Planning/Creating the Competitive Micro, Small & Medium Enterprise (MSME)
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This document summarizes an Indian MSME presentation. It defines MSMEs under Indian law and notes that they employ over 60 million people and contribute significantly to GDP and exports. It outlines opportunities for MSMEs in clustering, automotive, dairy and other industries. Key challenges include access to financing and technology. The presentation discusses government initiatives to support MSMEs and strategies for MSME growth, including developing new products/markets, mergers and acquisitions, and strategic partnerships. It concludes with a SWOT analysis of the Indian MSME sector.
Planning/Creating the Competitive Micro, Small & Medium Enterprise (MSME)
- 1. PRESENTED BY: HARSHIT SHARMA IV SEMESTER Creating Competitive/Developed Micro, Small & Macro Enterprises “Masters in International Business” Department of Banking & Business Economics Mohan Lal Sukhadiya University
- 2. Content Overview of Indian MSMEs Opportunities for MSMEs Challenges being faced by MSMEs Creating Competitive MSMEs Policies and Initiatives taken by Government of India Way of Growth of MSME’s SWOT Analysis Conclusion
- 3. Overview of the Indian MSMEs In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes : MSMEs Manufacturing Enterprises Service Enterprises
- 4. Definition of MSMEs The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under :
- 5. Investment Limits for service sector
- 6. MSME in India Employs – More than 60 Million 45% - Total Industrial Output 40% - Total Exports Creates more than 1 Million jobs annually. Contribution to GDP set to expand to 22% by 2012 from current 17%.
- 7. Some quick estimates The number of enterprises is estimated to be about 26 million and these provide employment to an estimated 60 million persons Of the 26 million MSMEs, only 1.5 million are in the registered segment while the remaining 24.5 million (94%) are in the unregistered segment The state-wise distribution of MSMEs show that more than 55% of these enterprises are in 6 States, namely, Uttar Pradesh, Maharashtra, Tamil Nadu, West Bengal, Andhra Pradesh and Karnataka. Source: 4th All-India Census of MSMEs, for reference year 2006-07
- 8. Some quick estimates (contd..) About 7% of MSMEs are owned by women and more than 94% of the MSMEs are proprietorships or partnerships MSMEs contribute 8 per cent of the country’s GDP, 45 per cent of the manufactured output and 40 per cent of our exports The labour and capital ratio in MSMEs and the overall growth in the MSMEs are much higher than in the larger industries. Source: 4th All-India Census of MSMEs, for reference year 2006-07
- 9. Opportunities for MSMEs in India Opportunities provided by clustering approach: Tirupur Garment Cluster Ahmedabad Pharmaceutical Cluster Chennai Leather Cluster
- 10. Opportunities for MSMEs in India(contd..) Automotive Dairy Industry Industrial machinery and machine tools Auto and auto ancillary
- 11. Key challenges faced by Indian MSME sector High cost of credit Collateral requirements Limited access to equity capital Problems in supply to government departments and agencies Procurement of raw materials at a competitive cost Lack of access to global markets
- 12. Key challenges faced by Indian MSME sector(contd..) Inadequate infrastructure facilities, including power, water, roads, etc Low technology levels and lack of access to modern technology Lack of skilled manpower for manufacturing, services, marketing, etc Absence of a suitable mechanism Branding and Marketing
- 13. Steps that can be taken to meet these challenges Adopting new standards in technology, quality and pricing to be able to survive in the marketplace. This sector is very seriously looking for ICT enablement Restructuring Building online presence as well as e-mail facilities. E-Commerce and enterprise management solutions
- 15. Major thrust areas for increasing competitiveness of MSMEs Government has identified three major areas that contribute to competitiveness of MSMEs Technology (including quality): ICT systems like ERP, HR & Information Systems, etc. Skills development Finance: MSMEs are beginning to move from a reliance on bank credit to a variety of other specialized financial services and options
- 16. Measures taken for promoting emerging Financial Resources Setting up of a separate trading exchange exclusively for the MSMEs Provision of special incentives for encouraging larger flow of Venture Capital & Private Equity funds into the sector More liberal “All-in-Cost Ceilings” for SMEs to raise low-cost funds through the External Commercial Borrowing route Bringing legislation on ‘Factoring Services’.
