Introduction Of Dissertation
The second section of the dissertation deals with the Literature review wherein the scholar is engaged in collecting the secondary information which will further assist in analysing and evaluating the concepts that have been highlighted in the introduction chapter. Herein, data is collected from past conducted research and has been presented in the following section. A literature review is also a means of analysing and fulfilling the gap between the past and present research (Beuren, Ferreira and Miguel, 2013). The scholar is deemed to correlate the information from varied sources such as books, journals and online websites. Further, a critical evaluation will be made to the opinions of the author that has already being presented in the section. Furthermore, in the current study on the SME development and the brand management on the international market, the significance of small-scale industries have been enumerated. Furthermore, the study also highlights the essence of SME in the international market. Moreover, the research is conducted so as to analyse and evaluate the limitations of small scale industries in the global market and also to assess the influence of import or export in the small and medium sized surgical industries. Last but not the least, the study will present the role of Chamber of Commerce in encouraging SME to go beyond national boundaries.
SME can be defined as those organisations which are generally micro, medium or small in size. The size is the major determiner or aspect of categorising under the respective head. Centeno, Hart and Dinnie, (2013) denoted that, SME generally has 250 or fewer employees present in the enterprise and the annual turnover of the respective companies shall not exceed 50 million pounds. However, the number of employees and an annual turnover of the country varies from region to region. These are independent firms which means that it is not the part of any other company and operates as a non-subsidiary. The size of the firm also depends upon the finance or capital that is available to the entrepreneurs. These firms generally operate or conduct their business operations in the national or domestic boundaries. Each of the corporations has their own aims and objectives. However, in India, the small enterprise largely functions to produce those goods and services which represent the culture and history of the region. It is the major region for its failure in the national as well as international markets (Renton, Daellenbach and Davenport, 2016). The selection of wrong products and services are the prime reason behind its losses suffered in the past period.
SME in the International Market
Mitchell, Hutchinson and Quinn, (2013) has significantly defined the international market as a place wherein the business gets the chance or possibility to sell and distribute their products and services in the host nations. There are several means and measures to enter into the global market, amongst which franchising, licensing, amalgamation; merger are the most significant moves. However, it is not easy for the small and medium size enterprise to opt for the following methods. These will degrade their authenticity and originality from the goods. Eggers and et.al., (2013) assert that, nonetheless, the international market is the most prominent means through which the company can gain market to compete against other rivalries and turn around to be a large enterprise with getting collaborated with any other companies.
As stated above, it aids the small enterprise to gain access to the foreign currency as well as use the intellectual properties for the development and growth prospects of the enterprise. For instance, The Sialkot in Pakistan has the largest amount of small and medium industries in the world. There are approximately 900 to 950 SME present in the city that is located towards the north and east Punjab border. Although, these organisations will face a lot of challenges and issues while entering into a global market. As per the viewpoint of the Du Plessis, Indavong and Marriott, (2015), SME has a large amount of sunk and fixed cost associated with it. These will only be recouped when the small and medium enterprise gets access to the international market and recover the cost of manufacturing and other expenditure from the global market. When the small and medium enterprises get access to the international markets, then it will expand their scope and volume of activities. The host nation will offer larger and greater form of opportunities to these companies and aids them to compete against other industries by using the latest technologies so as to produce the products and items in extravagant quality. In Accordance to Renton, Daellenbach and Davenport, (2013), the several other advantages and benefits that are associated with the international market includes exploitation of the economies of scale in the foreign market. It also includes reducing the amount of risk by sharing and allocating to cost to varied factors. These industries have a wide scope to use the research and development opportunities in the foreign markets and deploy the same in enhancing the product as well as improvising the field by adding some additional services and product. In order to gain the finance to carry out its operational activities, the international market provides the enterprises with the wide range of possibilities.
In an opinion to the Santos-Vijande and et.al., (2013), exports are not the only means of getting high growth and success of the companies rather it is the starting point which links or accompanies the firm in developing its services and products to gain more prominence in the international market. These are some of the opportunities which have been enumerated in regards to the small and medium size enterprise. However, it is not that easy to enter the international market, especially for the small sized firm. There will be a high amount of risk associated with which will also create hindrance for the companies. In the international market, there are a wide range of large sized companies that is rendering similar services at different prices. In the 21st century, wherein stiff competition exist between the most popular and prominent firms, it will become difficult or hard for the small firms to render their products in the host countries.
