Essay: Classification of an Organization

Sample Essay

Most people view that organisations are defined or classified as Small and Medium Enterprises by the number of employees working in these organisations. Albeit the number of employees is a determining factor in classifying an organisation as a Small and Medium enterprise but other factors should also be considered. Companies should be classified as SMEs on the basis of number of employees; revenue o profits generated in a year, capital structure of the company and size of an organisation within a sector as compared to other companies n that sector. Some countries may classify SMEs on the basis of capital invested and number of employees working in an organisation. In most parts of the world organisations employing up to 200 workers are designated as Small and Medium Enterprises.

In Australia a company comprising of more than 20 but less than 200 workers is referred to as a medium organisation while a company employing less than 20 employees is considered a small company. In Canada a manufacturing firm with less than 100 employees is considered a small enterprise and a service firm employing less than 50 workers is referred to as a small firm and if a company employs 100 to 500 workers it is termed as a medium enterprise. Germany designates SMEs on the basis of number of employees and turnover of an organisation. If a company in Germany has less than 10 employees and the average turnover is less than on e million it is designated as a small enterprise and if a company has an average turnover ranging between 1 million and 50 million and the number of employees between 10 to 49 it is designated as a medium enterprise. Japan defines small and medium enterprises based on various industries and the size of the firm is analysed through amount of capital invested and number of employees. The maximum number of employees designated as an SME by the European Union is 250 (OECD Working Party on SMEs and Entrepreneurship 2008).

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