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Table of ContentsParticulars Page No.

Abstract 02

CHAPTER ONE 03-09

Introduction 03

Objectives of The Study 04

Literature Review 04-05

Methodology of The Study 06

Small Scale Industry 07

Small Scale Industry And Its Importance 08

Globalization And Small Scale Industry 09

CHAPTER TWO 10-17

SWOT Analysis 10-11

Development Management And Small Industries In Bangladesh 12

Government Offers Incentive To SSI Sector In Bangladesh 13

Place Of SSIs In The National Economy Of Bangladesh 14

Growth And Structural Transformation Of SSIs 15

SSI Assistance Policies And Institutional Arrangements 16

Global And National Changes Implications For Small Scale Industries 17

CHAPTER THREE 18-26

Sample small scale industry: North Khulna Poultry Feed 18-20

Sample small scale industry: Shahdat Rice Mill 21-23

Sample small scale industry: Bismillah Bakery 24-26

CHAPTER FOUR 27-31

Major Findings 27

Concluding Remark 28

Conclusion 29

References 30

Acronyms 31

APPENDIX (SURVEY PAPERS)

Small Scale Industries of Bangladesh (Case Study of Three Small Scale Industries)

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AbstractThe small scale industries play a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Bangladeshi economy. By less capital intensive and high labor absorption nature, SSI sector has made significant contribution to employment generation and also rural industrialization. Under the changing economic scenario, SSI has to face number of diverse problems like vast population, large scale un-employment and underemployment and scarcity of capital resources and the like. Hence, the government has been providing some special facilities through different policies and programs to overcome the problems and for the growth and development of small scale industries. The efforts of the government have resulted in the phenomenal increase in the number of units in the small scale sector. The government also introduced various schemes and incentives for the promotion of SSIs. Constant support to SSI sector by the Govt. in terms of infrastructure development, fiscal and monetary policies have helped to emerge as dynamic and vibrant sector of Bangladeshi economy. Over the past five decades, Government policies and schemes have been to protect the interests of the SSIs and facilitate its rapid development from time to time.

Keyword: Small Scale Industry, Environment.


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CHAPTER ONE (Introduction)

IntroductionSmall scale industries (SSI) involving, relatively simple technology, low investment and having capable of generating larger employment opportunities, has a vital role to play in the economy of a country, like Bangladesh. Further, SSI is recognized as important source of entrepreneurship, innovation and growth. Again, the factors, such as inflation, economic recession and changes in technology affect adversely the growth and development of large- scale industries. In such a context, the strategy for the promotion and development of SSI has been increasingly attracting the attention of planners in many countries as a potent instrument of reducing the in equality in economic and material welfare among the individuals and nations. Further, the smallness facilities the utilization of small savings for productive uses that would not otherwise have come into existence as productive capital. Further, people can achieve the quality of life through SI ownership. In Bangladesh, SSI provide direct employment to about 2 million peoples, roughly 40% of the manufacturing value but contribute only 4.5% to GDP. Dynamic and effective market management has, therefore, become a vital exigency for the SI sector to meet the new challenges in the market and better performances in the changing business environment. Again, significant changes in the role and functions of the SI management are required for the development of the sector. Further, development management means an evolutionary change from the present situation into a better situation.


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Objectives of the Study

The main objective of this paper is to examine the entrepreneurial and environmental issues in the development process of small industries of Bangladesh. The specific objectives of the study are as follows:

To study the entrepreneurial excellence of sample enterprise. To examine the environmental issues for the growth of an enterprise. To recommend some line of actions for the development of small industries In

Bangladesh.

Literature ReviewOn survey of entrepreneurs ranked the problems in the following order: need for credit; marketing; training; technology; information; extension and consultancy; and infra-structural support services (Karim, 1996). Based on some literature review numbers of external and internal factor of the development barriers can be identified for the SSI sector. These are: information and knowledge, political, economic, legal System, government issues, technology, natural calamity etc, which can be categorized as external factors and people, machinery, structure or materials and process as internal factors (Salman, 2000). The entrepreneur in Schumpeterian model is an ‘innovator entrepreneurs’ who depends necessary social and economic overheads. These economic and social overheads are very poor in backward region, which cause the short supply of entrepreneurs (Schumpeter, 1954). Darzi defined an entrepreneur basically he is one who has initiative, skill for innovation and who looks for high achievement (Darzi, 2004). Butt (1998) mentioned an entrepreneur who is a front line actor in the process of industrial development with his dynamism, ability and ingenuity; he brings a change in the socio-economic order. Cooper, Woo and Dunkelberg stated, as from entrepreneurial point of view the most crucial stage is the start-up period (Cooper, Woo and Dunkelberg, 1989). McClelland’s hypothesis is that a society with a generally high level of achievement will produce more rapid economic development. The inner urge of the individual to something new, something unique in a particular field has been found to be an important factor. It includes entrepreneurial motivation, personal efficiency and capability. Achievement motivation and power motivation are equally important for entrepreneurship (McClelland and Winter, 1969). According to McClelland people could be entrepreneurs if they have high need for achievement (McClelland, 1961). Davies identified the need for achievement as the factor that instigates people to be entrepreneurial and venture into innovative and productive activities enhancing economic growth (Davies, 1991). Access to finance is the major problem for SSIs as commercially lending institutions typically ignores the financial requirements of the SSIs


