RESEARCH PROPOSAL ON “A STUDY ON MANAGERIAL AND PERFORMANCE OF SMALL AND MIDIUM ENTERPRISES IN NEPAL”
BY GAUTAM LAMA
KATHMANDU, NEPAL SEPTEMBER, 2012
1.1 Background of the study:
The meaning of SME depends upon who is defining it, however the meaning of SME can be generalized as those companies whose headcount or turnover falls below certain limit. According to UNDP’s data in context of Nepal; companies with fixed asset up to 200,000 rupees are categorized as micro enterprises, companies with fixed asset up to 30 million rupees are small enterprises and companies with fixed asset ranging in 30-100 million rupees are defined as medium enterprises. SMEs play a very important role in the economic growth and development of Nepalese economy. The role and importance of small scale industries can be judged as follows: (1) Employment generation: Small entrepreneurs use labor intensive techniques and therefore provide employment opportunities on a large scale. (2) Optimization of capital: Small entrepreneurs require less capital as compared to large scale units. Small entrepreneurs help in capital formation by mobilizing idle and small scattered savings of people and put them into productive use by investing in small scale units. (3) Balanced regional growth: They help to remove regional disparities by industrializing rural and backward areas. Small entrepreneurs help to reduce the problems of congestion, slums and population in cities by providing employment and incomes in rural areas. They help to improve the standard of living in sub-urban and rural areas, (4) Mobilization of local resources: Small entrepreneurs help to mobilize and utilize local resources like small savings, entrepreneurial skill and talent, raw materials etc. In the absence of small business units these local resources are likely to remain unutilized. (5) Export promotion: There has been a substantial increase in exports from the small scale industries in developing countries. Small entrepreneurs also help in reducing the pressure on the country’s balance of payments, because these industries do not require import of sophisticated machinery or raw materials. (6) Consumer needs satisfaction: Small entrepreneurs are now producing a wide range of mass consumption items. Small entrepreneurs serve as an anti-inflationary force by providing goods for daily use on a large scale. (7) Feeder to large scale industries: Small entrepreneurs play a complementary role to large scale industries by providing parts, components and accessories. They act as ancillaries to large units. (8) Social advantage:
Small entrepreneurs contribute towards the development of a socialistic pattern of society by reducing concentration of income and wealth. They provide an honorable and independent living to people with limited resources. They facilitate wider participation of public in the process of development and thereby the cause of democracy and selfgovernment. (9) Equitable spread of income and wealth: Small scale entrepreneurs ensure equitable distribution of income and wealthy by inculcating the spirit of entrepreneurship amongst people thereby providing them self employment with limited resources. Small scale industries also ensure equitable spread of income and wealthy amongst all whereas large scale industries result in concentration of income and wealth in a few hands. (10) Development of entrepreneurship: Small entrepreneurs also help in developing a class of new entrepreneurs. The development of small scale industries contributes to increase in per capita income or economic development opportunities with relatively low capital investment, make effective use of untapped local resources, facilitates development of backward areas and weaker sections of society. (11) Share in National economy: Small entrepreneurs have tremendous potentials to contribute to Nepalese economy. The small entrepreneurs have shown tremendous growth in their number, production, employment...
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