, half of the population) makes it harder to register.

An indirect way of knowing how many there are is based on Social Security contributions. For example in 1997 there were about 211,000 companies. 78% of which were micro enterprises, 14% and the rest small medium or large. A typical small industrial enterprises have fewer than 10 workers and an equal number of employees, and is administered by two or three owners, most with secondary or higher education. It does not employ unpaid family workers. Half have one or two managers, on the other half, the owner is the sole manager 60% have more than ten years of operation. 17% between six and ten years, and another 17% fewer than six. Weaknesses There is a lack of qualified personnel and strategic vision based on knowledge of what happens in your environment, be a serious obstacle to development, requiring urgent improvement of business management to strengthen its strategic vision in the face national problems, the opening towards socialism, globalization. There is a lack of qualified management, supported formal knowledge that fosters management science, seriously affecting its jurisdiction, the proper use of their resources, and knowing how to deal generate challenges and changes, changes necessary to ensure operability, productivity and competition.

Another major weakness in export because they have few organizational constraints, financial and technical, poor knowledge of foreign markets and distribution channels, inability to hire specialized personnel in international trade, lack of international agreements, low volume and narrow range products, and insufficient financial resources. Remarkably, export consortia, the most widely used organizational response by SMEs, especially from Europe, to overcome these obstacles, are 'underdeveloped in the country. There is only one example of industry consortium formed in May 1999 in the state of Carabobo under the patronage of the government and technical advice from the Institute for Social Research, Economics and Technology of Venezuela (INSOTEV) In the case of manufacturing enterprises the difference between Venezuela and other countries is greater: Venezuela has barely 0.35 per thousand manufacturing firms, while Colombia, four times this figure and Germany and Japan have the world's highest rates 8.2 and 6.2 respectively. These figures should not miss the almost continuous decline in private investment since 1978 leaves no doubt about the dismantling of Venezuelan production system. It is disturbing to note that no sector of the Venezuelan working at 100% capacity, it is presumed that this is due mainly to falling demand, which significantly affects the level of domestic production.

Definitely to meet the requirements of the new model of industrialization, modern SMEs increasingly need qualified staff and managers willing to compete with global markets. This leaves little room for traditional SMEs, generating products or services of poor quality, technological innovation which is scarce or absent and their managers are reluctant to integrate (horizontally or vertically? With other companies. It is known that a minority of the Venezuelan SME use advanced technology, based their competitiveness on design quality, production flexibility and timeliness of deliveries and exports directly or as suppliers of intermediate products for large enterprises that export. Small entrepreneurs usually do not know the status of their companies because their planning and control systems are poorly developed. Also another major weakness is its marketing. The employer responsible for a small company who want to know where they are, who the customers are and why they buy. SMEs do not have in most cases, strategies, financial or tax planning and management systems are weak, what hurts and affects up in bank lending.

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