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LONG TERM ISSUES:Law and Order, Intellectual Property Rights, Infrastructure

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SMEManagement (MGT-601)
VU
Lesson 14
Thislecture is still the continuation of the policy forming issues forSMEs. But in this sectioninstead of
short and medium term issues, we are dealing with long-termissues.
LONGTERM ISSUES
Thereare issues, which arebeyond the scope of ourcurrent interventions. Theyare partially rooted in
the multiple cultural structures of our society, frequentlyexacerbated by our geo-politicalsituation. We,
nevertheless, recognize their importance and thereforepoint them out here.However, it is not
recommended to attempt to solve these questions by ways of an SME policyInitiative.
Literacy
Theevidence reveals that SMEfind it extremely difficult to grow because of their inability to delegate to
soundly trained staff. The day the smallbusinessman feels comfortable to delegate, SME startprogressing.
Thelow literacy level alsodetermines the potential of ourlabor force. Higher literacyrates are essential to
enhance the quality of production can be enhanced by multiple factorswhich is what we need to be able to
effectivelycompete in the international economywhich is being extended to ourlocal markets by the effects
of opening up and WTOaccession.
Law and Order
Law and order situation in Pakistanhas always been regarded as worrisome. One survey reports thatone in
fiverespondents report that the business was the target of at least one crime during2002. Another
assessmentsuggests that the businesses in NWFP spend 4.5%, Sindh and Punjab 1-2% of their revenue on
security. One in four SME consider lawand order to be a severeproblem.
Law and order problems weakenproperty rights and as a resultweaken investor's decision to invest.These
problemsare clearly linked to the manner in which the law enforcement and criminal justicesystem
functions. The high time cost involved in seeking legal resource together with lack of access to both
effective informal and formal enforcement mechanisms, increase the costsassociated with contract
enforcement.
Intellectual Property Rights
IntellectualProperty Rights (IPR) is a vital issue that needs to be looked into. It hasbeen observed that
manydeveloping countries with the help of a change in their IP systems and laws areable to attractForeign
DirectInvestment (FDI) in the Researchand Development(R&D) especially in the industrial and the
scientific field. Therefore, promotion andprotection of the intellectual propertyspurs economicgrowth,
createsnew jobs and industries,enhancing the quality and enjoyment of life.
Anotherbenefit for Pakistan in properly adopting IPR culture is that it will protect the indigenous products
such as rice, kinno, traditional knowledge, pottery etc. the owners of the IPRs has the most valuableassets
whichcan be utilized in commercialtransactions, whether IP licenses, jointventures, manufacturing,
purchase or distribution agreements, or mergersand acquisitions. Licenses to use patents, trademarksand
copyrights are often combined withtransfer of know how in the form of training and areincreasingly an
important term in such transactions.
Infrastructure
Basicphysical infrastructure is a prerequisite to growth and development. Poweroutages and access to the
connectionsare considered an irritant,which significantly affects the productivity of firms in Pakistan. It is
estimatedthat a typical business in Pakistanloses 5.6% in annual salesrevenue due to just this single factor.
Differences associated with firm sizerecognize that smaller firms are relatively hard hit in comparisonwith
the larger ones because of inability to arrange alternate power source such as private power generators. High
rates of power, the poor quality of delivery and its reliability are the serious concerns for SME in Pakistan.
Similarly, access to the telecommunication facilities and transport also serve as a detriment to smooth
growthand transition of smaller firms to larger ones. The chief problem in the provision of the telephone
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SMEManagement (MGT-601)
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services is the shortage of new fixedline connections, which currently stand at a mere 0.5-0.6million a year
for the whole country. Pakistan could also save up to 16.5% of the value of exports by improving itstrade
and transport logistics systems. Inefficiency in transport alone is estimated to cost the economy RS.320
Billion a year.
The concentration of power, telecommunicationsand transport services, exceptfor road transport, in the
publicsector has been regarded as a major concern. Evidence suggests thatPakistan's state-controlled and
concentratedstructure of infrastructure delivery is highlyinefficient.
References
1-Small Entrepreneurs in developing countries by Dr Asghar S. Nasir
2-Task force issues paper for newSME policy (SMEDA)
3-PakistanSmall Entrepreneurs Summary andStatistical Tables, January2001,GALLUP/BRB (A world
Bank survey)
Book Recommended
50 Years of Pakistan's' Economy(traditional topics and contemporary concerns) EDITED by Shahrukh
Rafi Khan Published by Oxfordpress Pakistan.
