FACTORS AFFECTING THE GROWTH OF sme IN AGRA

MBM 203BUSINESS RESEARCH AND

METHODSTERM PAPER PRESENTATION

TOPICFACTORS AFFECTING THE GROWTH OF SME IN AGRA

PRESENTED BY:

AYUSH SINGH

MONIKA SINGH

NIKITA PANJWANI

CONTENTS

Introduction

Need of the study

Objective of the study

Review Of Literature

Research

Methodology

Analysis And

Interpretation Of Data

Findings

Suggestions/Remedial

Measures

Conti….

Conclusion

Limitations

Limitations

References

Appendix

Introduction

Small industrial units are the seedbed for industrial development in developing

economy because of its less capital involvement and more employment

generation capability.

A socio-economic model of government emphasizes on job creation at all levels

and discouraging monopolistic practices of production, operations and marketing;

and in all prospects contributing to growth of economy.

What is

SME’s

ServiceEnterprises

above Rs. 25 Lakhs & upto Rs. 5 Crores

ManufacturingEnterprises

above Rs. 10 Lakhs & upto Rs. 2 Crores

Such Industrial units fail to generate surplus on a

continuous basis and depends on frequent infusion of

external fund for its survival.

Some SMEs are incurring heavy cash losses for one year as

well as for the next year, they face an imbalance in the

financial structure such as current ratio, working debt-

equity ratio or we can say that in some of the SMEs

accumulative losses exceed capital and reserve.

Why aren’t

SME’s

growing?

Need of the study

Sickness among SMEs is the key issue of modern industrial

age; and incidence of sickness has been growing in

such large proportions.

It also effects in terms of unemployment, non-availability

of goods and services and the prices soaring up.

To give explanation of the sickness.

Objective of the study

To analyse the various symptoms and factors

affecting the growth of SMEs.

To suggest remedies that may help to

overcome these factors.

REVIEW OF

LITERATURE

Sr. No.Research Paper/

JournalAuthors Year Key Findings

1.

Pacific Business Review

International, Vol. 5, Issue 5,

29-35.

Dr. K.A (et.al) 2012Even if the industry is on favorable run various

factors may affects its growth.

2.

“Striving and Thriving in the

Era of

Globalization”

Dr. Shivani July 2012

The study depicts 9 causes affecting the growth of

industry in India. The major causes were “lack of

demand 71.6%, shortage of working capital 48.0%,

marketing problems 44.5%, and power shortage

21.4%.”

3.

A Case Study of Larkana

Estate Area.

Australian Journal of Basic

and Applied Sciences, Vol. 1,

Issue 4, 860-865.

Mumtaz Ali

(et.al)2007

In-depth study of Larkana estate area of India

showed that 23.25% lack of good management,

16.74% lack of working capital, 13.95% marketing

problems, 1.86% load shedding problem.

4.

Small Scale Industries

Common Causes of Sickness

and Probable Remedies.

International Journal of Current

Research,

Vol. 4, Issue, 01, 146-148.

P. Sunilkumar

(et.al)2012

Found that lack of finance: bad production

policies, wrong demand & forecasting, selection

of in appropriate product mix, absence of

product planning, wrong market research

methods and bad sales promotions, ineffective

corporate management, inappropriate

personnel management, personnel problem,

marketing constraints, production constraints,

and finance limitations are the major causes of

sickness to small scale industries.

5.

A Study on the Position of Small

and Medium

Enterprises in Kerala Vis A Vis

the National Scenario.

International Journal of

Research in

Commerce, Economics &

Management, Vol. 2, Issue 3,57-

60.

Rajeevan N. 2012

The study depicted that among the registered

SSI in India: lack of demand 58%, working capital

shortage 57%, non availability of raw materials 12

%, power supply 17 %, and equipment problems

9 %, are responsible for sickness to small scale

industries.

6.

