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HUMAN RESOURCE DEVELOPMENT:Market and Industry Information, Monitoring Developments

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SME Management (MGT-601)
VU
Lesson 12
This lecture is a continuation of the lectures No 9&10 and 11 dealing with the short term, medium term
and long term issues. These issues are pre-requisites for forming a comprehensive SME policy.
HUMAN RESOURCE DEVELOPMENT
One of the major challenges that SME have to face is the emergence of the knowledge-based economy.
People must continue to innovate, change and upgrade. There is a need to nurture the entrepreneurial spirit
and skill development for adopting innovative technologies.
The low-literacy level of our population poses an immense challenge to our competitiveness. Yet, it is a fact
of life, which we will not overcome, in the short run. It is therefore imperative that we seek intelligent short
and medium-term solutions to bridge the literacy gap.
One aspect of the Government's strategy is to strengthen non-formal skills and entrepreneurship
development, to better prepare workers for employment and to improve population's general capacity of
self-employment. But are there other ways by which we can enhance the skills of our workforce in such a
way that we need not despair when facing external competition?
The government has established a number of institutions that impart training and skill development. These
institutions, Pakistan Institute of Management Science (PIMS), Provincial Vocational Training Councils
Authority, Technical Training and Vocational Authority (TEVTA) Government Universities and various
other support institutions have however remained rather passive regarding the shaping of human resource
development for SME.
A frequent complaint is the mismatch of the output of our human resource development institutions with
the demand of SME. There are also only limited options for the training of the middle management. Low
skills of workforce, inadequate vocational training facilities yet remain out of the scope of the reforms
agenda.
Are there any mechanisms by which we may achieve effective consultation between supply and demand
sides of our vocational training system so as to attain a maximum benefit for our economy?
Entrepreneurship does not breed in a vacuum. For a healthy, growing business environment, it is necessary
to foster entrepreneurial culture in Pakistan, which goes beyond the inclination to trade in goods.
Entrepreneurial skill development programs can boost this.
Technology Transfer and Up-Gradation
Developing SME based on local skills/resources has now been rightly recognized as a means of promoting
economic growth and a very effective tool for providing productive employment in a country. But up to
date technology also plays a vital role in the vertical integration of the firms, moving them up the ladder in
terms of firm productivity enhancement.
In our country, growth oriented export firms still have problems sourcing quality inputs due to the lack of a
network of reliable suppliers. This adds to their transaction costs. Likewise, the SME are not large enough
to furnish sufficient demand to be an incentive for a big high quality input supplier.
The government in its efforts to facilitate technology transfer for indigenous SME initiated a program with
the United Nations Development Program (UNDP) to promote Technical Cooperation between
Developing Countries (TCDC) 8. The scope of Phase 1 remained narrow and focused on capacity building
of various public sector organizations through training programs. The intended final beneficiary, SME, has
not yet been able to benefit from the program.
In its other efforts, the government used to offer cash grants9 for ISO certification to those enterprises that
choose to be growth oriented internationalized SME. The government also set up a National Productivity
Organization as a resource center and a research institute to enhance industrial and labor productivity in
Pakistan.
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SME Management (MGT-601)
VU
Similarly, other organizations like Pakistan Council for Scientific Industrial Research (PCSIR), Pakistan
Industrial Technical Assistance Center (PITAC), Ministry of Science and Technology (MOST) etc.
established to facilitate industrial growth still need to adopt an active approach to provide their services to
SME in an effective manner.
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A few countries (mainly China, Singapore, Indonesia, Sri Lanka) also shared their experiences and
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expertise with Pakistan.
9 Discontinued since June 2003.
Major technology up-gradation obstacles include:
Inability to acquire sophisticated testing equipment and R&D facilities. (SME see it as a financial
problem).
Lack of skills/experience to operate high-tech machinery.
Insufficient information on technological cooperation opportunities.
Lack information on target market quality requirements and lack of knowledge on how to achieve
these quality levels.
Absence of appropriate metrology and testing equipment and related infrastructure as common
facility centers.
Market and Industry Information
Access to market and industry information is one of the keys to develop successful business strategies.
Frequently, business and trade associations are able to provide their members with such services. By
associating with like institutions in foreign countries, they are also able to establish links and obtain
information on foreign markets.
Over half of our SME belong to business and industry association. Their perceived role is limited to
lobbing and negotiation with the government. Yet very few SME (12%) perceive their associations to
be a source of information on new developments in their fields of business operation. How to increase
the service provisions by all types of stakeholders will become a fundamental issue when SME support
programs will be looking for deliver channels.
Monitoring Developments
Harmonizing Enterprise size Categories
Pakistan has no across the board legal definition of SME. This makes it extremely difficult to monitor
the development of our SME economy and to establish benchmarks against other countries in order to
devise areas of intervention and support.
Various government departments and public-sector agencies have adopted their own definitions. There
are, of course, various reasons for them to define SME, and there may even be discussion on just how a
strict and reasonable size standard could be defined.
A number of current definitions are based on capital standards since this influences the pattern of fund
raising in the formal and informal market by SME.
Many stakeholders consider enterprises with 100 or more employees as large, and enterprises with less
than 5 employees as micro. Yet our statistical system classifies enterprises with more than 10 employees
as large, and the State Bank of Pakistan considers those with more than 250 employees as large.
The reference to international practice also suggests differentiation among industrial, wholesale, and
retail10 and services related enterprises. This view also gets credence from various studies on the issue
for pakistan11. Again, this consideration is only visible in the SBP definition and missing in all others.
There are also rationales beyond the particular organizational motivations for defining specific size
classes, and it will therefore be useful for all stakeholders to review definitions on technical grounds.
For a national policy, it is extremely important to have a harmonized definition for, as it is also
important for the government to focus assistance as reasonably as possible for maximum efficiency. It
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SME Management (MGT-601)
VU
is also imperative to adopt a definition to foster the coherence of vision in the SME policy development
and for the better implementation of related support programs across institutions.
REFERNCES
1-SME Issues Paper by SMEDA (policy planning & strategy department)
2-World Bank survey (Gallop)
3-Financial issues &SMEs (paper read by Dr Ishrat Hussain)
4-Small Entrepreneurs in developing countries By Dr Asghar S. Nasir
Book Recommended
Small Entrepreneurs in developing countries By Dr Asghar S. Nasir
Key Terms
ISO certification (International Standards organization certification like ISO 9000 Quality certification)
R&D (Research and Development)
SBP (State Bank of Pakistan)
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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