De Gomez and Kang, (2015) depicts that due to the lack of resources regarding finance, manpower, technologies and high-quality raw materials, it becomes difficult for these firms to compete against each other, especially in the global market wherein numerous corporations from diverse regions are in the race. For instance in the case of Acumen Surgical Pvt Ltd, which is the most conspicuous surgical small size company of Sialkot. It has been significantly contributing its products and services to its most valued an trusted customers from the past three decades. The goods and services that are being rendered by it include the surgical, orthodontic and dental instruments. The company has maintained a high reputation for supplying quality products and services to its customers. However, it would not have been an easy task to function effectively and efficiently from a long duration. Entering into the international market is the most important dream and vision of the small scale firm. The respective SME requires the knowledge in the form of the political, social, cultural and legal exposures of the host countries. Dimitratos and et.al., (2016) has ascertained that there were only 50 to 100 employees working within the respective company and richness in the few number of engineers and research developers. Despite, being a limited amount of resources in the form of employees and sales, it has gained so much of prominence in the domestic markets.
However, in order to the start its services in the international market, the respective small size firm will require a great amount of knowledge, skill and power. Not only the Acumen Surgical, perhaps the other small firms that are operating in the respective region needs all the essential resources to expand its operations. D'Angelo and et.al., (2013) assert that the businesspersons that will be engaged in expanding its services in the international boundaries will postulate knowledge regarding the political and economic conditions of the host countries. In order to the export the goods and items in the foreign market, small sized firms will need to evaluate the benefits or losses associated with serving the goods in the respective market. For instance, the currency of Pakistan is quite weak which displays the economic condition of the nation. While exporting its equipment regarding the dental and clinical syringes in countries such as America, UK, India, Japan and Italy will be quite beneficial for it as this will result in fruitful results for the company.
Eriksson, Fjeldstad and Jonsson, (2016) has contended that there are several small and medium sized firms of the European Unions (EU) which are still troubling to get internationalise their operations, despite the fair and open trade framework policies within the country. It has been ascertained that out of the large number of the SME; there are only 25% enterprises which will be engaged in rendering its services across the world while the others will be involved in the distribution of the same to the specific member of the EU nations. Several policies and practices will also be adopted by the Commission and authoritative of the respective nations so as to provide access to the small sized firms to enter the foreign market. This will also aids in gaining sustainable growth, profitability by the corporations along with the capabilities to enhance its performance and face stiff competitions. In addition to the above, it can be stated that the foreign market is a means of exposure for the medium sized firm in order to develop their capabilities, make the use of the technologies and other resources, create policies and plans which ensure growth and prosperity.
SME has significantly contributed towards the growth and development of the economy. In the Pakistan and the European Union, it has not only contributed towards the economic development and meeting the social objectives rather it has also emphasised on creating employment opportunities for the citizens and unemployed. Onkelinx, Manolova and Edelman, (2016) confers that around 95% of the private organisation comprises of the small size enterprises. It has previously laid efforts to remove unemployment from the country by recruiting a wide range of employees and labourers in the manufacturing of goods. In other nations such as Turkey, the major source of employment for the people is the small scale industries. Apart from this, in regards to the Acumen Surgical company which is the manufacturer, wholesaler and distributor of the dental and clinical products has employed approximately 125- 150 employees to manage its operations and production process. As per the viewpoint of D’Angelo, Majocchi and Buck, (2016), Sialkot region in Pakistan is enriched with the small and medium-sized firms. Therefore, it can be denoted as the larger recruiter of labourers. It also brings in varied kinds of the individual from varied regions and parts of the world. A wide range of goods will be despatched and marketed in the varied regions of the world which further will render the high amount of prosperity to the company and economy as well. Further, for this purpose, brand management and creation is an essential concept.
Brand management of SME
A brand can be termed as the most imperative asset of the firm which cannot be seen and touched but has a highly influential power on creating the demand for the products and services of a particular company. Dickson, Weaver and Vozikis, (2013) has stated that brand is that psychological phenomenon which measures the company's reputation in the market as well as the concept wherein the consumers makes decisions regarding the buying or purchase of goods of a particular company. An appropriate design, name and image to the products of a company can lead it's towards success. It is the most valuable and significant part of the each and every business enterprise. However, Cerrato, Crosato and Depperu, (2016) asserts that branding is just a waste of time and resources of the small scale enterprise. The cause behind the current statement is the lack of availability of financial resources with the medium size firms. The finance and operations of the concern are not high enough so as to spend the money on the advertisement and branding of activities. Santhosh and Subrahmanya, (2016) argued that with the passage of time, opinions of these businesspersons has changed. The current market challenges faced by the managers has changed their outlook. Some of the major factors which will contribute towards the diminishing demands of the small and medium-sized enterprise include the waning loyalty and trust of the customers, their purchasing power and accelerating competition.