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primarily due to their weakness in offering fixed asset as collateral (Hasan, Mazharul and Rahman, Tawfiq, 2001). Misuse of political power is responsible for imperfect market. As a result, genuine entrepreneurs are underprivileged in terms of inaccessibility to certain business (Rahman and Das, 2005). Besides Roni (2003) stated the entrepreneurship in the political arena of Bangladesh is not adequately supported. Dun and Bradstreet statistics attribute about 52 percent of all business failure to “management issues” and as much as 90 percent of small business failures to incompetent managers (Hasan, Mazharul and Rahman, Tawfiq 2001). A working session of National Review Forum held in Dhaka, Bangladesh organized by the Centre for policy Dialogue (CPD). According to CPD, infrastructure like high cost of electricity, water and transportation, high interest, extortion is very important for SSI sector and it is making business difficult and non-viable in competition (Source: http://www.cpd-babgladesh.org/media/press_050603). Weak information infrastructure, just like weak transport infrastructure, can reduce attractiveness of merchandise trade with particular areas (George Caspary and David O’Connor 2003). Government, NGOs and International development agencies need to take proper steps to facilitate entrepreneurship (Rahman and Das, 2005). Small firms which possess more information about themselves and their environment engage in formal strategic planning and they perform better financially than their counterparts (Orpen, 1993). Still there is lack of awareness about new age and e-commerce (Salman, 2000). Roni observed the socio-cultural environment has a far-reaching effect upon the entrepreneurs. Positive result in people who are willing to assume entrepreneurial activities and the negative environment will be in the opposite (Roni, 2003). Roni also claimed that entrepreneurs can emerge from socially marginal groups, like religious culture, ethnic or migrant minority. Many authors have emphasized on social integration factors. According to Morris and Somerset, increase in the scale or range or interaction is necessary and those barriers to interaction must be broken down if entrepreneurship is to occur (Morris and Somerset, 1971). However, it is obvious that strong group ties may draw actors in to non-entrepreneurial roles (Lipret 1967, Marris and Somerset 1977). According to Esater-Brook, security essentially involves protection form uncertainties, want and social disapproval and political interference (Esater-Brook 1949, 1963). Easter Brook described the government role as being three possible types: protective, promotional or corrective (Esater Brook 1949). Rahman argued the higher prestige is attached to industrial profession as compared to other profession which has motivated farmers to adopt this profession (Rahman, 1981). With the advent of an era of liberalization and globalization, the small-scale entrepreneurs are facing an acute competition (Mittal and Batra,2004).


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Methodology of the StudyBoth primary and secondary data have been used for the purpose of the study. Primary data have been collected through structured questionnaire form sample entrepreneur and other managerial personnel of the industry. In order to collect the detail data, participatory observation method has also been used. Beside primary data, necessary secondary data have been collected from the sample enterprise. Secondary data covered textbooks, research articles, government publications and various published and unpublished research works on the subject.


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Small Scale Industry (SSI)

The definition of small scale industries has undergone changes over the years in terms of investment limits in the following manner:

Year Investment Limits Additional Conditions

1950 Up toTk.5.0 lakh in fixed assets Less than 50/100 persons withor without power

1960 Up to Tk.5.0 lakh in fixed assets No condition

1966 Up to Tk.7.5 lakh in Plant & Machinery No condition

1975 Up to Tk.10 lakh in Plant & Machinery No condition



1991 up to T.60 lakh in Plant & Machinery No condition

1997 up to Tk.80 lakh in Plant & Machinery No condition

1999 up to Tk.100 lakh in Plant & Machinery No condition

2001 up to Tk.150 lakh in Plant & Machinery Less than 50 persons

Table (1): The definition of small scale industries changes over the years

Now-a-days Bangladeshi Small Scale Industries are mostly modern small-scale industries. Modernization has widened the list of products offered by this industry. The items manufactured in modern small-scale service and business enterprises in Bangladesh include rubber products, plastic products, chemical products, glass and ceramics, mechanical engineering items, hardware, electrical items, transport equipment, electronic components and equipment’s, automobile parts, bicycle parts, instruments, sports goods, stationery items and clocks and watches, etc.


