The purpose of this power-point presentation is to give you a brief background on the Effect/Impact of globalization on Small Scale Business.

2.  Process by which the
people of the world are
unified into a single
society
 Integration of national
economies into the
international economy
through trade, foreign
direct investment, capital
flows, migration, and
spread of technology.

3. Small and medium enterprises(SMEs) or Small and
medium-sized businesses(SMBs) are companies
that maintains revenues or a number of employees
below a certain standard. SME firms tend to spend
a lot of money on IT and, as a result, these
businesses are strongest in the area of innovation.
The need to attract capital to fund projects is
therefore essential for small and medium-sized
enterprises.

4.  At present the Small Scale Industry (SSI) constitutes a
Very Important Segment of the Indian Economy & has
emerged as a Dynamic & Vibrant Sector of the Economy.
 The Small Scale Industry Sector holds the Key to
Economic Prosperity of the Indian Economy. The Small Scale
Industry has grown phenomenally during the last Six Decades
& has acquired a very prominent place in the Socio –
Economic Development in the Country.

5.  This Sector accounts for about 40% of the Country’s Total
Exports.
 Various Policy Initiatives undertaken by the Central Govt & Various State
Govts whether by way of Incentives or protection, have helped the sector in
acquiring the Status of a Major Contributor in the Growth Process.
 The Process of Liberalization & Economic Reforms,
since 1991, while creating Tremendous Opportunities for the
Growth of Small Scale Industrial Sector, have however thrown
up new Challenges for the Sector. This changed Industrial
Scenario, has called for building Competitive Strengths,
Improving Quality & Productivity, Introducing Technology Up
gradation, reducing Wastages & Rejections, Intelligent Use of
Resources, Employing Modern Management Techniques etc in
order to withstand growing competition & for ensuring sustained
growth.

7. Providing Technological
Innovation
Providing Employment
Providing Competition

8. Importance to Big Business
Greater Employment
Opportunities
Availability of Greater Variety
of Goods

9.  Innovation invention and are part of the
basics of our economy. Studies show that
the incidents of innovation among SMEs
workers are significantly greater than
among workers in large businesses.
 Small firms produce two and a half times as
many innovation as large firm relative to the
number of person employed.
 According to the U.S office of
Management and Budget, more than half
the major technological advances of the
twentieth century originated with individual
inventors and small companies.

10.  Small firms have added more than their
proportional share of new jobs to the
economy.
 Small firms hire a larger proportion of
employees who are older worker,
younger workers, woman, or workers
who prefer to work at part time.
Furthermore, SME provide 67% of workers
with their first jobs on the job training in
basic skills.

11.  SMEs businesses challenge higher, established firms
in many ways, causing them to become more
effective and more alert to consumer needs.
 Nowadays, SMEs can compete with a large firms in
all respects. But a small number of enterprises,
each competing in its own particular area and its
own particular way, together have desire
competitive effects.
 Thus, several small enterprises together add up to
reasonable competition for the no longer small
ServiceMaster.

12.  Most of the products made by big
manufacturer are sold to consumers by
SMEs. Small businesses provide big
businesses supplies and raw materials
they need with many of the services.
 Similarly, McDonalds's depend on heavily
on small agricultural distributors, bakeries
and wholesalers to supply many of the
ingredients that it needs to make Big
Macs. It also hires local maintenance
contractors to services its electrical signs
and clean its parking lights.

13.  Small firms also offer a variety of goods and
services to each other and to much larger
firms. General Motors relies on more than
32000 companies for parts and supplies and
depends on more than 11 000 independent
dealers to sell its automobiles and trucks.
 Large firms normally buy parts and
assemblies from smaller firms for one very
good reason: It is less expensive than
manufacturing that part in their own
factories. This lower cost eventually is
reflected in the price that consumers pay
for their products.

14.  Globalization involves businesses which
are carried out around the world. To
carry out the business, a sufficient
number of workers are needed in every
country the business is carried out in.
 Therefore, this will open up more job
opportunities for people in the respective
countries.

15.  Certain countries provide goods which
are only available or mostly available in
the country itself only.
 The goods in different countries can be
distributed to other country which does
not have the specific goods. And with
this, everyone in the world would have
equal access for food, medicine and
others.

16. Larger countries take advantage
from lower wage rate and their
natural resources
Negative
implications for
Indian Women
Outsourced manufacturing and white
collar jobs
Fast Food
Chains

17. Fast Food Chains
 Fast food chains like
McDonald and KFC
also has a relation to
negative effect of
globalization as they
are spreading fast in
the developing world.
 People are consuming
more junk food which
has an adverse impact
in their health.
Larger countries take
advantage from lower
wage rate and their
natural resources
 Agricultural goods are
usually the main export of
the poorer countries, but
larger countries often
subsidize their farmers. The
inequality in trade is
involved.
 In addition, reducing tax
sometime just bring the
benefit for rich countries
than for developing
countries like Vietnam.