Proposed Research Direction for

Sustainable SMEs in

Bangladesh. Bangladesh

Research Publications Journal,

Vol. 6, Issue 3, 317-329.

Rashid, Md.

Mamunur2012

Identified some causes in Bangladeshi Small

Scale Industries. The causes he identified include

Marketing problem (31%), Management

inefficiency and lack of entrepreneurial skills

(22%), Faulty project planning and appraisal

(14%), Imbalance of machinery and

inappropriate technology (12%), Implementation

delay (12%) etc.

7.

A case study of Tripura.AFBE

Journal, Special Issue of

Selected Papers from

AFBEUNITEN Conference - 2012,

Vol. 5, No. 3, 240-251.

Bhushan

Chandra

(et.al)

2012

Observed the causes in micro and small

manufacturing enterprises in Tripura. It was found

that demand, management issues, obsolete

technology, inadequate working capital, etc.

were the main factors in micro and small sector

of Tripura.

8.

Proceedings of the International

Conference on Mechanical

Engineering, held at Dhaka,

Bangladesh, ICME07-AM-22.

Biswas S.K. 2007

“Besides identifying the various key reasons liable

to industrial sickness, they emphasizes on

Government policy level for the well being of

national economy and development. Besides

they showed some ways to utilize the application

of the theories and principles of Production and

Operations Management in preventing the

industries becoming sick.”

Research Methodology

Type/Nature of the Research Descriptive as well as exploratory in nature

Emphasized on describing the present status of theindustrial units of Agra

Objectives of the Research To explore the main cause/causes for the sick industrial

units

Find out ways by which these sick industrial units can

be revived

????

Target Population of the study

The total number of industrial units was 200 out of

which, 7 small industrial units were sick and 5

ultimately closed down. Hence the total population

comprised of 2 sick Industrial units.

The sample size was 2 Industrial units which is

about 28.5% of the total population

The sampling technique Random sampling i.e. 2 sick industrial units were

selected on convenience basis out of 7 sick

industrial units

Tools for data analysis The data was analysed through descriptive statistics

and exhibited in, graphs, charts, showing

percentages and other numerical results.

Data Collection

Analysis And

Interpretation Of Data

We have conducted the survey of two sick units

through questionnaire. Under that questionnaire

they have to rate the factors from 100 points.

We have analysed the data of the enterprises

individually and after that we compare that data

on the basis of central tendency.

Are U

Married No !! Or

Bache2 !!!

Factors Ratings

Shortage of Manpower 28

Shortage of Raw material 14

Tough Competition 12

Inadequate Working Capital 9

Increase in Cost due to late Implementation of Projects 8

Lack of trained and highly skilled labour or technically competent personnel 7

Delay in Implementation of Project 7

Shortage of Power Supply 5

Delay in Getting Financial Assistance 5

Changes in Technology 3

Changes in Customer Behaviour 2

100

For the company X

0

5

10

15

20

25

3028

14

12

98

7 7

5 5

32

Ra

tin

gs

Factors

Factors

Factors Ratings

Mismanagement 25


Shortage of Manpower 8

Shortage of raw material 7

High Cost of Production 7

Poor quality control 7

Lack of trained and highly skilled labour or technically competent personnel 6


Delay in Implementation of Project 5

Increase in Cost due to late Implementation of Projects 5

Inadequate Working Capital 5


Bad Industrial Relations 3

Others 1

100

FOR COMPANY Y

0

5

10

15

20

2525

12

87 7 7

6

5 5 5 5

4

3

1

Ra

tin

gs

Factors

Factors

COMMON FACTORS ANALYSIS

0 5 10 15 20 25 30

Tough Competition

Shortage of Manpower

Shortage of Rawmaterial

Delay in Getting Financial Assitance

Inadequate Working Capital

Increase in Cost due to late Implementation of Projects

Lack of trained and higly skilled labour or technically…

Delay in Implementation of Project

Changes in Technology

Poor quality control

Shortage of Power Supply

Mismanagement

High Cost of Production

Others

Changes in Customer Behaviour

Bad Industrial Relations

Ratings

Fa

cto

rs

Factors leading to sickness

COMPANY Y COMPNY X

COMPARISON (CENTRAL TENDENCY)

