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MGT601 - SME Management - Lecture Handout 02

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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.

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MGT602 - Entrepreneurship - Lecture Handout 42

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PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT
DECISIONS (Continued….)

CREATING AWARENESS OF THE NEW VENTURE

In the early stages, the entrepreneur should focus on developing awareness of the products offered.

Publicity is free advertising provided by a media outlet. Many local media encourage entrepreneurs to participate in their programs. The entrepreneur can increase the opportunity for getting exposure by preparing a news release and sending it to as many media sources as possible. For radio or TV, the entrepreneur should identify programs that may encourage local
entrepreneurs to participate. Free publicity can only introduce the company. Advertising can be focused on specific customers.

Internet Advertising

The Internet is an excellent medium to create awareness and to effectively support early launch strategies. Creating a website is the most important first stage. The website should indicate: Background of the company. Its products, officers, address, telephone and fax numbers. Contact names for potential sales. Direct sales from the website may also be available. Significant advertising is needed to create interest and awareness of the existence of the website. It is important to change the content of the website as necessary. The entrepreneur may also consider using a banner ad, small rectangular ads similar to billboard ads that appear on browser websites.

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