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STRATEGIES FOR INCREASING THE COMPETITIVENESS OF SMALL AND
MEDIUM BUSINESSES IN THE DIGITAL ECONOMY
Sanakulova Iroda Abrorovna
Samarkand State University Kattakurgan Branch
Economics (by sectors and industries) 2nd year student
+99877-404-47-22
Abstract:
This article analyzes effective strategies for increasing the competitiveness of small
and medium-sized businesses in the digital economy. At a time when the economy is
transitioning to a digital basis on a global scale, the use of innovative technologies, e-commerce,
digital marketing and automated management systems is becoming an important factor for small
and medium-sized businesses. The study examines the opportunities for small and medium-sized
businesses to reduce costs, expand their customer base, and improve the quality of products and
services through modern technologies. The importance of digital infrastructure, state support and
digital literacy is also highlighted. Using the example of Uzbekistan, strategies are developed to
strengthen the competitiveness of regional small and medium-sized businesses in national and
international markets through digital transformation.
Keywords:
Digital economy, small business, medium-sized businesses, competitiveness, digital
transformation, e-commerce, innovation, digital marketing, technological development, strategic
management.
Global digital transformation is covering all layers of the modern economic system. In this
process, small and medium-sized businesses are emerging as the main driving force. They play
an important role in creating jobs in the economy, introducing innovations and stimulating
competition in the domestic market. In the context of a digital economy, the success of SMEs
directly depends on how they implement digital technologies and adapt their business strategies.
In the context of the digital economy, in an information environment where the development of
entrepreneurship and small businesses is rapidly entering, in order to further develop the
development of the state and society, the President of the Republic of Uzbekistan, in his Address
to the Oliy Majlis on the most important priorities for 2020 dated January 25, 2020, also
mentioned the following regarding the development of the digital economy in our country: “In
order to further develop science in our country, educate our youth as people with deep
knowledge, high spirituality and culture, and to continue the work we have begun on forming a
competitive economy and raise it to a new, modern level, I propose to name 2020 in our country
the “Year of Science, Enlightenment and the Development of the Digital Economy.”
In addition, in order to implement the Decree of the President of the Republic of Uzbekistan No.
PF-5349 dated February 19, 2018 “On measures for the further development of the sphere of
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information technologies and communications”, as well as to create conditions for the rapid
development of modern information technologies for the implementation of the digital economy
in the state administration system in the Republic, as well as to ensure information security, the
Cabinet of Ministers adopted a Resolution on August 31, 2018 “On additional measures for the
introduction and further development of the digital economy in the Republic of Uzbekistan”,
which defines the goals and objectives of the digital economy, and the Resolution of the
President of the Republic of Uzbekistan No. PQ-3832 dated July 3, 2018 “On measures for the
development of the digital economy in the Republic of Uzbekistan” can also be included in these
measures.
This article analyzes the strategic directions necessary to increase the competitiveness of small
and medium-sized businesses, ways to use digital infrastructure and modern technologies, as
well as practical situations in the conditions of Uzbekistan.
Digital technologies are increasingly playing an important role in the modern global economy.
The concept of a digital economy refers to an economic system operating on the basis of
information and communication technologies (ICT). In recent years, Uzbekistan has also paid
great attention to the development of the digital economy. The Strategy for the Development of
the Digital Economy in Uzbekistan for 2020-2030 has been adopted, in which the digitization of
small and medium-sized businesses (SMEs) is identified as one of the priority areas.
SMEs provide a large part of jobs in the country and make a significant contribution to gross
domestic product. Therefore, increasing their competitiveness and improving their efficiency is
of great importance for the economy of Uzbekistan. Digital technologies, while creating new
opportunities for SMEs, also pose certain challenges.[1]
Digital economy and small and medium-sized businesses: new opportunities and challenges
The digital economy is a system of economic activity created and managed using digital
technologies. Its main features are:
Speed of data and information flow;
Platforms and services operating on the Internet;
Automated management systems
Digital payment and trade systems.
For small and medium-sized businesses, these changes open up new opportunities: they will be
able to enter the global market at low cost, work with online customers, and reduce marketing
costs. However, for businesses that have not fully mastered digital technologies, the risk of
falling behind in competition is also high.
