Country Reports for Current Situation & Analysis of Needs of SMEs on Strategy Authors: Semih Ceyhan, Kadir Hızıroğlu, Mehmet Barca, Mahmut Hızıroğlu, Karel.

Country Reports for Current Situation & Analysis of Needs of SMEs on Strategy
Authors: Semih Ceyhan, Kadir Hızıroğlu, Mehmet Barca, Mahmut Hızıroğlu, Karel Van Isacker, Maria Goranova, Bernard Van Isacker, Anne-Myrtille Rivoal & Denia Frioua This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

3. The Importance and role of SMEs in each country
Introduction The importance of the big corporates and small and medium enterprises (SMEs) differs among countries. United Sates of America (USA) has put more emphasis on corporate dimension while Europe give importance to the development of SMEs. For the development of the European Union (EU) economy, the preparation of long term strategies for SMEs is very important. EU tries to set its policies in a way that enhances the SMEs’ capabilities, competitiveness, entrepreneurship and innovation capacities. In contrast with USA, the main focus is not on huge investors or big corporations, but on the sustainibility and development of smaller enterprises. This study aims to provide a comparative analysis of the current situations and strategy education perspectives of the SMEs in Turkey, France and Belgium. The importance and role of the SMEs is analyzed, the state and legal framework for SMEs is summarized and conclusions of the fieldworks are provided for each country. This study package provides a detailed analysis of SMEs in Turkey, France and Belgium covering the issues of demographics, legal framework of SMEs. In addition, findings of a strategy need analysis questionnarie are provided for each country.

Contents 1. Research Objectives & Methodology 4 1.1 Objectives 5 1.2 Methodology 6 2. The Importance and Role of SMEs 7 2.1 The Importance and Role of SMEs in Turkey 8 2.2 The Importance and Role of SMEs in France 19 2.3 The Importance and Role of SMEs in Belgium 28 3. State and Legal Framework 39 3.1 State and Legal Framework in Turkey 40 3.2 State and Legal Framework in France 54 3.3 State and Legal Framework in Belgium 61 4. Findings of Analysis of the Current Situation and Needs Study 68 4.1 Key Findings –Turkey 69 4.2 Key Findings – France 79 4.3 Key Findings – Belgium 89 5. Final Remarks 100

Section 1 Research Objectives & Methodology 1.1 Objectives 5 1.2 Methodology 6

Research Objectives & Methodology - Objectives Objectives The objectives of the «Cross-cultural analyses of the current situation and needs», workpackage 3, are stated as follows: Examining the current situation of SMEs in Turkey, France and Belgium. Identifying the major issues related to strategic management of SMEs. The elaboration of a detailed analysis of needs of small enterprises in Turkey, France and Belgium. Providing the necessary information about the state and legal framework for the SMEs in Turkey , France and Belgium. Obtaining the database of the national bodies, professional and educational institutions and enterprises related to SMEs support and training regarding the strategic management in Turkey , France and Belgium. Mapping recent approaches that relate to the issue of provision of training on strategy. Revealing the existing shortfalls in vocational training in small enterprises, as well as the reasons that cause the situation. Providing the findings obtained from the analysis of current situation and needs. Providing input for the preparation of the training modules by emphasising the needs of SMEs in Turkey, France and Belgium.

Research Objectives & Methodology - Methodology Methodology Work package 3 has been divided into 6 sections; introduction, research objectives & methodology, the importance and role of SMEs in each country, state and legal framework, analysis of the current situation and needs study, and conclusions. For sections (iii) and (iv) desk research was conducted. The secondary data on the current situation of SMEs and the legal framework were gathered from different resources. Moreover, preliminary assessment of the situation took place by providing necessary information on demographics of SMEs, as well as the relevant legislations. In section (v) a survey scale was developed in order to determine the perspectives of SMEs' owners/managers with regards to the need of strategy training. The survey forms that consist of open and closed end questions were prepared with the support of academicians, who are experts on strategic management. Dur’ng the survey, there were 205 participants from Turkey, 161 from France and 31 from Belgium. The tendency and need of the SMEs on strategy training were measured. These participants were selected so that the sample would represent the whole SME population. This survey was applied to different regions of Turkey including Ankara, Sakarya and their surrounding areas. In France, the questionnaire was submitted to company managers of the Vaucluse region, located in the South of France. In Belgium, respondents were also from different sectors from the Flemish region. Surveys were made online, and the responses were analyzed, mostly via descriptive statistics. This work package is managed by Yildirim Beyazit University (YBU). While conducting the research, partner organizations of Turkey (YBU, Sakarya University and KOSGEB), Belgium and France performed a collaborative work using their experience and resources. A team was established consisting of members from all partners. After the desk and field researches were finished, the team delivered the findings.

Section 2 The Importance and Role of SMEs 2.1 The Importance and Role of SMEs in Turkey 8 2.2 The Importance and Role of SMEs in France 19 2.3 The Importance and Role of SMEs in Belgium 28 At a glance This section provides the necessary demographics about the current state of art of the SMEs in each country. These demographics constitute of any related statistical information: some macro-economic indicators, such as the number of SMEs in each sector, contribution of SMEs to employment, import & export ; their share of total GDP, educational level of SME workers etc.

Section 2.1 The Importance and Role of SMEs in Turkey Current situation 9 The main industries which SMEs dominate (sectoral distribution of SMEs) 14 Human Resources Profile/Structure of SMEs 15 Training and consulting services employed within SMEs 18

The Importance and Role of SMEs in Turkey - Current Situation The criteria of being an SME is based on the number of employees and annual turnover amounts The scales of enterprises in Turkey are defined according to certain criteria; the number of employees, annual turnover and balance sheet. The first criterion, number of employees, is the same as that adopted by the EU. However, financial criteria limits are lower than those of the EU, due to the characteristics of Turkish enterprises. A specific regulation has been adopted in Turkey on definition, qualification and classification of SMEs. According to this regulation, enterprises whose number of employees are less than 250 and annual turnover or annual balance sheet does not exceed 25 million Turkish Liras are determined as SMEs. However, if state institutions or organizations have control over 25 % of an enterprise capital or the right to vote over it, the enterprise is not regarded as an SME, even it remains within the limits determined above. Table-1 SME differentiation scales Scale # of employees Annual Turnover Micro <10 <1 million TL Small <50 <8 million TL Medium <250 <40 million TL SMEs are classified into three groups based on the definition of the industry ministry; micro enterprises (less than ten staff and one million Turkish Liras-annual turnover or balance sheet), small enterprises (less than fifty staff and eight million Turkish Liras-annual turnover or balance sheet) and medium enterprises (less than two hundred and fifty staff and forty Turkish Liras-annual turnover or balance sheet). Regulations have also defined the enterprise as any entity engaged in an economic activity, irrespective of its legal form.

The Importance and Role of SMEs in Turkey - Current Situation SMEs plays an important role in international trade, penetrating 38,5% of the import and 62,6% of the export in 2012 Table-2 Total import and export contribution of SMEs in 2011 and 2012 Export (in 000TL) Import (in 000TL) Sector 2011 2012 Manufactured Products Products of Agriculture, Forestry And Fishing Mining And Quarrying Water Supply; Sewerage, Waste Management Electricity, Gas, Steam And Air Conditioning Others Total SME contribution Total import / export % share of SMEs 59,6% 62,6% 39,8% 38,5% Based on the data from TurkStat (TSI), in 2011 SMEs contributed %63 of the total GDP in Turkey. Export and import amounts reflect the fact of how important this contribution is. Total export share of SMEs in Turkey was 62,6% in The 34,9% of the exporting enterprises were operating in manufacturing, while 60,1% of the export were made by SMEs in the trade sector. When it comes to import, the share of the SMEs is much lower compared to exports. As summarized in table-2 SMEs realized 38,5% of the total imports. 33,2% of this import is made by manufacturers, while 55,7% of the import were made by SMEs in the trade sector.

The Importance and Role of SMEs in Turkey - Current Situation The main source of the increase in the export of SMEs is manufactured products Table -3 Manufactured Products export breakdown of SMEs Export (in 000TL) Growth Sector 2011 2012 TL % Basic metals 125% Wearing apparel 9% Textiles 12% Food products 15% Electrical equipment 6% Machinery and equipment n.e.c. 11% Fabricated metal products 16% Chemicals and chemical products Rubber and plastic products 10% Other non-metallic mineral products Motor vehicles, trailers and semi-trailers 13% Others 23% Total 28% As it can be derived from table-2, there was a significant increase in export from 2011 to That increase was caused by the 35,2 billion $ growth in the manufactured products’ export. The basic metal export increased by 125% with an approximate amount of 21,4 billion $ from 2011 to The table aside summarizes the breakdown of the Manufactured Products export of SMEs.

The breakdown of the imports from SMEs in Manufactured Products sector
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Turkey - Current Situation The breakdown of the imports from SMEs in Manufactured Products sector Table -4 Manufactured Products Import breakdown of SMEs Import (in 000TL) Growth Sector 2011 2012 TL % Chemicals and chemical products 4% Basic metals 16% Machinery and equipment 0% Computer, electronic and optical products 78.171 1% Motor vehicles, trailers and semi-trailers -15% Electrical equipment, -3% Coke and refined petroleum products 67.421 Textiles -16% Food products 10% Rubber and plastic products 5% Other manufactured goods Others -1% Total Table-4 on the left, which provides the breakdown of the manufactured products imports, shows that the total imports of SMEs have not been changed significantly (only ~1%) from 2011 to 2012. Manufactured products again constitute a large proportion of the SME imports as it is in the exports. Chemicals, basic metals, machinery and equipment, computer electronics are the most imported products by SMEs.

The Importance and Role of SMEs in Turkey - Current Situation Historical change in the number of firms that opened, liquidated, closed from 2009 to 2013 in Turkey In the first five months of 2014, the number of firms opened in Turkey increased 29% compared to the first five months of For the same period, the number of closed firms declined 2%. Graph-1 Number of opened, liquidated and closed firms between Graph-2 Comparison of first 5 months of 2014 with 2013 Based on the data from The Union and Chambers and Commodity Exchanges of Turkey (TOBB) in 2013, the number of firms opened in Turkey had increased 2% compared to The number of closed firms had declined 22% in the same period.

The Importance and Role of SMEs in Turkey - The Main Industries Which SMEs Dominate (Sectoral Distribution of SMEs) There were enterprises operating in Turkey and %99,9 of them were SMEs ( ) in 2011 Table-5 The number of SMEs in different sectors in 2011 SME size (by # of employee) % in 1-19 20-49 50-99 SME 250+ Total SMEs Wholesale and Retail Trade; Repair Of Motor Vehicles 10.351 2.019 880 372 40,8% 9,9% Transportation and Storage 2.599 582 329 177 16,4% 4,7% Manufacturing 15.760 4.299 3.062 1.467 12,8% 39,0% Accommodation and Food Service Activities 2.725 672 494 227 8,8% 6,0% Professional, Scientific and Technical Activities 1.362 214 133 81 5,4% 2,2% Construction 6.658 1.964 1.030 312 4,9% 8,3% Human Health and Social Work Activities 28.459 1.273 250 292 30.274 129 30.403 1,2% 3,4% Other sectors 5.172 1.790 1.398 1.127 9,7% 29,9% 45.900 11.790 7.618 3.763 100,0% % in SME size 97,3% 1,8% 0,5% 0,3% 99,9% 0,1% Based on the data provided by the Turkish Statistical Institute (TSI), in 2011 there were SMEs operating in Turkey. This number constitutes the 99,9% of the total enterprises and 76% of the employment, 53% of the total wages, and 63% of the total sales. The table above provides the sectoral distribution of the SMEs by grouping them according to their employee numbers. The main economic activities of SMEs are as follows: 40.8% Wholesale and Retail Trade - Motor Vehicles and Motorcycles Repair, 16.4% Transportation and Storage, 12.8% Manufacturing Industry. These three sectors provided the 30,6% of the employment, 24,7% of the total wages, and 53,4% of the total sales.

