Small & Medium Enterprise (SME)

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SME in Reviving Economy.... and role of Management Accountants to revivify SME catergory business. (pakistan)

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Small & Medium Enterprise (SME)

  1. 1. SMALL & MEDIUM ENTERPRISE (SME) Presenter: Aamir Ali Stage III Institute of Cost & Management Accountants of Pakistan
  2. 2. Turning Potential Into Profit . . . <ul><li>Why SME </li></ul><ul><li>SME In Pakistan </li></ul><ul><li>Obstacles & Solutions </li></ul><ul><li>The Step To Future </li></ul>
  3. 3. WHY SME ? <ul><li>SME IS NOT A SECTOR OF ECONOMY </li></ul><ul><li>BUT </li></ul><ul><li>IT IS A CATEGORY OF ECONOMY </li></ul>SME IS THE BEST REVIVER !
  4. 4. POTENTIAL OF SME <ul><li>Creates Large Scale, Low Cost Employment Opportunities </li></ul><ul><li>Uses Locally Available Inputs </li></ul><ul><li>Mobilizes Small & Scattered Savings </li></ul><ul><li>Develops Entrepreneurship </li></ul>
  5. 5. SME IN PAKISTAN <ul><li>SME POLICY DEFINES SME AS: </li></ul><ul><li>Business Category With : </li></ul><ul><li>. EMPLOYMENT SIZE up to 250 PERSONS </li></ul><ul><li>. CAPITAL `` Rs. 25 MILLION </li></ul><ul><li>. SALES `` Rs. 250 MILLION </li></ul>
  6. 6. SME & EMPLOYMENT
  7. 7. SME: GDP & EXPORTS GLOBAL BANGLADESH PAKISTAN COUNTRY 40 - 50 30 40 % OF GDP -- 55 25 % OF EXPORTS
  8. 8. OBSTACLES <ul><li>FINANCING </li></ul><ul><li>INFLATION </li></ul><ul><li>TARIFF ANOMALIES </li></ul><ul><li>RISK MANAGEMENT </li></ul><ul><li>LOW PRODUCTIVITY </li></ul>
  9. 9. OBSTACLE: FINANCING <ul><li>COMMERCIAL BANKS GAVE LESS THAN 12% OF TOTAL LOANS!! </li></ul><ul><li>GRAMEEN BANK’S EXPERIENCE </li></ul><ul><li>MANAGEMENT ACCOUNTANTS: </li></ul><ul><li>POINT OUT LESS RISKY BUT MORE PROFITABLE BUSINESS </li></ul>
  10. 10. OBSTACLE: INFLATION <ul><li>SHUT DOWN BUSINESS </li></ul><ul><li>DECREASE PROFIT </li></ul><ul><li>INCREASE PRICES </li></ul><ul><li>BUT GLOBAL COMPETITION !!! </li></ul>UNDESIRED
  11. 11. INFLATION… <ul><li>MANAGEMENT ACCOUNANTS TECHNIQUES: </li></ul><ul><li>MARKETING STRATEGY </li></ul><ul><li>PRICING STRATEGY </li></ul><ul><li>TRANSPORTATION MODELING </li></ul><ul><li>LINEAR PROGRAMMING </li></ul>
  12. 12. OBSTACLE: TARIFF ANOMALIES <ul><li>LACK OF KNOWLEDGE OF: </li></ul><ul><ul><ul><ul><li>TAXATION LAWS </li></ul></ul></ul></ul><ul><ul><ul><ul><li>GLOBAL MARKET INFORMATION </li></ul></ul></ul></ul><ul><li>MANAGEMENT ACCOUNTANTS ROLE: </li></ul><ul><li>TAX CONSULTANTS </li></ul><ul><li>MARKETING MANAGERS </li></ul><ul><li>GLOBAL INFORMATION BUT LOCAL WISDOM </li></ul>
  13. 13. OBSTACLE: RISK MANAGEMENT <ul><li>45% DON’T ALLOCATE BUDGET FOR R&D </li></ul><ul><li>PHILOSOPHY: PRODUCE, SALE AND EARN </li></ul><ul><li>DON’T MAINTAIN FINANCIAL DISCIPLINE </li></ul><ul><li>MANAGEMENT ACCOUNTANTS ROLE: </li></ul><ul><li>BUSINESS ANALYSTS </li></ul><ul><li>BUSINESS RISK MANAGERS </li></ul>
  14. 14. OBSTACLE: LOW PRODUCTIVITY <ul><ul><li>36% SME FAIL WITHIN 5 YEARS !!!!! </li></ul></ul><ul><li>MAJORITY IS NOT GETTING GOOD RETURN…. </li></ul>WHY? MANAGEMENT ACCOUNTANTS: “ USE OF TRADITIONAL METHODS OF COST REDUCTION”
  15. 15. COST REDUCTION APPROACHES MANAGEMENT ACCOUNTANT’S TRADITIONAL Reduce Unnecessary Process from Production Reduce Parts of Production Reduce Inefficiencies Hire Cheap Labor Effective Utilization of Material Use of Sub-standard Material Accounting Fixed Cost and Capacity Determination No Such Concept Effective Pricing Strategy Not as Efficient as Management Accountants can do
  16. 16. THE STEP TO FUTURE <ul><li>CHALLENGES CAN BE MET PROFITABLY!! </li></ul><ul><li>“ IF STRATEGIC LEADERSHIP OF MANAGEMENT </li></ul><ul><li>ACCOUNTANTS” IS GIVEN THE TASK OF POLICY </li></ul><ul><li>MAKING AND MANAGING ECONOMIC AFFAIRS… TO </li></ul><ul><li>REVIVE THE ECONOMY.” </li></ul><ul><li>… </li></ul>

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