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MGT601 - SME Management - Lecture Handout 44

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WTO is a reality, which has come to stay. We have to face the emerging challenges and grasp the opportunities. As the Governor, SBP stated that we need to develop strategy to get maximum benefit from globalization.

Foremost areas of concerns

  • The textile sector, which contributes 67% of our total exports, would in 2005 face severest competition from other major suppliers like china, Hong Kong, Thailand and Bangladesh. We have made some progress in facing post quota era under Textile Vision 2005 to take the production of textile good, upwards in the value chain. it is apprehended that the MFA phase out will start another era of non-tariff barriers. With the phasing out of quotas, textile manufacturers in industrialized and some quota free countries may decide to relocate. Government should provide incentive to ensure that they relocate in Pakistan.
  • The country urgently needs to build a strong network of anti-dumping and countervailing duties to protect the local industry against the onslaught of unfair foreign competition. It is heartening to note that Trade policy 2003-04 envisages enhancement of capabilities of NTC and it is recommended that NTC should be restructured and converted into an autonomous body employing private sector professionals.
  • The developing countries face problems in hiring law firms to advice on WTO related issues, which is a constraining factor in seeking relief from Dispute Settlement Body. There is a need to train local lawyers with WTO expertise.
  • Our survival lies in enhancing credibility through adoption of international quality standards, but Pakistan has a long way to go in obtaining certifications of ISO9000, ISO14000 and other standards. We need to set up PNAC accreditation testing laboratories for conformity assessment.

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MGT601 - SME Management - Lecture Handout 22

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The prerequisites for approaching a lender which every small and medium scale industry owner should know are discussed in this lecture.

Commercial Information

Details of orders booked: If you are requesting credit to enable you to fulfill a large or profitable new contract, it is advisable to have all the documents, correspondence, quotations from suppliers, draft contracts with buyers and suppliers, and your own costing, and calculations ready for discussion. This is all the more important if your order is for export. The credit facility you obtain from your bank will almost certainly need to tie in with the payment methods that you use with your suppliers or that are stipulated by your overseas buyers.

You are strongly advised not to sign any firm contract with suppliers or customers before you have discussed credit and payment methods with your bank. The reason is simple. Most import-export business arrangements or contracts stipulate the form of payment and the credit (delayed payment) terms the buyer or the seller offer or require. Once the contract is singed it may be too late to alter the terms and this may seriously limit the scope of the facilities your banker may be able to offer you.

Business Plan: If you have an up-to-date business plan for your company, showing intended capital investments and forecast revenue and expenditure for the coming three to five years, this is an excellent document to produce during discussions with your banker or financial adviser.

If, on the other hand, you do not have such a plan, you may find it useful to draw one up. It will be of great value to you personally, apart from anything else. It will also add to your credibility when you discuss your credit request with lenders. You should be able to prepare such a plan yourself, with the assistance of your qualified status is necessary. You may also ask an outside accountant or consultant to prepare the plan for you. The outline of a short, simple but effective business plan is shown in Box 7.

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