Small And Medium Enterprises

Problems of Small & Medium Entreprises:

1. Problems in production:
a. Power shortages.
b. Poor quality of raw materials.
c. Poor labour productivity.
d. Lack of production planning & control.
e. Machine breakdowns, poor maintainence, poor quality of machines.
f. Poor industrial relations.
g. Delayed supplies from sub-contractors.
2. Problems in marketing:
a. Low quality/ technical incompetence.
b. Poor marketing efforts.
c. Recession
d. Competition
e. Irregular deliveries
f. Government policies
g. Obsolescence.


3. Problems in input availability:
a. High cost
b. Poor quality
c. National or regional shortage
d. Lack of planning.
e. Overdue payments
f. Uncertain supplies
4. Problems in cost of production (Inputs):
a. High material wastage
b. High inventory costs
c. c. Large order booked at fixed prices in an inflationary market.
d. Increased cost not recovered in selling prices due to faculty costing.
5. Problems in cost of production (Overheads):
a. Large unutilized capacity
b. Heavy borrowings, higher interest charges.
c. Inefficient production.
d. New product development or diversification without corresponding returns.
e. Unplanned capital expenditure.
f. Increased administrative or selling cost.
6. Financial problems:
a. Poor collections
b. High inventory
c. Deliberate diversion of funds
d. Unproductive & flamboyant expenditure
e. Well intentioned but unwise diversion (eg,, unplanned & current funds diversion)
f. Unplanned payments to creditors.
7. Other problems:
a. Differences of opinion, among partners/directors
b. Delay in sanction of loan
c. Changes in govt. policy
d. Delay in disbursement of sanctioned loan
e. Strikes, lockouts, natural calamities.
f. Powercut & power shortage
g. Delay in implementation of the project on account of (b) & (d) above & also on account of variety of reasons, for example shortage of cement or steel
h. Escalation in the project cost & ability of the promoters to raise the required margin money for escalated project cos; & in some cases, due to unsatisfactory appraisal of the promoters ability to raise his share of the project cost even though there was no escalation.
i. Delay in sanction of working capital limits by banks.



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