MGT601

SME MANAGEMENT
Lesson 13

Short and Medium Term

Issues for SME Policy
Formulation – III
Chapter Learning Objectives
 This lecture is continuation of
defining the issues for making a
SME policy.
 This lecture deals with the short and
medium term issues.
 The vital issues of gender
development and environmental
protection are also discussed in
detail.
Market and Industry Information
 Access to market and industry
information is one of the keys to
develop successful business
strategies.
 Business and trade associations are
able to provide their members with
such services.
Market and Industry Information…..

 Associating with foreign

countries institutions.
 To establish links and obtain
information from foreign
markets.
Market and Industry Information…..

 SME belong to business and

industry association.
 SME (12%) perceive their
associations to be a source of
information on new
developments in their fields of
business operation.
Monitoring Developments
Harmonizing Enterprise size Categories
Pakistan has no across the board
legal definition of SME. This makes is
extremely difficult to monitor the
development of our SME economy
and to establish benchmarks against
other countries in order to devise
areas of intervention and support.
Continued……
 Various government departments
and public-sector agencies have
adopted their own definitions.
 A number of current definitions are
based on capital standards since
this influences the pattern of fund
raising in the formal and informal
market by SME.
Continued…….

Many stakeholders consider

enterprises with 100 or more
employees as large, and
enterprises with less than 5
employees as micro.
Continued……..

Our statistical system

classifies enterprises with
more than 10 employees as
large, and the State Bank of
Pakistan considers those
with more than 250
employees as large.
Measuring Our Success

Public sector resources are as

scarce as private sector resources,
and we need to ensure that they
are being used in a most efficient
way so as to be able to create and
maintain sustainable support
structures for SME, which are able
to perform in the long run.
Continued…….

Government have no mechanism in

place for measuring our success. In
fact, we do not even have a criteria
established by which we are able to
determine our success as a nation
in fostering SME development. And
we are not able to correctly state
what the Government is spending
on SME support annually.
Continued……

Our present “system” of support is

incoherent. While division of labor
with diverse stakeholders is
necessary condition for obtaining a
maximum reach, it is also a perfect
ground for the duplication of
activities and wastage of resources.
SME as a Medium-Term Channel for
Other Objectives

It is common practice in many

countries to make use of SME in
order to further specific
development objectives as, for
example, sustainable or
equitable development.
Continued…….

SME constitute the

overwhelming part of the
economy. Currently, we are
not making use of this
channel for promoting the
development of our country.
Issues relate to SME competitiveness

Gender Development
Men and women are the two
genders of any society
constitutes roughly half of the
population, and Pakistan is no
exception.
Gender Development……
 People of both genders embody not only
labor force, but also knowledge and
creativity, which may be mobilized, to
achieve economic ends.
 Discarding either of the genders,
therefore, implies foregoing the potential
benefits, which arise from mobilizing the
respective human resources for
development.
Gender Development……

Pakistani women have been

engaged in the production process
for ages. Their participation in the
economic activities in the modern
society has also progressed beyond
agriculture into the local market
economy.
Gender Development……
Women are increasingly migrating to
urban areas for employment in a
range of cottage industries, such as
carpet weaving, textiles and
handicrafts. In search for wage
employment, women are moving
into small business and self-
employment ventures thereby
creating many formal and informal
opportunities for work.
Problems in the development of gender

The business environment for

women in Pakistan reflects a
complex interplay of many factors
made up of social, cultural,
traditional and religious elements.
These have taken shape over many
centuries; are anchored in
patriarchal system and are clearly
manifested in the lower status of
women.
Problems in the development of
gender….

The gender bias is rigid and deep-rooted

as it draws legitimacy from the
perpetuation of a traditional mind-set,
established rituals and a firm belief
system. It has conclusively been shown
that women business owners encounter
more obstacles, and face more risks,
financially, socially, economically,
culturally and legally than male business
owners face.
Government has taken steps for
Gender Development

The Government of Pakistan is well

aware of the potential of the women
in our society and the contribution
they can make towards economic
development. Women are
continuously being encouraged to
enter the business stream of the
country and are being provided
incentives.
Issues relate to SME competitiveness
Environmental Issues

Environmental issues are most

frequently a result of the interaction
between human activities of
production and the environment.
Under fierce competitive pressure in
the market economy and as part of
the coping strategy when faced with
difficulties to cover basic needs,
enterprises and individuals are
creating environmental issues.
Continued…….

One of the economic root causes for

environmental damages are
externalities, which require
appropriate government
intervention, it is frequently
overlooked that there are many
economic gains, which may be
achieved from producing in an
environmentally friendly manner.
Continued…..

Reducing material waste can be one

way of reducing cost. Saving
resources such as water and energy
does not only generate benefits at
the national level but may translate
into competitiveness and thus
economic gain at the enterprise
level.
Continued…
There is also a direct link between the
effectiveness of the technology transfer
and the stabilization of the global climate
change and natural resources depletion.
Major constraints to effectiveness lie in
the high transaction costs associated with
the development of the capacities and
capabilities to manage and generate
technological change.
Environmental Development
Many OECD (Organization for Economic
Co-operation and Development) countries
make use of channel of SME promotions
in order to achieve improvements for the
environment. For example, special credit
lines may be provided in order to
encourage the adoption of
environmentally friendly technologies.
Specific training courses are being offered
to SME on waste reduction.
Continued……

ISO 14000 is actively being

promoted in the European Union as
one way of combining
environmental concerns with quality
and thus competitiveness. How may
we best use our current and future
SME support structures in order to
achieve positive effects.
 Thanks you
Happy Learning,
Keep Learning