SMEs provided 76% of the employement in 2011
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Turkey - Human Resources Profile/Structure of SMEs SMEs provided 76% of the employement in 2011 Table-6 The number of person employed in SMEs in different sectors in 2011 SME size (employee size) % in Sector 1-19 20-49 50-99 SME 250+ Total SMEs Wholesale and Retail Trade; Repair Of Motor Vehicles 30,6% 12,3% Manufacturing 24,8% 35,3% Construction 10,8% 5,3% Transportation and Storage 80.084 38.495 48.904 8,7% 8,3% Accommodation and Food Service Activities 83.699 46.519 75.210 7,7% 5,5% Professional, Scientific and Technical Activities 40.282 14.703 19.887 45.025 4,4% 1,6% Human Health and Social Work Activities 77.796 38.467 16.759 47.144 72.821 2,1% 2,6% Other sectors 29,1% 100,0% % in SME size 46,6% 12,4% 7,0% 10,1% 76,0% 24,0% SMEs in Turkey play an important role by providing employment opportunities. 76% of the workers in Turkey are employed in SMEs according to the data that TSI provided in ,6% of the employment is provided by the SMEs who have 1-19 employees, which indicates the importance of the micro-small size enterprises. The majority of the SMEs are from wholesale and retail trade, repair of motor vehicles, manufacturing and construction sectors; 30,6%, 24,8% and 10,8% respectively. Larger companies who has more than 250 employees provide only 24% of the total employment and the sectors that holds the big share are Manufacturing and Wholesale and Retail Trade, Repair of Motor Vehicles with percentages of 35,3% and 12,3% respectively.

The Importance and Role of SMEs in Turkey - Human Resources Profile/Structure of SMEs Average number of employees in an SME is 3 in 2011, while this number is 735 for large companies Table-7, which summarizes the average number of employees according to the size of the enterprises in 2011, shows that the average number of employees among different sectors does not change too much. The average number of employees worked in an SME is 3 while this number is 735 for large enterprises. Table-7 Average # of person employed per firm in 2011 SME size (employee size) 1-19 20-49 50-99 SME 250+ Manufacturing 3 32 69 153 7 665 Wholesale and Retail Trade; Repair Of Motor Vehicles 2 31 67 148 914 Construction 4 68 150 8 465 Accommodation and Food Service Activities 152 667 Transportation and Storage 1 66 149 1.294 Professional, Scientific and Technical Activities 30 556 Human Health and Social Work Activities 161 6 565 Other sectors 155 714 Total 735

The Importance and Role of SMEs in Turkey - Human Resources Profile/Structure of SMEs The value added at factor cost, education level and age of SMEs’ managers Table-8 Value added at factor cost per employee in 2011 (in TL) SME 250+ Manufacturing 20.346 Wholesale and Retail Trade; Repair Of Motor Vehicles and Motorcycles 19.868 48.682 Construction 22.445 48.795 Professional, Scientific and Technical Activities 37.617 34.340 Transportation and Storage 14.792 52.752 Other sectors 19.933 54.111 Total 21.789 60.552 When we compare SMEs and large companies we observe that average value addition at factor cost per employee is three times higher in large companies than the SMEs. Dramatic differentiation occurs in manufacturing sector. Average employee in a large manufacturing company provides TL while a manufacturing employee in an SME only creates TL. The education level of the managers of the SMEs is summarized at the graphs above. Based on the data from KOSGEB in 2007, 69,52% of the managers at the same time are the owners of the businesses. 35,97% of these managers have education level under high school level. The average age of the managers is 41 based on the same KOSGEB data in Most of these managers are younger than 50 years old.

The Importance and Role of SMEs in Turkey - Training and Consulting Services Employed within SMEs There is a reluctance in SMEs for taking professional assistance from outside Table-9 Outsourced advisory and education services Service type Advisory Education Marketing, Advertisement 3,1% 5,0% Sales, Distribution 2,0% 4,0% Management Organization 3,5% 4,8% Human Resources 3,4% Total Quality Management 5,8% 6,9% Production Planning and Control 4,9% International Trade - Export 2,1% 3,8% Computer Systems 4,2% 6,8% Scheduled Maintenance 2,4% 3,2% Financial Management 3,0% Manager Education 1,7% The young managers are providing a dynamism to the SMEs on catching up with new technologies and innovation. This helps SMEs on adapting better to changing environmental conditions. However, this situation is not a solution of deliberate choices but the family business perspective of the SMEs in Turkey. Education level and age are not enough for being competitive in the market, there is a strong need for professional assistance for SMEs. Table 9 summarizes the percentage of the service purchased by SMEs on advisory and education in This table shows that in Turkey professional assistance seeking is very low in Turkey, in most service types it is below 5%. According to the KOSGEB data, between , TL amount of training support was provided to 811 SMEs. In addition, KOSGEB also distributed TL advisory support to SMEs. These supports could be for any subject that SMEs need. When it comes to specific supports on strategic management; KOSGEB provided TL and TL amounts respectively to training and advisory since April 2012. KOSGEB does not have a specific support to SMEs on strategic management but they consider the subject within general management training and advisory supports.

Section 2.2 The Importance and Role of SMEs in France Current situation 20 The main industries which SMEs dominate (sectoral distribution of SMEs) 22 Human Resources Profile/Structure of SMEs 24 Training and consulting services employed within SMEs 25

The General Overview of SMEs in France
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in France - Current Situation The General Overview of SMEs in France Table-10 Number of companies at January 1st 2012 Company number and distribution Changes over the last year Share on market sector* Craft Companies 2,1% 32,2% Companies whose main activity is artisanal 100,0% 2,0% 26,6% Food industry 67.929 7,4% -0,2% Manufacturing 13,6% 1,3% 3,6% Construction 49,1% 2,2% 13,1% Services 29,9% 2,7% 7,9% Field: France, units registered in the craft chamber. * Less agriculture, finance and insurance Reference: Insee, Sirene 2012; treatment Dgcis In France, the category of Small and Medium Sized Enterprises (SMEs) is made of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euros, and/or an annual balance sheet total not exceeding 43 million euros. Among them, there are also micro-enterprises which employ fewer than 10 persons and have an annual balance sheet total not exceeding 2 million euros. Table-11 Number of companies at 12/31/2012 VAUCLUSE Source CMV Companies at 12/31/2012 Business Sector Number % Food 1.430 9,8% Construction 6.708 46,1% Manufacturing 2.208 15,2% Services 4.186 28,8% Other 10 0,1% Total 14.542 100% In France, all sectors included, there are a little more than 3 million SMEs, among which 96% are micro-enterprises. Regarding the craft sector, there are a little more than 1 million craft enterprises in the country and in the Vaucluse department. They employ 3 million people and have a turnover of 268 million euros.1 Almost 50% of them are in the construction industry. 1

The Importance and Role of SMEs in France - Current Situation Focus on Export In Provence-Alpes-Côte d'Azur (PACA), small and medium sized enterprises (SME's) export and had an export turnover of 5 billion euros in 2007; which corresponds to 7,7% of the total amount of French exports. Paca is therefore the 3rd region in France in terms of SMEs export turnover, behind Île-de-France (34,1 %) and Rhône-Alpes (11,3 %). The region is characterized by the importance of the international trade with African and Mediterranean countries. 17% of SMEs exports are destined to Africa, with 12% to Maghreb countries (Algeria, Tunisia and Morocco). 38% of SMEs export are made to Mediterranean countries (14% towards countries outside the Euro zone). The main part of trade is made towards Europe which receives 64% of the region SMEs exports; with 40% destined to neighboring countries. Italy is the preferred partner of PACA's SMEs, with 17% of the region's total exports.2 2

One exporting country out of two belongs to the trade sector
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in France - The Main Industries Which SMEs Dominate One exporting country out of two belongs to the trade sector Table-12 Sector breakdown of the international activities of PACA SMEs in 2007 Regional SMEs Including Regional Exporting SMEs Industry Importance in Regional Export Share of Revenues Generated on Export Average Share of Export on Companies Revenues Industry (in number) (in %) (in % of profit on export regional) (in % of profit on each sector) Trade 51.237 6.427 12,5% 51,7% 4,4% 25,6% Intermediate Goods 3.057 687 22,5% 11,2% 13,2% 20,6% Enterprise Services 35.870 2.538 7,1% 10,2% 12,8% 36,6% Transporting 6.916 818 11,8% 9,5% 14,0% 39,9% Capital Goods 3.670 712 16,9% 6,0% 18,7% 23,5% Consumer Goods 4.529 622 15,7% 4,9% 7,2% 23,7% Construction 35.159 926 2,6% 2,7% 1,1% 43,8% Agri-foodstuffs 4.807 240 5,0% 1,9% 5,4% 14,9% Service to Individuals 35.677 873 2,4% 1,6% 33,7% Automotive 104 32 30,8% 0,3% 14,4% 26,9% Total 13.875 7,7% 100,0% 6,5% 29,6% Reading: on the trade SMEs of PACA in 2007, export (12,5%) and realize 51,7% of regional export. 4,4% of trade profit is generated in international market. Exporting SMEs of trade realize on average 25,6% of their profit in international market. Field: mono regional SMEs of business sector (less agriculture, energy, financial activities, education, health, administration and housing activities Source: Insee, Ficus, Clap, Lifi Trade is at the heart of the region's exports: almost half of the companies which export operate in the trade sector (which represents 6400 companies). 25% of the total turnover of these companies comes from exports. Their export turnover represents, therefore, 52% of PACA SMEs total export turnover. 3 3

90% of construction enterprises operate in the craft sector 4
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in France - The Main Industries Which SMEs Dominate 90% of construction enterprises operate in the craft sector 4 Craft enterprises are predominant in 3 sectors: construction : 90% of its enterprises are craft enterprises ; manufacturing industry : 79 % of its enterprises are craft enterprises ; other service activities (appliance repair, personal care) : 75 % of its enterprises are craft enterprises 4

The Importance and Role of SMEs in France - Human Resources Profile/Structure of SMEs The Craftman Profile Most of craft enterprises managers are men around 44 years old, and women around 42 years old. The average age for both genders is therefore 43 The highest degree of almost half of craft enterprises managers (47%) is a CAP or BEP. These are diplomas awarded after the completion of a secondary level vocational training. 74 % of craft enterprises managers have completed their secondary education and 13 % of them have no diploma at all.