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SMALL SCALE INDUSTRY AND ITS IMPORTANCE

Economic development of a country is directly related to the level of industrial growth. The expansion of industrial sector leads to a greater utilization of natural resources, production of goods and services, creation of employment opportunities and improvement in the general standard of living. Bangladesh has also been striving to develop the country’s industrial base over since independence. It has framed various policies aimed at development of industries in the public and private sectors. Special emphasis has been laid on small-scale industries. Small scale industries play a key role in our planned development with its advantages of low investment, high potential for employment generation, diversification of the industrial base and dispersal of industries to rural and semi urban areas. The small-scale industries sector has been appropriately give a strategic position in our planned economy towards the fulfillment of the socio economic objectives particularly in achieving equitable growth. P. N. Dhar and H. F. Lydall in introduction to their book, “The Role of Small Enterprise in Bangladeshi Economic Development” have observed that ‘The promotion of small scale industries has been widely recommended as one of the most appropriate means of developing industry in over populated backward countries’. The definition of small scale sector is broadened from small-scale industries to small scale enterprises that include all business enterprises in the services sector which provide service to industrial sector in addition to small scale industries taking into account all these factors, at present, Bangladesh Bank uses an expanded definition of small scale industries which include: Small scale industrial undertaking which are engaged in the manufacturing, processing and preservation of goods in which the value or replacement cost of durable resources other than land and factory building is in between .05 – 15 million taka and employment generation is not more than 50 persons.

To provide additional employment opportunities. To mobilize resources of capital and skill from various parts of the country. To provide a more equitable distribution of national income. To provide a helping hand to large industries and facilitate them in their work.


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GLOBALIZATION AND SMALL SCALE INDUSTRY

For the purpose of the argument in this paper, as well as understanding some of the responses to globalization, it is important to define what mean by globalization. This is all the more crucial because even if we leave out the unambiguous supporters of globalization in its present form- those who hold that it is purely beneficial, and the benefits will ‘trickle down’ automatically to the poor- there are still widely differing conceptions of this process. Those who either oppose globalization, or are anxious about its potentially detrimental effects on employment and poverty, encompass a wide political spectrum. The extreme right opposes it from the standpoint of economic and cultural nationalism, and liberals might deplore the loss of national sovereignty because it reduces the effectiveness of state intervention to regulate capital and labor, alleviate poverty and so forth. Globalization is the process of integrating various economies of the world without creating any hindrances in the free flow of goods and services, technology, capital and even labor or human capital. The term globalization has, therefore, four parameters:

Reduction of trade barriers to permit free flow of goods and services among nation-states; Creation of environment in which free flow of capital can take place among nation stated; Creation of environment, permitting free flow of technology; and Last, but not the least, from the point of view of developing countries, creation of

environment in which free movement of labor can take place in different countries of the world.


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CHAPTER TWO (SSI and Bangladesh)

SWOT AnalysisSome of the well-recognized strengths of the SSIs are:

source of new employment opportunities more flexible in terms of internal organizational structure comparatively flexible in adopting, more rapidly and readily, innovations and new

technologies able to provide favorable environment for development of entrepreneurial skills and

business culture closer to the ultimate consumers and can respond to their demands more rapidly and

efficiently in some cases, generator of higher competitiveness on the market primarily focused on domestic demand and the local market in recent times receiving all-out support from the government and, accordingly, to create

favorable conditions for the development of the SSI sector is among the priorities in the policy of the government

the development partners are also focusing on mitigating hindrances to foster this sector

At the same time, some of the SSI weaknesses need to be pointed out, for instance due to difficult access to financing, a great part of the SSIs are engaged with activities

which are characterized by higher labor intensity than invested capital and, thus, leading to sub-optimal use of resources

a substantial part of the entrepreneurs do not have sufficient marketing, financial, accounting and legal knowledge, which hinders smooth-running of their business and reduces the efficiency of the enterprises

low access level and disregard of the real needs for information and consultation underestimating of the quality requirements and lack of knowledge on standard

specifications some entrepreneurs are not well acquainted with the current effective international

agreements and requirements


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The importance of SSI for the national economy could also be outlined in terms of the opportunities for further strengthening and development of the sector and its impact on the economy toward:

reduction of the unemployment rate increase of economic competition development of new high-technology industries reduction of regional economic discrepancies possibility to loop the production cycle and achieve higher efficiency by setting up

clusters (related production) on regional or branch principle increase of the welfare of the nation