Onkelinx, Manolova and Edelman, (2016) denotes that brand aids in creating distinction. The above correspondent statement can be explained by conferring that brand aids the managers or leaders of the SME to present and coincide their ideas, thoughts, values, objectives, strengths and mission into a singular image or statement which represents as distinctive identity. After reviewing the current trends and environment prevailing in the country, it has become more relevant to focus on brand management issues. This will further assist the managers and other personnel of the enterprise to gain prosperity and popularity for its product. In the opinion of Kahiya, (2013), the major benefit of brand management for the small and medium-sized enterprise is that it presents a chance so as to create a strong brand image in the international market which will further assist in competing against its competitors. In regards to the Acumen Surgical, brand management is the utmost important tool that assists it to gain a bigger platform to publicize its products and services. Through a high brand image, it enables the new customers to purchase its syringes and dental equipment as well as gains the loyalty of the existing ones and ensuring them as there choice of the product was correct.
A brand does not only means to spend a huge amount of money on creating copyrights and trademarks rather it includes the presence of the organisation everywhere. Starting from web presence to maintaining public relation as well as printing information on about the product and services on the brochures to keeping personal contacts with the customers.
Dimitratos and et.al., (2016) contended that numerous of SME had formed the opinion that the budgets that are required to create or form a professional brand image are quite high which cannot be offered by these firms. Nonetheless, Miettinen, (2016) argued that forming a successful and strong brand image in the global market will just not requires funds and fortune. Although, there are several other big players in the planetary which tend to have wider resources at the disposal. Contradictory to the this, it can be depicted that there are several other factors which governs or assists the small and medium size enterprise to make a precise space in the global market. These includes the communication of its strengths and ideas which can be presented in the more clear manner. Fir instance, in regards to the surgical organisation of the Sialkot in Pakistan, can create a strong brand image in the national and domestic market through the display of ISO standards used in producing instruments. It will also make the use of its competitiveness in the respective sector or industry along with the after sales services and local presence that it possess. These are some of the most crucial or specific points which when considered by the owners will result in successful brand creation. Al-Hyari, Al-Weshah and Alnsour, (2012) signifies that using the respective tools or phenomenon will aid the small enterprise to create a strong brand image and name within the less amount of budgets thereby building a long term value for the product and services. Furthermore, it can be depicted consistent and concentrated messages are the most spectacular means to create brand awareness amongst people especially leaving an embarking mark in the international market.
Limitations in global expansion
As discussed above, entering into a global market requires huge efforts and resources by the entrepreneurs. There is a wide range of barriers being experienced by the owners and other personnel in order to expand in the international market. Once the goods and services have become prominent in the domestic country, then the business owner feels or necessitates to expand in the international market. In the viewpoint of the Korsakienė and Tvaronavičienė, (2012), the small and medium size enterprise faces lots of barriers and constraints in order to develop and grow the operations in the international market. Some of the major limitations will be discussed and elaborated hereunder.
Durst and Runar Edvardsson, (2012) present that limitation or shortage of resources are the major forms of constraint being faced by the small and medium size firms. Finance is the main player in the entire process of internationalisation. In order to expand the business operations in the international markets, it becomes relevant for the entrepreneurs to accumulate sufficient resources so as to manage its operations. Going global also requires increasing the production and services of the concern. This can only be ascertained by the means of deploying enough resources in the form of manpower and finance so as to conduct the operations in the desired direction. However, Acumen Surgical is a small enterprise which is planning to expand globally. The major constraints faced by the company is in the form of the amount of personnel that required to carry out research and development projects. Furthermore, the annual sales of the company is quite low which generates nominal profit. Therefore, it cannot be utilised for the purpose of expanding the business operations internationally.
Therefore, Beuren, Ferreira and Miguel, (2013) depicts that, lack of working capital by the firm is the major limitation in expanding the business operations internationally. There are several other small-sized industries which such as those found in the Canadian and Australian market which have faced trouble in expanding to overseas market due to the non-availability of resources in form of physical and human. In India as well, there were a lot of small scale failures due to the limited access to the infrastructure. Furthermore, these firms do not have sufficient and capable manpower which can be utilised for the most essential or crucial activities. In accordance to the opinion of Richter, (2008), it has been assessed that analysing the external environment of the country is the most imperious task which needs to be performed by a professional. Lack of such personnel are the major hindrance in developing the company and expanding the operations in the global market.