A Slight Decrease of the Number of Applications Filed 5 (1/3)
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in France - Training and Internal Consulting Services for SMEs A Slight Decrease of the Number of Applications Filed 5 (1/3) Among the various training programs offered by training centers, 10 specialties attract 60% of the trainees. The first three - safety, multivalent training in trade and management, and a training aiming at strengthening the capabilities for professional guidance and for social and professional integration - have been the same since We have noticed a steady increase of the trainings in the fields of hygiene and safety. This can be explained by the evolution of the French labor law and of the new legal obligations companies have to comply with (professional diseases, occupational health and safety). Vocational training can sometimes provide certified skills or diplomas. Through the Validation des Acquis de l’Expérience (VAE) scheme, or Validation of Experience Knowledge, it is possible to validate knowledge and skills acquired on the job as well as those acquired in non-formal and informal learning settings certifications or diplomas have been awarded by the French ministry of education in 2012. 5

A Slight Decrease of the Number of Applications Filed (2/3)
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in France - Training and Internal Consulting Services for SMEs A Slight Decrease of the Number of Applications Filed (2/3) In these graphs, we can notice a slight decrease of the numbers of candidates who have been awarded a diploma. This decrease is due not only to the number of candidates (-1.5%), but also to the final decisions of certification boards (-1%). Regarding the types of applications, the level V (CAP, which is the lowest level for a French vocational diploma) has decreased by 2%, with 23% of the applications filed. On the other hand, the level III (BTS, DEES, vocational training after secondary education), has increased by 2% to reach 44 % of the total amount of applications filed. It is still the most requested diploma, with 31 % of applications, followed by the CAP (31 %) and the vocational secondary school diploma (18 %).

A Slight Decrease of the Number of Applications Filed (3/3)
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in France - Training and Internal Consulting Services for SMEs A Slight Decrease of the Number of Applications Filed (3/3) VAE concerns, by definition, people who have acquired enough working experience to file an application. The number of older applicants is bigger at the end of the assessment process: 58 % of the applicants who were awarded the whole diploma in 2012 were at least 40 years old, whereas they were 52 % when they filed their applications and only 50 % when their request was accepted. 6 6

Section 2.3 The Importance and Role of SMEs in Belgium Current situation 29 The main industries which SMEs dominate (sectoral distribution of SMEs) 35 Human Resources Profile/Structure of SMEs 37

Number of SMEs in Belgium, and its employment
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Current Situation Number of SMEs in Belgium, and its employment Source: These are estimates for 2012 produced by London Economics, based on figures from the Structural Business Statistics Database (Eurostat). The data cover the 'business economy', which includes industry, construction, trade, and services (NACE Rev. 2 sections B to J, L, M and N), but not enterprises in agriculture, forestry and fisheries and the largely non-market service sectors such as education and health. SMEs represent 99.8% of the total Belgian businesses. There were a total of SMEs in Belgium in 2009 providing 2,6 million jobs and 41,1% of the total employment nationally. Of these, the majority, , are one-person companies SMEs (24%) have 2 – 199 employees and the remaining companies have employees. 7 There are approximately 38 SMEs per 1000 inhabitants in Belgium, which is almost in line with the EU-27 average of ca 40. However, since this is mainly due to a smaller overall number of businesses, the proportion of SMEs to all enterprises is analogous to the EU average, as well as the SME share of total employment and value added. This also holds true when looking at the micro, small and medium-sized enterprise level. 8 Comprehensive analysis of programmes and initiatives in Belgium that assist the Collaboration between science and SME, February 2011, Mauro Bianchi, Hannah Centeno (TESEO Sprl.), MaPEer SME FP7 project Source: 2013 SBA fact sheet Belgium, issued by EC, Enterprise and industry

Other indicators of SMEs
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Current Situation Other indicators of SMEs SME location: Brussels: 22,965 (11.2%) Flanders: 123,986 (60.6%) Wallonia: 57,736 (28.2%) SMEs - Total employment: 2.6 million (41.1% of total employment) in SME distribution by size in 2009, excluding one-person companies: Some other indicators: SME size: Total number of SMEs in Belgium in 2009 was 855,897. Excluding one-person companies,9 there were 204,597 SMEs10 of which there were in: Brussels: Total 22,965 (11%): Micro 19,395 (84%), Small 2,977 (13%), Medium 593 (3%) Flanders: Total 123,896 (61%), Micro 105,876 (84%), Small 15,561 (13%), Medium 2,459 (2%) Wallonia: Total 57,736 (28%), Micro 50,312 (87%), Small 6,538 (11%), Medium 886 (2%) SME Weight: SMEs represent 99.8% of total businesses in Belgium. The proportion of SMEs in each of the Belgian regions is as follows: Flanders: 99.4% Wallonia: 99.5% Brussels: 99.1% No. of employees No. of companies 1-4 5-9 28.694 10-19 14.931 20-49 10.145 50-199 3.938 Total For 2013,11 following figures are available: Basic Figures Number of enterprises Number of employees Value added (Billion €) 39 26.572 34 4.248 107 One-man firms (or independents) are not taken into account. Enterprise size: Micro, 1-9 employees; Small, employees; Medium, employees.

Economic SME indicators in facing the ongoing economic crisis (1/4)
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Current Situation Economic SME indicators in facing the ongoing economic crisis (1/4) Belgian SMEs are highly internationalised compared to other countries with 73% selling goods or services outside of Belgium. Belgian SMEs have so far weathered the crisis relatively well. They have even been outperforming their EU peers in many areas since Although they too experienced a decrease in the number of SMEs, employment and gross value-added, the surges before and after the downturn made Belgian SMEs better off now than they were before the crisis. For instance, SME employment levels were estimated to be 4% higher in 2012 than in Very few other Member States have a similarly positive development. The economic crisis had a stronger negative impact on Large Enterprises (LEs) than on SMEs. Between 2008 and 2012, LEs just managed to hold their level of value added, while SMEs showed positive growth (more than 7%) over the entire period. The outlook for Belgian SMEs in 2013 and beyond is still moderately optimistic. However, some risks have recently appeared, most notably due to the wave of closures or downsizing of larger plants (such as the Ford factory in Genk and Caterpillar in Charleroi), which may have an impact on smaller suppliers, especially at regional level. Deloitte Fiduciaire in its SME Compass 2013 survey12 measured the impact that the recent years of crisis have had on the financial performance of Belgian SMEs. The survey also highlights the fiscal pressures placed on SMEs. Some of the major conclusions include: Half of SMEs saw their turnover decline in 2012; only the services sector was able to limit the damage. In 2012, only 44% of SMEs recorded a real increase in turnover – i.e. where growth exceeded inflation. Just about every sector shared in the knocks last year. No fewer than 57% of the companies operating in the construction sector had to deal with a significant fall in their turnover. More than half of businesses in commerce and industry also saw their sales shrink. Only the services sector managed to limit the damage to some extent, with ‘only’ 4 out of 10 SMEs recording a loss of turnover.

3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Current Situation Economic SME indicators in facing the ongoing economic crisis (2/4) Half of the companies that saw their turnover fall recorded a decline of at least 9.1%. A quarter of this group of businesses suffered a reduction in turnover of 21% or even more. By contrast, half of the companies that grew did so by a maximum of 8.8%. As a result, the loss of turnover comfortably exceeded any growth in sales. Only 31% of family-owned SMEs are recruiting; 4 in 10 non-family SMEs provide more employment. Whereas a small majority of non-family SMEs saw their turnover grow last year, more than half of family-owned SMEs had to deal with a decline in turnover during the same period. At the same time, 28% of family-owned SMEs found themselves obliged to reduce their workforce last year. This was in contrast to non-family businesses, where 4 in 10 SMEs were able to provide more employment. The number of businesses investing is at an all-time low; those companies that are investing increased their investment budgets by 22%. In 2007, the last year before the financial and economic crisis erupted, 66% of SMEs were still investing. However, by the end of 2012, the number of companies still investing had fallen back to 58%. The number of businesses reducing their investments on balance was historically high at 23%. One positive note was that the amount being spent on investments by those companies still investing rose by 22% to an average of € 1 in 2 SMEs paid more than 37% of their EBITDA (earnings before interest, taxes, depreciation, and amortization) in taxes and social security contributions; fiscal impact on small SMEs equivalent to half of the wages bill. The fiscal impact takes all tax and related charges together and measures how much a company is paying to the government. The large proportion of employer contributions – representing 63.7% of the total fiscal impact – stands out immediately.

3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Current Situation Economic SME indicators in facing the ongoing economic crisis (3/4) The second biggest component is company tax, which represents 23,5% of the total fiscal impact. Half of profitable companies in 2012 paid at least 26,7% corporation tax on their book profit. One quarter of them even paid more than the normal rate of 33,99%. Even the average management company, which is currently strictly audited, paid 32,5% company tax in 2012. The various types of tax include non-deductible VAT, excise tax, traffic tax, the various provincial and municipal taxes and environmental levies. Together, these represent 12,6% of the total fiscal impact. As a result, we should not underestimate the importance of these various taxes. Finally, the SME Compass 2013 survey shows that of gross book profit, a good half (53,7%) is paid to the State The strength of Belgian SMEs remains their level of self-funding, and a reduction in assets from banks as a source of funding. At the end of 2011, the real solvency of the average SME was 48,3%. At the end of 2012, this ratio had risen to 51,7%. One quarter of SMEs fund themselves with 74,4% or more using their own resources. This means that the company’s own shareholders and directors/business managers are by far the most important providers of assets for SMEs in Belgium. By contrast, the importance of bank finance as a source of funding fell by a good 2,8%.