The potential threats for the successful development of the SSI sector are mainly in the following directions:

impossibility to extend an individual enterprise by modernization, expansion of activities and employment of new workers because of the adverse external (macroeconomic) environment - high taxation and insurance liability, difficult access to financing, administrative barriers etc. - and also due to the inability of the entrepreneurs to deal with its challenges

insufficient managerial skills of the entrepreneurs, inability to react adequately to liberalized markets and reshaping the manufactured produce and provided services in compliance with the international standard requirements


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Development Management and Small Industries in Bangladesh

Bangladesh has been pursuing a reform agenda for the purpose of rapid industrialization to accelerate its present growth rate of 4 percent to 10 percent per annum. In industrialization process, SSI sector producing goods and services mostly for domestic consumption, with lower capital employment ratio and higher output-input ratio have a significant importance in the economy. Again, the present government offers various incentives to SSI sector under present industrial policy. Beside the various types of incentives, one government special agency viz. ‘Bangladesh Small Industries Corporation’ has been created with specific promotional roles. Its major functions are-promotion & registration of SSI, conducting advisory and industrial promotion services including scouting & training of entrepreneurs, construction & development of industrial estates with necessary infra-structural facilities and development of linkages between SSI and large & medium sized industries in the country. Despite these various measures, the desired level of development and target set for could not be achieved as between 1962 and 2003; they increase from 16,331 to 67,867 only (BSCIC, 2003). However, it is argued that entrepreneurs are not concerned only with tax or incentive facilities. Moreover, there is need to improve the management and business skills of those involved in SSI in order to promote efficiency and success. Again, SSI is recognized as an important source of enterprise, growth and innovation. Further, it ensures quality of life as well as growth of an economy with equity. Therefore, effective and efficient management is a critical input in ensuring the development of SSI in Bangladesh. Further, development management of SSI sector denote ideas used in a new process to manage evolutionary change from the present environment into a better environment which ensure development of individual on one hand and growth of a society with equity on the other, in a country like Bangladesh. However, one of the notable successes in entrepreneurship and innovation as well as growth & development of small industry, which is the subject of this research study.


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Government offers incentive to SSI sector in Bangladesh

SL No. Heads Incentives

1. Custom duty on imported machinery * 10% for developed areas* 5%for undeveloped areas

2. Excise duty In SSI sector there is no excise duty

3. Income tax rebate * For developed areas 7 years* For undeveloped 9 years* BSCIC registered units are exempt from payment of advance income tax on import of their raw materials.

4. Debt-equity ratio * 80: 20

5. Subsidize interest rate * Fixed capital 10%* Working capital 14%

Table (2): Incentive to SSI [Source: Ministry of Industry, Government of Bangladesh.]


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Place of SSIs in the National Economy of Bangladesh

Table (3): Current position of SSIs [Source: Ministry of Industry, Government of Bangladesh.]

Year No. of Units Employment Value Added (TK.)

Small and

Cottage

Combined

Small Cottage Small Cottage

1990 24590 321743 322110 855200 17987

2000 38294 405476 523472 1331032 21154

2010 (end of June)

55916 511621 808959 166724 29323

Average AnnualGrowth Rate(% change)

6.36 2.95 7.55 4.73 3.15

Any precise quantitative estimate of the importance of SSIs in Bangladesh economy is prohibited by non-availability of comprehensive statistical information about these industries at the national level. The latest BSCIC estimates suggest that there are currently 55,916 small industries excluding handlooms. Whatever the correct magnitude, the SSIs are undoubtedly quite predominant in the industrial structure of Bangladesh comprising over 90% of all industrial units. This numerical predominance of the SSIs in Bangladesh’s industrial sector becomes visible in all available sources of statistics on them. Together, the various categories of SSIs are reported to contribute between 80 to 85 per cent of industrial employment and 23 per cent of total civilian employment. However, serious controversies surround their relative contribution to Bangladesh’s industrial output due to paucity of reliable information and different methods used to estimate the magnitude. The most commonly quoted figure by different sources (ADB, World Bank, Planning Commission and BIIDS)relating to value added contributions of the SSIs is seen to vary between 45 to 50per cent of the total manufacturing value added.