0 2 4 6 8 10 12 14 16 18 20

Tough Competition


Shortage of Rawmaterial

Delay in Getting Financial Assitance



Lack of trained and higly skilled labour or technically…





Mismanagement


Others



18.5

17.5

10.5

8.5

7.5

6.5

6

5.5

5

4

2.5

2.5

2.5

1.5

1

0.5

Average Score

Average Score

After the statistical analysis we got to know that

there were some factors common in both the

unit with were directly or indirectly affecting the

growth of both the enterprises. Thus, a survey

was done on a healthy unit to analyse that do

these factors affect a healthy unit also?

FOR COMPANY Z

Factors Ratings

Mismanagement 30




Others 15

100

0

10

20

30

40

30

40

5

10

15Ra

tin

gs

Factors

Factors affecting healthy unit

After this, we compare both the sick

units with the healthy unit to analyse the

factors which are commonly affecting

each other positively or negatively.

0% 20% 40% 60% 80% 100%

Tough Competition


Shortage of Raw material

Delay in Getting Financial Assistance



Lack of trained and highly skilled labour or technically competent…





Mismanagement


Others



Ratings

Fa

cto

rs

Company X

Company Y

Company Z

Difference is that healthy units cope up with these

factors significantly well as compared to sick units.

When asked for the ways by which they deal with

these factors we got to know that they believe in

finding the root cause instead of fining quick fix

solutions to the problems. This process helps them

to deal with long term problems

FINDINGS

Inadequate working

capital as revenue

generation was a

problem

Difference in practices of

objectives like production procedure, manpower

handling etc.

Both facing the problems like executive inefficiency,

technological lag, problems

relating to export etc.

Shortage of raw material is also one the main reason

Found that,natures ofproblemsfaced by boththe enterprisesunits were notmuch different

Main reason of sickness is increasing competition in the market.

Lack of proper management and lack awareness about the market

INTERNAL & External FACTOR AnalysisSTRENGTH

Markets:

Traders/Wholesalers are present in the local market.

No import is required as all items are indigenous.

Innovation capability:

Ability to develop duplicate and customized products.

WEAKNESS

Markets:

Development trust and relationship in the long run. (Bad Industrial Relations).

Presence in the domestic market.

Inputs availability:

Raw materials are not available in sufficient quantity.

Unavailability of other inputs like Adhesives, chemicals, Punch, mould, Grainderies and packing

materials (Boxes) etc.

Skills:

Workers are not very skilled and working like machines.

Workers are not specialized in specific field.

No skill up gradation training for the workers.

Technology:

Tradition method of production.

Low level of technological development.

Manufacturing defects and use of substandard materials.

Problem with quality and productivity.


Very frequently changes in design, technology, process and marketing due to foreign branded

footwear availability in the market.

Business Environment:

Business Environment is changing.

Competition is increasing.

OPPOURTUNITIES

Markets:

The domestic market has tremendous market potential and can be utilized at the maximum

Quality and productivity is the rule of the game.

Enterprises can join hands together for international marketing, brand buildings and

participation in trade fairs.


Exposure visits, participating in exhibitions may make the entrepreneurs and technicians more

innovative and problem solving.

Skills:

Increased awareness is likely to improve the skill base of the workers.

Business Environment:

Changing business environment and marketing channel can provide opportunity

enterprising firms.

THREATS

Markets:

Tough competition because of setting up modern units elsewhere in the country.

Overseas importers are smart enough to change their sourcing country.

Technology:

Low level of technological development.

Technology can impose a major threat unless it is changed/ modernised.

Technology is an ever changing process.

