Small Scale Business NEW

8/3/2019 Small Scale Business NEW

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PRESENTATIONPRESENTATION

ONON

PROBLEMS AND OPPORTUNITIESPROBLEMS AND OPPORTUNITIES

OFOF

SMALL BUSINESSSMALL BUSINESS

SUBMITTED TOSUBMITTED TO ::-- SUBMITTED BY :SUBMITTED BY :--

Mr.Mr. PankajPankaj GoelGoel AnuAnu TayalTayal

NavdeepNavdeep SharmaSharma


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CONTENTSCONTENTS

Introduction to Small BusinessIntroduction to Small Business

Problems of Small Business in IndiaProblems of Small Business in India

Opportunities for Small Business in IndiaOpportunities for Small Business in India

Indias rapidly growing sectorsIndias rapidly growing sectors

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INTODUCTION TO SMALL BUSINESSINTODUCTION TO SMALL BUSINESS

Small business enterprises play an important role in the industrialization ofIndia. They provide large scale employment and have a comparativelyhigher labour capital ratio. They need a shorter gestation period, lowerinvestments and ensure a equitable distribution of income and facilitate aneffective mobilization of resources of capital and skill.

According to GOI-2000,

An undertaking having an investment in plant andmachinery of not more than Rs.1 cr.

The GOI has also given an important place to small business in frameworkof Indian Economy. As a result, Small business enterprises have achievedan impressive growth in number of units over the period of time.


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PROBLEMS OF SMALL BUSINESSES IN INDIAPROBLEMS OF SMALL BUSINESSES IN INDIA

The growth of entrepreneurship in India , directly or indirectly depends

upon the growth of small business units .The small business enterprises

have their own set of problems which are faced by them. Previously such

problems were not considered seriously, but GOI is keen on providing

solutions to such problems through various departments.


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Problems

ofsmall

businesses

Problems

related to

Marketing

Problems

related to

Production

Problems

related to

Finance

Problems

related to

Human

Resources

Other

Problems


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PROBLEMS RELATED TO MARKETINGPROBLEMS RELATED TO MARKETING

Poor product quality :- There is generally low demand of the products

produced by small business units due to poor quality. There are various

reasons for low quality

* Lack of quality consciousness

* Dependence on manually operated machines

* Lack of skilled labour workforce

* Lack of technical education

* Insistence of buyers for low price

P

oor sales promotion :- Many small business units do not want to spendany amount on sales promotion activities such as advertising ,after sale

services etc due to lack of awarness .


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Contd..Contd..

Absence of suitable marketing channels :- Marketing problems of these

units vary not only by size of these units but also by the pattern of

distribution channels necessary to reach the customer.

Lack of marketing opportunities :- Small units set up in rural and backword areas face the problem of finding market opportunities within local

areas and have to search for outlets elsewhere for which they do not have

adequate resources.


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PROBLEMS RELATED TO PRODUCTIONPROBLEMS RELATED TO PRODUCTION

Shortage of raw material:- Non-availability of quality raw materials on atimely basis in an adequate quantity is one of the main problem faced bythese units. Sub-Standard quality of raw material is supplied to them.

Obsolescence of Technology being used :- Majority of small scale units useold techniques of production & outdated machinery and equipment. Theyare not able to afford new machines and equipments and therefore not inposition to use the latest techniques of production. Therefore productivityand quality in small scale units tends to be low while unit cost ofproduction is generally high.


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Contd..Contd..

Gestation period:- Means gap between establishment and production of a

unit. Many small scale units having long gestation period because there is

procedural delay in sanctioning the loan, power connection, shortage of

raw material etc.

High production cost:-Two main inputs of cost of products are labour and

raw material. Various problems related to raw material and labour are

* Poor quality of material

* Insufficient supply of raw material

* High transport cost* Unskilled labour

* labour strikes

All these problems are result in low productivity and high production cost.


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Contd..Contd..