Industry

Sub-sector

No. of Units, 1997 No. of Units, 2008

No % of total

No % of total

Rice Mills 12242 61.76 13482 49.92

Bakery 2167 10.93 2765 10.24

Flour Mills 1315 6.63 1718 6.36

Light Engineering Works 1120 5.65 2252 5.88Printing & Publishing 995 5.02 1775 8.34Readymade Garments 757 3.15 2365 8.76Saw Mills 713 3.82 1023 3.79Soaps 143 0.72 351 1.30Plastic Products 74 0.37 725 2.68Automobile Servicing & Repairing 296 1.49 550 2.04Total 19822 100 27006 100

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Growth and Structural Transformation of SSIs

Table (4): SSI sub-sectors Source: Ahmed, M.U., 2008.

In terms of number of establishment, the SSI sub-sector has exhibited notable dynamism, registering reasonably high growth rates over the decade’s of1990s and 2000s. This numerical expansion of the SSIs has contributed towards substantial new business creation in the industrial economy of Bangladesh. Available evidence suggests that the SSIs were responsible for giving birth to 36.24% of the new industrial enterprises during 1997 to 2008. Growth in SSI


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employment seems to have been even better during the period. The dismal performance in value added growth is explained by the weak and faulty data base used by the BBS to estimate the parameters. This phenomenon of gross underestimation of SSI value added resulting from weak estimation procedures used by the BBS has been confirmed by many researchers.

SSI Assistance Policies and Institutional Arrangements

The economic efficiency and overall performance of the SSIs especially in the developing countries are considerably dependent upon macroeconomic policy environment and specific promotion policies pursued for their benefit. It is thus important to examine the policy environment and institutional support within which the SSIs operate. Though promotion of SSI development has been a stated objective of successive governments ever since Pakistan days, the broad macro policy has continued to remain biased against SSI development in many ways. Allocations of public sector investments, trade policies and taxation policies in particular have mostly been anti-SSI development in character and contents. The specific promotional policies and support measures such as extension services, financial and physical support from the public sector agencies and the development partners have also not always been adequately effective. Weak and inefficient management and lack of proper implementation of the various policy support measures have rendered various assistance relate business advisory services, such as training, credit marketing and physical infrastructural facilities much less effective than desired. The private sector efforts through participation of BASIC Bank and selected NGOs (especially GB, BRAC and Proshika) have not so for been adequate especially in SSI promotion. The SSIs because of their structural weaknesses, such as, scale barriers, inefficient management and weak technological capacities therefore need pro-active policies and institutional support in addition to removal of existing policy biases. Though BSCIC has been the key public sector agency responsible for supporting SSI promotion for a long time, its operational efficiency remains weak for a number of structural and administrative and managerial bottlenecks. While “getting the Government out of business” and greater participation of the private sector are now emphasized as key strategies for development, some public sector participation for desirable monitoring of


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selected essential public services such as, effective legal and judicial procedures, commercial contracts, land settling arrangements etc. will still be necessary.

GLOBAL AND NATIONAL CHANGES IMPLICATIONS FOR SMALL SCALE INDUSTRIES

Last decade was a remarkable period in terms of policy changes nationally as well as internationally. Since the beginning of 2000s, policy changes have been taking place at two different levels: global and national. Both have implications for the functioning and performance of SSI in Bangladesh. Globalization refers to free movement of factor inputs as well as output among countries. However, the developments that have been taking place since the early 2000s are mostly reference to the movement of capital, commonly known as Foreign Direct Investment (FDI), and the free movements of goods, particularly from the developed not the developing economics. The liberalization of FDI regimes and the strengthening of international standards for the treatment of foreign investors give foreign firms greater freedom in making internationally location decisions. More than 58 countries have annually introduced changes in their investment regimes during the 2000-2008. In 2001 alone, 70 countries made a total of 150 regulatory changes, of which 147 were more favorable to foreign investors. The increased flow of FDI has led to its greater share in gross capital formation in all industries as well as manufacturing industries (Table 5). The increase was more significant in developing countries. This would have led to intensifying competition in the national as well as international markets for small firms.

Year FDI as a percentage of Grosscapital Formation( All industries )

FDI as a percentage of Grosscapital FormationIn manufacturing

1990 2.3 9


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2000 4.7 14

2008 9.7 22

Table (5): FDI percentage change over the year Source: UNCTAD

CHAPTER THREE (Case Study)

Sample small scale industry: North Khulna Poultry Feed

Personal information: Profullah Chandra Biswas was born in 1970.He is the 3 rd of 5 children of his parents. His father was a small businessman and mother was a housewife. He was a good student in school level. But his education life terminated after HSC examination. He passed HSC in 1989. He doesn’t try for any jobs. He wants to be a businessman from student life. Then he wanted to be self-dependent.

