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MGT601 - SME Management - Lecture Handout 19

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Chapter deals with post and field this problems faced by a new concern.

  1. Acquisition of land;
  2. Construction of building and other aspect of civil works;
  3. Acquisition of machinery and its installation;
  4. Preliminary work about the sources of supply of raw materials , labor and managerial inputs;
  5. Prospecting about marketing;
  6. Preliminary work regarding sources of working capital;
  7. Coordination problem connected with the acquisition of different kinds of assets or completion of jobs;

Unless care is taken to ensure proper sequencing of different activities, the project would have cost over-run and/or time over run. Here in some kind of PERT analysis could be quite helpful.

Post Operative Problems of a New Enterprise

Several problems can create hurdle to start any enterprise-whether small or large. They need not always arise but an awareness regarding them could enable their timely avoidance or prevention. Below are given some of the post-operative problems.

  • Lack or absence of profits.
  • Experience factor:
    • Unfamiliarity or lack of experience in product or services line.
    • Lack of experience in management. There is a vast difference between being a machinist and being able to manage a machine shop.
    • Over-concentration of experience e.g. focusing only on the area of interest say, sales, finance, production etc and neglecting others.
    • Incompetence of management.

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MGT601 - SME Management - Lecture Handout 11

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We are dealing with the short and medium term issues for SME policy formulation. In fact this whole issue is inter-related in lessons No 10,11,12,13 and14.

Labor Issues

Likewise, the intensity of the regulations is the second most important reason for firms to drift into the informal economy all over the world. Labour Laws and regulations in Pakistan14 are considered to be one of the most complicated areas with which any business enterprise deals. The present set of the labor laws was the result of checkered initiative of various governments to create a healthy business environment for the labor. Consequently, enterprises have to deal with fifty six (56) labor laws with some of them being industry specific. The existing plethora of labor laws has made compliance impossible for the enterprises due to their inherent inconsistencies. Numerous labor inspections under these laws are yet another impediment that retards the growth of SME.

The labor market dynamics have changed considerably over the years, a higher degree of adaptability and flexibility along with Labor market security, including protection against arbitrary loss of employment, reductions in income and healthy work practices are essential requirements of new environment. Besides, the condition for compliance for international labor standards under the global economic system is another issue.

Taking into account the need of labor market and employers, the Ministry of Labor and Manpower introduced an employment security regime. The new labor policy initiatives is aimed at creating a favorable environment for facilitating industrial promotion and revival along with legislative and structural changes to bring in an environment to devoid of restrictive labor practices, but protecting the rights and interest of the workers.

It was proposed that existing labor legislation be simplified and rationalized into six basic laws. In addition, for promoting bilateralism among government employer and employees, government established a forum Workers Employers Bilateral Council of Pakistan (WEBCOP). The government is also working in the development of Labor Inspection Policy under the SME Sector Development Program to reduce the interface of government officials with businesses without compromising on the unhealthy work practices. The only issue highlighted thus far through direct interaction with SME is that of co-ordination. The business and labor community at large has been supporting the reforms.

Read more: MGT601 - SME Management - Lecture Handout 11