Key strategic directions for small and medium-sized businesses
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a) Step-by-step implementation of digital transformation
SMEs can increase efficiency by gradually introducing digital technologies into their activities.
For example:
Using automated systems in accounting and bookkeeping;
Selling products and services online through e-commerce platforms;
Improving the quality of customer service using CRM (Customer Relationship Management)
systems.
b) Developing digital marketing strategies
Unlike traditional advertising tools, digital marketing tools (social media, email marketing, SEO,
contextual advertising) can be used to advertise more economically and effectively. This
increases brand visibility and attracts new customers.
c) Introducing innovative services and products
SMEs that introduce digital or technological innovations to the market are always one step ahead.
This can be a new platform, type of service, or form of online service provision.
d) Improving the digital literacy of personnel
The success of digital transformation depends on the ability of employees to work with these
technologies. Therefore, it is necessary to organize continuous training and advanced training
courses.
Directions for increasing the competitiveness of small and medium-sized businesses in
Uzbekistan
In recent years, great attention has been paid to the development of the digital economy in
Uzbekistan. In this process, small and medium-sized businesses are increasing their
competitiveness in the following areas:
Expansion of e-commerce platforms: Thousands of SMEs operate on "Uzum Market",
"Zoodmall", "Asaxiy", "Texnomart" and others.
Convenient service provision through mobile payment systems: Payment systems such as
"Payme", "Click", "Apelsin", "UzumPay" provide convenient opportunities for small shops and
service enterprises.
Support through state programs: Grants, subsidies and loans are being allocated for small and
medium-sized businesses within the framework of initiatives such as "Youth Notebook",
"Women's Notebook".[2]
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Problems and strategies to overcome them
a) Limited technological infrastructure
In some remote areas, the lack of internet speed and technical equipment is becoming an obstacle
to the introduction of digital technologies.
Solution: improving technological infrastructure in cooperation with the public and private
sectors, providing subsidies.
b) Lack of digital literacy
The lack of skills in using digital tools among owners and employees of small and medium-sized
businesses slows down development.
Solution: creating a system of continuous professional development through trainings, master
classes, online courses.
c) Limited access to financial resources
Technological transformation often requires initial investment, which is not available to all small
and medium-sized businesses.
Solution: expanding preferential loans, subsidies, and leasing opportunities for technological
equipment.
Digital cooperation and innovation clusters
Small and medium-sized businesses can strengthen digital cooperation among themselves and
share common IT resources. For example:
Technoparks and startup incubators: in these places, small and medium-sized businesses can test
innovative ideas and use the necessary infrastructure.
B2B platforms: create opportunities for cooperation with other companies to deliver products,
exchange services, and use logistics services.[5]
In short, increasing the competitiveness of small and medium-sized businesses in the Digital
Economy is a matter of time, requiring not only technological innovation, but also strategic
thinking, flexibility, and an innovative approach. For the small and medium-sized business sector
of Uzbekistan, the decisive factors on this path are state policy support, the expansion of digital
infrastructure, and most importantly, the initiative and openness to innovation on the part of
entrepreneurs themselves.
In addition, it is necessary to eliminate the “digital infrastructure” imbalance between urban and
rural areas. Some regions have access to high-speed Internet and modern digital services, while
others lag behind. Bridging the digital divide is essential to ensuring that all small businesses,
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regardless of their location, have equal opportunities to participate in the digital economy.
By consistently implementing these strategies, small and medium-sized businesses can find their
place not only in the domestic market, but also internationally.
References
1. Tulkunovna, K. F. (2023, May). The modern stage of development of the digital economy and
its impact on the development of small businesses. In Proceedings of International Educators
Conference (Vol. 2, No. 5, pp. 137-140).
2. Dildora, S., Umidjon, X., & Abduazim, A. (2024). The role of digital economy in small
business. Research and Publications, 1(1), 139-143.
3. Solijonovich, R. T. (2023). Development of business entities through digital technologies.
Bulletin of Kokand University, 366-370.
4. Bayzakova, D. (2023). Entrepreneurship in the digital economy, its description. Education,
science and innovative ideas in the world, 20(10), 108-112.
5. Khayitova, I. N. (2024). Improving small business and entrepreneurship in the digital
economy. International Conference and Journal Quality Indexing Service, 1(1), 250-254.