Business History: He started his 1st business as grocery shops in 1990. He faced large amount of loss in the business. He closed the business within 2 years. He remained unemployed about 2 year. In 1993 he started the business of poultry farming. Before the starting the poultry farming there is no poultry farm in the village. He got expected profit from the business. He continued his business about 10 years. In 2003 he started the business on poultry feed. His beginning capital was 30 lakh. 10 lakh is the own and 20 lakh is loan. Now his capital is about TK. 1.2 corer. All time he wants to be self-dependent.

Industry Information: The sample industry name is “North Khulna Poultry Feed”. The industry situated in the Koya Bazar beside Khulna-Shatkhira highway. The area of the industry is medium in size. It is the first poultry feed industry in the Khulna division.

PEST Analysis:

Political View:

Stable political environment


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Maintaining the rules and regulation regarding the business No direct influence of destructive politics in the business Payment of Tax and VATs regularly

Economic View:

Unique business in the area Past experience of poultry farming Cheap Labor facilities Availability of poultry farm in the area Availability of energy

Socio-cultural View:

Encourage people for poultry farming Availability of potential consumers Ensure the availability of poultry feed Offered direct service to the people

Technological View:

New dimensional technology to the area Ready feed though using technology reduce time and cost to make the feed Ready feed ensure the quality demanded by poultry farmer

SWOT analysis:

Strengths:

First ready poultry feed company in the Khulna Division The industry has enough capital to maintain any obstacles BSTI approved product Cheap labor facilities Availability of poultry farms

Weaknesses:

No branch Small market area Low capital compare to other poultry feed company Excess use of generator increase the cost of energy Cost of raw materials are high in recent time


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Opportunities:

Availability of potential customers Reduce the rate of feed at optimum Training system for employees make them more efficient Availability of labor Perfect source of feed for newly established poultry farms

Threats:

There are many ready feed companies available in Bangladesh Stink of the poultry feed is annoying matter for labor Disease like Bird flu, Gambaro etc. of poultry reduce its demand

Capital:

Profullah Chandra Biswas started his business in his self-fund and loan. He took loan from Agrani Bank. His starting capital was Tk.3000000. He started his business in 2003. Now 2011 his capital is TK.12000000.

Market area:

Poultry farmer of Khulna, Satkhira, Bagerhat get the service from ready poultry feed. It has some fixed customer.

Production System:

Production system is technology based. North Khulna poultry feed uses the technology to produce quality feed.

Employees:

There are 45 employees working in the North Khulna poultry feed. There are 35 male and 10 female employers in the industry. Owner Profullah Chandra Biswas offered training facilities to the employees to make them more efficient. As incentives he provides occasional increment, performance reward etc. to the employees.

Management system:

Management system doesn’t use technology to manage the organization. That means management system of North Khulna poultry feed manages the organization manually but efficiently. At present this industry has one computer and they are trying to record data on computer repository.

Competitors:

Aftab Poultry Feed


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Narish Poultry Feed Kazi Poultry Feed Quality Poultry Feed Paragon Poultry Feed etc.

Corporate Social Responsibility:

Free medicine supply Arrange training program

Future Plan:

Expand business Establish a poultry hatchery Generate more capital

Sample small scale industry: Shahdat Rice Mill

Personal information: Shahdat Hossain was born in 1959.He is the 2nd of 3 children of his parents. His father was a Post master and mother was a housewife. He was unable to get the quality education. He dropped after SSC examination. He got the job of security guard of Sonali Bank. After 5 years he left the job. Then he wanted to be self-dependent.

Business History: He started his 1st business as selling books. He didn’t get enough profit. He closed the business within 3 year. In 1990 he started his present business of rice mill. Before the establishing the rice mill there is no rice mill in the village. People have to go long distance for husking rice. So the business got popularity in short time. His capital was very low at first time. His beginning capital was Tk.5000. Now his capital is about TK. 1700000. All time he wants to be self-dependent. He doesn’t get any loan from any sources.

Industry Information: The sample industry name is “Shahdat Rice Mill”. The industry situated in the Dumuria Upazila. It is 5 kilometers away from Upazila sadar. The area of the industry is not very large. It is adjacent to the owner’s house.

