Small Business Role in Development of Economy


Published on

Published in: Business, News & Politics
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Small Business Role in Development of Economy

  1. 1. Research Methods & Techniques Final Report/ Research Paper By. Fahad Ali Mirza ID # 121103 0
  2. 2. Role of Small Business in GDP Abstract:This research paper basically understands of to what extent Small Business contribute to the GDP of the Pakistan and how we can utilize them to the Growth of the Economy and making money of it. Small Business make many big business and having sound Future. 1. Introduction: Pakistan is a Developing Nation. We all are striving hard for the growth and stability of the Economy and Country. In the population of 183 Million we Pakistanis are somehow managing the Resources and maintaining the Standards that every individual has set up. Small business in Pakistan are we good. They are making handsome amount of money. There are many business in Pakistan that is making quite good contribution in the GDP of the Country. Basic Objective is to calculate and analyze the contribution and what we can achieve from them if we add them to our GDP and use them for the Betterment of the Pakistani Economy. Small business are the initial of the Big Entrepreneurs. Looking at the trend and market the Small Business would best to be observed and making good amount of money. Questions which will be answered is; their average income? Their Sources? And their Turnover? 2. Problem Statement: Based on the Market Views and trends. The small business such as Cigarettes, Pan, Confectionary and Drinks (Khokhaz) are making good money and what if we add them to the GDP and use them as a source in small areas. 3. Hypothesis: H1: If Small Business are Included in the GDP, it will lead to the More Economic Development and more of the Development and contribution in the Country Progress. H0: If Small Business are not included in the GDP, Economy will still progress but could be Slow and the Development of country will not be at such pace but Personal development will be there. Reasoning: According to the Conduct the hypothesis are developed on the following Basis:   Cigarettes, Pan and other items are the Addiction so People do take them regularly. Even small Area where Population is low, the Business still make Money. 1
  3. 3.  Availability of the different Brands according to the Customers’ Demands. Measure:  Dependent Variables: In the Given scenario three things would be considered as the dependent Variable: a. Performance b. Contribution c. Efficiency If these three things are developed and marked the economy will progress and make good outcome even in the worst condition. The recent trends in the market have showed that the country on the basis of the small business does not have any impact on the economy even in the period of the Recession. And in the great depression Period. The Example is here of the general Motors of the USA. In Recession period Government gave them the bailout package to continue the production and maintain the certain level.  Independent Variables: Independent variable are those which can’t be predicted or can’t be scrolled. Addiction is independent variable. The addicted person would take it at any cost no matter how expensive the product would be will affect from the Proper treatment he/she could take. If the Small business are not included in the GDP the Economy can lose the basic element of success and major part to show the progress in the economy. Furthermore the income generated from there could be used as the petty cash. 4. Literature Review: Literature review is the process in which the basic elements of sources are defined and explained in all modes and method of this Research paper.  Data Sources: Sources for the data are not purely defined. This Research paper in based on the primary Sources of the data. The Initial Data was not available and the Data which could be linked is not up to the level. Basically this small Business exists more in the Asian Region or you can say in the Developing Countries.  Search for the Data Sources: The data Sources are the true Business entities. Personal Visit to the small business are the best way to gather information. Personal touch to anything will give extra value and satisfaction to anything you are working on.  Evaluation of Data: Data that is collected need to be evaluated. To evaluate the data we have to be very careful and make it accessible.As this Data is the Primary Data, the Evaluation could be done through the 2
