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MGT601 - SME Management - Lecture Handout 28

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Objectives of Training

  1. To improve job performance.
  2. To develop employees for new responsibilities.
  3. To prepare employees for promotion.
  4. To reduce accidents and wastage.
  5. To instruct in the operation of new equipment.
  6. To ensure management succession.

Effective management succession requires prior planning. Seemingly simple matter has special problems in the case of small business particularly when it comes to its practical implementation. The entrepreneur is moulded in thinking in a groovy fashion. Moreover, training is not a one time job. It is a rather continuous process. Training seeks to upgrade an employee’s knowledge to keep abreast of changes in competitive business environment and prepare for advancement to challenging opportunities.

Before initiating a training Programme, the owner/manager should ascertain as to what training would induct change. Change herein implies the attainment of improved ability. The change should benefit both individual and organization. The change should occur in the following five areas:-

  1. Knowledge
    It refers to the storage of information by an individual for use in problem-solving and decision-making. Greater the amount of knowledge, better equipped shall be a person to accomplish a job.
  2. Attitude
    It is a state of mind which creates an urge to work for personal and organizational growth.
  3. Ability
    It is the proficiency in performance of a given task.
  4. Job Performance
    It measures how well the individual meets the requirements of a position.
  5. Operational Results
    These indicate how well the organization has been able to achieve its objectives and goals.

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MGT601 - SME Management - Lecture Handout 17

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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.

Read more: MGT601 - SME Management - Lecture Handout 17