MGT601 SME Management Assignment Solution Fall 2012

The development and growth of SMEs is indispensable for steady economic development and same is true for

Pakistan. In Pakistan, the government has realized the importance of development and growth of SMEs for

creating self-employment opportunities and solving many chronic socio-economic problems. Different

measures have been taken for promoting the SMEs in different parts of the countries. Ahan, Aik Nager Aik

Hunar is a recent example which is working as non-profit organization. It is a subsidiary of Pakistan

Industrial Development Corporation (PIDC) and working under the administrative control of Ministry of

Production, Government of Pakistan. The idea is inferred from the One Village One Product (OVOP) model

of Japan and One Tambon One Product (OTOP) of Thailand. On the same model, Ahan aims at promoting

SMEs in rural areas for creating self-employment opportunities with the prime focus on poverty reduction.

The mission, objectives, project details, and Ahan history can be read at http://www.ahan.org.pk/site/. Ahan is

an attempt to solve the socio-economic problems prevailing in Pakistan through promotion of SMEs in rural

areas.

Requirement

You are required to read above mentioned case along with details available on website of Ahan and produce

the answers of following questions.

Q1. Mention at least five potential problems associated with SMEs which can be solved by Ahan. (10 marks)

Solution

1. Product Development and Quality Assurance
We assist crafts persons in improving their product designs & quality and business skills through technical
support and capacity building initiatives.
2. Marketing and Enterprise Development
We assist artisans in development and implementation of marketing strategies focusing on market analysis,
product selection, brand development, design of promotional campaigns, and test marketing & distribution
systems for rural non-farm products of Pakistan.
Crafts persons and artisans are introduced to effective ways of enterprise/business development. AHAN
aims to support employment generation by providing awareness and exposure to entrepreneurs in
marketing their products and managing their businesses.
3. Technology Up-gradation
AHAN provides technical up-gradation in clusters by identifying technology up – gradation requirements
through research. Further, upgraded technology suggestions are setup as pilot projects for replication in
similar clusters. Additionally, AHAN maintains regular interaction with the clusters for provision of hands on
training to encourage transfer of knowledge.
4. Linkages with Microfinance Institutions
Access to finance plays an integral role in progress and development of any business. Rural enterprises are
primarily financed through Microfinance Institutions and therefore require support services to facilitate
interaction between the two. We facilitate networking between rural entrepreneurs and microfinance
institutions to provide support to clusters in obtaining easy credit facilities to meet their business
requirements

Q2. Keeping in mind the framework of Ahan, indicate at least five socio-economic problems which can be

solved by Ahan. (10 Marks)

Solution:

Poverty
One-third of India’s population (roughly equivalent to the entire population of the United States) lives below the poverty line and India is home to one-third of the world’s poor people.
Terrorism
The regions with long term terrorist activities today are Jammu and Kashmir, Central India (Naxalism) and Seven Sister States (independence and autonomy movements). In the past, the Punjab insurgency led to militant activities in the Indian state of Punjab as well as the national capital Delhi (Delhi serial blasts,anti-Sikh riots). As of 2006, at least 232 of the country’s 608 districts were afflicted, at differing intensities, by various insurgent and terrorist movements.Terrorism in India has often been alleged to be sponsored by Pakistan. After most acts of terrorism in India, many journalists and politicians accuse Pakistan’s intelligence agency, the Inter-Services Intelligenceof playing a role. Recently, both the US and Afghanistan have accused Pakistan of carrying out terrorist acts in Afghanistan.

Lack of Education
 Education is essential for the economic development of countries, since the industry of different states requires skilled professionals. When there is lack of education, businesses cannot grow because of lack of expertise among labor. For example, the Indian University Grant Commission indicates that access and quality in education in the country continue to experience problems such as bad infrastructure and lack of professional academics. This results in decline of the economic activity in particular areas such as South Indian provinces.
Cultural and Religious Issues
 The integration of different cultures and religion in a state result in a stable social structure that is favorable for economic development. However, a persistent problem in many countries is the cultural and religious disagreements between social classes. For example, Kazakhs in Russia cannot be integrated in the society because of unwillingness and lack of dialogue between both parties. Leading academics from Agentura.Ru Studies and Research Center indicate that this has led to increased terrorism activity, which is negative for the development of the economy — the state departments exhaust resources in the fight against terrorism and Russian people lack a satisfactory level of security.
Overpopulation
o Overpopulation is a serious socio-economic issues in countries of the developing world, namely Asian states such as China and India. Overpopulation results in reduced opportunities for members of a family, large expenses for the states and hardship in the access to education. Furthermore, overpopulated territories suffer from extreme poverty and lack of resources available to people. This is described by a publication from the Population Reference Bureau, which focuses on the problems that India tackles in relation to overpopulation.
Unemployment
o In his report on South Africa, economist Gary S. Fields from the U.S. University of Cornell indicates that unemployment is a major  economic and social issue. It cases serious economic decline as the  standard of living in countries reduces. Unemployment causes social  inequality since members of the public suffer from a decreased earning  capacity and minimal economic activity.
Corruption
o Corruption is among the most serious issues that bar countries from proper  economic development. In countries with high rates of corruption, the decision-making processes are subordinated to the needs of powerful business organizations and do not serve the public well being. This results in strong separation of classes, inflicts poverty and favors erosion of political values. In its corruption assessment on Ukraine, the U.S. Agency on International Development indicates that the country is among the most corrupt states in Europe because of the influence of powerful business structures that exercise influence over the decision-making process in the state. This contributes for a strong social separation and impaired economic development.

 

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