The small scale firms get exposure to the overseas market by starting their distribution operations. These get started with exporting the goods and services to the international market which is a minor form of capturing the international market. All these require intensive research and knowledge of the legal and political factors. Facilitating SMEs access to international markets, (2004) states that, every nation has its own policies and practices in regards to the export and import practices. Therefore, in order to export the goods and services in the host country, the personnel need to analyse the policies governing the same. The businesses shall only continue operating if the respective practices are in its favour. Otherwise, it needs to drop out the following plan of exporting the goods.
Import is also another important factor which determines the global expansion decision. Evaluating the markets and analysing the information is the significant task. Gang, (2011) has presented that inadequate amount of information is another crucial factor or constraints in the global expansion process of SME. This has been analysed from the past researches the inadequate amount of information about the market in the host country will become a barrier in the internationalisation process. In the present era of extensive information and high amount of internet usage, the small and medium size firms may face challenges in order to enter into another country. For instance, Acumen Surgical while supplying its goods and services into the international boundaries needs to analyse the import and export police of the domestic and host nation. This will aid the company to manage its operations significantly and also gain a wider platform through which it can soon turn out be a large enterprise. Although the company is exporting its instruments in the North-eastern States, Western Europe, South Africa and Middle-East and its main customer comprises of the UK, Italy, Span and Japan. Therefore, the major constraints that are faced by the company in conducting or distributing its products in the international market include the lack of resources and information which hinders in order to expand the operations internationally.
In contrast to the above, Bergestrom, Landgren and Muntzing, (2010) as depicted that there is another factor which is the leading barriers to the small and medium-sized firms in order to expand its business internationally. These firms are unable to contact with the target customers sitting overseas. Recent studies have highlighted that adopting or ascertaining the most prominent and reasonable channel of distribution is the impediment task. There are several channels through which the small-sized firms has the chance to expand its business in the international boundaries. These comprise of the partnership, licensing, exporting, franchising, merger, amalgamation, etc. Ascertaining the foreign market as to get access to the target customers is a major challenge or barrier being faced by the SME. This can clearly be cited from the operations of Acumen surgical expanded to host country. Since export is the major factor, therefore, it has been analysing the policies and practices of the host country.
There are several other challenges or limitations of global expansion for the small scale sector. These encompass of stiff competition and exposure to foreign market and large scale enterprises. Top Barriers and Drivers to SME Internationalisation, (2009) also asserts that numerous other constraints of the SME in internationalisation process include, documentation and other formalities needed to be completed by the owners. This the very tricky and hectic task as the personnel needs to keep revolving the government agencies to take prior permission so as to expand and operate the business in the international market. Apart from this, exchange rate are also another consideration or factor which needs to be considered by the businessperson in order to expand in the overseas market. Apart from this, Centeno, Hart and Dinnie, (2013) also states that technical issues are another limitations which cause the small scale enterprise to change its mind of getting internationalised. This can be cited from the challenges that has been faced by the Acumen while operating its business operations in India. It has faced challenges in form of the currency and market competition. All these problems have created a big problem for the SME to operate in the global market.
According to the view of Renton, Daellenbach and Davenport, (2016) whenever company plans to expand its business in international market then the main limitation which is faced by the firm is a cultural aspect. Value, beliefs, attitude of each country differs from others, so it is very difficult for entities to sustain in other nation without having proper information about cultural background. In some nations use of the black material is restricted in advertisements but without knowing the actual meaning if the firm tries to expand its business in international market then it may be possible that they may face a huge loss. As per the opinion of Mitchell, Hutchinson and Quinn, (2013), it is important to get full information about the culture of a particular country so that firm can market its products accordingly otherwise it may harm the reputation of the company worldwide. The major issue faced by the employer of the organisation that due to the language of people have differed from their own country. Thus, it is very hard to understand their meanings. Sometimes managers want to say something else, but due to communication gap population do not read it and it creates a negative image of the company in front of customers or may create a situation of conflict in the global market. If the surgical industry does not focus on the cultural aspects, then it may be possibles that it would not be able to run its operations in particular nation. According to the view of Eggers and et.al., (2013) surgical industry has to look upon this barrier closely, and before entering into the new geographical area it needs to gather all relevant information about beliefs and values of the population. It will help the industry to grow well in the global market.
As per the opinion of Du Plessis, Indavong and Marriott, (2015), lack of managerial skills and knowledge is another top limitation for small businesses to expand in the international market. As it is the fact that due to incompetency in risk management and risk perception of managers, firm has to face huge risk in the global market. As they have no knowledge about the new area and their competition, requirements of people then the industry can not survive in such environment. As per the opinion of Renton, Daellenbach and Davenport, (2013) if the surgical industry wants to expand globally then it has to consider this point closely. It is essential that managers of SME improve their knowledge and risk assessment skills so that they can identify the risk associated with the particular country. Thus, employees will be able to make effective strategies which can help to enhance their skills. Such as companies can give training to its workers and managers about particular location so that they can access that what kind of situation may get occur it will help to be prepared and reduce adverse effects of such complexity. It is the major limitation so before entering into international market surgical industry needs to train its employees well so that they can understand the background of the country and can be prepared to wok better for getting success in the global market.
