Comparative analysis of managerial practices in
small medium enterprises in Malaysia
Abu Bakar Abdul Hamid
Noor Hazarina Hashim
Faculty of Management and Human Resource Development
Universiti Teknologi Malaysia
The purpose of this paper is to examine the existing practice in managerial strategic and tools being used and problems faced by local small medium enterprises (SMEs) in the manufacturing sector. With today’s arduous competition, it requires the SMEs to tune its current business practice to cope with the rapid changes in the business environment. Due to the rapid changes, SMEs’ managers need to equip themselves with new knowledge and ideas to promote effective managerial practices. In other word, SMEs must have better trained managers, knowledgeable in managerial activities. Focus should be on the knowledge on financial management, human resource management and marketing management techniques. The research method was adopted from the combination of quantitative and qualitative approaches. Since there is no detailed and up-to-date databases about SMEs in the Malaysian industry, the sampling plan was designed by using judgment and snowball sampling. A total of 102 responses were obtained from the owner-managers drawn from Johor Bahru city area. The most important findings of the study on managerial practices are that the SMEs appear to have a very limited knowledge of the overall spectrum of managerial practices.
The increasing magnitude and significance of the SMEs is a recognized feature of most nations. Malaysia is no exception. In her vision to be a fully developed and industrialised nation by the year 2020, future progress toward that end was seen to depend greatly upon the development of SMEs (Abdul Hamid et al., 1993). The “Vision 2020” of the country recognized the importance to industrialize rapidly by capitalizing on the country’s strengths and forcefully tackling the weaknesses. In Malaysia, the majority of the manufacturing companies fall into the category of SME, before the new definition announcement made effective in January 1998. According to research conducted in 1988, there were 28,335 manufacturing companies in Malaysia, of which 92.6% were SMEs, which created 40.2% of job opportunities for the whole industry (Mohd Asri, 1993). Fundamental weaknesses in the manufacturing sector are recognized as impediments to growth by Malaysian government. Amongst the prominent problems facing the SMEs development are the shortage of skilled personnel, poor linkage development, lack of market access, inadequate finance, unintended impact of policy instruments, competitions from foreign SMEs and technological constraints (Salleh, 1990; Chee, 1986). Academics and practitioners also 35
have advocated that SMEs are plagued with limited funds, lack of research and development (R&D) to upgrade quality, unattractive packaging and labeling, plus poor quality and distorted information on the demands of the international markets (Salleh, 1991; Sarkar et al, 1992; Chee, 1986; Aziz, 1981).
The role, importance and contribution of SMEs differ from one industry to industry and from country to country. Similar to other businesses, SMEs also face miscellaneous problems which in some instances may affect their profitability and growth. In order to cope with the constant rapid changes in business environment, having a well-versed business manager is vital to an organization. Given the above scenario, this study has been conducted to provide some evidence regarding the SMEs’ managerial practices and problems faced among the SMEs in the vicinity of Johor Bahru city. In promoting and coordinating the development of SMEs, the National Development Council would pursue the following guidelines: (Mohd Khairuddin, 2000:33)
a. SMEs would assist in the development of a balanced economy, use of advanced technology and help in providing a more equitable distribution of income;
b. SMEs would...
References: Abdul, A., (1981). Malaysia entrepreneurship: Problem and development, A
comparative empirical study
Abdul Hamid et al., (1993). Vision 2020: Understanding the concept, implication and
Chee Peng Lim, (1986). Small industry in Malaysia. Kuala Lumpur: Berita Publishing.
Bates, J., (1971), The financing of small business, London: Sweet and Maxwell.
Cannon, T., (1991). Marketing in small businesses, in Baker, M.J. (ed.), The marketing
book, 2nd ed., London: Butterworth-Heinemann.
Carson, D., (1993). A philosophy for marketing education in small firms, Journal of
Marketing Management, Vol
Davis, C.H. and Klassen, M.L., (1991). What entrepreneurs need to know: are we
researching it?, in Hills, G.E and LaForge, R.W (eds.), Research at the
Dollinger, Marc J. (1999). Entrepreneurship: Strategies and resources, New Jersey:
Edwards, Pamela and Turnbull, Peter W. (1994), Finance for small and medium-sized
enterprises: Information and the income gearing challenge, International Journal
Gibson, Brian (2001), Financial structure in Australian small firm, Paper presented at
SEAANZ 14th Conference, 13-15 September, Wellington, New Zealand.
Gupta, M. and Cawthon, G., (1996), “Managerial implications of flexible
manufacturing for small/medium-sized enterprises”, Technovation, Vol
Hill, Jimmy (2001), A multidimensional study of the key determinants of effective
SME marketing activity, International Journal of Entrepreneurial Behaviour &
Kotler, Philip, (2003). Marketing management, International Edition, 11th ed., New
Jersey: Prentice Hall.
Malhotra, N.K., (1999). Marketing research, New Jersey: Prentice Hall.
Miles, M.B and Huberman, M.A., (1994). Qualitative data analysis, London: Sage
Mohd. Asri Abdullah, (1983). Government support, inter firm linkages and the success
of urban small firms in developing countries: A case study of small textile and
Mohd. Khairuddin Hashim, (2000). Business strategy and performance in Malaysian
SMEs: A recent survey, Malaysian Management Review, Vol
Mohd. Khairuddin Hashim, (2000). A proposed strategic framework for SMEs’
success, Malaysian Management Review, Vol
Mohd. Khairuddin Hashim and Syed Azizi Wafa, (2003). Strategic planning practices
in Malaysian SMEs: An empirical assessment, Paper presented at 1st International
Please join StudyMode to read the full document