MANAGEMENT ISSUES IN MSMES

Raghvendra kumar(131206)

K. Anusha (131208)

INTRODUCTION TO MICRO, SMALL AND MEDIUM ENTERPRISE

Manufacturing Sector:

Service sector:

THE MAJOR PROBLEMS CONFRONTING THE SECTOR HAVE BEEN IDENTIFIED AS:

1. Technology obsolescence 2. Human Resources 3. Infrastructure 4. Marketing and Export 5. Increasing Competition 6. Raw materials and Products 7. Credit or Finance

1. TECHNOLOGY OBSOLESCENCE Although technology adoption considerably increased during

implementation of India’s 11th five year plan, it did not show much of effect on msme’s. Barriers to technology:

• Cost: msme’s are not yet convinced about the return on investment in technology adoption & hence are hesitant to invest in technology.

Suggestion: Demonstrate the value using cost benefit analysis & comparisons of growth between traditional approach & IT based approach.

• Low awareness of benefit of technology: msme’s are not aware how technology can help them in their business and to what extent. Hence, they do not want to invest in it.

Suggestion: small businesses which successfully adopted technology should be shown as “success stories”

• Infrastructure: In addition to poor physical infrastructure, lack of broadband connectivity & power outages reinforce the face that manual work is better

Suggestion: Government is planning many initiatives to increase broadband connectivity

Privacy & data security: Many businesses worry storing corporate data online as it may be used wrongly.

Suggestion: Make security more fool proof such that businesses trust enough to adopt technology faster. Lack of skilled manpower: msme’s are struggling to find

the right kind of skilled manpower to operate technological equipments

Suggestions: Technology should be made user friendly so that they can be used confidently.

2. HUMAN RESOURCES

Whenever we think about an HR manager we think about large firms.The managerial skills required for the management of small/ medium firms are not very much different from those necessary in large scale business.The managerial functions of planning, organising, staffing, directing and controlling are common to both.

ISSUES:The business function in SMEs is hindered by constraints such as limited access to resources, and a lack of expertise on the part of the owner/manager.

Suggestion: MSME should try to hire some experts and skilled managers for their compnies.However as the business grows, owner/ manager finds it difficult to manage even small business effectively.

Suggestion: For this, it becomes necessary to increase the number of manpower in the enterprise.

3. INFRASTRUCTURE ISSUE

Infrastructure issue 1. Small and medium scale entrepreneurs find it difficult to

distribute their products to the markets which are located at far off places because of incomplete construction or non-existence of basic roads/ highways

Suggestion: Near by all MSME unite together and force on government to give facilities of road and transportations.

2. Small and Medium scale enterprises face shortage of power supply.

Suggestion: First MSME should try to set up there factories near where electricity present. If not possible they should force on electricity department to give power source.

Government should take care of basic infrastructure such as road. Trade centers, raw material depots, warehousing, tool rooms/testing centers , housing for industrial workers etc

4. MARKETING ISSUES

1. MSME find it very difficult to cope with ever-changing demands/ preferences of consumers, etc.

Suggestion: They should Conduct survey through b. school students. It will benefit for both. And it will be cost effective for MSME.

2. Most of them do not have their own marketing network.

suggestion: They should invest some part of money to strengthen their marketing network. They should not only focus on production.

3. Most of them do not have good knowledge and/ or experience of various marketing concepts and strategies.

suggestion: They should send their children to b. school and try to hire competent and skilled mangers.

4. They also lack the resources and funds needed for effective sales promotion.

suggestion: They should sponsor events and festivals .

5. Due to their weak bargaining power and some times urgent needs of funds they sale there product at very less price.

suggestion: similar type to MSME should unite and they should fix minimum cost for each product.

5. INCREASING COMPETITION ISSUE

Big companies many times try to remove the small business from the market by selling there product at low cost.Suggestion: If any small business see any unhealthy competition in the market they should inform to Competition Commission of India(CCI) immediately.

6. RAW MATERIALS AND PRODUCTS

1.Non-availability of quality raw materials on a timely basis in an adequate quantity .

Suggestions- some of the enterprises can start raw material manufacturing together (backward integration)

2. No benefits of bulk buying Suggestions- since individual enterprise could not take

benefits of bulk buying so similar type of enterprise should purchase products at bulk amout.

National Small Industries Corporation (NSIC) and State Small Scale Industries Development Corporations are involved in making efforts for providing some raw materials to MSME sector.

State Directorate of Industries distributes scarce raw materials to small units.

They have set up depots for distribution of raw materials to small scale industries (SSIs).

The Central Government has introduced a buffer stock scheme to ensure availability of scarce raw materials to this sector.

Raw Material Assistance Scheme of NSIC aims at helping small scale industries by way of financing the purchase of raw material (both indigenous & imported.

SOLUTION TO REDUCE RAW MATERIAL SHORTAGE IN

MSMEs

7. CREDIT OR FINANCE ISSUES

They are often unable to procure adequate financial resources for the purchase of machinery, equipment and raw materials as well as for meeting day-to-day expenses.

Government work:

a. Priority Sector Lending

b. Small Industries Development Bank of India (SIDBI)

Suggestion: MSME should apply for loan earlier, they should keep enough time in hand, because these work may take some time.

Show proper document and planning strategies to SIDBI .

CONCLUSION

MSME can grow if they utilizes all the available resources and government schemes along with follows our suggestions.

Thank You