Santos-Vijande and et.al., (2013) has asserted that local support is another limitation of expansion for the organisations. As it has been said that in local market there is no need to have a good relationship with concern authorities but whenever firms want to expand its businesses in international market than to reduce the complexity of the operations and trade barriers they have to build relationships with local government. In the absence of the bonding, it may be possible that entities face critical situation regarding operating business. According to the view of de Gomez and Kang, (2015) surgical industry is having the limitation that in some country particular surgical equipment is not allowed so in such condition, firms has to face issues related to ignorance and non-acceptance of parts, thus; expansion program gets failed. For instance, if industry makes strong relationship with local government then it may be possible that they will assist the firms to run their business and they will aid to give permit selling such type of products in the nation. SME needs first to examine the market, their competitors, budget before entering the global market, if it is unable to meet the needs of corporate clients, then investment in the expansion will be failed. As per the view of Dimitratos and et.al., (2016) Trade barriers are other limitations, due to these companies do not get a chance to expand their business in global market.
Factors that drive SME towards industrialisation
There are numerous of factors which caused the SME to drive towards industrialisation. Onyancha, (2013) states that the urge to get higher profits, wider market and new technologies so as to enhance the operations of the organization has caused the SME to move towards industrialisation. These can be defined as stimulus or motives which are the major driver towards development. One of the basic driver for SME industrialisation process is the growth motive. There are wide range of opportunities being present in the international market which provides small and medium size enterprise wide chances to manage its operations. It has been analysed that the small firms in Sialkot Pakistan that has showed their intention towards expanding their business in international market has significantly increased their export twice times in the past period. While on the other hand, those that did not have made or showed any such intention are still struggling to sell their products and services in the domestic market. In regards to the Acumen Surgical company the major drivers or stimuli which has caused the firm to globalized include the a wider market to publicize its products and services, the urge to enhance the profitability of the company and increase its operations by entering into new market which has wide range of possibilities that in-turn renders huge benefit to the company.
Szirmai, Naudé and Alcorta, (2013) asserts that, finance is not the only motive or driver that caused the small scale firm to industrialisation. However, there are varied other factors which have been analysed in the past researches which has resulted in the growth and liberalization of small scale firms. Knowledge is the most imperious factor that is responsible to take SME towards the industrialisation process. There are basically two phenomena to knowledge that is push and pull scenario. The push concept purports that SME is more likely to move towards industrialisation in regards with the past or prior experience of international market. In addition to it, the impulse to enter into an international market is widely affected by the current capacity of management along with the need to get highly trained managers so as to conduct the operations of the organization in the most prominent manner. In contrast to the above, Ho and et.al., (2016) denotes that the pull dimension has widely been analysed in those cases wherein the companies enter into the global market in regards to search knowledge based assets. In order to remain competitive in the market, it requires high amount of knowledge to keep the technologies up to date. Furthermore, the desire to get high amount of innovative technologies, language skills, research and development investment, unique product and innovation capabilities, SME plans to get industrialized. Similarly, it has been analysed that the small scale firms in Pakistan Sialkot, the Acumen Surgical has industrialized in order to high amount of personnels in the field of medical that can render effective knowledge and ideas about the production or manufacturing of surgical instruments and other drugs according to the current demand of the market. Furthermore, it also assist in undertaking research and development activities which can render high amount of information about the foreign markets and the disease that are pertaining the different regions. Moreover, the instruments are designed and manufactured in regards to the current situations and trends pertaining in the medical field.