3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Current Situation Economic SME indicators in facing the ongoing economic crisis (4/4) Despite the above somewhat positive elements, a striking aspect is nevertheless that 99% of bankruptcies in 2012 were SMEs. In the period January - May 2013, there were bankruptcies (this is an increase of 12,5% compared to 2012). There was a loss of jobs ( jobs in 2012). UNIZO and Graydon detailed in their 2014 SME report that in % of Flemish SMEs are facing financial difficulties (read: potential bankruptcy), 16,7% in Wallonia and 26% in Brussels. Especially SMEs active in the horéca, retail and transport sector are prone to difficulties. The 10 main reasons of bankruptcies are: Economic situation, declining demand Lack of vision, changing market Mismanagement Bad cash flow management Lack of capital, less fluent credit from banks Hesitation to lay off staff Fraud Bad/No payment by clients Incapacity to work by owner, fire, theft, etc. Bankruptcy mother company, sister company, holding

The Importance and Role of SMEs in Belgium - The Main Industries Which SMEs Dominate The main industries which SMEs dominate (sectoral distribution of SMEs) ( 1/2 ) Table-13 Number of SMEs with 0-50 employees per sector and region in Belgium Sector Brussels Flanders Wallonia Belgium Financial Services 3.485 15.088 6.033 24.606 Hotel, restaurant & catering 7.066 34.025 16.898 57.989 Real estate 5.856 20.102 7.179 33.137 Other personal services 3.855 31.762 15.102 50.719 Business service sector 21.773 84.883 34.625 Subtotal services incl. tourism 42035 185860 79837 307732 Representing a regional % of: 42,7% 36,2% 33,5% Trade/Commerce services 2.763 14.316 8.972 26.051 Wholesaling 5.439 29.218 8.961 43.618 Retail 10.671 55.414 29.307 95.392 Subtotal trade 18.873 98.948 47.240 19,2% 19,3% 19,8% 19,4% Construction 9.993 65.264 30.291 10,20% 12,70% 12,40% Automobile sector 2.260 14.332 8.046 24.638 Chemicals 323 2.283 1.184 3.790 Industry: wood products 391 3.302 1.774 5.467 Industry: ICT & electronics 265 1.203 508 1.976 Industry: metal products 340 5.767 2.769 8.876 Industry: paper & printed press 717 3.460 1.321 5.498 Industry: textile, fabric & leather 484 2.250 823 3.557 Industry: Processed food & beverages 554 5.336 2.492 8.382 Other industry 724 5.946 2.740 9.410 Subtotal manufacturing industry 6.058 43.879 21.657 71.594 6,2% 8,5% 9,1% 8,4% Sector Brussels Flanders Wallonia Belgium Other 9.738 36.908 18.143 64.789 Representing a regional % of: 9,9% 7,2% 7,6% Agro, fisheries & forest 324 34.823 20.290 55.437 0,30% 6,80% 8,50% 6,50% Communications & IT 6.088 18.959 7.727 32.774 Transport and logistics 2.843 13.672 4.616 21.131 Subtotal logistics, post, telecom & IT 8.931 32.631 12.343 53.905 9,1% 6,4% 5,2% 6,3% Health 2.419 15.516 8.840 26.775 2,5% 3,0% 3,7% 3,1% TOTAL 98.371 Source: UNIZO-Coface EuroDB, November 2009, no data for > 50 employees From table-13, we see that in each of the three regions and nationally, the most important sector is services including business, financial, tourism and real estate and accounting for 36% of SMEs nationally, with Brussels showing 42% as would be expected given its status as a national capital city and home to many EU institutions. The next most significant sector is trade related with 19% of SMEs involved in such activity throughout the three regions.

The Importance and Role of SMEs in Belgium - The Main Industries Which SMEs Dominate The main industries which SMEs dominate (sectoral distribution of SMEs) (2 /2 ) Construction is the third most important sector for Belgian SMEs with 12% engaged in related activity nationally and a little less in the Brussels Region (10%). Manufacturing industries are fourth in importance with 8,4% of SMEs engaged nationally with the figures for Brussels, Flanders and Wallonia coming in at 6,2%, 8,5% and 9,1% respectively. Other individual sectors account for less than 7% each nationally apart from logistics, communications and IT in which 9,1% of Brussels Region SMEs participate.

Human Resources Profile/Structure of SMEs
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Human Resources Profile/Structure of SMEs Human Resources Profile/Structure of SMEs The following table provides an overview of the size of the SMEs in Belgium: # of employees 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 None 1 to 4 47.337 47.450 48.451 50.778 51.012 51.866 53.135 50.510 51.456 53.026 5 to 9 12.564 12.875 13.062 13.680 13.527 13.957 14.162 13.945 14.309 14.615 10 to 19 7.789 7.949 7.851 8.081 8.053 8.026 8.178 7.908 8.097 8.192 20 to 49 5.455 5.549 5.547 5.587 5.503 5.544 5.656 5.555 5.655 5.584 Total Table-14 Overview of the size of the SMEs in Belgium Source: UNIZO – GRAYDON13 Majority of the SMEs does not employ staff, and either is a one person business or has staff that works under a self employed status. This is also reflected in below table-15 Table-15 Legal form of the SMEs in Belgium Legal form 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 NV 63.206 62.878 62.516 62.131 61.677 60.957 60.547 60.039 58.804 57.538 BVBA EVBA 524 2.223 5.118 7.778 10.068 11.981 14.231 16.819 19.551 21.864 Diverse Commanditaire en Coöperatieve Vennootschappen 12.203 12.337 12.379 12.631 13.063 13.550 14.497 15.643 17.220 18.819 One person companies VOF 2.530 2.773 3.087 3.412 3.855 4.481 5.274 6.262 7.443 8.511 Other 5.569 5.633 5.730 5.911 6.244 6.730 7.208 7.765 8.784 9.514 Total BRON: UNIZO – GRAYDON

Educational level of workers in manufacturing SMEs
3. The Importance and role of SMEs in each country The Importance and Role of SMEs in Belgium - Human Resources Profile/Structure of SMEs Educational level of workers in manufacturing SMEs The education approach for workers in the manafucaturing SMEs is organised through 2 yearly cross-sectoral negotiated agreements by social partners (employers, labour unions). This determines the overall vocational training efforts, the competence and qualification needs, how to recognise and validate them, and to mobilise resources. The collective labour agreements further define on a sectoral level the contribution by companies to identify and anticipate competence and qualification needs, how to recognise and validate, and to mobilise resources. Training takes place via skills centres (organised by VDAB in Flanders). Obviously, this is only applicable to larger companies where labour unions are active. Close to 68% of surveyed SME employees indicated they were pleased with education and training within their company. However, the study which was conducted by the ACV trade union indicated that in the small SMEs of less than 50 employees, there is less view over the level of provided training. They claim this is the result of less presence of trade unions in those small SMEs (as stated by Mario Snaet of the study and formation department of ACV West-Vlaanderen). 14 Flemish SMEs can make use of training cheques, a subsidy whereby SMEs can pay for trainings with relatively large reductions of the actual training course expenses. 15

Section 3 State and Legal Framework 3.1 State and Legal Framework in Turkey 40 3.2 State and Legal Framework in France 54 3.3 State and Legal Framework in Belgium 61 At a glance This section provides the necessary information about the state and legal framework for the SMEs in each country. Main governmental institutions which support SMEs and the type of supports are summarized. This section also focuses on these public authorities and their impacts on SMEs.

Section 3.1 State and Legal Framework in Turkey Institutıonal structure 41 Legislative Framework Regarding the Development of Strategy in each country 51 Related initiatives/projects regarding strategic development/training on national or regional level 53 Encountered problems/difficulties on strategy development/training 54

State and Legal Framework in Turkey – Institutional Structure Business environment in Turkey, the policies and the structures of government institutions influence the performance of SMEs Small and medium-sized enterprises (SMEs) play a very important role in Turkish economy owing to their large share in total number of enterprises and in total employment. But they have also some weak aspects especially in technology, R&D and innovation, institutionalization, access to sufficient finance, trademark concepts, modern marketing strategy, employees’ education level and quality, credit guarantee system and harmonization to global standards etc. The government authorities have for many years carried out a variety of programs to support these enterprises and overcome these weaknesses. Therefore, design and implementation of strategic programs for SMEs have received increasing attention. Several institutions have been involved in the formulation and implementation of such programs. Business environment that SMEs operate in has many aspects that are dependent on and affected by present institutions and structures. The policies and the structures of these institutions directly influence the performance of SMEs. Some institutions become prominent and have been involved in the preparation and execution of industrial policies

Government actors and their functions in SME policy (1/2)
3. The Importance and role of SMEs in each country State and Legal Framework in Turkey – Institutional Structure Government actors and their functions in SME policy (1/2) Actors Functions Ministry of Science Industry and Technology Facilitates determination of industrial policies, provides and encourages rapid and sustainable development of industry, promotes competitiveness of SMEs, holds records of the industrial enterprises. Ministry of Development Prepares long-term development plans and annual programs, develops future-oriented strategies and policies in cooperation with related institutions. Small and Medium Industry Development Organisation (KOSGEB) Support mechanisms for increasing competitiveness of SMEs, encouraging entrepreneurship and innovative start-ups. The Undersecretariat of Treasury State aid for investments, financial transfers to public enterprises. The Undersecretariat of Foreign Trade Support mechanisms for improving export capacity.

Government actors and their functions in SME policy (2/2)
3. The Importance and role of SMEs in each country State and Legal Framework in Turkey – Institutional Structure Government actors and their functions in SME policy (2/2) Actors Functions Ministry of Finance Taxation, finance matters for enterprises. The Scientific and Technological Research Council of Turkey (TUBITAK) Support and policy making for R&D, scientific research, innovation activities Ministry of Food, Agriculture and Livestock Support mechanism for SMEs on investment in agriculture Ministry of Tourism Support mechanism for SMEs on investment in tourism industry Universities Provide education and consulting to SMEs on a variety of subjects

State and Legal Framework in Turkey – Institutional Structure Half governmental actors and their functions in SME policy Actors Functions The Union of Chambers and Commodity Exchanges of TURKEY (TOBB) Represents private sector, ensures unity and solidarity between chambers and commodity exchanges, facilitates professional work of members, and promotes confidence in the relations of members with the public. The Confederation of Tradesmen and Artisans of Turkey (TESK) Coordinates and represents tradesmen, craftsmen chambers and the federations, takes vocational measures for its members according to national and global economic development, provides vocational training. Vocational Training and Small Industry Supporting Foundation (MEKSA) Aims to promote quality of workers for SMEs through vocational training at national level. Turkish Technology Development Foundation (TTGV) Supports technology development projects. Universities, Techno Cities, Technology Transfer Offices Supports R&D activities of SMEs and acts as incubator centers for start-ups. Also provides knowledge spillovers among SMEs

State and Legal Framework in Turkey – Institutional Structure Major Financial Institutions actors and their functions in SME policy Actors Functions Turkish Foundation for Small and Medium Business (TOSYOV) Feedback for consultation mechanisms. Banks Credits ISRISK, VAKIFRISK, KOBI A.S. Venture Capital Credit Guarantee Fund (KGF), TESKOMB Guarantees

State and Legal Framework in Turkey – Institutional Structure KOSGEB and the SME support mechanism KOSGEB (Small and Medium Industry Development Organization) is one of the major organizations executing the SME policy in Turkey. The strategic objectives of KOSGEB are stated as: To increase the management skills and institutional capacities of SMEs. To increase the R&D and innovative activities of SMEs. To improve the culture of enterprises and encourage them to establish new successful businesses. To constantly develop KOSGEB so as to present qualified services to SMEs Before 2003, SMEs which want to benefit from KOSGEB supports, could directly apply KOSGEB service providers and the requested support could be provided within the frame work of budget availability. After restructuring of KOSGEB organization and support mechanism, SMEs have been directed to strategic objectives depending on their capacity and competitiveness power. In addition, KOSGEB aims to make SMEs gain short and middle term projection perpectives and work on project basis analysis of needs and then apply supports for this specific needs. The supports of KOSGEB are categorized under 8 support programmes: R&D, Innovation and Industrial Application Support Programme General Support Programme SME Project Support Programme Cooperation-Leaguing Support Programme Entrepreneur Support Programme Thematic Project Support Programme Emerging Enterprises Market SME Support Programme To utilize from these supports SMEs are first needed to register in the KOSGEB Database system. Then they submit their project to the system and KOSGEB comittee decide whether the application meets the requierements or not. If the opinion is positive SMEs are supported. KOSGEB also provide laboratory support for SMEs in 9 cities and 11 centers, in which SMEs could test / increase their products quality

