Discuss about the Challenge Faced By Small And Medium Sized Enterprise.
The research is based on the strategic challenges which are faced by the small and medium sized enterprises into the cottage industry in Tobago. Small and medium sized enterprises (SME) such as cottage industry faces challenges when they are approaching products providers for project fixed capital asset as well as market standards (Regnier 2017). The cottage industry is one that runs by individual with help of the family members with little capitals. Into the cottage industry of Tobago, the industry is facing strategic challenges related to lack of credit facilities, higher cost, old design and machines, insufficient skilled labor, undeveloped market and scattered distribution of products (Bakht and Basher 2015). SME are faced challenges for the international marketing standards. The cottage industry is developed out of need for additional sources of income, because of relative ease to acquire required raw materials to set the industry. The products of the cottage industry satisfied the local demands.
The issues into small scale and cottage industries are divided into two groups such as internal and external. The external problems into cottage industry are availability of power, communication and infrastructural facilities (Karadag 2015). The internal problems are organizational structure, training and distribution of products. The internal problems coupled with the external problems put threat into business operations of SME.
The research will provide support to SME to analyze the strategic challenges in the cottage industry. It examines the challenges which reduce the growth of the industry as small and medium sized enterprises.
Following is the research question for this research study:
The research aim is to analyze the strategic challenges into the small and medium sized enterprises which affect the business operations of cottage industry. It assesses the challenges which are faced by SME towards the international marketing standards in Tobago. The research provides the solutions to the challenges so that the industry can meet its growth objectives and increase its sales.
Following are the research objectives for this research study:
The literature review is describing the aspects which are connected to the study of the strategic challenges which are faced by SME in getting of credit in Tobago. The literature provides some definitions related to SME which is being followed by characteristics of cottage industry SME. In this literature, the researcher discusses the contribution of SME towards the economic development along with growth. It also analyzes the strategic challenges which are faced by SME cottage industry. It also provides the solutions against the challenges which are identified in this section.
Eniola and Entebang (2015) stated that SME is defined into two ways: one is based on number of employees in the organization and second is organizational fixed assets. According to Ogechukwu, Akinlo and Goldman (2017), the size of the enterprise employment is considered as key significant criteria in cottage industry. When SME is defined based on fixed assets, the definition becomes outdated due to depreciation into exchange of rates.
The organizational sector is engine of economic growth; therefore it leads to increase in growth of the business. Karadag (2015) discussed that economic development is a process for economic transition involved transformation of economy plus income per head. () stated that the researchers observed that SME are enhancing competition as well as entrepreneurship which provides direct governmental support which can boost the economic growth along with organizational development.
According to Meath, Linnenluecke and Griffiths (2016), the SME are facing challenges mostly when they are compared with the large scale industries. Into SME, external uncertainty influenced the industry most. Therefore, the market of SME is unpredictable due to which uncertainties becomes a problem for small organizations. The challenges which are faced by SME in cottage industry are as follows:
Lack of credit facilities: As the cottage industry is SME, therefore they have lack of financial facilities (Hillary 2017). The commercial banks are not interested to provide finance to this sector.
Higher transportation cost: The challenge is that there is non availability of the transportation networks in the rural areas. It affects the movement of the SME products from one region to another (Li et al. 2016). It results into increasing the cost of transportation, damage of the products at the time of transportation and both of them contributes to lower economic return.
Old design and machines: The SME are faced of challenges into production due to old machineries. SME such as cottage industry is not able to compete with the products for larger scale industries (Zhou 2016). Due to aged and old design of products, the products are not able to meet with the modern demand of the customers.
Insufficient skilled labor: The labors those are working into the cottage industry are not having required skills to work as per organizational requirements (Du et al. 2015). They do not have knowledge about the products, how to sell the products and use of marketing strategies to increase the market sales.
Undeveloped market: Due to undeveloped market in Tobago, the cottage industry is facing of challenges related to marketing of the products. There is lack of organized market for the industry (Bouazza, Ardjouman and Abada 2015). It is based on middleman to sell the products. In case the market is undeveloped, the products are remained untapped.
Scattered distribution of products: The strategic challenge which affects the marketing of the products in this region are scatted distribution of the products that is uneconomical along with incompetent (Krishnan and Scullion 2017). It results into distress of sale of the surplus products into the local market of Tobago as it is not able to attract the outside buyers.
The SME plays a key role into the national economy, and the cottage industry should take step to develop and promote their growth in the market of Tobago so that the customers should know about their products (Meath, Linnenluecke and Griffiths 2016). The opportunities into cottage industry require a holistic approach to develop the economy of Tobago. Following are the solutions against the strategic challenges which are identified in the cottage industry:
Development of market identity: The cottage industry should develop their market identity in the market of Tobago by working on the graphic designer; logo developed which becomes a registered brand name of the organization. With increase into production of the commodities, it is required for the industry to systematically market the products as well as commodities (Lacity and Reynolds 2014). The brand identity is required to establish market for different products as it is difficult for customers along with producers to get high identity. Both brand name as well as logo helps to identify the products.
