ASSESSMENT OF PERSONAL REQUIREMENTS AND ORGANIZATIONAL CAPABILITIES:Analysis of Competition

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SME Management (MGT-601)

Lesson 18

This chapter deals with the teething problem that a newly established company faces.

ASSESSMENT OF PERSONAL REQUIREMENTS AND ORGANIZATIONAL

CAPABILITIES

Human beings provide the motive force to an enterprise. For this purpose, it is necessary to consider the

available talent and skills consonants with the organization structure. An inventory must be made of the

skills needed for effective implementation of new venture. The steps in undertaking the exercise relating to

determination of personal requirements and designing the initial organizational structure are described

below:

Ascertaining the anticipated workflow and the various activities (called activity

analysis). At this stage, the total range of activities and level of skills are identified.

Grouping the activities into set of tasks that individuals can handle effectively.

Categorization of various tasks to form the basis of structure of organization.

Determination of interrelationship between different positions and designing of

organizational hierarchy.

Analysis of Competition

In order to ensure the survival and growth of enterprise, it is essential to make competition analysis.

Generally, every organization to face two types of competition:

A) Direct competition from similar products.

B) Indirect competition from substitutes.

Competition analysis must seek to identify potential competitors, the strategies adopted by them

and their impact on proposed enterprise, specific advantages enjoyed by the purpose venture and

formalization of strategy in consonance with these advantages. The entrepreneur must guard against being

content with neutralization competitors strategic advantages. The aim should be to have superior strategies

at least during the initial stages.

Field Problems of Starting a New Enterprise

Identification of a venture after a thorough analysis of the five major aspects described earlier

should not be regarded as the end of all problems. Rather the real problems have been summarized in the

following paragraphs.

(1) Pre-operator problems

(a) Problem of selecting an appropriate form of business organization.

(b) Problems related with the acquisition of basic facilities such as sources of raw materials,

power, transport etc.

(2) Problems during the construction phase.

These would be connected with:

(i) Acquisition of land;

(ii) Construction of building and other aspect of civil works;

(iii) Acquisition of machinery and its installation;

(iv)

Preliminary work about the sources of supply of raw materials , labor and

managerial inputs;

(v)

Prospecting about marketing;

(vi)

Preliminary work regarding sources of working capital;

(vii)

Coordination problem connected with the acquisition of different kinds of

assets or completion of jobs;

SME Management (MGT-601)

(3) Post Operative Problems of a New Enterprise

Several Problems are common to starting a y enterprise-whether small or large. They need not always arise

but an awareness regarding them could enable their timely avoidance prevention. Below are given some of

the post operative problems.

(i)

Lack or absence of profits.

(ii)

Experience Factor:

(a) Unfamiliarity of lack of experience in product or services line.

(b) Lack of experience in management. There is a vast difference between being a machinist and being

able to manage a machine shop.

production etc and neglecting others.

(d) Incompetence of management.

(iii)

Sale Causes

(a) Weak competitive position ;

(b) Lack of proper inventory control;

(d) Poor location ;

(e) Decline in demand due to recessionary trends in the particular industry ;

(f) Inappropriate marketing strategy ;

(g) High production costs and consequent high pricing ;

(iv)

Expense Causes i.e. failure to control operating expenses that reduce profit and

Pose a threat to survival of the firm. For instance, borrowing too heavily may force business to

close if debts cannot be timely paid;

(v)

Neglect Causes

Common Cases of neglect are; poor health, laziness, family or manage

Problems .Entrepreneurs needs to establish priorities for themselves relative

To their involvement in the firm. They must concentrate on objectives of the

Firm.

(v)

Capital Causes

(a) Low a over estimation of capital needs;

(b) Fund mismanagement ;

(d) Poor debt collection or unfavorable credit terms.

(vi)

Customer Causes .i.e. extension of credit on liberal terms.

(vii)

Personnel Causes.

(a) High rate of absenteeism &/or labor turnover;

(b) Unhealthy industrial relations;

(d) Low productivity ;

(e) Militant trade unions.

(xi)

Natural calamities such as burglaries, earthquake .fire etc.

(x)

Government Regulations.

(a) Difficulty of compliance due to excessive cost burden;

(b) Interference and dilatory tactics adopted by government authorities.

(xi)

Unmindful expansion so that sufficient business is not generated to sustain

Expanded capacity.

(xii)

Environmental Causes.

(a) Changes in government policy ;

(b) Changes in social or political conditions ;

(xii)

Production Causes

(a) Technological obsolescence ;

(b) Low capacity utilization ;

SME Management (MGT-601)

(d) Non availability of spares and replacement ;

(e) Poor machinery maintenance.

Reference

Corporate Collapse; the causes and symptoms byJohn wiley

Book Recommended

Entrepreneurship and small business by C L Banasal

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