State and Legal Framework in Turkey – Institutional Structure KOSGEB had distributed approximately 104 m TL in the first half of 2013 Table-16 KOSGEB Support Amounts for SMEs in 2012 and first half of 2013 Jan- Dec 2012 Jan- June 2013 Support name Support Amount (TL) # of SME supported R&D, Innovation and Industrial Application Support Programme 740 700 General Support Programme 8.807 9.325 SME Project Support Programme 796 1.136 Cooperation-Leaguing Support Programme 44 35 Entrepreneur Support Programme 2.839 3.580 Thematic Project Support Programme 75.674 7 13 Emerging Enterprises Market SME Support Programme - 6.000 1 Others 122 433 KOSGEB Supports Programs 13.355 14.791 KOSGEB SME Loan Interest Supports 4.833 37 Total 17.759 14.316

State and Legal Framework in Turkey – Institutional Structure Estimated supports to be distributed to SMEs in 2014 Table-17 KOSGEB 2014 Budget for Performance Objective Expenditures Support name Support Amount (TL) % SME Loan Interest Supports 20,2% Entrepreneur Support Programme 14,6% General Support Programme + Thematic Project Support Programme 10,8% R&D, Innovation Supports 9,4% Industrial Application Support Programme 9,0% Cooperation-Leaguing Support Programme 6,9% Women Entrepreneur Support Programme 6,4% SME Project Support Programme 4,6% Applied Entrepreneurship Training Programme 0,2% Women Entrepreneurship Training Programme 0,0% Total direct supports for SMEs 82,1% Total performance objective expenditures 100,0% KOSGEB has distributed millions of TL as a support for SMEs. Their 2014 budget for realizing their performance objectives is approximately 435 m TL and 82,1% of this budget is devoted to direct supports of SMEs. SMEs Loan Interest Supports take the lead by 88 m TL and Entrepreneur Support Programme follows the former with a budget of 63,7 m TL.

State and Legal Framework in Turkey – Institutional Structure TUBITAK provide suport SMEs between with a total project number of 6.859 Scientific and Technological Research Council of Turkey (TUBITAK) is one of the biggest public institutions on supporting R&D activities of firms, entrepreneurship, academia-industry co-operation, science and innovation. TUBITAK tries to develop the suitable environment in which Turkish companies could increase their R&D and innovation capacity, competitiveness. They have plenty of supports for both big firms, academia and SMEs. Some of the support programmes related with the SMEs are listed below: Programme Entrepreneurship Multi Phased Support Programme: Based on a multi phased form, the programme targets young entrepreneurs. In first phase TUBITAK provides the seed capital and in the second continues to support R&D activities. In the final phases aims to help the SME for commercialization and provide firms the opportunity of meeting venture capitals. Programme SME R&D Support Programme: Aim of this support is to provide financial support to SMEs to access R&D services. Programme Support Programme for Increasing Capacity in Entrepreneurship and Innovation Areas: This support targets to increase the innovation and entrepreneurship capacity of SMEs by establishing mentorship mechanism. Programme Venture Capital Funding Programme: This support aims to create new venture capitals that supports entrepreneurship projects with a value-added aspect that is innovative and leads to developing new products and processes. Programme 1602 –Patent Support Programme: to fund SMEs patent expenditures in order to increase the number of national and international patent numbers. The number of project applications made to TUBITAK and supported project numbers are provided below. 63% of the SMEs who has an application is funded by TUBITAK and 56% of the projects are accepted between 1995 and 2012. Table-18 Project Applications between Project # % Firm # SME 12.249 74,6% 6.486 90,7% 250+ 4.173 25,4% 662 9,3% Total 16.422 100,0% 7.148 Table-19 Supported Projects between Project # % Firm # SME 6.859 70,6% 4.081 89,1% 250+ 2.862 29,4% 501 10,9% Total 9.721 100,0% 4.582

State and Legal Framework in Turkey – Institutional Structure TUBITAK distributed on average 170 m TL grant to SMEs per year since 2007 Graph-5 The amount of grant distributed by TUBITAK between (in m TL) As it can be derived from the table, the proportion of the SMEs on taking grants from TUBITAK had increased dramatically after While the proportion was less than 30% before 2003, after this point the SME share from the grants had an average of 46%. After 2010, this share had exceeded the big firms. Despite of the increasing support in terms of money distributed to SMEs there is a lack of impact analysis of these funds. Control and monitoring mechanisms are not effective. Beside the lack of analyzing the impact of the supports, it is not also clear that whether only the same companies are supported every year or not. Only a limited number of SMEs are aware of these supports and knows how to utilize it. It is important to make a research on these impact analysis and fair distribution topics and determine the needs on the subject of government supports instruments.

State and Legal Framework in Turkey – Legislative Framework Regarding the Development of Strategy SME Strategy developed by the government In recent decades government began to put more emphasize on strategic planning. Especially for government institutions there is an obligation to prepare a strategic plan, set strategic objectives and act in line with the related project and activities. For this purpose, the law 5018 force public institutions to build up Strategy Development Units. The main purpose of the government in making reforms for preparing strategic planning is to measure the performance and plan the budget of public institutions according to this criteria. However, when it comes to SME strategy priority is set to competitiveness, development and economic growth. In last decades, government realized the importance of the SMEs in economic sustainable development and effective support for the development of SMEs in the development of applications, facilitating access to finance, technology and financing non-renewal of policies in areas determined to provide support. Thus, government wants to set a strategy for SMEs in Turkey and the responsible unit is KOSGEB. By preparing strategy and action plans and providing financial supports to SMEs as mentioned detailly in previous sections; KOSGEB is the largest player which applies government policies directly on SMEs. In the 9th Five-year Development Plan of Turkey, article 668 stated that: «Differentiated SME policies in terms of regional convergence and competitiveness objectives will be introduced. In this context, special attention will be given into the training of skilled labor needed, expansion of the financial resources, diversification of financial instruments and facilitation of access to markets and technology.» Another policy instrument used in Turkey for creating a conducive investment climate for the SMEs is the Coordination Council for the Improvement of the Investment Environment (YOİKK) Action Plans. In order to strengthen the overall business environment in the market, the Council aims to rationalize the regulations on investments in Turkey. They develop policies by defining the necessary preparations that will improve the competitiveness of the investment environment and to generate solutions to the administrative barriers encountered by the domestic and international investors. The enhancement of the general environment indirectly effects the SMEs.

State and Legal Framework in Turkey – Legislative Framework Regarding The Development of Strategy Turkey accepted European- wide rules of Small Business Act in 2010 which determines the actions which should be carried out for SMEs The National SME Strategy first established in 2004 which was based on the idea of harmonizing SME policies with EU. Turkey accepted the rules of Small Business Act in This EU-origin document determines the actions which should be taken for small businesses. KOSGEB is the national coordinator of this act and monitoring the progress of the project. Small Business Act has 10 strategic principles: Create an environment in which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance Design rules according to the “Think Small First” principle Make public administrations responsive to SMEs’ needs Adapt public policy tools to SME needs: facilitate SMEs’ participation in public procurement and better use State Aid possibilities for SMEs Facilitate SMEs’ access to finance and develop a legal and business environment supportive to timely payments in commercial transactions Help SMEs to benefit more from the opportunities offered by the Single Market Promote the upgrading of skills in SMEs and all forms of innovation Enable SMEs to turn environmental challenges into opportunities Encourage and support SMEs to benefit from the growth of markets

State and Legal Framework in Turkey – Related Initiatives/Projects Regarding Strategic Development/Training on National or Regional Level SME Strategy and Action Plan (KSEP) plays an important role on policy making Government tries to set a strategy for SMEs in Turkey and the responsible unit is KOSGEB. They prepare SME Strategy and Action Plans in every two years. In order to enhance coordination among these institutions «SME Strategy and Action Plan (KSEP)» has been prepared. KSEP also aimed at harmonizing the SME Policy of Turkey with the European Union as it was stated in the 2003 Accession Partnership Document. This document try to implement the strategies on SMEs by ensuring the coordination between institutions. The actions stated in KSEP are realized by the related institutions and the progress reports are gathered by KOSGEB. SME Strategy and Action Plans Committee has held two meetings with the Ministry of Industry in a year. In these meetings progresses are monitored and new decisions are taken. The last strategic plan was prepared in 2011 which includes the period The document determined the weaknesses and threats of SMEs and these problems were classified as five strategic areas: improving and supporting entrepreneurship, improving managerial skills and institutional proficiency of SMEs, taking into consideration of SMEs needs while improving business and investment climate, improving SMEs’ R&D and innovation capacity, making accession to finance easy for SMEs and Entrepreneurs.

State and Legal Framework in Turkey – Encountered Problems/Difficulties on Strategy Development/Training Encountered problems on strategy development SMEs in Turkey face some problems due to liability of smallness and generally newness. Globalization has lead significant changes in the economic environment. The problems are listed below: Technology: Most of the strategic actions needed to be taken includes enhancing the technology capacity of the SMEs. However, the know-how is generally low in SMEs. Relations with universities and technical skills of the firms are weak. Most of the SMEs are classified in medium or low level industry sectors. Innovation: The low level of technology causes the weakness in innovation. Although the R&D activities and increasing amounts of supports provided by the government, it is difficult to say that SMEs are sufficient to upgrade to technology intensive industry sectors. Finance: The most important obstacle for SMEs on making innovative and technological changes is finance. They do not have enough finance to increase their capacity and adapt to the technological improvements. Investors and banks often avoid invest in start-ups or young SMEs due to the risks involved. When it comes to the point of asking SMEs to build up their strategies, this requires strong financial backgrounds. Labor: Due to high tax rates, most of the SMEs chose unrecorded labor. This decreases both the security of employees and the quality of the human resource. Moreover, in some sectors that requires high technology or strong competence, it may be hard to find qualified workers. This low quality level of labor also makes the strategy implementation difficult for SMEs. Marketing and Export: Most of the SMEs focuses on domestic markets, which does not help the strategic vision of being internationally competitive as a country. Environment: Environmental complexity has been increasing day by day and SMEs face some problems catching up with these changes. Lack of information, scarcity of resources and insufficient expertise make it difficult for SMEs to implement visionary strategies.