Electricity:- Power is major input to many industries and its shortage can

cause failure in the industry. Many small scale units have become sick and

have closed down due to

* Delay in getting new connection

* Inadequate supply

* High costs


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PROBLEMS RELATED TO FINANCEPROBLEMS RELATED TO FINANCE

Inadequacy of funds:- Finance is one of the critical inputs for growth and

development of industry. Inadequate access to credit is a major problem

facing small units. They are unable to procure adequate financial resources

for purchase of machinery, equipments as well as for meeting day-to-day

expenses. Due to their low goodwill ,little fixed investment ,they find itdifficult to borrow at reasonable rates.

Hurdles in getting loan sanctioned:-

* Personal qualification of entrepreneur

* Firms accounting policy* Size of enterprise

* Nature of product & market prospects etc


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Contd..Contd..

Pattern of repayment of loan:- The amount of installment and repayment

schedule are fixed by financial institutions. If a unit fails to repay the

installment then the institution can take serious action.

Improper utilization of funds:- If a unit is not able to manage its fundseffectively it may get sick.

Inappropriate financial structure:- In small units, the usual course of

sickness is due to under capitalization, inappropriate finance mix and high

cost of capital. Many small scale entrepreneurs lack knowledge of thesefacts.


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PROBLEMS RELATED TO HUMAN RESOURCEPROBLEMS RELATED TO HUMAN RESOURCE

Non-availability of skilled man power:- As small units located in back-

ward areas may get abundant supply of unskilled labour. Professionalmanagers, engineers, qualified staff is not willing to work in a backward

places. The enterprise have to pay more to retain the skilled labour force.

Labour related problems:- Labour related problems are absenteeism, high

wage rate, training cost, indiscipline etc. In various small units theseproblems have led to low productivity, increase in wastage, high maintains

cost, deterioration of quality results in decline profitability of units.

Less no. of employees:- The organization structure of small units is simple

due to presence of few employees. The owner himself manage all theactivities. However the business grow, the owner finds it difficult to

manage all the activities. For this, it become necessary to increase the

amount of manpower in enterprise.


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OTHERPROBLEMSOTHERPROBLEMS

Infrastructure facilities:- Adequate infrastructure facilities are necessary for

the overall development of business. But the small scale units face various

problems related to this, that are

* Shortage of power supply

* Lack of proper airways and waterways

* Non-existence of basic roads and highways

* Small units associated in rural areas find it difficult to communicate with

other regions due to lack of telecom network.

Lack of technology up gradation:- The technology use by small units isgenerally not globally competitive. Without technology up gradation these

units not survive in global market.


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Contd

Low level of ICT adoption:- Information and Communication

Technologies (ICT) adoption by Indian small enterprises is very lowcompared to advanced countries. The main reason for low adoption is the

small units are not technology savvy and are resistant to change. Without

ICT adoption they are unable to get the various advantages which these

technologies can bring to a small business enterprise.

Research & Development:- Indias small businesses are not inclined

towards research & development initiatives. There is no proper linkage

between academic institutions, research and development institutions and

industry.


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Contd..Contd..

License system:- Obtain license from authority is other problem faced bysmall units. A lot of time and energy is required. This is a major handicapwhich hinders the growth of small units.


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OPPORTUNITIES FOR SMALL BUSINESSESOPPORTUNITIES FOR SMALL BUSINESSES

The Government of India has undertaken several reforms to attractThe Government of India has undertaken several reforms to attract

more investors to the small business sector in India. The Indianmore investors to the small business sector in India. The Indian

business opportunities is huge in possibly in every sectorbusiness opportunities is huge in possibly in every sector

Financial servicesFinancial services

TelecomTelecom

Auto MobilesAuto Mobiles

MediaMediaITIT

Real Estate etc.Real Estate etc.

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FAVOURABLE BUSINESS OPPORTUNITIES INFAVOURABLE BUSINESS OPPORTUNITIES ININDIAINDIA

Improvement in the infrastructure and intellectual capital.Improvement in the infrastructure and intellectual capital.

Progressive tax reforms.Progressive tax reforms.

Tailor made policies as per investor requirements.Tailor made policies as per investor requirements.

Massive young skilled work force.Massive young skilled work force.

Increasingly Indians have become more brand conscious,Increasingly Indians have become more brand conscious,

resulting in increased growth for retail sector.resulting in increased growth for retail sector.