KeyTerms
WTO(World Trade Organization)
IPR(Right to protect an idea,piece of writing, designfrom copying)
Merger(combination of two or more organization)
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Table of Contents:
  1. THE HISTORY:Cottage Industry, CONCEPT OF SMALL BUSINESS
  2. THE RELATIONSHIP BETWEEN SMALL AND BIG BUSINESS:The SME’S in Pakistan
  3. THE ROLE OF ENTREPRENEURSHIPS IN SMEs:Focus and Perseverance Guide the Entrepreneur
  4. THE ROLE OF ENTREPRENEURSHIPS IN SMEs:Kinds of Entrepreneurs
  5. SMALL ENTREPRENEURS IN PAKISTAN:National Approaches
  6. THE DEVELOPMENT OF SMES IN PAKISTAN:The Industrial History of Pakistan
  7. GOVERNMENT’S EFFORT TOWARDS SME DEVELOPMENT:Financing Programs
  8. THIS LECTURE DEFINES THE ROLE OF NGOS AND SMEDA:Mission Statement
  9. ISSUES AND POLICY DEVELOPMENT FOR SME:Monitoring Developments
  10. ISSUES IN SME DEVELOPMENT:Business Environment, Taxation Issues
  11. LABOR ISSUES:Delivery of Assistance and Access to Resources, Finance
  12. HUMAN RESOURCE DEVELOPMENT:Market and Industry Information, Monitoring Developments
  13. MARKET AND INDUSTRY INFORMATION:Measuring Our Success, Gender Development
  14. LONG TERM ISSUES:Law and Order, Intellectual Property Rights, Infrastructure
  15. THE START UP PROCESS OF A SMALL ENTERPRISE:Steps in Innovative Process
  16. TECHNICAL FEASIBILITY:Market Feasibility, Market Testing
  17. FINANCIAL FEASIBILITY:Financial resources and other costs, Cash Flow Analysis
  18. ASSESSMENT OF PERSONAL REQUIREMENTS AND ORGANIZATIONAL CAPABILITIES:Analysis of Competition
  19. Post Operative Problems of a New Enterprise:Environmental Causes
  20. HOW TO APPROACH LENDERS:Bank’s Lending Criteria, Specific Purpose, Be Well Prepared
  21. WHAT A BANK NEEDS TO KNOW ABOUT YOU:General Credentials, Financial Situation
  22. COMMERCIAL INFORMATION:Checklist for Feasibility Study, The Market
  23. GUARANTEES OR COLLATERAL YOU CAN OFFER:Typical Collateral
  24. Aspects of Financial Management:WINNING THE CASH FLOW WAR, The Realization Concept
  25. MEANING OF WORKING CAPITAL:Gross Working Capital, Net Working Capital
  26. RECRUITMENT, SELECTION AND TRAINING:Job Description, Job Specification
  27. SELECTION AND HIRING THE RIGHT CANDIDATE:Application Blank, Orientation
  28. TRAINGING AND DEVELOPMENT:Knowledge, Methods of Training
  29. CONDITIONS THAT STIMULATE LEARNING:Limitations of Performance Appraisal, Discipline
  30. QUALITY CONTROL:Two Aspects of Quality, Manufactured Quality
  31. QUALITY CONTROL:International Quality Standards, MARKETING
  32. MARKETING:Marketing Function, MARKETING PROCESS - STEPS
  33. MARKETING:Controllable Variable, Marketing Uncontrollable, Marketing Mix
  34. MARKETING:Demerits of Product Mix, Development of new product, SMEDA
  35. ROLE OF TECHNOLOGY:Training programmes, Publications
  36. ROLE OF TECHNOLOGY:Measure to Undertake for Promoting Framework.
  37. EXPORT POTENTIAL OF SME IN DEVELOPING COUNTRIES I:Commonly Seen Assistance Programme
  38. EXPORT POTENTIAL OF SME IN DEVELOPING Countries. II:At the national level
  39. WORLD TRADE ORGANIZATION (WTO):WTO Agreements: Salient Features
  40. WTO MINISTERIAL CONFERENCES:PAKISTAN AND WTO
  41. WORLD TRADE ORGANIZATION (WTO) PAKISTAN & WTO. II:International Treaties
  42. WORLD TRADE ORGANIZATION (WTO) PAKISTAN & WTO. III:Agriculture
  43. WORLD TRADE ORGANIZATION (WTO):PAKISTAN & WTO. III
  44. WORLD TRADE ORGANIZATION (WTO):CONCLUSIONS AND RECOMMENDATIONS
  45. SUMMARY & CONCLUSIONS:Financing Tool, Financing Tool