Section 3.2 State and Legal Framework in France Institutıonal structure 56 Legislative Framework Regarding the Development of Strategy in each country 58 Related initiatives/projects regarding strategic development/training on national or regional level 60 Encountered problems/difficulties on strategy development/training 61

State and Legal Framework in France – Insitutional Structure Schemes implemented by the French government to support SMEs SMEs play an important role in the French economy, not only because they are numerous but also because they employ many people. Nevertheless, SMEs must sometimes face major obstacles in terms of financial development, innovation etc. To help SMEs overcome these obstacles, various schemes have been implemented by the French government. Indeed, the government has launched the national pact for growth, competitiveness and employment, and created the public investment bank. It then enacted the employment security law and, organized the entrepreneurship conference. Dozens of measures which were taken to simplify the life of enterprises, rebuild their confidence in the future, help them to invest, innovate and recruit. All those initiatives designed to help companies, have been grouped together on the same internet page, a page that is accessible to everyone. It presents eleven different themes: accompanying start-ups; financing SMEs; simplifying administrative procedures; stimulating competitiveness; stabilizing SMEs taxation; encouraging innovation; creating employment; favoring entrepreneurial activity; developing exports; improving relationships between companies; maintaining social balance inside companies. 16 16

State and Legal Framework in France – Institutional Structure The government authority on Chambers of craft and small business and the role of DGCIS The French minister in charge of craft enterprises exercises the authority of the government on the permanent assembly of the chambers of craft and small business (APCMA in French). As for smaller connected offices, the authority is exercised by the Prefect of each region, with the assistance of the directors of the public finances,. Les Directions régionales des Entreprises, de la Concurrence, de la Consommation, du Travail et de l’Emploi (DIRECCTE) exercise also a local authority. This authority is exercised on acts (budgets, internal regulations…) and persons as well (suspension of a member for serious misconduct…) As for the DGCIS (national board for competitiveness, industry and services), it designs the regulations governing the organization and operations of the APCMA and its local offices. It coordinates the actions of local offices; bring them its expertise and advice, especially for personnel matters. Within the DGCIS, the CMA (chamber of craft and small business) authority office is in charge of all these missions. CMAs develop close relationships with local SMEs and carry out missions of public services that are essential to the structuring of craft enterprises: Creation-Development-Transmission: Each CMA consultant teams bring their expertise in a wide range of sectors. They can give customized advice or set up collective actions, depending on the answer that is necessary. Le Repertoire des Métiers (professional directory): it is kept by CMAs. The law defines how the book must be kept and how to assign the titles of Artisan (craftsman), Artisan d’art (art craftsman) or Maître artisan (Master craftsman). Training and apprenticeship: CMAs act as independent training centers. As they have been training apprentices for 75 years, they play a key role in this field. A recent and innovative scheme is the Centre d’Aide à la Décision, (decision support center) which has been created to help young people, adults and companies. It is an interface between job seekers and recruiting SMEs. Promoting craft enterprises: through collective actions (fairs, exhibitions, professional fairs and consumers exhibitions), CMAs bring new markets and customers to their members, in France and abroad. CMAs also organize advertising and promotional campaigns aiming at enhancing the understanding of craft enterprises.

State and Legal Framework in France– Legislative Framework Regarding the Development of Strategy Measures taken by the government since (1/2) The following measures were grouped together in the pact for competitiveness: Reduce labor costs by 20 M€ through a competitiveness and employment tax credit (CICE). Set up a new government guarantee to provide 500 M€ worth of cash for SMEs. Reduce the payment times, to address the issue of late payments. Create the Public Investment Bank (BPI in French). Create incentives to invest in companies through the reform of the saving and taxation system. Refocus banks onto their core business, which is the financial support of actual economy, by implementing an imminent banking law. Facilitate access to capital markets for SMEs. Restructure and boost policy for supporting innovation inside the companies. Spread digital applications and technologies. Redirect competitiveness hubs towards the products and services to be reindustrialized. Differentiate internationally attractive strategic hubs from local development hubs. Restructure the national industrial conference (CNI) to set up agreements between companies operating in the same sector. Design a sector based strategy for the industrial sector. Ensure that at least two employees' representatives will take part in the board of directors or supervisory board meetings. Provide customized international support to growth MSBs or SMEs. Provide export financing schemes that are identical to the best financing schemes of other countries. Develop and increase the number of VIE (international volunteers in business). Develop a strategy to improve the attraction of France, aimed at attracting international talent and major investment projects, as well as cultural and scientific activities. Launch a "France brand" to promote the "made in France" and French excellence. Maintain the advantages of our infrastructures and deploy high-speed digital broadband throughout the country Ensure continuous monitoring of the suitability of training opportunities to employer skill requirements. Create 10 national professional re-skilling platforms. 17

State and Legal Framework in France – Legislative Framework Regarding the Development of Strategy Measures taken by the government since (2/2) Strengthen the role of companies in technical and vocational training, Promote the employment of young apprentices in SMEs with a goal of 500,000 apprentices by 2017. Ask social partners to discuss the creation of an individual learning account for each and every employee, regardless of their position in the company. Boost international mobility, doubling the number of French students abroad by 2020. Stabilize 5 key tax schemes for investment and SMEs survival over the five year term of the elected President. Set up 5 procedures to simplify business and administrative procedures. Set up a sustainable simplification procedure and introduce an "SMEs test" for projects with the strongest impact on SMEs (including taxation matters). Rationalize the taxation system. No further tax will be implemented if another tax, of the same amount, is not simultaneously cancelled. Restore public finances to provide a stable Financial environment. Pursue and implement structural reforms to improve public services: transport, housing, energy, etc. Support the development of innovative growth SMEs through public purchasing. Overhaul commercial law to make it more effective. Provide the country with a forum for dialogue, forward-looking debate and expertise. Give free access to public data from the website: data.gouv.fr. Make a formal request to get the advice of independent experts when European decisions on competition issues have to be formulated.

State and Legal Framework in France – Related Initiatives/Projects Regarding Strategic Development/Training on National or Regional Level A « Small Business Act » for Europe In June 2008,, the «Small Business Act» for Europe reflects the Commission's political will to recognize the central role of SMEs in the EU economy. For the first time it puts into place a comprehensive SME policy framework for the EU and its Member States. It aims to improve the overall approach to entrepreneurship, to permanently anchor the « Think Small First' » principle in policy making from regulation to public service, and to promote SMEs' growth by helping them tackle the remaining problems which hamper their development. The Small Business Act for Europe applies to all independent companies which have fewer than 250 employees and whose turnover is lower than a defined amount ; i.e. 99% of all European businesses.18 18

State and Legal Framework in France – Encountered Problems/Difficulties on Strategy Development/Training Problems and difficulties met in the process of strategic development In France, SMEs must face more or less serious difficulties. In some fields, these difficulties can be explained by a lack of appropriate skills; but not always. Many of them don't have a good strategy and haven't set the right targets and objectives. Finances: The financial aspect is one of the most serious difficulties SMEs may encounter. The lack of equity, low profitability, difficult access to bank loans, accounts receivables… are daily problems which have an impact not only on the company's good health but also in other fields (technological, innovation…). Technology: Technological weakness is linked to a lack of knowledge and a lack of skills, as well as a lack of investment. Technologies are not updated because there is no technological watch. Innovation: With the right technological capacities a company can innovate. But for SMEs, technological investment is low and sometimes there is no investment at all. R&D is therefore left aside. Marketing and Export: Tariffs, complex regulations, administrative difficulties, or the cultural or language barriers make of the road to international trade. Environment: Because of the lack of information, research and appropriate skills…it is difficult for small companies to anticipate and adapt to their environment.

Section 3.3 State and Legal Framework in Belgium Institutıonal structure 63 Legislative Framework Regarding the Development of Strategy in each country 65

Institutional Structure (1/2)
3. The Importance and role of SMEs in each country State and Legal Framework in Belgium – Institutional Structure Institutional Structure (1/2) Various instruments are available to support investments by SMEs. The main bodies providing such support are: Federal FINMIX for complex financing needs The Participation Fund for subordinated loans Flanders PMV for guarantees and loans BAN Vlaanderen: coordinator for promising entrepreneurs Brussels and Wallonia Brussels Guarantee Fund for government guarantee SOWALFIN for guarantees and subordinated loans The “Agentschap Ondernemen” guides SMEs in finding the most relevant support actions. The website provides the necessary information, together with a subsidy database. For Brussels, there is and for Wallonia In Flanders there is also the SME portfolio. This is a web application through which entrepreneurs can obtain up to € in subsidies each year. The aid can be obtained when purchasing services provided by recognized service providers in six areas: Training: Training programs attended by all people employed (employees and employers) in the enterprise, with the aim of improving the current or future operation of the enterprise. Legally obligatory training programs are also eligible. Advice: Written, specific, valuable suggestions and recommendations consisting of an analysis of the problem, an actual advisory opinion, an implementation plan and assistance in implementing that plan. An advisory opinion is always in writing and tailor-made for the enterprise. Legally obligatory and periodical advisory opinions are excluded from aid. Services regarding subsidies, guidance and the implementation itself are not eligible either Technology watch: A study providing an answer to a specific technological knowledge question with regard to a product, process or service, tailor-made for the SME.

Institutional Structure (2/2)
3. The Importance and role of SMEs in each country State and Legal Framework in Belgium – Institutional Structure Institutional Structure (2/2) Advice for internationalization: Written, specific, efficient suggestions, studies, plans and recommendations with regard to internationalization. Strategic advice: A written tailor-made advice that pertains to a turning point within the enterprise and leads to decisions that are hardly irreversible. The advice offers a long term solution and influences the whole organization. Coaching: counselling services aimed at improving the personal effectiveness of the coached person in his/her business processes. This pillar focuses at coaching growth companies and the transfer of companies. This aid applies following percentages and upper limits: The SME portfolio is oriented towards practitioners of ‘liberal professions’ and SMEs whose operational headquarters are located in the Flemish Region. Only enterprises that fit the definition of an enterprise and with an acceptable legal form (e.g. not-for-profit organizations are excluded) and an acceptable main activity on the basis of the NACE code can apply for aid. The service providers that are engaged must be recognised as such. A survey of the recognised service providers per area can be found on the website Table-20 SME portfolio aid percentages and aid upper limits Training Advice Technology watch Advice on internati-onalisation Strategic advice Coaching Aid % 50% 75% 50%-75%(*) Aid upper limit per pillar € 2.500 € € 5.000 € Max per period € Period 1 year (*) 75% support for advice in drawing up a relaunch plan for enterprises in danger of getting into difficulty and in opportunity analyzes for growth companies

Legislative Framework Regarding the Development of Strategy (1/3)
3. The Importance and role of SMEs in each country State and Legal Framework in Belgium – Legislative Framework Regarding the Development of Strategy Legislative Framework Regarding the Development of Strategy (1/3) While there is no real legislative framework in place, there are a range of Flemish subsidies available to SMEs to develop innovation and strategy. For Flemish SMEs there is for example an SME Programme (SME feasibility study and an SME Innovation Project). They are supported by the IWT (Agentschap voor Innovatie door Wetenschap en Technologie – Agency for Innovation through Science and Technology). IWT is the government agency for Innovation by Science and Technology. They help Flemish companies and research centres in realizing their research and development projects. They offer them financial funding, advice and a network of potential partners in Flanders and abroad. They also support the Flemish Government in its innovation policy. See Some relevant subsidies: SME feasibility study from IWT - An SME feasibility study focuses on the acquisition of knowledge and informed understanding of the possibilities and feasibility of an innovation and the subsequent innovation path. 'Innovation' should be understood as 'a renewal for SMEs with a clear impact on the companies' activities'. All the knowledge acquisition activities which contribute substantially to the definition of the innovation path are eligible for funding. The SME may provide the knowledge development independently – with or without recruiting the necessary skills – or collaborate with research institutions, other companies or subcontractors. Only Flemish SMEs that meet the European criteria for an SME are eligible for SME feasibility study grants. The applicant company must have (or will have) its operational headquarters in Flanders and must (will) perform economic activities there. Even companies in the social profit sector may apply, if they can demonstrate sufficient economic valorization potential in Flanders. Another condition is that the company should have a legal personality upon signing the agreement.

