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MGT601 - SME Management - Lecture Handout 35

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ROLE OF TECHNOLOGY – I

The application of industrial technology, as indeed of all technologies, is a means to an end, the end being the development goals of each country. An appropriate technology path has therefore to be derived from the development goals adopted. Industrial development is a centre piece of the development process. It cannot be viewed only as the means of producing a large variety of goods and services by modern processes and techniques; it must result in adequate employment opportunities, greater income generation and distribution to poorer sections and improvement in the conditions of life for the larger community in developing countries.

Technology is in fact not applied in isolation

Technology is in fact not applied in isolation but as part of the performance of one economic activity or another which contributes to development. in such activity, say industrial development, technology is again applied, not alone, but matching with investment, skills, resources and other related factors, in other words, the application of industrial technology cannot be divorced from the total context of industrial development. When considering industrial technology, and for that matter any technology a balance has therefore to be struck between considering it is the abstract and treating it as totally indistinguishable from the economic activity itself. To strike such a balance between these two trends, either of which by itself is likely to be misleading. There is a close interrelationship between industry & technology in general. Perhaps no other single branch of economic activity influences or gets influenced by technology more than industry.

Within this over-all framework, attention will be focused on certain major elements for purposes of national and international action. The linkage of technology to industrial development and industrial development to over all development goals will be successful only in the context of the formulation of relevant policy measure by national government. Technology policy and planning therefore becomes an important element. The second major element is the development of technological capabilities in each country which is a prerequisite for the selection, acquisition, adaptation, absorption or development of technology. This will involve among other things the building up of institutions and the training manpower.

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MGT601 - SME Management - Lecture Handout 17

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FINANCIAL FEASIBILITY OF SMES

This lecture deals with the financial feasibility, flow sheets, short term and long term loans, cash flow analysis and financial cost.

Financial Feasibility

It covers the following:

Determination of total financial requirements

It can be done by preparing a financial statement in the following way:

Financial Requirement Statement:

Initial Expense Period 1 Period 2
Expense in product development ------- -------
Legal expense ------- -------
Product testing expenditure ------- -------
Marketing and technical feasibility Expenditure ------- -------
Miscellaneous expense ------- -------
Sub Total(1) ------- -------
Fixed investments ------- -------
Building ------- -------
Equipment and machinery ------- -------
Patents ------- -------
Other equipments ------- -------
Sub Total(2) ------- -------
Operational expenditure ------- -------
Material ------- -------
Wages ------- -------
Sales promotion, distribution ------- -------
Rent, interest, insurance, taxes ------- -------
Contingency ------- -------
Sub Total(3)    
Total 1+2+3 1+2+3

In making the above estimation, provision must be made for cost escalation that is inevitable due to price changes. Besides, appropriate sales forecasts should also be made to have a clear picture of expenditure. The projection could be weekly or monthly.

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