PEST Analysis

Political View:

Stable political environment No direct influence of politics in the business Maintaining the rules and regulation regarding the business

Economic View:

Unique business in the area Small capital of owner Cheap Labor facilities


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Availability of energy Industrial area close to owner’s house


First rice mill in the area Paddy to rice service in their hand Reduce processing time and cost of the people Offered direct service to the people

Technological View:

New dimensional technology to the area Rice mill helps to reduce time and human effort Rice mill also ensure the quality of rice

SWOT analysis:

Strengths:

First rice mill in the area The industry has no burden of loan Standard quality of the rice Cheap labor facilities Availability of energy

Weaknesses:

Limited market area Unable to accumulate large capital Excess use of generator increase the cost of energy Industry capacity is limited against huge demand

Opportunities:

High demand in village area Fixed customers Low rice husking rate Training system for employees make them more efficient Availability of labor Generator service available during load shedding

Threats:

There are 4 rice mills available in the area


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Mobile rice husking machine Sound of the rice mill is annoying matter to passerby and others

Capital:

Shahdat Hossain started his business in his own capital. He doesn’t taking any loan from Banks, NGO or other sources. His starting capital was Tk.30000. He started his business in 1990. Now 2011 his capital is TK.1700000.

Market area:

Market area of this rice mill is limited and competitive. Shahdat Rice Mill fulfills only local demand. It has some fixed customers.

Production System:

Production system is both technology and manual based.

Employees:

There are 12 employees working in the rice mill. 4 male and 8 female employers are working in the industry. Owner Shahdat Hossain offered training facilities to the employees to make them more efficient. As incentives he provides occasional increment, performance reward, provide rice, husk etc. without any cost to the employees.

Management system:

Management system doesn’t practice technologically. Management system of rice mill manages the organization manually but efficiently.

Competitors:

Mainly 4 rice mills. The mills are Chanchal Rice Mill, Mir Rice Mill, Bakkar Rice Mill & Beauty Rice Mill.

Mobile rice husking machine


Free rice supply to hunger class people in various occasion/ season.

Future Plan:

Expand capacity Beside rice mill start wheat, turmeric, coconut, etc. processing


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Sample small scale industry: Bismillah Bakery

Personal information: Md. Kabir Hossain was born in Chadpur, Hagigong in 1977.He is the younger of 5 children of his parents. His father was a farmer and mother was a housewife. He doesn’t get much education. He dropped after completing primary school. Then his family came to Khulna. He tried for many businesses.

Business History: He started his 1st business as grocery shops in 1994. He faced loss in the business. He closed the business. He remained unemployed about 3 year. In 1998 he started the business of Bismillah Bakery. He got expected profit from the business. Now the Bismillah Bakery is one of the popular Bakeries in Khulna city. All time he wants to be self-dependent.

Industry Information: The sample industry name is “Bismillah Bakery”. It is situated at Joragate in Khulna. The area of the industry is medium in size It has no branch office..

PEST Analysis:

Political View:

Stable political environment Maintaining the rules and regulation regarding the business No direct influence of destructive politics in the business Payment of Tax and VATs regularly

Economic View:

Situated in central point of the city Availability of raw materials Cheap Labor facilities High demand of bakery and confectionery product in Khulna city Availability of energy



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Encourage people for eating bakery and confectionary product Magnificent potential consumers Ensure the availability of product like biscuit, cake, bread etc. Offer home delivery service to the people

Technological View:

Establishment cost of machinery equipment is very low in here Machinery equipment helps to reduce time and cost Technology helps to attractive shape of product according to customer expectation

SWOT analysis:

Strengths:

Quality Food BSTI approved Efficient Labor Management

Weaknesses:

Loan Rented Factory Lack of Capital

Opportunities:

Demand Low Labor Cost Marginal Profit

Threats:

Competitors Mobile Court

Capital:

The amount of initial investment of the bakery is 50-60 thousand. The current investment of the firm is 2000000. The amount of cash investment is 500000 and the amount of loan is 1500000. The loan was collected from relatives and from the banks. The amount of bank loan is 1000000 taka.

Market area:

Khulna City and its adjacent area.

Production System:


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Production system is technology based. Bismillah Bakery uses the technology to produce quality products.

Employees:

At present there are 20 workers in production process and 5 in selling and distribution and 2in administration. Among them 16 are male and 4 are female. There are 4 vehicles for the distribution of the

products. They have only one selling and distribution center. Md. Kabir Hossain offered training facilities to the employees to make them more efficient. As incentives he provides occasional increment, performance reward etc. to the employees.

Management system:

Management system doesn’t use technology to manage the organization. That means management system of Bismillah Bakery manages the organization manually but efficiently.

Competitors:

Bangladesh Bakery Barisal Bakery Hoogli Bakery Howrah Bakery etc.


