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tablishing effective distribution channels, communicating product features, pricing products and services in an attractive way, implementing sales and marketing efforts to win and retain customers and undertaking constant product development in order to sustain sales. SMEs generally do not have the knowledge or information about other markets, thus, this limit their ability to market their products to larger groups of customers and expand their business.

Technology - SMEs tend to have low productivity and they are weak in terms of competition which is the result of using inefficient technology, not maximizing machinery utility and not improving in technology due to the limitation of funding and most SMEs are mainly users of technology, not adaptors of technology (OSMEP, 2007 a).

The World Bank (2009) claims that investments in technology are required in order to build up existing capacity and to improve the quality and productivity of production which will generate in higher value-added products that will improve the competitiveness for firms.

Innovation - Innovation also plays a crucial role in now day business and it is regarded as a key characteristic of SMEs, mainly due to the attitude of the manager. Innovative companies are able to respond within the bounds of the knowledge about existing products or services to changes required by the customer within their niche market (Levy and Powell, 2005)

The impacts of globalization have pressured SMEs to greater demands. Innovation relies on bringing together different types of research and utilizing this knowledge to design new products, therefore innovation greatly relies on research and development investments.

Normally developed countries allocate about 3% of GDP to R&D activities. Some developing countries, including China, India and Brazil, have rapidly increased their R&D expenditure, to levels with those of the world’s most developed countries (Morrison, 2006)

2.6 External factors

Financial support- According to Guffey, business plan is essential when you start your own business. Unless you can count on the bank of your relatives you will need financial backing such as a bank loan or venture capital supplied by investors. A business plan is critical for securing financial support (Guffey, 2008)

Throughout the region, SMEs do not have an easy access to credit and equity finance. This is because of the weak banking institutions in the region, the absence of capital markets, and the weak legal framework for credit and collateral. Finance in general are critical issues for growing businesses, forming the primary resource base from which other factor inputs are acquired. There are various ways the business owners can finance the growth of their firms but the fundamental decision is whether or not to accept external equity finance return for part ownership of the business. If owners allow external equity finance they choose to relinquish part of their control to either a financial institution or other individuals.

Financing the firm is essential and getting access to finance plays a crucial role on firm’s growth process. For many lenders it is almost impossible to assess the risks of an investment this is mainly because of the high level of uncertainty (World Bank, 2001).

Laws and regulations - The World Bank researchers argued that constra