- 17. 1. Organic Strategies Growth Strategies a. New Product / Technology b. New Market c. New Customer
- 18. New Product/Technology: Beginning … New Search algorithm Start-up of a company in a garage 12 years back by two PhDs. Today … $ 200 billion enterprise … and growing Today the name is used as generic for “search” on the internet. The company leads the rankings when it comes to product/technology innovation. Organic Growth
- 19. New Markets: Different geography or different channels Sales channel for India Organic Growth Sales Channel – Direct/Retail/Outlet Result – No.1 PC/Laptop brand in India within 8 years despite stiff competition from entrenched foreign and local low cost competitors. Sales Channel – Direct IndianGlobal
- 20. New Customers: Organic Growth Range of product in different product categories. 14000+ employees Revenue: Rs. 4500 Crore + One product – washing powder. Single entrepreneur Facility: own premises TodayStart-up Market is not just finding a customer but finding need gaps that can be satisfied in a economically viable way.
- 21. Understanding the customer: • MSMEs should focus not only on finding solution for its customers but also take care of their preferences. The company adapted to different sales channels for its customers in different regions (Europe and America). MSMEs: Growth Strategies Order book: more than Rs.1000 Crore. Market standing: Preferred supplier for to all major global retailers Order book: Rs. 6 Lakh Market standing: Newcomer TodayStart-up
- 22. To connect more closely with its customers it is important for MSMEs to leverage “Branding”. A strong brand build reassurance, credibility and reliability among its customers. Branding creates goodwill and goodwill helps entrench the position of the product in the market MSMEs: Growth Strategies
- 23. 2. In-organic Growth Growth Strategies a. Mergers & Acquisition b. Strategic Partnership c. Joint Venture
- 24. Mergers and Acquisitions: In-organic Growth Control of target firm by buyer firm. Arise from buyer’s deep desire to expand. TATA + Corus = TATA Union of two firm. Often on equal terms. Often arise out of business necessities. Nissan + Renault = Nissan-Renault AcquisitionMerger
- 25. Strategic Partnership: Typically companies with complementary business assets ally to harness the available market opportunity. In mid – 2009 Intel joined hands with Nokia for developing a new class mobile computing device and chipset architectures. The devices will combine the performance of powerful computers with high-bandwidth mobile broadband communications and ubiquitous Internet connectivity. In-organic Growth
- 26. Joint Venture: Established when two parties come together to set a new project. The partners share markets, IP, other business assets and profits as per the agreed- upon arrangement. 1. Tata Teleservices+ Virgin Group = Virgin Mobile India Limited 2. Bharti Enterprises + Wal-Mart = Best Price Modern Wholesale Inorganic Growth
- 27. Policy Initiatives & Measures taken by the Indian Government
- 28. ‘Udyami Helpline’, the Call Centre of Ministry of Micro, Small and Medium Enterprises (MSME) Proposed to link the ‘Charkhas Scheme’ of Khadi and Village Indutries Commission (KVIC) with the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Enactment of the ‘Micro, Small and Medium Enterprises Development Act, 2006’. Policy Initiatives & Measures taken by the Indian Government
- 29. Policy Initiatives & Measures taken by the Indian Government National Manufacturing Competitiveness Program(NMCP) Task Force to reflect on the concerns & issues regarding MSMEs and formulate an agenda for action.
- 30. SWOT ANALYSIS
- 31. SWOT Analysis Strength • Government support • Low cost production • High employment rate Weakness • Unskilled Labour • Lack good Infrastructure • Lack of new technology Opportunity • Create Export Oriented Units more • Adaptation of effective marketing strategies from relating MNC’s Threat • Entry of Big Firms or MNC’s • Corruption • Making of unrealistic NTB’s by foreign countries SWOT
- 32. Conclusion MSME’s can utilize the Schemes of GOI. Training & Development Programme for unskilled Labour can make skilled labour. Adaptation of Marketing strategies. Funding help by Financial Institutions SIDBI NABARD Use of new technologies. Customer Satisfaction is Necessary .
- 33. THANK YOU