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Belman Inbal and Tzachor, (2015) has also observed that social ties or network is another motivator of SME towards the industrialization process. There are varied small islands that are isolated from the large economies and has no chance to get integrated with the other firms. This has further led to the decline in their operations in the domestic market along with the low scope of expansion. supply chain is another trigger that hampers the operations of such industries. The low or no amount of connection with the planetary world leads to availability of less amount of resources as well as affects the operations. Chan, Yusuff and Zulkifli, (2015) purports that past research has depicted that the exports of some of the regions such as America, Canada, Portuguese, Pakistan and Australia have been reduced or are minimal due to the lack of social connectivity with other developed or developing regions. Furthermore, it has been assessed that the other factors including the immigrants managers were also creating hindrance to the expansion process of SME. Therefore, to overcome the discussed issues and challenges many of the small firms have moved towards the industrialization process wherein creating bonds with other nations could result in high amount of profitability for the companies. In addition to the above, Halila and Tell, (2013) has witnessed that the factors stimulating the small scale companies towards the industrialisation includes is taking the benefits of creating the collaborative links with the other firms which are located in diverse regions. In context with the SME's in Sialkot Pakistan, the following motive can be clearly associated. It is an underdeveloped region which has no or very few links with the outer world. Due to the underdevelopment of the area and low amount of technology, these firms has got less amount of opportunities present in the domestic regions. Therefore, in order to expand its business and get collaborated and connected with the outer world, The Acumen surgical Pvt Ltd has felt the urge to enter into globalization process wherein its high quality goods and services can be easily sold out to the overseas market and develop as an emerging companies of respective region.
As per the opinion of Subrahmanya, (2014), the regional or domestic market drivers are another factors that drive SME towards industrialisation. This can clearly be ascertained from an example or study on UK based small scale firms. The company was exporting manufactured instruments for the purpose or use of hospital. The major reason behind the globalization or industrialisation process of the firm was to get higher growth, profitability and wider market share. However, the challenge that has been faced by the small scale firms is to find appropriate agent or distributors. Although there are several other factors or barriers that obstructs the industrialisation of these companies. Some of them includes, the cost associated with marketing, fluctuation in currency exchange rates, incompetencies of managers, stiff competition against other rivalry manufacturers and deficiency about market information. However to overcome all such barriers these firms aim to enter into the industrialisation. Pillalamarri and Mohamed, (2016) states that, due to the lack of opportunities being present in the parent country, the companies feel the urge to intensify their operations in the global market. However, the high amount of advantages associated within the international market creates desires for the small scale firm to expand its business operations. Furthermore, it has been assessed that the amount of exports and the wider number of foreign market also aids the country to turn out to be the developing nations. In this way, the production can be intensify as well as the global supply chain can be strengthened. As enumerated above Pakistan is an under-developing nation and Sialkot is small town that has wide variety of small scale firms. Therefore, in order to develop the respective region and enhance its economies of scale, these SME's has desired to move towards the industrialisation. Herein, the Acumen Surgical has increased its production process and made great connections with other regions such as Eastern Asia, Africa, Western Europe, North America and Japan which has significantly led to the development and growth of the economy as well.
The foregoing discussion on the factors that stimulate the industrialisation process of small scale firms it can be analysed that both the external and internal factors are the major motivators. Gebremichael, (2014) depicts that out of which the internal drivers are the most common which have been identified in most of these firms. These comprises of the urge or necessity to increase the financial status and profitability of the firm. This is the basic or lower level motivator that caused the owners of the SME to diversify its operations by entering into a newer and wider market. In addition to the above, the secondary motivators or factors influencing the business person are the need to get highly qualified personnel so as to manage the operations in the most prominent manner. However, due to the lack of resources in form of finance, technology, raw materials and manpower are some of the other drivers that stimulates the industrialisation process. Cyril Eze and et.al., (2013) confers that another endogenous motivation factor for the SME encompasses of the external factors. Herein, the owners or the businessperson has a wider prospector towards the development process. Rather than merely focussing on the growth and development of the organization they are involved in the fostering the growth of economy as analysed in the case of Acumen Surgical which has highly contributed to the development and prosperity of Pakistan. through increasing exports and production process the firm was able to meet its objectives. This in turn also fulfils the internal along with the external factors or motivators. In the end, it can be said that the desires or driver which caused the small scale enterprise to enter into industrialisation is highly affected by the provisions made by the government of Pakistan which contributes towards its success and growth.
Measures to overcome the challenges associated with industrialisation
The above enumerated barriers and challenges that has been faced by the small scale firms can be eradicated from the root cause if things are managed in the appropriate manner. Effective planning, reforms, capabilities, entrepreneurship, employment, finance, laws are some of the major dimensions through which the industrialisation process for SME can be managed and enhanced (López and Rubio, 2015). Some of the measures or ways through which the challenges can be overcome has been enumerated in following para.