3. The Importance and role of SMEs in each country State and Legal Framework in Belgium – Legislative Framework Regarding the Development of Strategy Legislative Framework Regarding the Development of Strategy (2/3) Both individual Flemish SMEs and groups of business partners – several Flemish companies that bear the risk and costs of the study – may apply. The business partners also share the ownership and exploitation rights to the potential study results. Collaboration with research partners such as universities, third-level institutions and collective centres is possible in the implementation of an SME feasibility study. Task packages can also be outsourced to subcontractors. Both the research partners and the subcontractors may be located abroad. The applicant company bears the cost of the research partners and subcontractors; it can include these in the study. An SME feasibility study lasts up to 12 months. Its budget should amount to at least € The funding for an SME feasibility study takes the form of a grant calculated on the basis of acceptable costs. The aid rate is 50% and the funding may not exceed € Under certain conditions IWT may raise this ceiling to € or even € If the SME feasibility study includes a preparatory study for a project of international cooperation, the rule of thumb is that the grant is capped at € Per calendar year, each SME can receive funding for three SME feasibility studies (including R&D feasibility studies). SME innovation subsidies from IWT - The Flemish Government wants to stimulate innovation in Flanders. Therefore, it grants IWT annually the budgets necessary to finance research and development (R&D) by and for Flemish companies. All types of companies are eligible for R&D funding, even if their innovative projects are non-technological. Companies can apply for R&D funding throughout the year. IWT evaluates the applications based on multiple criteria. During these evaluations, they attach equal value to the quality and the valorization of the research and/or development. Important is that it are not only technological projects that can receive support, but also non-technologic knowledge collecting activities.

3. The Importance and role of SMEs in each country State and Legal Framework in Belgium – Legislative Framework Regarding the Development of Strategy Legislative Framework Regarding the Development of Strategy (3/3) The subsidy is a percentage of the accepted costs. These are mainly personnel costs, but can also include direct costs (depreciation of equipment) and indirect general costs. There are also a whole range of subsidies and support for innovation in Flanders (see e.g. PMV-Innovatiemezzanine, Vlaams Innovatiefonds (VINNOF), Investment related tax deduction, Tax credit for research and development.

Section 4 Findings of Analysis of the Current Situation and Needs Study 4.1 Key Findings –Turkey 69 4.2 Key Findings – France 79 4.3 Key Findings – Belgium 89 At a glance This section provides the analysis of the answers to the survey that was conducted in Turkey, France and Belgium. The survey questionnaire contributed to drawing a better picture of the SMEs’ current state of art. Questionnaires were applied to different regions of each country SMEs from Turkey, 161 from France and 31 from Belgium answered the questionnaire.

Section 4.1 Key Findings - Turkey

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Turkey Questionnaire Participant Demographics In order to define the needs of small enterprises in Turkey, 205 questionnaires are filled in by different SMEs from different regions of Turkey. Graph-7 summarizes the foundation year of the SMEs which participtate the survey. 73% of the participants are the SMEs which is founded after 2000. Most of the participants (68%) are operating in national level. 32 % of them are involved with import & export, and only 5% of the participants actively have operations in Europe. Average number of workers of the participants is 19 and average number of apprentices is 1. Sectoral distribution of the participants is summarized on the graph-8 below:

Findings of Analysis of the Current Situation and Needs Study – Key Findings , Turkey There is a lack of professional support & education on strategic management 75% of the participants claimed that their company follows a pre-defined strategy. They also stated that this strategy is well understood by the employees. However, 63% of the SMEs think that they do not have sufficient resources at present in terms of strategic management training and strategic management support. These two answers seems to be different at the first glance. However, it shows that most of the SMEs defined their strategies without a professional support. There is a lack of strategic management training due to lack of resources. This situation may pose a problem on the quality of the current strategies of the SMEs.

Findings of Analysis of the Current Situation and Needs Study – Key Findings , Turkey The motivation behind the idea of investment on strategy Table- 21 What motivates you to invest in training on strategy development or strategic planning? Response % In terms of strengthening your business I want to learn how to increase profitability 67% I want to learn how to increase market share 61% I want to learn how to increase my sales 58% I want to learn how to compete with my competitors 56% I want to learn how to develop marketing capabilities 52% I want to learn how to give a clear direction to my organization 48% I want to learn how to improve our business processes 44% I want to learn how to develop a better organizational structure 43% I want to learn how to extend social networks 42% I want to learn how to build a (more) powerful brand 41% I want to learn how to cope with environmental challenges/changes I want to learn which markets I can invest in 37% I want learn how to solve my financial issues 30% I want to learn how to export my products 2% In terms of considering external influences If my competitors invest in training, then I think I should invest in it as well 36% If government regulation will force me to invest in training, then I will invest in it If my institutional customers will force me to invest in training, then I will invest in it 47% I do not believe that external influences can impose on me to invest in training 24% Participants stated the reasons listed on the left that motivates them to investing in training activities on strategy. The table summarizes what they are expecting from a strategic management training. Beside expectations, these statements shows what they understand from strength. They want to build their strategies in such a way that these strategies meet their needs and made their business stronger. The results show that external influences are not as effective as some internal concerns. Only 36% of the participants answered they would follow their competitors’ actions on strategy training. However, they also put emphasis on the force of customers (47%).

Findings of Analysis of the Current Situation and Needs Study – Key Findings , Turkey Barriers that prevent SMEs from investing in strategy training SMEs defined their obstacles which prevent the investment on strategy training as showed in the diagram above. Participants mostly want to avoid the financial and time cost of the trainings. The answers indicate that most of them are aware of the contribution of strategic training on their development. Only 25,5%of the SMEs stated that they do not know how training on strategy development can help them. The answers also implies that there is a significant lack of knowledge about which organizations to go when a SME wants to get professional consultancy. 41,1% of the SMEs stated that they do not have information about organizations that can help them.

Findings of Analysis of the Current Situation and Needs Study – Key Findings , Turkey How to overcome the barriers that prevent SMEs from investing in strategy training Table-22 What can be done to overcome these barriers on training on strategy development or strategic planning? Access to (financial) resources, including e.g. strategy development consultancy subsidies 69,6% Concise modular training courses 59,7% Online version of the training 47,1% Information about the providers of training and the available courses 40,8% Assistance in defining a clear approach towards strategic development or strategy planning 35,6% Explanation on how the training will be a benefit for my business 25,1% Testimonials from business leaders 22,5% SMEs are also asked what should be done to eliminate these barriers. Yet, the solutions still imply the importance of finance on strategic training. Most of the SMEs are reluctant to create budget for such training. The answers also intimate that there is a strong need for concise training materials; such as modules, online platform and displaying works to increase the awareness on the subject. An online version of strategy training would be a permanent solution for overcoming these barriers. Firstly it would not create financial liability to the SMEs, it will be free. This accessibility would create a flexible platform to meet the different needs and conditions of SMEs.

Findings of Analysis of the Current Situation and Needs Study – Key Findings , Turkey Tendency of SMEs on making assessments for the affects of external conditions & internal activities The diagram above summarizes the SMEs assessment of their external conditions and internal activities on affecting their business. Almost half of the SMEs do not make such assessments. These answers intimate that while %61 of them putting emphasis on internal activities, most of the SMEs do not make any PESTEL (Political, Economic, Social, Environmental and Legal) analysis properly. Considering the internal analysis, when SMEs are asked how they make their analysis on their internal activities (production, marketing, human resources, purchasing, technology, logistics etc.) most of the participants stated that they perform SWOT analysis.

Findings of Analysis of the Current Situation and Needs Study – Key Findings , Turkey The level of knowledge and need on strategic analytical tools The diagram on the left summarizes the SMEs level of knowledge on the analytical tools of strategy. Other than popular SWOT analysis, approximately only 10% of the SMEs are aware of the other tools. Majority of them are willing to take training about these tools. Some of the SMEs stated that they do not need training even they do not know the tool. They specify their reasons as follows: Graph-14

Findings of Analysis of the Current Situation and Needs Study – Key Findings , Turkey Preferred training provider & location SMEs who are willing to take the training are asked where and by whom they want to be trained. The answers intimate that most of the participants consider online training as a significant method. Moreover they want to see external consultants and universities as training provider mostly.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Turkey Summary of Findings - Turkey This survey results indicate that SMEs are mostly (75%) claiming that they have a pre-defined strategy, however they are not conducting the strategy development in a systematic way. As an instance the proportion of SMEs which make assessments for the affects of external conditions & internal activities is only about 50%. Even this 50% does not make these assessments in a systematic way, the level of knowledge and need on strategic analytical tools are not sufficient. ( Over 80% of the participants do not have adequate information to apply these tools.) Participants claim that they do need training on these, however they can not provide the financial resources and time to do so. Online training would be a solution on strategy development training by decreasing the financial costs and eliminating the time problem of SMEs.

Section 4.2 Key Findings - France

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France Questionnaire Participant Demographics As a reminder, the objective of this study is to set up an online training platform and an online training program that are innovative and whose theme is the strategic development of SMEs. The analysis of the answers given to the questionnaire has enabled us to highlight the practices of company managers in the fields of management and strategy planning. This was done in order to offer them training courses tailored to their needs. The questionnaire was submitted to company managers in the Vaucluse department, in the South of France. 161 managers answered the questionnaire. The answers were analyzed using Microsoft Excel. Graph-18 Among the SMEs that answered the questionnaire, 58 said that they have been operating for 10 years, i.e. 36 % of the companies surveyed. And 68 % were set up more than three years ago Graph-17 89 companies (or 55.3 %) operate nationally, whereas only 6.8 % operate internationally, inside or outside Europe. Then, more companies operate at a regional level than locally or in the Vaucluse Department, (25 % against 13 %).

