Spanish SMEs and Cooperatives: Economic Impact and Challenges

SMEs and Cooperatives in the Spanish Economy

Small and medium-sized enterprises (SMEs) and cooperatives are crucial business models in the Spanish economy, generating approximately 90% of employment.

Challenges of Small and Medium Enterprises

SMEs hold significant importance in the Spanish productive and commercial landscape. As a result of economic globalization, these enterprises face international challenges. These market challenges include a market without borders and the incorporation of technological changes. SMEs must address these challenges by leveraging their advantages and minimizing their disadvantages.

Benefits of SMEs

• Flexibility: The size and structure of SMEs allow for greater agility in adapting to changing market conditions.
• Proximity: The customer relationship is more direct than in larger companies.
• Reduced Conflict: Many of these companies have a strong personality.
• Adaptability: There are goods and services whose production methods are not profitable for a large company but are viable for an SME.

Disadvantages of SMEs

• Access to Financing: SMEs may not be able to access certain forms of financing, such as the stock market.
• Weak Bargaining Power: Their size does not allow them to impose conditions on suppliers.
• Risk of Acquisition: Due to their size, they can be acquired and controlled by larger businesses.
• Technology Investment: They have fewer resources to invest in developing new products and processes.
• Production Costs: They cannot produce large series of products, typically leading to higher production and selling prices.
• Information Gap: The employer may have less technical knowledge than a large company.

Operating in an open economy allows SMEs to:

1. Adjust their supply to demand, through exportation or importation.
2. Increase their profits by taking advantage of rising prices in the international market or from increased production methods if they can expand their market.
3. Compete in international markets, encouraging the company to innovate, specialize, and improve its products.

Definition of Business Integration

The integration of companies involves their union to gain competitive advantages due to a larger dimension, an increased presence in international markets, or the decrease of costs resulting from the inclusion of activities within the same company that were previously performed by different companies separately, thereby avoiding duplication.