Promotion of products: The logo which is developed has firstly being promoted among the community and customers (Boso et al. 2016). The products sold are marketed with the logo. The products should be promoted through social media, offline advertising, workshop, conferences and exhibitions.
Establish a market infrastructure: The cottage industry should provide with retail outlet, storage centre as well as cold storage for streamlining the supply chain activities. The data are collected from market as well as material availability and monitoring reports to help in effective distribution along with marketing of products (Valentim, Lisboa and Franco 2016). The retail outlet provides a platform to the community for selling of products to rural along with urban customers.
E-marketing: It is done by promotion of the products under the governmental websites. It provides such a platform to showcase the products that enables the buyers to contact with the community for bulk businesses.
Transportation linkage: There should be better road connectivity which will reduce the cost of transportation along with transportation time for the goods. The road connectivity should transport the surplus products from one place to another (Herbane 2015). The organization is facilitated to purchase of vehicles by the community groups that help into transportation of materials. The transportation vehicles are carried out produce from the growers to the marketplace.
A well planned design research and methodology help the researcher to design along with redesign of the products. A high quality of research methods is required for this research study. Proper research approaches along with techniques are considered for this study to gather data on the strategic challenges which are faced by SME in cottage industry. SME should set accurate goals for research to limit the research theme in order to suit with the case. Taylor, Bogdan and DeVault (2015) emphasized that the research aims should be clear for conducting the study with use of proper research methods.
The research study is based on epistemology which includes of theory of knowledge based on the selected research methods with scope among belief as well as opinion. Ontology helps to set the concepts as well as categories into the subject area. Positivistic paradigm is used in this particular study to assume that real world objects are apart from human knower. The study is totally based on objective reality. Quantitative data technique is used to perform the statistical analysis of the collected data. Inductive approach is used where there are uses of theories as well as observations as the research methods.
This research is based on descriptive type of investigation. This research design is such a study for depicting the participants into proper way. It describes people those are take part into the study. The investigation and data collection for this particular study is based on survey using online questionnaires (Bryman and Bell 2015). It aims to provide light on the strategic issues of SME through process of data collection which enables to describe the situation properly. This study provides different aspects of the situation.
Data collection: In this particular study, primary data collection method is used where an online survey is done.
Data analysis: Quantitative data analysis is used to collect information from various sources such as observation.
Matthews and Ross (2014) discussed that data collection is such a process for collecting information from relevant sources to answer the research question and find answer to the research problems and finally evaluate the research outcomes. Collection of data is required aspect of this study. There are two types of research data collection method such as primary and secondary methods. The data are collected is questionnaire through interview.
The data collection is based on internet based research. The objective of questionnaire is that a series of printed open ended questions are marked by the researcher and in the interview, the questions are asked to the participants. The questions should be based on selected research topic. This data collection method is quicker but also provides fewer details (Bryman and Bell 2015). The questionnaires are made use of checklist. It also helps to quantity the attitudes plus behaviours of people.
The objective of interview is face-to-face interaction between the researcher and the participants or managers and employees. It is a best data collection method to have proper information from the participants. It helps to get additional information from the respondents. It also helps to establish mutual understanding between the cottage industry and participants and builds a good company’s image.
Matthews and Ross (2014) defined that sampling is a method to select participants and groups from large population for the research study. The target population is the total group of individuals from which the sample size is to be taken. Taylor, Bogdan and DeVault (2015) stated that the sample is the group of participants those are taking part into the research investigation. There are two types of sampling methods such as probability and non-probability sample design. For this particular research study, probability sampling is selected which consists of simple random sampling. It is the subset of individuals which are chosen from larger set of population. Each of the research participants are selected randomly such that each participant has same probability during the sampling process. The sample size of the research study is 5 managers and 20 employees of cottage industry in Tobago.
In this research study, the data analysis plan is focused on questionnaires for getting of quantitative data. The questionnaires should enable use of various languages; therefore the responses are gathered from wide range of target group. Matthews and Ross (2014) stated that quantitative data provides of statistical manipulation of the collected data. This type of data are counted as well as measured. Based on the collected data through questionnaire, they are analyzed using statistical forms such as graphs and charts. This data analysis method gathered the information of higher quality and it also provides deeper insight into the research study (Taylor, Bogdan and DeVault 2015). The statistical data through use of quantitative data are helpful to gather larger amount of sample size.
It is possible that any unauthorized person can access to the research data, therefore the researcher should keep the data through password protected. Any users are not able to access to the data, therefore when any other person can require the data, they will not able to access it. Therefore, the data and information are kept secured with proper authentication method so that no other unauthorized person can access those data.