Bala Subrahmanya, (2013) denotes that small scale firms lack efficiency and in order to make them highly capable and useful it is necessary to induce proper guidance and policies in the current system so as to develop the these firms. Therefore, to overcome the respective challenge, introducing strong links in the production system. Complimentary to the above, it has been assessed that there are numerous number of small and medium sized enterprise that uses the products manufactured by the large firms. However, some of the equipments or products produced by SME are also utilized by the large firms so as to conduct the manufacturing process. These sorts of distribution arrangement is highly found in some of the nations such as Japan, Taiwan, China and Korea. The interdependence of each of the unit creates the urge to industrialized the SME and also allows the small firms of Pakistan to develop. Hsu and et.al., (2013) purports that these links cannot be created without the subsequent assistance of the government. However, the growth and emergence of the SME has a high amount of contribution of its government that was started from the year 1950's. In order to induce industrial skills and talents in the respective field, the regime needs to create effective training and developmental programmes, concessions in fiscal and monetary policy and import license for technologies. Furthermore, it has led to the large firms of Pakistan to become vast centres for that of SME which in turn facilitated growth and industrialization. The Acumen surgical is also dependent on wide range of large scale firms so as to avail goods and services which are rendered by them.
In accordance to the view point of Ngugi and Bwisa, (2013), it has been assessed that entrepreneurship promotion is another remedy through which the challenges faced by the SME in the industrialization can be reduced. Since these firms are facing issues regarding efficient managerial skills and low quality products disposal in the foreign market. Therefore, the government needs to emphasised on rendering industrial management training. This will further assist in improving the quality of the product so as to gain more prominence in the industrial market. Gereffi and Wyman, (2014) depicts that in order to establish strong linkage between the small and large firms, effective promotion is the best technique. A major example of this could be seen from the two most prominent companies of Pakistan that is Ittefaq and Becco Engineering firms. Herein the large enterprise has significantly invested its funds in the small scale company for the special interest or benefit of the own.
In the opinion of Asua, (2014), modernization in the production process is the key towards the industrialization and success of small scale firms. The products and services of these enterprises are outdated and traditional which caused low demand for the goods in the international market. The major reason behind this has been discussed above in the topic barriers to trade which includes lack of resources present by the enterprises. Therefore, in order to overcome these challenges, the company needs to bring certain amount of changes in its current product line. Giovannoni and Pia Maraghini, (2013) confers that the most significant way to carry out the above scripted statement is through effective allocation or use of scarce resources. This can be done by the means of using the potential capital in manufacturing new products rather then simply wasting in less fruitful production lines as been experienced in Pakistan. The SME institutions are the major role players in the current field as they are responsible to measure the quality and specification of the items that are sold in overseas. Furthermore, the political regime of Pakistan is planning to install Japan MITI so that it will assist in analysing the new machines or technologies that can be used to upgrade the small scale firms. In regards to the Acumen surgical companies, it has adopted itself to the policies and practices launched by the government in order to make necessary modifications in products and services that has been supplied in the international market so that it can render stiff competition to other producers of hospital instruments foreign market.
Ackah and Vuvor, (2011) has significantly said that finance is the major variable or component for the success, growth and development of SME. As already stated above, that the barrier faced by these firms in the process of industrialization includes lack of funds which restricts their growth. Therefore, in order to overcome the said challenge, government efforts is one of the most important measure. Therefore, it is essential to establish financial institutions that renders appropriate funds to the needy. Priya, (2015) asserts that there are high amount of financial institutes already being present in the country but the reach of these cooperatives is not that string. There are wide range of SME's that are deprived of finance due to the inappropriate system. A large portion of money is surpassed to the medium size enterprise. The reason behind this has been analysed there is no difference being made between the medium and small sized firms. Therefore, taking respective actions and categorizing them into diverse sections is an essential step by the government. Furthermore, to overcome the challenges of the finance related issues, the regime should make a distinct quota for the allocation of firms especially to SME for the industrialisation process. This shall be further set in the Annual credit plan of the firm so as to avoid the distribution of money to the unintended units. Onyancha, (2013) also states that rendering training to the personnel of commercial bank and providing them with necessary information about loan allocation to small size enterprise will also aid in removing the resource allocation problem. Another measure that can be taken by the government includes introduction of collateral facilities or items for the companies that have lack of resources. These assets will aid the SME to avail funds for the industrialization. Some of the major banks found in Pakistan encompasses of Micro Finance, Khushali, Agha Kahn banks. These banks shall supply credit or loan to the companies at low rate of interest that helps in effective management of funds. In the end it has been recommended to stop the use of Small industries Corporation due to their inefficient role in the development and growth of small scale units. Furthermore, it shall emphasize on rendering advisory services to these firms.
Szirmai, Naudé and Alcorta, (2013) states that, Pakistan being an underdeveloped country, it faces lots of issues in form of scare resources. At times due to the lack of materials in form of electricity, water supply, gas, steel and other equipments the nation faces the black market rates wherein the prices of the products and services gets doubled and tripled according to the current situation. Therefore, in order to remove the environmental factors affecting the operations of SME and also hampering the industrialization process, the government must allow the small scale manufactures the access to essential equipments that does not affects its current operations.