Introducing the concept ofPublic Private Partnership(PPP).Introducing the concept ofPublic Private Partnership(PPP).

More mergers and acquisitions to build brand value of theMore mergers and acquisitions to build brand value of the

individual Co.s and in turn creating the Indian brand value.individual Co.s and in turn creating the Indian brand value.

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Contd..Contd..

Indias competitive advantage in Information Technology can beIndias competitive advantage in Information Technology can be

used to enhance productivity in industries.used to enhance productivity in industries.

Availability of huge pool of technical manpower .Availability of huge pool of technical manpower .

India is rich in natural resources and self sufficient inIndia is rich in natural resources and self sufficient in

agriculture.agriculture.

A well established banking system consisting of public andA well established banking system consisting of public and

private banks and other financial institutions.private banks and other financial institutions.

The capital market in India are one of the fastest growing marketThe capital market in India are one of the fastest growing marketin the world, attracting huge investments from FIIs.in the world, attracting huge investments from FIIs.

India is a well established democratic country, with free andIndia is a well established democratic country, with free and

fair judiciary.fair judiciary.

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INDIAS RAPIDLY GROWING SECTORSINDIAS RAPIDLY GROWING SECTORS

Indian Retail IndustryIndian Retail Industry

Indian Software IndustryIndian Software Industry

Indian Pharmaceutical IndustryIndian Pharmaceutical Industry

Indian Automobile IndustryIndian Automobile Industry

Hospitality Industry in IndiaHospitality Industry in India

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Indian Retail IndustryIndian Retail Industry

The Indian retail industry is the largest among all the

industries, accounting for 10% of the countrys GDP and

around 8% of the employment.

The India Retail Industry is gradually inching its way towardsbecoming the next boom industry.

Indian retail is expected to grow 25 per cent annually.

The future of the India Retail Industry looks promising with

the growing of the market, with the government policies

becoming more favorable and the emerging technologies

facilitating operations.

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Indian Software IndustryIndian Software Industry

The software industry is the main component of the

information technology in India.

Presently there are more than 2000 software firms in the

country. It is expected that the Indian software industry will generate a

total employment of ten million people by 2012

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Hospitality Industry in IndiaHospitality Industry in India

The successful growth story of hospitality industry in India

seconds only to china in Asia pacific.

Hospitality segment, just like many other segments in India is

booming.

The world travel and tourism council, India data says, India

ranks 18th in business travel and will be among the top 5 in this

decade.

Hospitality industry in India is set to grow at 15% a year

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Indian PharmaceuticalIndian PharmaceuticalIndustryIndustry

A highly organized sector, the Indian pharmaceutical industry

is estimated to be growing at about 8 to 9 percent annually.

The Indian pharmaceutical industry ranks very high amongst

all the third world countries, in terms of technology, qualityand the vast range medicines that are manufactured.

The Pharma industry in India is one of the major foreign direct

investments encouraging sectors

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Indian Automobile IndustryIndian Automobile Industry

Indian automobile industry has grown leaps and bounds

since 1898,a time when car had touched the Indian

streets for the first time.

Automobiles industry of India can be broadly classifiedunder passenger vehicles, commercial vehicles , three

wheelers and two wheelers.

Some of the leading names in Indian automobile industry

Maruti, Tata Motors, Mahindra & Mahindra, Hero.

The auto mobile sector of India is the seventh largest in

the world.

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CONCLUSIONCONCLUSION

The growth & development of small scale units has been constrained byThe growth & development of small scale units has been constrained by

several factors including technological obsolescence, inadequate & irregularseveral factors including technological obsolescence, inadequate & irregular

supply of raw material, imperfect knowledge of machinery, constrains ofsupply of raw material, imperfect knowledge of machinery, constrains of

infrastructure facilities, lack of managerial skills, low quality products andinfrastructure facilities, lack of managerial skills, low quality products and

high production cost. Instead of this Government of India undertakehigh production cost. Instead of this Government of India undertakeseveral reforms which include provisions of training facilities , availabilityseveral reforms which include provisions of training facilities , availability

of machinery, special bonus for setting small business in backward areas,of machinery, special bonus for setting small business in backward areas,

tax deduction for small scale business.tax deduction for small scale business.

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