At the time of performing this study, the researcher is required to follow the research rules and regulations which help them to perform the work properly as well as efficiently. Before following the ethical standards, the researcher analyzed following ethical issues which are faced by the researcher to conduct the research study:
The study helps to expand the research outcomes for the selected research topic which helps to identify the limits into the study. Into the research study, limitations are normal which defines the restricted scope. These particular studies are concerned on various cultures as there is risk to perceive questions from different cultural backgrounds that affects the way to answer the questions. Therefore, it is hard for the participants to provide answer to the research questions. The researcher has limited time to do a detailed research on the study. In this way, a detailed research analysis is not possible as this research is cross sectional. There is also limitation of the research budget and due to lack of budget estimation; there is lack of research fund which hampers the quality of the research study. The participants those are participated into the questionnaire response are not focused on the motivational factors. The management team of the industry are not motivated them to give their responses. It affects the findings of the research study. Therefore, there is higher concern for reliability of the research study.
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Main research activities |
Week 1-3 |
Week 3-6 |
Week 6-9 |
Week 9-12 |
Week 12-15 |
Week 15-18 |
Week 18-21 |
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Select a research topic |
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Prepare a poster proposal on the selected research topic |
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Investigation and full proposal preparation |
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Analyze the research aims, objectives and question |
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Perform a literature review on selected research topic |
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Collect the data through primary method |
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Prepare the survey questionnaire |
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Take the interview through the questionnaire to the participants |
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Collect the feedback data |
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Analyze the collected data |
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Rough draft writing |
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Supervisor review |
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Final editing |
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Table 1: Gantt chart for the research study
References
Bakht, Z. and Basher, A., 2015. Strategy for Development of the SME Sector in Bangladesh. Bangladesh Institute of Development Studies, Dhaka. SCP in Bangladesh, 131.
Boso, N., Story, V.M., Cadogan, J.W., Annan, J., Kadi?-Maglajli?, S. and Micevski, M., 2016. Enhancing the sales benefits of radical product innovativeness in internationalizing small and medium-sized enterprises. Journal of Business Research, 69(11), pp.5040-5045.
Bouazza, A.B., Ardjouman, D. and Abada, O., 2015. Establishing the factors affecting the growth of small and medium-sized enterprises in Algeria. American International journal of Social science, 4(2), pp.101-115.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Du, J., Guariglia, A. and Newman, A., 2015. Do Social Capital Building Strategies Influence the Financing Behavior of Chinese Private Small and Medium?Sized Enterprises?. Entrepreneurship theory and practice, 39(3), pp.601-631.
Eniola, A.A. and Entebang, H., 2015. Government policy and performance of small and medium business management. International Journal of Academic Research in Business and Social Sciences, 5(2), p.237.
Herbane, B., 2015. Threat orientation in small and medium-sized enterprises: Understanding differences toward acute interruptions. Disaster Prevention and Management, 24(5), pp.583-595.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business imperatives. Routledge.
Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A strategic management approach. Emerging Markets Journal, 5(1), p.26.
Krishnan, T.N. and Scullion, H., 2017. Talent management and dynamic view of talent in small and medium enterprises. Human Resource Management Review, 27(3), pp.431-441.
Lacity, M.C. and Reynolds, P., 2014. Cloud Services Practices for Small and Medium-Sized Enterprises. MIS Quarterly Executive, 13(1).
Li, W., Liu, K., Belitski, M., Ghobadian, A. and O’Regan, N., 2016. e-Leadership through strategic alignment: an empirical study of small-and medium-sized enterprises in the digital age. Journal of Information Technology, 31(2), pp.185-206.
Matthews, B. and Ross, L., 2014. Research methods. Pearson Higher Ed.
Meath, C., Linnenluecke, M. and Griffiths, A., 2016. Barriers and motivators to the adoption of energy savings measures for small-and medium-sized enterprises (SMEs): the case of the ClimateSmart Business Cluster program. Journal of Cleaner Production, 112, pp.3597-3604.
Narayanan, V., 2015. Export barriers for small and medium-sized enterprises: A literature review based on Leonidou’s Model. Entrepreneurial Business and Economics Review, 3(2), p.105.
Ogechukwu, O.L., Akinlo, A.E. and Goldman, G.A., 2017. Financial schemes to boost small and medium sized enterprises. Sources of finance by the Nigerian government: a commentary.
Regnier, P., 2017. Small and Medium Enterprises in Distress: Thailand, the East Asian Crisis and Beyond: Thailand, the East Asian Crisis and Beyond. Routledge.
Taylor, S.J., Bogdan, R. and DeVault, M., 2015. Introduction to qualitative research methods: A guidebook and resource. John Wiley & Sons.
Valentim, L., Lisboa, J.V. and Franco, M., 2016. Knowledge management practices and absorptive capacity in small and medium?sized enterprises: is there really a linkage?. R&D Management, 46(4), pp.711-725.
Zhou, B., 2016. Lean principles, practices, and impacts: a study on small and medium-sized enterprises (SMEs). Annals of Operations Research, 241(1-2), pp.457-474.
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