  4. 4. seniors and other representatives of the field. If the Data is evaluated and up to the standards as required then we can proceed further.  Documenting the Literature: As we have collected all the Data required for it. Small business are good source of the money making and can contribute major role in the development of any economy especially the Developing Economy. All the data will be documented. 5. Data Collection: Currently there is no official information or data available for it. I would be using the primary data for it by conducting the survey in the market. Following would be the modes of Data Collection: • Interview Interviews are conducted straight to the owners of the business. As it is not that much difficult to reach them. Interviews were conducted in the Area of Defence and its surrounding. As it the basis of the Research Paper. • Survey Survey includes the general talk and marking the opinions. The survey was very open and can’t be predicted. It was general that how people think towards that small business. • Personal Sources Sometimes the customer loyalty is more than the price of the product. People tend to believe that customer retention is more important as compared to the new one. JADDI PAN SHOP in Defence, is the oldest and was the first one to start in Lahore Defence. I have seen him from Zero to Hundred know. • Observation This is the general observation while standing at the side of the stall or shop and viewing the customers. Observation is the biggest element in this Business Evaluation. Many business which are known included in the Tax ratio are given tax payment through the observation of the representatives. 6. Evaluation: Evaluation Means the Purpose, Scope, Audience & Authority and Reputation. It should cover the Basic things that are required and so remaining in the limits of the Knowledge regarding the Topic and should satisfy the Audience. When coming to the Authority and Reputation the audited reports are considered to be the best. In the Primary data the specialist of the field comes in the field very well. Below are the basic thing in regards of the profit and cost are explained so that the evaluation becomes Authenticity and accepted by all. 3
  5. 5. 7. Different Products Price, Cost and their Profit Analysis: There are some Few Common items selected. There profits, prices and cost are mentioned so that we can easily calculate the Income Generation. The Below mentioned Rates are of Single Product. Product Calling Card Cigarettes Drink 250ml Drink 500ml Pan Easyload Chips Water 250ml Juice Fresh Juice Price 100 100 20 45 15 50 10 25 15 50 Cost 94 90 13 40 10 47.5 8.5 21 12 40 Profit 6 10 7 5 5 2.5 1.5 4 3 10 The above mentioned Products are general and almost available in every stall or Khokhaz. In order to make this Research paper general and applicable we have to take these products as the universal code. The Above mentioned profits can also vary depending upon the quantity and supply and most importantly the area in which the business is being operated. The Area in which the research is conducted is Defence. There are almost 50 Khokhaz with high customer inflow and charging capabilities. The profit of the business solely depends upon the customer and the amount of the products offered to the customer. There are certain items which are high on profit such as imported Cigarettes, drinks, Juice and other things. That’s where the profits major portion is generated and market. People living in these area have high demands so the business demands for the high price from the customers. 8. Profit and GDP Evaluation: In Lahore area of Defence these Khokhaz make handsome amount of the money. The Customer In and Out is very high rate especially after 3 PM. And they are open till early in the morning. On the basis of Observation the Khokhaz are making good money. Their Average Income per day goes by 2,000/- to 3,500/- in small scale. While known small Khokhaz are making more than it and heavy amount. They are considered to be the Hub of all the Activities. If Government is able to hold them under tax it will create an impact in the GDP. An average Khokha make about 20,000/- to 25,000/- rupees per month after deducting all the Dues and Expenses and for the Known there is no counting. The general observed value is sometimes even more than 1 Lakh per month. Jaddi Pan Shop is the best example. From nowhere to here. 9. Capital Analysis of Business: 4
  6. 6. The amount of the capital required for this business is not very high. With very low amount of Capital Business can be started. This Business is based on the promotional level. Different companies facilitate for the Business person to give a proper view of the Shop and decorate it. Owner has nothing to do with it. All the investment will be made by the company. The owner just has to make the Capital Investment of Shop and Utilities. Which can’t be more than 50,000/rupees. 10. Analysis in View of GDP Contribution: GD P L AS T GDP GROWTH RATE 3.59 PREVIOUS HIGHEST 2013-06- LOWEST FORECAST UNIT 4.36 10.22 -1.80 3.60 2013-12-31 PERCENT 4.36 10.22 -1.80 3.60 2013-12-31 PERCENT 30 GDP ANNUAL GROWTH RATE 3.59 2013-0630 GDP CONSTANT PRICES 10379262.00 2013-06- 9785335.00 10379262.00 8216160.00 10428749.29 PKR 2013-12-31 30 GROSS FIXED CAPITAL FORMATION GROSS NATIONAL PRODUCT 1372742.00 2013-06- MILLION 1362100.00 1569742.00 1342291.00 1373601.08 PKR 2013-12-31 30 10379262.00 2013-06- MILLION 9785335.00 10379262.00 3778155.00 10607522.53 PKR 2013-12-31 30 GDP PER CAPITA 672.10 2011-12- MILLION 668.55 672.10 187.75 672.77 2012-12-31 USD 2675.72 2763.41 584.40 2770.72 2012-12-31 USD 211.00 231.00 3.70 233.12 2013-12-31 31 GDP PER CAPITA PPP 2763.41 2011-1231 GDP 231.00 2012-1231 USD BILLION The current GDP is believed to be estimated and forecasted by the end of 31-12-2013. The Developing countries GDP 3.60 is considered to be very low. According to the International Standards it is believed that it should be above the 4.00 percent. This small business of Khokhaz is now become a big industry type in Pakistan. Almost in every corner of the Pakistan you will find that. If government is able to add them in there GDP it will help a lot in increasing the GDP of the Country. 