Criteria For The Labelling Of Smes

1185 Words Dec 26th, 2016 5 Pages
on the criteria set by a particular country. The criteria for the categorization of SMEs can be scaled by looking at the company’s turnover sales, some countries look at the number of employees in the business and there are countries which perceived SMEs based on mixed criteria. In addition, global organization entities such as European Commission and World Bank also have their own views on how to identify SMEs.
The European Commission states that “the criterion of the number of staff as the main criterion, however, introducing a financial criterion is nonetheless a necessary adjunct in order to grasp the real scale and performance of an enterprise and its position compared to its competitors” (European Commission: 2003, item 4). Figure 1.0 below is an illustration of SMEs definition by the European Commission.

Figure 1.0: European Commission definitions on SMEs Sourced: European Commission (2005)

According to Independent Evaluation Group (2008), the following quantitative criteria to identify SMEs are incorporated by The World Bank; Total assets in USD, annual sales in USD and number of employees. A particular business must met the manpower criteria and at least on financial based scale in order to be defined as SMEs. Figure 1.1 below shows the categorization made by World Bank.
Figure 1.1: World Bank definition on SMEs Sourced: Independent Evaluation Group (2008)
All countries in the world have the sovereignty to define SMEs based on their own business landscape…

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