Inputs availability:

Difficulty in encountering competition unless raw materials are made cheaper.

Quality of raw materials.

Quality of footwear components.


Innovation is required in every facet of business operations.

Conclusion

From this study, it has been found that ‘Tough Competition’ (18.5%)

and ‘Shortage of Manpower’ (17.5%) and ‘Shortage of Raw material’

(10.5%) are the major factors of sickness as perceived by the

respondents. The sick enterprises should be given priority in the supply

of raw materials. The government should grant soft loans to their units

at concessional rates of interest and reduce margins. Government

needs to support entrepreneurs with promotion schemes to cope up

with global competition with effective marketing strategies with

innovative ideas in their product and marketing programme to cope

up with tough competition, the only they can fight with industrial

sickness. “Prevention is better than cure”.

Suggestions/Remedial Measures

The identification and detection of sickness at the incipient stage.

Banks and financial institutions should periodically review.

The sick enterprises should be given priority in the supply of raw materials

The state and central governments should take the required measures to implement strictly their policies

Attitude of the management.

The government should grant soft loans to their units at concessional rates of interest and reduce margins

Limitations

LIMITATION

Lack of sufficient knowledge

Lack of previous practical experience

Lack of enough available data.

Confidentiality

Non-cooperation &

unwillingness

No proper records

Hemantkumar.Bulsara (2010): “A Study of factors responsible for industrial

sickness as perceived by entrepreneurs”, SV National Institute of

Technology, Surat.

Chandel K.S. (2009): “Ethics in Commerce Education”, Paper presented

at the Annual International Conference for the all India Management

Association, New Delhi.

Rajeevan N., Sulphey, Dr. M. M. (2012). A Study on the Position of Small

and Medium Enterprises in Kerala Vis A Vis the National Scenario.

International Journal of Research in Commerce, Economics &

Management

Desai, Vasant. (2006). Small-scale Industries and Entrepreneurship.

Mumbai: Himalaya Publishing House.

Sandesara, J.C. (1988).Industrial Framework for Promoting Small-Scale

Industries in India. Asian Development Review, Vol.6, Issue 2, 10-40

Junejo, Mumtaz Ali; Rohra, Chandan Lal; and Maitlo, Dr. GhulamMurtaza. (2007). Sickness in Small-Scale Industries of Sindh: Causes & Remedies.

A Case Study of Larkana Estate Area. Australian Journal of Basic and Applied Sciences, Vol. 1, Issue 4, 860-865.

Sujatha, Y.; Reddy, P. Sunilkumar and Rao, Dr. K. Prahlada. (2012). Small Scale Industries

Common Causes of Sickness and Probable Remedies. International Journal of Current Research, Vol. 4, Issue, 01, 146-148.

S Anil Kumar, S.C. Poornima, M.K. Abraham, K. Jayashree (2003). ‘Entrepreneurship Development’, New Age Publishers.

Questionnaire

Questionnaire

Name of Enterprise

Location (Urban/Semi-Urban/Rural)

Total Investment in Plant and Machinery

Inception Year

Nature of Business

(Service/Manufacturing)

What are the reasons of sickness of your

enterprise?

FACTORS

o Adverse Government Rules and Regulations

o Mismanagement

o Economic conditions

o Tough competition

o Shortage of manpower

o Shortage of raw material

o Inadequate technical know how

o High cost of production

o Poor quality control

o Excessive high wage structure

o Lack of trained high skilled labour or technically competent personnel

o Dependent on a single customer

o Transport bottlenecks

o Underutilization of resources

o Shortage of power supply

o Delay in getting financial assistance

o Inadequate maintenance and replacement

o Delay in the implementation of the project

o Increase in the cost due to late implementation of project

IMPORTANCE

Questionnaire.docx

FACTORS AFFECTING THE GROWTH OF sme IN AGRA

Business

Transcript of FACTORS AFFECTING THE GROWTH OF sme IN AGRA