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France Most of the SMEs in France claim that they don’t have a defined strategy and resources to build one 72 % of the companies surveyed said that they don't have a defined development strategy; whereas having a clear strategy is essential for the sustainability and the development of the company. We may think this is because of a lack of training or information regarding the numerous advantages offered by the formulation of a good development strategy. Today, half of the company managers think they don't have the necessary resources (training, support from the Chamber of Craft and Small Business) to set up a strategic management. This could explain, in part, the answers given to the previous question.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France Motivations to invest in training on strategy Graph-21 What motivates you to invest in training on strategy development or strategic planning? This question is asked company managers to find the reasons why they would decide to take part in training in strategic development. The main reason would be to increase their company profitability. The second would be to better face competitors, and the third would be to boost sales. Company managers are therefore aware that training courses can offer many assets. So, we can see that the obstacles to defining a strategy or following a training course are not linked to a lack of information.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France Barriers faced in investing in training on strategy Analyzing the answers to this question we can understand the reasons why company managers don't want to invest in this type of training. The first reason is a lack of time (61 %),, the second is a lack of financial resources (53 %), and the third most important reason is the cost of training courses (46 %). We can also notice that 31 % of company managers lack information on institutions that could help them. 24 % lack information on the advantages they could gain by following training courses.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France How to overcome these barriers? Table-23 What can be done to overcome these barriers on training on strategy development or strategic planning? Access to (financial) resources, including e.g. strategy development consultancy subsidies 56,3% Assistance in defining a clear approach towards strategic development or strategy planning 42,7% Information about the providers of training and the available courses 38,5% Online version of the training 37,5% Explanation on how the training will be a benefit for my business Concise modular training courses 36,5% Testimonials from business leaders 15,6% This part of the questionnaire is related to the previous one. Analyzing these answers, we can define the actions that can be undertaken to help company managers overcome the obstacles that were previously highlighted. About 60 % of company managers would like to get some help to identify the financial resources they can use to finance their training courses 43 % would like to get some advice/help to understand what is company development or strategic management and how it can be formulated and set up for their own company. Previously, we have explained that the main objective of this questionnaire is to develop an innovative online training platform and program on the theme of SME's strategic development. This option was chosen by almost 38 % of the managers surveyed.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France Tendency of SMEs on making assessments for the affects of external conditions This diagram shows that company managers demonstrate little interest in the assessment of their environment. More than half of them don't analyze their environment and, therefore, cannot deal with unexpected situations.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France The level of knowledge and need on strategic analytical tools Graph-24 The diagram on the left shows the training needs regarding analytical tools, and how to use those tools. About half of the company managers don't use these tools and said that they don't want to use them. In the other half, about 40 % can't use them but would like to follow a training course to learn how to use them; and 10% can already use them, so don't need any training. Among those who don't use those tools, 47 % said they don't have time to use them, almost 28% think they are not efficient and almost 58% answered that they don't have the internal resources to use them.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France Preferred training provider & location As for the training provider, 76 % answered they would choose the Chamber of Craft and Small Business or any other public body. Regarding the location of the training courses on strategic management, 52% of the managers surveyed said they would prefer online or distance course; 38 % answered they would rather receive off the job training, «away from the work environment or after working time».

Findings of Analysis of the Current Situation and Needs Study – Key Findings, France Summary of Findings - France Thanks to this questionnaire we can see the potential benefits of developing an online training platform and program on the theme of SME's strategic development. Indeed, the analysis of this questionnaire highlights the absence of strategic management in SME's. SME's Managers said the main reasons are the lack of time, information on training centers and also a lack of financial resources. The questionnaire also tells us that managers would rather receive off the job training and would prefer online and distance courses to save time. As for the training provider, they would choose the Chamber of Craft and Small Business or any other public body. It would be therefore interesting and innovative for the Chamber of Craft and Small Business to create an online platform and to communicate about it and about its benefits.

Section 4.3 Key Findings - Belgium

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Questionnaire Participant Demographics Out of a sample of 31 SMEs that participated, 13 were established since 2000, of which 6 were active on a European. 20 SMEs has less than 100 employees, while 10 worked with apprentices (mainly bigger SMEs). They were active in following sectors, healthcare and social services, and services being the largest group: Graph-28 Questionnaire Participant Demographics in Belgium

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Most of the SMEs claim that they have a pre-defined strategy Asked if their organisation had a predefined strategy that was being following, following feedback was received that indicates the majority of the surveyed SMEs has a strategy in place. However, when asked whether this stragegy was well known throughout the company, almost 36% indicated that the strategy was not well known throughout the company.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Barriers faced in investing in training on strategy Asked if they have the necessary means to support strategy training, the feedback obtained indicates there is obviously a lack of financial means to do so. Additionally, information is lacking on the availability of such courses (where is this provided, who provides it, etc.). The following 2 graphs illustrate this.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium How to overcome these barriers? Table-24 What can be done to overcome these barriers on training on strategy development or strategic planning? Access to (financial) resources, including e.g. strategy development consultancy subsidies 87.5% Concise modular training courses 56.3% Information about the providers of training and the available courses 31.3% Assistance in defining a clear approach towards strategic development or strategy planning Online version of the training 18.8% Testimonials from business leaders Explanation on how the training will be a benefit for my business 12.5% When asked how these barriers could be overcome, the access to financial sources was given as the main element in overcoming the barriers. This is combined also with the fact that not all SMEs are aware of what subsidies exist to support such training (e.g. SME portfolio).

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Motivations to invest in training on strategy When looking at the motivation for strategy training following diverse results were gathered: Table-25 What motivates you to invest in training on strategy development or strategic planning? Response Percent I want to learn how to cope with environmental challenges/changes 68,8% I want to learn how to compete with my competitors 18,8% I want learn how to increase profitability 31,3% I want to learn how to increase market share 12,5% I want to learn how to increase my sales I want to learn how to give a clear direction to my organization 56,3% I want to learn which markets I can invest in I want to learn how to develop a better organizational structure 62,5% I want to learn how to improve our business processes I want to learn how to build a (more) powerful brand 43,8% I want to learn how to extend social networks 37,5% I want learn how to solve my financial issues 25,0% I want to learn how to export my products Other, please specify 6,3%

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Tendency of SMEs on making assessments for the affects of external conditions Next we wanted to know what external influences pushed them towards investing in such training. Next we wanted to know how respondents assess on a regular basis how the “outside world”, as well as their internal existing activities and approaches affect their business. Following replies were collected for the different domains: Economic aspect: almost 70% did so, with 4 mentioning explicitly they use the SWOT analysis for this. Social aspect: 57% indicated they did so, albeit this was done in a much less structured manner. Technological aspect: almost 67% did so, albeit this was also done in a much less structured manner. Legal policies: only 46% did so, in no structured manner. Environmental: only 40% did so, in no structured manner. In terms of internal activities (production, marketing, human resources, purchasing, technology, logistics etc.): close to 79% did so, mentioning among others the usage of the SWOT analysis and the balance score card.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium The level of knowledge and need on strategic analytical tools Table-26 Tools I know and I use it I do not know but would like to use it and need training Not interested SWOT 87.5% 6.3% PIMS 13.3% 53.3% 33.3% PLA 37.5% 25% Porter Value Chain 43.8% 31.3% Gognitive mapping 26.7% 46.7% Experience curve analysis 18.8% 56.3% 7 S 50% PESTEL 40% Porter 5 forces model 28.6% 42.9% BCG matrix 23.1% 46.2% 30.8% Portfolio analysis 14.3% Strategic canvas 20% VOC In a next question, the knowledge on the usage of analytical tools was analysed. While they indicated they know about these tools (especially SWOT tools), the practical knowledge is rather limited (exception for SWOT analysis), while the interest in training is substantial. Reason for this is linked to the lack of internal financial and human resources to use them, as well as the lack of time.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Preferred training provider & location Regarding the preferred places to get the training, the SMEs indicated a preference for training during the working hours but preferably away from the workplace. The preferred provider of training on strategic management is as stated above.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Interviews feedback In addition to the survey we also conducted some interviews with SME CEOs and collected following data that focused on the poor entrepreneurship skills present in employees that just come from school: There is resistance to entrepreneurship training at schools by teachers as it means some topics will have to be reduced in hours to allow for more entrepreneurship training. Training methodology is a challenge as entrepreneurship is a difficult topic to teach as it contains following elements: Basic business skills such as accounting, finance, strategic business planning and business law Fundamental skills such as people management skills, opportunity recognition, organizing skills, business ethics and negotiation skills. Entrepreneurial skills: creativity, risk-taking, initiative, self guidance There is need for good practices in the training, as often they are considered to be rather weak, especially when many given good practices have turned out to be bad practices (see MBA courses) while still being taught as good and successful practices. There is a need for project driven teaching/training (see regional technological centres in Flanders that facilitate the collaboration between schools and businesses). There is also a need for teacher training with regard to entrepreneurship.

Findings of Analysis of the Current Situation and Needs Study – Key Findings, Belgium Summary of Findings - Belgium Following conclusions can be made regarding the survey among Flemish SMEs: A majority of the surveyed SMEs have a predefined strategy, however, this strategy is often not known by company employees. Almost 75% of the SMEs indicate a lack of resources to provide such strategy training. These resources are both in terms of time and financial resources. The motivation for such strategy training is quite diversified, but it is characteristic that is mostly legislation that forces them to invest in training overall. It was indicated that modular training is preferred, whereby those modules can be selected that are of interest. The external world is analysed by the surveyed SMEs, but not really via formalised tools (very limited usage of tools, with exception of SWOT analysis). While there is an interest in getting training in these tools’ usage, the aspect of limited (financial and human) resources is omnipresent. If training is to take place, such training is requested mainly from an external consultant or an umbrella organisation during the working hours and outside the company premises.

Section 5 Final Remarks

Final Remarks In Conclusion... The Country Reports for Current Situation & Analysis of Needs of SMEs on Strategy is a part of the transfer of innovation project STeP, funded by the EU within the scope of the Life Long Learning and specifically the Leonardo da Vinci Program. It was transferred from the Agreement No LLP AT-LEONARDO-LMP project, named as STRATEGY-TRAIN – Small Enterprises Strategic Development, and completed by MERIG – Multidisciplinary European Research Institute Graz and their consortium. Scope of the STeP project includes Turkey, France and Belgium. This report therefore aimed to provide information on SMEs and their strategy education needs in the three aforementioned countries. To do this we first provide general information & demographics about SMEs. Then we provide detailed information about the legislative framework for the SMEs in each country. To understand the strategy implementation of SMEs in a closer way, we conducted a survey with feedback from 205 SMEs in Turkey, 161 in France and 31 in Belgium. The results implied that there is an awareness about strategy and its importance among SMEs, however they don’t have a systematic way to develop and implement strategies. Results indicate that Turkish and Belgian SMEs proportion of having pre-defined strategy is over 75% while French SME’s proportion is around 30%. Despite that French SMEs seem to provide positive answers in terms of having sufficient financial resources for strategy education. Motivation behind the strategy education needs vary among the countries. Belgian SMEs need the education mainly for coping with the environmental changes and developing better organisational structures, while Turkish and French SMEs need the education mainly for increasing their profitability. This may indicate that French and Turkish SMEs have short term perspectives compared to Belgium. The level of knowledge of strategic analytical tools are not sufficient, and this across all countries, while SMEs express an interest in using them. SMEs also have a reluctance to allocate resources for strategy. SMEs indicated that the biggest barriers on investing in strategy education are the lack of time and financial resources, including the cost of training. STeP aims to fulfil the aforementioned gaps by providing an online strategy training which will be accessible, free and applicable for all SMEs in the participant countries, addressing topics that are of interest to the SMEs. This way, better strategies to cope with an increasingly European and global market could be developed by the SMEs on a micro level.

Country Reports for Current Situation & Analysis of Needs of SMEs on Strategy Authors: Semih Ceyhan, Kadir Hızıroğlu, Mehmet Barca, Mahmut Hızıroğlu, Karel.

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Country Reports for Current Situation & Analysis of Needs of SMEs on Strategy Authors: Semih Ceyhan, Kadir Hızıroğlu, Mehmet Barca, Mahmut Hızıroğlu, Karel.

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Presentation on theme: "Country Reports for Current Situation & Analysis of Needs of SMEs on Strategy Authors: Semih Ceyhan, Kadir Hızıroğlu, Mehmet Barca, Mahmut Hızıroğlu, Karel."— Presentation transcript:

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