18. Negative implications
for Indian Women
 Women that get their
jobs are always paid
less, mentally and
physically unhealthy,
demeaning, or
insecure. Women are
suffering two fold.
 Their domestic
responsibilities are not
alleviated as women in
developing countries
more into the work
force. Women work
two full time jobs. They
are paid almost to
nothing when working
in a factory.
Outsourced
manufacturing and
white collar jobs
 Manufacturing work is
outsourced to give
profit to nation like
China where they
provide lower cost for
goods and wages.
 Many employees has
lost their jobs due to this
outsourcing especially
programmers, editors,
scientists and
accountants because
they outsources the
manufactures to
cheaper locations

20.  The Census of Establishment and
Enterprise 2005 stated that only 16% of
SMEs respondents indicated a
dependence on financing from financial
institutions that is banking and
development financial institutions.
 The study highlight that the main
obstacle faced by SMEs is when seeking
financing from banking institutions.

21.  Figure 1 shows the responses of SMEs on the constraints to
accessing financing from financial institutions.
5.30%
55.20%13.10%
10.70%
9.80%
5.90%
Constraints of SMEs in Accessing Financing from
Financial Institutions
FI deem business
plan as not viable
Lack of collateral
Insufficient document
to support loan
application
No financial track
record
Long loan processing
time

22.  In year 2001, Bank Negara Malaysia’s SME
conduct a survey which shows that only 5%
of the SMEs had fully automated their
operations, while 45% were still labor
intensive. In addition, the SMEs reported
that 48 % low usage of computers in their
daily work.
 SMEs technological constraints lead to low
efficiency and production quality. Their
capabilities to monitor and respond to new
environment and development has been
hinders.

23. Lack of Training
 Operators are not willing
to release their staff for
more than ½ of 1 day for
training or even benefit
themselves of training
opportunities, which is
they consider it as a
waste of resource
because the can not
readily trace the training
outcomes directly to the
firm’s bottom line.
High Cost
Infrastructure
 The mainstreams of SMEs
are still placed on land
not designated for
industrial use.
 The dispersed pattern of
SMEs has hindered the full
realization of synergies in
the industry clusters, and
created additional
difficulties of providing
common user
facilities, thus its affecting
the ability and the SMEs
capability to meet the
requirement of their
customers

24.  To improve their business capability, the
SMEs have highlighted that they require
advice mostly on marketing, finance
business administration and
management, accounting, information
technology.
2%
23%
28%
21%
19%
7%
Advisory Services required by SMEs
Others
Marketing
A/C, Finance & Audit
Business Admin
IT

25.  Emphasize on providing more information and
knowledge to business.
 SMEs should be encouraged to increase their
competitiveness in the global market by
assimilating IT and knowledge management in
their business efficiently and in order to be
maintainable in the knowledgebase economy.
 Government agencies should implement more
policies that encourage SMEs to be innovative in
their production and marketing of goods and
services.

26.  Supply chain activities
(Purchasing, Producing, Storing, Distributing &
Selling) should be performed more efficiently
by firms than their competitors in order to bring
more value to their customers and increase a
competitive advantage.
 Lack of efficient executive is also felt. So, the
thrust areas like marketing and salesmanship
besides general entrepreneurship training
should be emphasized in the schools and
college programme.

27. Need for Institutional Support :
Therefore, Small Scale Enterprises Sector needs a lot of support
& encouragement for its rapid growth from both Central & State
Govts. Setting up of Small Enterprise requires Infrastructural
Facilities & Financial Support as Entrepreneur on his own cannot
arrange all these requirements. Entrepreneur also requires
support for marketing his Product(s) / Service(s), he requires
Technological Inputs, therefore, a strong Governmental
Institutional Network is required.

28.  The Governmental Institutional Support
Network can be broadly be classified into Two
Categories as under :
Govt. Institutional
Support Network
Central Level
Institutions
State Level
Institutions
• District Industries
Centers (DICs)
• Directorate of Industries
& Commerce (DI&C)
•Technical Consultancy
Services Organization of
Karnataka (TECSOK)
• Khadi & Village Industries
Commission (KVIC)
• National Productivity
Council (NPC)
• Indian Institute Of
Entrepreneurship(IIE)

29.  SMEs can attain considerable growth with the help
of government policies and support from other
country’s investors in terms of training and funding.
 There are still many constraints facing the
sector, such as costly sources of finance, global
competition, quality issue an difficulty in meeting
international quality standards, poor business
knowledge, lack of international marketing
experiences, and unfavorable attitude to
training, and low R&D activities.
 Globalization influences small businesses in a
variety of ways. It is important for them to
constantly evaluate opportunities so that they can
optimize their potential in the market.