Ever since the time when formal setups began taking shape for trade and business, defining a mid-sized firm was never easy. The smaller ones were easier to comprehend and big ones very much visible. The grey zone was for the mid-sized ones. Mining through the available international literature, trade databases and expert views on the subject has only generated more array of confounding ambiguity. CEOs, founders, and incumbents in the direction of leading entrepreneurial and innovative enterprise must start thinking.
No common or universally accepted definition of mid enterprises exist across countries or international organization. In the policy documents at some places, investment is the sole criteria whereas employment is the measurable parameter in some other cases. However, given the dynamics and rapid disruptive changes across business verticals, one definition cannot fit all. It will be akin to try and predict the colour of the butterfly as no one knows, which colours will bloom on the butterfly once transformed from the green caterpillar. Have you visited your geography?
Any study or research into mid-sized firms must thus indicate a direction for more enabling policy framework. This is important because these firms have grown beyond the survival stage unlike small businesses. Instead, the key strategic objectives for these mid-sized firms reside in staying market relevant and to propel ahead. These are not the case so often with large businesses, given their market presence and established clientele.
This article would thus attempt to draw some conclusions based on the available set of information for identifying mid-sized enterprises which work on competitive strategy coupled with foresight and launch itself onto trajectory of a high net worth venture.
Attempts to Define Mid-sized Firms.
Most of the developed countries have a combined definition for small and mid-sized enterprises as those having less than a certain no. of employees, including USA, France, Germany, Ireland, Portugal, Greece. EU defines mid-sized companies based on triple criteria of certain no. of employees, a benchmark turnover and balance sheet not exceeding a certain value. The developing and transitional economies have wide variation in the criteria, nomenclature, and range of values in each.
With rapid advent of technological innovations driven by start-ups and especially emergence of service sector enterprises, the available definitions fail to capture the essence of mid-sized firms in India. This complicates the issue as observations indicate that small units tend to diversify into different firms despite common ownership to take advantage of the concessions for finance, taxation and incentives well laid for small firms. This acts as a retardant for the transition from small to mid. In the absence of clarity, any economic turbulence leads to wiping out of a considerable number of mid-size firms.
Transformation of Firms
In a disruptive, uncertain, and rapidly evolving economy, the transformation of a mid-sized firm into a full-fledged big scale industry requires strategic thought as the starting point and foresight deployment to arrive at an envisaged future. Firms use different strategies to pace themselves. Strategies emerge from keen analysis of opportunities and continuous development of acquiring competences to make offerings based on the market pull. Foresight deployment however requires a conscious adoption of a strategy rather than it being more of an emergent phenomenon sans well planned process. Proponents need to mobilise and move ahead with a deliberate attempt to tread on the path of intended strategies to arrive at the desired future.
The mid-sized firms having a strong customer-centric approach, operate on a predominance of expansion strategies in the form of growing a distribution network, augmenting sales force, service network, and a pre-emptive capacity expansion, some also supplement their expansionary phase by differentiated strategies of advertising, branding and quality enhancement. External expansions happen through strategic, technical or distribution tie-ups or partnerships, joint ventures, and franchising. The foresight to arrive at a future scenario of customer service as a pillar of business survival is certainly a driving force behind these strategies. Hello Mr. CEO, is your firm customer centric?
New Product-centric firms
New product centric firms identify with patents, innovation, and large investment in research and development. They focus on value creation through superior products by creating a niche in their product markets. They deploy quality improvement programs for both product and process as the central theme of their strategies. They routinely undertake process, product, and design improvements as a part of their overall strategic positioning. These firms are driven by the foresight of a future where product quality, its supply chain and market creation shall become the deciding factor for customer choice. Hello Mr. CEO, is your firm product centric?
These firms are those having a clear focus on cost control. Many of these firms are producing goods which are commoditized, yielding wafer thin margins. These firms work to optimize on costs through a collaborative strategy of tight economic management and better managerial efficiencies. Since operating at economies of scale envisages large capital investment, joint ventures, technical tie-ups, and phase wise capacity expansion are actively pursued. The future market for cost-effective value products is the decisive strategic foresight of these firms. Hello Mr. CEO, is your firm operations centric?
The discussions undertaken in this article are not exhaustive in any way. Geographies and verticals across the globe may add to the perspective. Several segments of mid-sized firms can still be studied as innovative technologies and way of working come through. What remains relevant is trying to identify the latent potency in the capabilities of these mid-sized firms which may often remain disguised if a rigid framework is applied to define them within the confines of investments and employment generation. The aspiring amongst these can be yet differentiated and identified on their urge and surge towards an evolutionary future of transformation akin to metamorphosis of caterpillars to butterflies!
Are you ready to metamorphosize from a caterpillar to a butterfly?
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