There is no remarkable contribution

Future Plan:

To be a leading position in Bakery Market To produce more items Expand home delivery service


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CHAPTER 4(Findings, Recommendations, Conclusion, References)

Major Findings

Last amendment of industrial law define the small scale industry in which the value or replacement cost of durable resources other than land and factory building is in between 0.05 – 15 million taka and employment generation is not more than 50 persons

Growth rate of small scale industries is 36.24% during 1997 to 2008 SSI provide direct employment to about 2 million peoples SSI contribution to GDP 4.5% in 2008 Allocations of public sector investments, trade policies and taxation policies in particular

have mostly been anti-SSI development The increased flow of FDI has led to its greater share in gross capital formation in all

industries as well as manufacturing industries Women participation varies industry to industry. Women participation in Rice Mill is

remarkable 80%. North Khulna poultry feed successfully meeting up the regional demand. Shahadat Rice Mill successfully operated without taking loan Bismillah Bakery ensure the quality product in Khulna City.


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Concluding Remarks

The economic arguments for SSIs should be more broad-based and include emphasize the various special merits intrinsic and specific to their smallness.

A uniform set of definitions should be designed and used by all pertinent agencies (i.e. BBS, Ministry of Industries/ BSCIC, Planning Commission and NBR) with respect to classification of enterprises by size.

A sufficiently large sample survey should be carried out to generate a bench mark national level database both for accurate estimation of the SSI contributions to the national economy and for formulation of comprehensive policies for the sector.

Given heavy reliance of the national economy on the SSIs for generating employment and income especially for the poor in the rural areas, development of entrepreneurship, new business creation and development of intersectional linkages the SSIs should be declared as a ‘priority sector’ and backed by formulation of a proactive SSI development policy.

Within the SSI sector, the fast growing sub-sectors exhibiting greater dynamism and prospects for sustained future growth should be declared as ‘thrust sector’ and supported by adequate incentives on a priority basis.

Develop separate and specialized institutions in three areas: (a) finance, (b) technology and (c) skill development.

North Khulna Poultry Feed should expand business boundary to the whole country. Shahadat Rice Mill should increase capital and production capacity as soon as possible

and expand business to a variety processing industry like wheat, turmeric, coconut etc. Bismillah Bakery should use cross product sale system.


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Conclusion

Thus, to conclude SSI is an instance of a successful story in the development of Bangladesh in general and in small industries sector in particular. Again, the question that remains is what more can be done for better market management through growth with equity as well as to stimulate entrepreneurship, innovation, small enterprise development and growth of the economy of a country like Bangladesh.


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References

Available at

www.cdrb.org/journal/2008/1/2.pdfwww.ilo.org/public/english/iira/documents/.../ smallscale ent.pdf www.shodhganga.inflibnet.ac.in/bitstream/10603/684/7/07_chapter-i.pdfwww.papers.ssrn.com/sol3/papers.cfm?abstract_id=1682186

(Browsing Date 10th December, 2011)Centre for Policy Dialogue (CPD), "Changes and Challenges: A Review of Bangladesh's

Development 2009"

Chowdhury, P. K., Financing of Small-Scale Industries in Bangladesh (Ph.D.Thesis) Chandigarh: Punjab University, 2010, p.4.

Field Survey 14th December 2011 at North Khulna Poultry Feed and Shahdat Rice Mill Dumuria, Khulna and Bismillah Bakery, Joragate, Khalishpur, Khulna.

I & D Analysis, “Role of Small Industry in Economic Development”, vol.3, 2008.

Industrial Policy 2006, Ministry of Industries, Government of Bangladesh

Memorandum of the President of the International Development Assistance and the International Finance Corporation to the Executive Directors on a Country Assistance Strategy of the World Bank Group for the People's Republic of Bangladesh, March, 1998

Pickle, Hal. B and Abrahamson, Small Business Management, New York: John Wiley & Soils, 2004, p.5.

Sharma, S.V.S. Small Entrepreneurial Development in some Asian Countries.- A Comparative Study, New Delhi: Light & Life Publishers, 2009, p.1.


http://www.papers.ssrn.com/sol3/papers.cfm?abstract_id=1682186

http://www.shodhganga.inflibnet.ac.in/bitstream/10603/684/7/07_chapter-i.pdf

http://www.ilo.org/public/english/iira/documents/.../smallscaleent.pdf

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ACRONYMS

ADB=Asian Development Bank

BASIC Bank= Bangladesh Small Industries and Commerce Bank Limited

BBS= Bangladesh Bureau of Statistics

BIIDS= Bangladesh Institute of International Development Studies

BRAC= Bangladesh Rural Advancement Committee

BSCIC= Bangladesh Small and Cottage Industry Corporation

SSI= Small Scale Industry

CPD= Centre for Policy Dialogue

FDI=Foreign Direct Investment

GDP= Gross Domestic Product

GB= Grameen Bank

NGO= Non-Government Organization


Mst 326(Vigilance)

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