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THE REGIONAL CONCEPT Of SMEs

This lecture will throw light on the relationship between small and big business ,concept of SME’s in our region i.e. South East Asia and in Pakistan. It should give a student a clear idea about its definitions in these areas and will help him in differentiating the variable factors of labor, investment and production volume of our region in comparison with developed countries of Europe and USA.

The Relationship between Small and Big Business

Small businesses powerfully effected by developments within the big business sector this relationship serves the interest of general economic disequilibria. Small business is less affected by economic disruptions and is more or less self-adjusting. It tends to act as cushion for economy .The nature of interlink age between small and medium business is as under

1. Job subcontracting i.e. the large business provides materials and components to small units who process the same into finished goods
2. purchase subcontracting i.e. in this case the material is procured by small unit who manufactures a specific part or component needed by a particular large unit
3. Complementary: in this case the product manufactured by small company is purchased by a big unit as accessory like plastic dust covers for video recorders, electronic passive components, packaging etc.
4. Merchandising or commercial trading: in this case the small units manufacture the goods and big units on the strength of their financial power market it with their own brands like fans, washing machines, refrigerators etc.
5. Maintenance and repair services: many large enterprises give the operation and maintenance contract to the small companies due to being more economical and helpful
6. Social benefits: employment generation, decentralization of industrial benefits etc.



Read more: MGT601 - SME Management - Lecture Handout 02

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CREATING AND STARTING THE VENTURE (Continued….)

LEARNING OBJECTIV ES

1. To present examples and a step-by-step explanation of the business plan.
2. To explain how to write a business plan
3. To explain the procedure and list of document included in business plan
4. To discuss the contents of each document and how to prepare them

WRITI NG THE BUSINESS PLAN

Description of the Venture

The description of the venture should be detailed in this section. This should begin with the mission statement or company mission, which describes the nature of the business and what the entrepreneur hopes to accomplish. The new venture should be described in detail, including the product, location, personnel, background of entrepreneur, and history of the venture. The emphasis placed on location is a function of the type of business. Maps that locate customers, competitors, and alternative locations can be helpful. If the building or site decision involves legal issues, the entrepreneur should hire a lawyer.

Production Plan or Operations Plan

If a new venture is a manufacturing operation, a production plan is necessary. This plan should describe the complete manufacturing process, including whether or not the process is to be subcontracted. If the manufacturing is carried out by the entrepreneur, the plan should describe the physical plant layout and machinery and equipment needed. If the venture is not manufacturing, this section would be titled operational plan. The entrepreneur would need to describe the chronological steps in completing a business transaction.

Read more: MGT602 - Entrepreneurship - Lecture Handout 23