Question

QUESTION

a) Small and medium enterprises (SMEs) are the pillar of economic growth of a country. Explain five challenges faced by SMEs in the developing countries.

b) Aryan is a successful young business entrepreneur in Nepal. He owns a chain of Speed Mart 88 convenience shops in major cities in Nepal. He plan to diversify his business to Malaysia. Explain the possible external business strategies that can be adopted by Aryan to expand his business in Malaysia. Which external business strategy is suitable for Aryan’s business expansion in Malaysia? Why? Justify your answer.

Answer 1

Five challenges faced by SME's

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Top 10 Challenges Facing Small And Medium Sized Businesses

Challenges Facing Small and Medium Sized Businesses

Having worked with over 400 businesses over the last 19 years, I believe I’ve gained a good perspective on the key challenges facing small and medium sized businesses (SMEs) today.

Some are perennial and others are particularly relevant to UK-based businesses because of the recent political turbulence. This has created specific challenges that have severely disrupted some businesses and will continue to do so for some time.

This article has been updated to take into account the financial impact that COVID-19 is having and will have for years to come on the economy.

The top challenges facing small and medium sized businesses are:

1. Leadership
2. Culture
3. Strategy
4. Building an “A” team
5. Strategy Execution
6. Making the business stand out
7. Putting your employees first
8. Systems and Processes
9. Productivity
10. Measuring performance

We will now take each of these in turn to explore them in more detail.

1. Leadership

There is no academic qualification to be a leader of an SME and I suspect if one were offered most entrepreneurs eager to get started wouldn’t do it any way. Nevertheless, given the many challenges of running a business and leading people, a lot of owners falter because they don’t have the right skills.

2. Culture

I have noticed over the last few years that getting the right culture is becoming more important to business owners. The purpose of the business needs to be crystal clear and from this purpose the values of the organisation can flow. Four values seem to be the maximum anybody can remember and successfully embed into a business.

For me, for a well run and nice business to work for and do business with the key values are:

• Professional/Integrity/Honesty
• Customer Service/Going beyond/Falling Over Backwards
• Initiative/Self Starting/Innovation
• Respect

3. Strategy

A consequence of a lack of leadership development is a lack of business planning in most SMEs. There are now well documented, single page, business planning tools available that can really help your business focus on what matters. Take a look at: Strategyzer Business Model Canvas & Traction by Gino Wickman

4. Strategy Execution

Something that really helps businesses to succeed is to be great at executing strategy, plans and ideas; being able to take a three-year plan and break it down into 12 months objectives, and then be really focused and translate those into 90-day objectives.

5. Building an “A” Team

The next challenge to trip up a lot of SMEs is finding the right people to grow the business, the team members who make sure all functional aspects are delivered such as sales, marketing, production, operations and accounts.

To run and grow a business effectively, an owner or managing director should be removed from the distractions of running the day-to-day operations. Having a great “A” team in place really helps this. Initially, this may be one person who is a star player but eventually, as the business grows, each function needs somebody who has complete ownership.