1. CHALLENGES FOR SMALL ENTERPRISES AUTHOR: ALPANA TREHAN CHAPTER-9 © 2011, Dreamtech Press :: Chapter 9 1

2. Managerial ProblemsFinancial ProblemsMarketing ProblemsHuman Resource ProblemsRaw Material-Related ProblemsTechnological Problems PROBLEMS FACED BY SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 2

3.  Most of the SSEs are not managed effectively and efficiently  SSEs generally lack managerial capacities to successfully implement new opportunities  SSEs also have an insufficient number of trained and experienced employees as they cannot pay high salaries  The different Government initiatives to overcome managerial problems are:  Management Training Programs  National Institute for Micro, Small and Medium Enterprises  National Institute for Entrepreneurship and Small Business Development, Noida  Indian Institute of Entrepreneurship (IIE), Guwahati MANAGERIAL PROBLEMS FACED BY SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 3

4.  SSEs are unable to borrow at reasonable interest rates due to their low goodwill  For rejection of consignment and delay in payment small enterprises need to close their operations  The Government initiatives to overcome financial problems are:  Priority Sector Lending Policy  Credit Guarantee Cover Fund Scheme  Policy Package for Stepping up Credit to Small and Medium Enterprises (SMEs)  Small Industries Development Bank of India (SIDBI)  State Financial Corporations (SFCs) and State Industrial Development Corporations (SIDCs) FINANCIAL PROBLEMS FACED BY SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 4

5.  Dependency on outside sources tends to raise the cost of their products and services  SSEs, being unaware of marketing concepts and strategies, hesitate opting for efficient marketing techniques  Small scale entrepreneurs do not accurately understand what kind of products are in actual demand in the market  The Government initiatives to overcome marketing problems are:  Consortia and Tender Marketing Approach  Single Point Registration for Government Purchase Scheme  Exhibitions and Technology Fairs  Facilitation in Export of Products and Projects MARKETING PROBLEMS FACED BY SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 5

6.  SSEs generally face difficulty in acquiring and retaining employees with proper knowledge and skills  Small enterprises cannot offer equal compensation to employees  The Government initiatives to overcome human resource problems are:  Various training programs, seminars, and workshops to bridge the skill gaps of employees in SSEs conducted by NSIC  Some of the institutes focusing on human resource development of SSEs :  Indian Institute of Entrepreneurship(IIE), Guwahati  Fragrance and Flavour Development Centre, Kannauj  National Institute for Micro, Small and Medium Enterprises(NIMSME), Hyderabad HUMAN RESOURCE PROBLEMS FACED BY SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 6

7.  Non-availability of raw materials on a timely basis or insufficient quantity of raw materials  Scarcity of basic raw materials needed for daily production  The Government initiatives to overcome raw material-related problems are:  NSIC and Small Scale Industries Development Corporations  Raw Material Assistance Scheme RAW MATERIAL-RELATED PROBLEMS FACED BY SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 7

8.  Unable to use the latest techniques of production due to lack of capital  The productivity and quality of products of SSEs tends to be low  The Government initiatives to overcome technological problems are:  ISO 9000/14001 Certification Fee Reimbursement Scheme  National Manufacturing Competitiveness Program (NMCP)  Credit Linked Capital Subsidy Scheme (CLCSS) TECHNOLOGICAL PROBLEMS FACED BY SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 8

9.  Entrepreneurship Development Programs (EDPs)  Rajiv Gandhi Udyami Mitra Yojana (RGUMY)  Scheme of Survey, Studies, and Policy Research  Micro, Small, and Medium Enterprise Development (MSMED) Act, 2006  Reservation Policy of Government ROLE OF CENTRAL AND STATE GOVERNMENTS IN PROMOTING SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 9

10.  IPR 1948  IPR 1956  IPR 1977  IPR 1980  IPR 1990  New Small Enterprise Policy (NSEP), 1991  Comprehensive Policy Package for Small Scale Industries and Tiny Sector 2000  Industrial Policy Package for SSEs2001-02  Industrial Policy for SSEs 2003-04  Policy Package for SSIs 2004-05  Policy Package for SMEs 2005-06 INDUSTRIAL POLICIES FOR SMALL ENTERPRISES © 2011, Dreamtech Press :: Chapter 9 10

11.  Small Scale Enterprises (SSEs) come across difficulties in every stage of their operations.  In case of SSEs, they are often unable to obtain adequate financial resources for purchasing equipment and machinery, procuring raw materials, and meeting day-to-day expenses.  Recognizing the importance of SSEs in the economic growth of the country, the Indian government has formulated several policies and schemes for the development and promotion of SSEs. RECAP © 2011, Dreamtech Press :: Chapter 9 11