11. Data Interpretation: The Data Collected is all on the basis of the Primary Research. No Data regarding the Khokhaz are available. The data which might link up is not to the best of the Knowledge or does not have any credibility. According to the Data Collected the Khokhaz are good business with small amount of the Capital investment. And it’s the successful business in any sort of time and state. People Start it from single shop or stall then Reach to the top level. And more they expand their business it to the top level making it prominent and creating a prestige for the people and themselves. 5
  7. 7. The Data which is collected is only from the Posh Area of Lahore which is Defence and its Surrounding areas. As they are accessible and easy to manage. Data Collected from these are shows the trend in that area in terms of Economy and Money. 12. Research Methodology: The Data collected is Primary data. Primary Data is that data that has never been Collected or explained in such format. The data which you can also call as a raw fact. After proper processing it becomes the proper Information or the Primary Data. Design that was used in this Research Paper is the Exploratory. Exploratory means that the concept that has never been explored or searched. While Sampling Design adopted in this Research paper is of Non-Probability. Which Includes the Convenience, Purposive and judgment. Sampling is done to for the 3 broader Reasons.    Time Cost Resources Sampling is done for the sake of these three things. It is not possible to evaluate each and every part of the city or area for the research. Time is very limited so the cost is very high as the time increases and it is obvious that Resources are always limited. That what economics has taught me. 13. Limitations: During the conduct of the Research Paper the limitations were very high. Business entities were not willing to share their views regarding the business turnover and other factors. So one should come up with the sources or links to conduct the research paper. More importantly this semester is of only 2 months so it’s very hard to cover all the practical area in respect to field and data collection. Basic reliance is on the sampling and it might get hard how to sample the size and how to conduct each subject. Another important thing is to be able to have a view regarding the GDP. In getting the small business with big money under the GDP there will be some obstacles in this. We believe that their earning are not as much secondly it’s the trust level of the business on the government that their money will be spent on them. Most importantly the Small business sometimes does not have the capability to pay that amount so another factor of black money comes that may temper the system. 14. Conclusion: In Pakistan Small business are very important and a good source of Income. With very little amount of investment the entrepreneurs can earns thousands of rupees from it similarly if Government is able to avail it as a opportunity and facilitate them and provide certain incentives the GDP will not only improve but also show some positive vibes. When GDP improves it always attract the investor to invest and make money from it. 6
  8. 8. On the General basis an Individual Khokhaz Earns a daily amount of rupees 1,000/- to 1,500/- an average one. The other known shops on the major location can earns more than it and have a very high outcome from the small amount of the Investment. Current GDP Ratio is 3.60 percent. And it can increase easily if we add them. As Addiction is hard to go unless treated properly. References: Gross Domestic Product. [March 20th 2010]. An Economy’s All. [February 18th 2010] Pakistan GDP. [January 4th 2013] The economics of small business finance. [April 20th 2007] Differentiating entrepreneurs from small business owners. [February 18th 2009] Berger and Udelle (1998): Journal of Banking and Finance, 22, 6-8, 613-673. Acs Z., Audretsch D. 1987. Innovation, market structure, and firm size. Review of Economics and Statistics, 71: 567–574. Aldrich H. 1990. Using an ecological perspective to study organizational founding rates. Entrepreneurship Theory and Practice. Spring: 7–24. 7
  9. 9. Acknowledgement First of all many thanks to ALLAH almighty, who bless me with a lot of skills and abilities. Through which I’m able to complete my research with in time. I would also like to thank Sir. MudassirFarooqi whose way of teaching, method, guidance support me to do this task effectively and efficiently. The blessing, help and guidance given by him time to time shall carry us a long way in the journey of life on which we all about to embark. 8