SME vs. MNC: Definitions, Benefits and Key Differences
By Indeed Editorial Team
Updated 8 October 2022
Published 15 November 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Deciding where to work can be an exciting journey as there are a variety of possibilities. There are many different types of workplaces and each company has its own corporate personality and culture. Learning about the different types of companies and what working there is like can help you decide which sort of company is the right fit for you. In this article, we explain what an SME and MNC are, discuss the differences between them and list the potential benefits of working at each type of company.
SME vs. MNC
The first step to comparing SME vs. MNC is understanding what each of the acronyms means. Here are the definitions for each:
What is an MNC?
MNC stands for multi-national corporations. These are usually corporations with international business operations. The number of countries the MNC operates in depends on the size of the MNC. The MNC usually has a headquarter in one country and regional or local offices around the world. They're usually large companies with many employees. MNCs may exist in many different industries, such as the freight and shipping industry, food industry and fashion industry.
What is an SME?
SME stands for small and medium-sized enterprises. These are usually locally owned businesses. An SME is usually larger than a start-up but smaller than an MNC. SMEs may also generate significantly less revenue than MNCs. Small and medium enterprises are crucial to the local economy as they often hire local staff and employees which helps to reduce unemployment rates. They also drive innovation in their attempts to save costs. Governments may offer SMEs favourable tax policies or certain grants to help them grow and develop.
What's the difference between an SME and an MNC?
Here are some differences between an SME and an MNC:
Number of employees: There are typically more employees in an MNC than in an SME.
Annual revenue: An MNC typically generates more revenue than an SME.
Number of departments: There are usually more departments in an MNC than in an SME.
Location of offices: An MNC may have offices around the world while an SME may only have a local office.
What are the benefits of working at an SME?
Working at an SME can be fulfilling if what you seek in your next job is unique to SMEs. Here are some of the benefits of working at an SME:
Greater variety of work
SMEs tend to have fewer departments and the employees they hire may not have specialised expertise in a certain area. Since job roles are more flexible, you may have the opportunity to try a wider range of work, including cross-departmental tasks which could help you build your portfolio. A fresh graduate who's looking to try out different areas of work before deciding which area to settle in may wish to seek out a job at an SME to try a variety of work.
Doing a variety of work can also be beneficial to you in the long run as you learn to think from different perspectives. The business sales department's considerations could differ from the marketing department's concerns. Having tried work in both areas may equip you with the perspective of both areas. If you decide to specialise in one area in the future, you may find it easier to communicate with the other departments by possessing insights into their preferences and concerns.
Related: Preparing for the Future of Work
Since the teams are small, you may not report to an intermediate manager before reporting to the head of the department. You may also find that you work more closely with your direct manager or head of the department on projects. This translates to a flatter hierarchy in the company. If you enjoy more personal interactions or find that a welcoming company culture is important to you, you may wish to consider applying to an SME for your next job position.
A flat hierarchy could also mean an open work culture. Your colleagues may be happy for you to give suggestions or ask questions, even if you're a junior employee. Other departments may be willing to hear the feedback and thoughts of colleagues in different departments even if they have no prior professional experience in their field.
Related: A Guide to Singapore Work Culture
Since the company is smaller and there are fewer hierarchy levels, you may find that you and your team complete the work more quickly. There's less waiting time for an intermediate-level manager to approve your work product before it gets sent to a higher-level manager. A product development journey could end more quickly than if an MNC developed it.
The fast-paced environment also means that you're more hands-on in your work as you explore the best way to complete your work. You have more ownership over your work instead of passively reacting to what the intermediate-level manager asks of you. Having more ownership may increase your sense of belonging in the company and lead to greater job satisfaction. You could also feel more confident if you take the lead on some projects from an early point of time in your career.
What are the benefits of working at an MNC?
Here are some common benefits of working at an MNC:
You may be an individual who enjoys in-depth research and specialisation in a certain area instead of being a generalist. Working in an MNC could be better for you as MNCs can break down tasks into smaller specific tasks. Employees who do such work well are then left to complete these smaller tasks. Doing a specific area of a task means that you have more time and energy to focus on developing skills that help you excel in that area of work.
Another benefit of specialisation is that you build a unique name for yourself. If the area you specialise in is uncommon in the industry, that could make your skill set more desirable and make you more attractive to future employees. An example of employees who specialise in MNCs is engineers.
An MNC is likely to have more financial resources to send employees and staff for on-the-job training and professional development. This means that you may receive more structured training which can help you effectively learn more skills. Alternatively, the company may have some budget for employees to pursue professional development. You may have opportunities to upgrade yourself professionally with little or no cost to you.
Further, MNCs have a wider pool of employees from various countries. This means that you could potentially seek advice or tap on the knowledge of your foreign colleagues who may have some experience that is helpful to the project you're working on. The increased pool of talent makes collaboration and networking within the company itself an exciting possibility.
FAQs about working at an SME vs. an MNC
Here are some frequently asked questions about working in an SME vs. an MNC:
What skills are necessary for me to work in an SME or an MNC?
Having good conflict resolution skills may be helpful for you to excel in either an SME or an MNC. In both cases, you're likely to work in a team with other colleagues. On occasion, there may be disagreements within the team about certain aspects of a project. In such a situation, having the skills to diffuse a tense situation or calm your colleagues down can help to avoid unnecessary delays in the project.
On a related note, another useful skill you may wish to acquire is how to communicate with others. It's beneficial to have good communication skills because you're better able to manage conversations with colleagues across different departments. With fewer instances of miscommunication, you save time and resources when executing the project.
What level of guidance am I likely to receive when working in an SME?
The training at an SME may be informal due to the smaller scale of an SME. There may be a smaller number of incoming fresh graduates in your batch and hence it's not economical for the company to conduct firm-wide training sessions. You may still have a buddy or mentor to help ease your transition into the company. If your colleagues are busy, you may wish to be more proactive and put in greater effort to engage with them. A good source of guidance is your colleague's wealth of experience and knowledge.
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