An entrepreneur faces several managerial problems in relation
to production, marketing, infrastructure, financing, etc. The basic cause
for many of such issues is the existence of intense competition in the
market scenario. Large scale firms/ industries that have huge production
and distribution network, or enterprises that have goodwill in the market
or have intellectual property rights/ standardization for their products
or produces large range of products etc., are more likely to dominate
the business environment in the country. In contrast, small and medium
scale enterprises mainly deal in one specialized line of products, have
very small production and distribution network, and generally have no
protection for their products. As a result, inspite of having useful and
good quality products or having products similar to those produced by
large scale firms, they are largely not able to create/ hold demand for
their products and tend to lose customers to large scale enterprises owing
to cut-throat competition.
Although the Government, both at the Centre and the State
level, are making all efforts to create climate conducive for the sound
growth of small and medium enterprises with a view to bring them at par
with large scale enterprises and, thereby, create adequate demand for
their products. But still, the competition for small and medium entrepreneurs
are intensifying over the years which disrupts the entire business scenario
and raises their cost of production and marketing.
In the years after independence, small and medium scale
enterprises were largely protected from such competition by following
the policy of reservation. Many of the products were reserved for exclusive
production by them. However, over the years, several enterprises were
dereserved for encouraging the employment and entrepreneurship activities.
Further, over the years, the small/ medium scale sector in India has progressed
from the production of simple consumer goods to the manufacture of many
sophisticated and precision products like electronics control systems,
micro wave components, electro medical equipments, etc. The process of
economic liberalisation and market reforms has further exposed these enterprises
to increasing levels of domestic and global competition.
However, healthy competitive environment is necessary for
the proper growth of enterprises so that they can take advantages of new
and viable opportunities. In order to provide a continuing forum for enhancing
the competitiveness of manufacturing sector, especially of small and medium
enterprises sector, the National
Manufacturing Competitiveness Council (NMCC) has been set up by the
Government at the Central level. But, as such, the problem faced by small/
medium scale entrepreneurs is that of increasing unhealthy competition
within and between firms/ industries.
Further, such entrepreneurs have huge difficulty in accessing
technology needs of the sector and maintaining competitiveness. The reasons
for this include:- poor financial situations and low levels of R&D;
risk-averting attitude; non-availability of technically trained human
resources; lack of access to technological information and consultancy
services; isolation from technology hubs; low focus on production costs;
etc.
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