MBA 224 Managerial Accounting & Financial Management

REFLECTION PAPER FINAL OUTPUT

JERAMIE G. ALAG
MBA, Romblon State University
October 10, 2022

How small and medium-sized enterprises (SMEs) in

Turkey confronts the dynamic competitive marketplace

Small and medium-sized enterprises (also known as SMEs) are the engine that drives modern
economies but, in Turkey, it is difficult to both get started in business and maintain a competitive
edge. Multinational and large-scale corporations, which have dominated a significant portion of
the economy, pose the greatest threat to growth and sustainability.

Most of Turkey's population resides in metropolitan areas. Small and medium-sized enterprises
(SMEs) in urban and rural settings face many of the same challenges as their larger counterparts.
Local businesses have been the target of government protection efforts with mixed results.
Despite having one of the most developed economies in the world, SMEs are necessary,
especially during this time of economic revival following the global recession.

Start-up success costs vary between sectors and countries. Some countries rarely keep SMEs,
while others have a high percentage of sustainability due to government strategies. Some sectors
are much more likely to collapse than others. The failure rate in the service sector is far higher
than in the goods sector, which has far fewer failures overall.

After reading the article, I understood that small and medium-sized enterprises (SMEs) face
significant obstacles when trying to compete with large, well-established organizations. Despite
the government's apparent willingness to help small and medium-sized enterprises (SMEs), a lot
of work remains for both the government and business owners. The government should not
shield small and medium-sized enterprises (SMEs) forever but instead, work to provide a playing
field that is level for companies of varying sizes.

From what I have read in the article, both positive and negative influences were at play, and
Turkish SMEs had to adapt to a highly competitive and ever-changing market. The challenges the
SMEs were experiencing, such as unfair competition, financing, technical development and
globalization, the cultural aspect, lack of management competence, and insufficient market
information, were discussed.

Because global corporations operate in multiple countries, they can get raw materials at more
favorable prices than those offered by local SMEs. This is made possible by engaging in unfair
competition. When raw materials are sorted at a low price, the cost of production of a particular
product or service can be kept at a reasonable low level. When the cost of manufacturing is low,
then businesses are in a position to sell their wares at prices that are relatively less expensive
than the prices that are quoted by other local businesses.

Financing, both monetary and human, is essential to the operation of a firm that is effective and
competitive. Although Turkey has one of the most excellent banking systems in the world, the
country nevertheless adheres to the more conventional model of banking, in which loans are
given preference to companies that already have substantial assets such as land and properties.
During the development period, small and medium-sized businesses typically lack the necessary
assets, so their access to financing is restricted. A slow growth rate is the result of restricted
access to loans.

When it comes to technological advancement and internationalization, many believe that the
rate of technological growth in the world is a challenge to SMEs, which is something they are
concerned about. They have little choice but to continue using the outdated technical system.
However, their rivals, who operate on a larger scale and are international corporations, have
upgraded to more advanced technologies.

The rate at which the globe's technology is expanding is rapid. The pace is so rapid that it is
difficult for local SMEs to keep up. In addition to the general global rate, multinational
corporations and large-scale companies are the ones who push technological advancement. They
make confident that there is the progress made in technological advancement so that it might
benefit what they do.

Compared to purchasing from regional businesses attempting to raise their quality standards,
the people of Turkey are more likely to purchase goods from reputable businesses that operate
at a high level of productivity. This culture of the country comes at the expense of SMEs, and as a
result, their market is diminished.

Although having information is power, small and medium-sized businesses often lack access to
this crucial aspect of the production process. Due to a lack of information, businesses cannot
take advantage of the opportunity to provide high-quality products. As a result of the fact that
Turkish multinational corporations and large-scale firms have access to this knowledge through
their internal research and development programs, these companies can maintain their
competitive edge and even outperform the local SMEs.

There is also a level of ignorance on the part of those who own SMEs; these people tend to rely
on the information they acquire directly from the market, but they forget that there are national
and international databases that can supply the information desperately required. They make
decisions as a result of very little knowledge. Decisions that were taken with limited information.

As a result of these difficulties, the Turkish government has made it a priority to safeguard both
domestic and foreign small and medium-sized enterprises. The government's financial policies
keep the economy in check despite the country's capitalist structure.

They have decided to put up set minimum and maximum prices for certain commodities in an
effort to shield buyers and small businesses. These changes are an effort to level the playing field.
The reason these tactics work is because they focus on one or two sectors, leaving the rest of the
economy vulnerable to unfair competition from global corporations. Tariffs and non-tariff trade
barriers are another policy decision that is linked closely with pricing.

The government's acceptance of this change is an effort to level the playing field for various
actors. Loans are now available to SMEs at competitive interest rates. The difficulty arises while
attempting to obtain the maximum credit amount from these establishments. Their long-term
viability is also a source of worry.

The government has investigated a number of topics, one of which is the development of a
database for use by small and medium-sized enterprises (SMEs). The databases also have
external access to global information useful for modern businesses. Depending on the industry,
databases might be updated as frequently as once every week. These sites' one and only flaw is
that they provide only broad, overarching information that managers of small and medium-sized
enterprises (SMEs) can dismiss as unimportant.

In contrast to the micro data that would be useful for SMEs, macro statistics tend to focus on the
economy as a whole. The owners and managers of SMEs are likewise largely ignorant about this
issue. Due to their rejection of evidence-based methods of making choices, they avoid these
resources.

It made sense that before starting a company, aspiring entrepreneurs would do well to educate
themselves on the benefits of using data and science to make decisions. Traders can benefit
significantly from government libraries and statistics because they will have access to the most
up-to-date information on current business trends. This will help them make better, more
strategic judgments in the face of competition.

Turkish economic conditions have evolved, necessitating new approaches from the government.
Since they have the most relevant information, traders are in the most significant position to
propose solutions.