TEHRAN (Mehr News Agency) - Recently, the significance of small and medium industries in the process of industrial development has been proved in both industrialized and developing countries.

With the appearance of modern technologies in the fields of production and communication, the process of delivery, distribution and the structure of productive industries have widely changed, increasing the importance of small and medium industries. With the development of competitive fields and the concentration of different companies on pivotal activities, companies are vertically divided and therefore contracting relations with compartment and raw material suppliers are improved while the supply chain is reinforced. All these prove that small industries should be taken more seriously into consideration. This includes those industries that are affiliated to greater networks and have provided themselves with technology, expertise, and advanced management because the special training process in small and medium industries brings out accomplished managers. Meanwhile, the society will suffer slight loss if these industries are taken over from the commercial cycle, so they can be regarded as suitable environments to develop larger competitive industries.

Many governments have adopted special strategies and policies to upgrade small industries in order to secure free market trade competition so that giant companies would not be able to take control over of the markets. They also tried to facilitate job-creative industries to be engaged in economic fields. This is because it has been realized that great industries may stay competitive through the market assuming that they interact with dynamic, innovative small and medium enterprises.

In this chapter, we shall firstly define small and medium industries and determine their development factors in order to compile suitable strategies and policies for the improvement of such industries. Then, we discuss the role of such stimuli in other countries. The current situation of these industries in Iran will be the next subject of discussion. Finally, we study the future possibilities for the small and medium industries and offer strategies to strengthen these industries. - Small and Medium Industries: Definition

There are different definitions of small and medium industries throughout the world. In fact, economic and industrial circumstances in any country define its small and medium industries. Some criteria for defining such industries are as follows: number of workforce, amount of investment, total sales volume, production capacity. The most common criterion to define small and medium industries is the number of workforce.

Industrial research articles show that different countries use different scales to elaborate the concept of small and medium industries. Even the definition of small industries in some economies wholly complies with the definition of large industries in other economies. For example, some countries consider a 150-worker industry as a small or medium one while this is used for 300-worker industries in another country. Generally, small and medium industries have been classified to prevent market failure as a result of their smallness. So, there would be different definitions for small and medium industries because of various implications the concept of market failure has in different countries. Some other considerations in defining such industries:

- Small and medium industries are classified under the same category due to their common features. - Small and medium associations include productive, service, and trade industries

- Small and medium industries are defined as independently-managed industries and do not include affiliated industries. - Changes in the global economy

Since 1970, numerous economic crises, mainly oil shocks, affected large industries around the world. It then resulted in more serious attention towards smaller industries. Some factors that greatly influenced and accelerated the process are as follows: competition growth, uncertainty, public interest conversions, production technology development, and interaction between large and small industries. - Competition growth

As different companies realized the very advantages of competition growth and motivation, they focused on their most essential products and capabilities and stopped marginal activities. The number of multi-purpose companies (conglomerates) in the United States, which were active in more than twenty different industrial fields, decreased 37 percent in a four period (1985-89). Instead, one-product industries experienced a remarkable 54 percent increase in their shares in the same period.

However, as the competition fields developed in recent decades, most of the companies could not ignore the inevitable impacts of specialization. Thus, they started the process by means of reshuffling, sub-contracting, out-sourcing, and spin-off. The result was that large industries shrank and smaller ones were formed.