Another issues that has been discussed above which obstructs the growth of SME in Pakistan is the lack of capable manpower. Author states that a company requires highly efficiency workforce that can assist in undertaking production in the least possible cost, research and development activities so as to make the affirmable use of scarce resources. Therefore, to overcome the said issue, the government must make special efforts to provide highly trained and professional managers to conduct the operations of these enterprises in the most trenchant manner. However, author states that there are wide range of uneven labour laws been ascertained in Pakistan regarding the old age pension, minimum wages, security, etc. These are the prime hindrance for the owners to appoint trained workers. Due to lack of financial resources, the entrepreneurs face challenges to meet these obligations. Henceforth, it is recommended to club all such laws and norms under one act which will reduce the burden of businesspersons and can be implemented successfully. The main reason behind this is to increase the number of workers in the small enterprise.
In addition to the above, in order to gain trained and highly proficient workforce, emphasising on increased education is the major factor which will assist the SME to gain better workforce in future. However, to fulfil the present need of the organization, it is essential to hire managers from other countries or get collaborated with the firms of varied nations. This will help in gaining knowledge regarding how manage the operations of small scale firms. Moreover, it assist in the industrialization of SME. This can be analysed in the way Acumen surgical has gained five engineers from varied other nations so as to conduct the operations in effective manner.
In the view point of the author, another significant step that can be taken by the government in order to promote SME industrialization could be reducing the amount of barriers to trade. This the main constraint that is faced by most of the small firms as it has been discussed above. Therefore, Pakistan becoming a part of several bodies such as WTO, EU and UNWTO would help the nation to make prominent effort by removing these barriers to trade. However, in addition to the above, the imports and exports of several materials can be made without any hindrance. For instance, the surgical company requires varied kinds of materials in order to make the instruments that are finally supplied to hospitals. These items are exported by the large enterprise firms from other nation. The import is more likely to decrease the deficit of the country as well as it could be quite expensive for the Acumen Surgical to import high quality items and machineries. Therefore, momentous contribution of government towards the EXIM policy will aid the small firms to expand and globalized.
According to the view point of Author, reducing the amount of documentation and procedures from the import export policies is another crucial step that has assisted in SME to grow and expand its business operations in international market. The major reason behind the foremost step is to provide the small scale firms with adequate market and resources which will further assist in its expansion process. Author supports the above measure associated with the industrialization process. It has also raised an epochal issue which illustrates as follows. Due to the commitments that has been made by the regime in the WTO agreement of adopting ISO-9000 standards in producing product, a high amount of SME is struggling to adopt these standards due to the low amount of funds availability. This has caused the dynamic firms i.e. the large scale enterprise to make deliberate advantage of the same and thereby leading the SME to become its sub contractors. These firms have been disclosed themselves as an informal companies that work in linkage with the medium and dynamic firms. Majority of the firms iin Faisalabad and Sialkot comprises of textile and surgical industry that has low amount of financial resources and are not able to produce goods upto the mark standards or quality amongst which Acumen is the most prominent one. In conclusion to this Author, denotes that government of Pakistan not only focus on linkage of small and large firms rather provide them with the opportunity to interact with the foreign companies. This will aid in getting relevant resources through which they can expand its business operations in the international market.
Background of manufacturers of surgical instruments
Author confers that, Pakistan is the major producers of surgical instruments. Out of the 90% equipments that are used by hospitals have been produced in Sialkot and other small regions of Pakistan. Despite of so many technicians and other skilled person being present in the nation, it still faces severe issues in form of low prices and its the most underdeveloped economies of the world. However, producing varied kinds of surgical instruments is not an easy task, it requires high amount of skills, training, experience and knowledge in the respective field. Although the practices of producing these equipments has been followed since the 16th century and the tradition is still following. There are approximately 2500 small scale firms being present in the region Sialkot amongst which Acumen surgical is most prominent one.
These surgical industries in the respective region has opened due to the spectacular knowledge and idea of Grand parents of the present owners. In the past period, Britishers assigned the craftsmen of Pakistan with the necessary clinical equipments for the purpose of repairing. From that time, they imitated the imported equipments and started manufacturing surgical products through grinding stones. Author purports that since then instruments in form of scissor, forceps, scalpel, tweezers started producing in Pakistan. Furthermore, it has been assessed that in order to produce or design such equipments, a degree or certificate is required so as to be placed in the top most companies. However, in the case of surgical manufacturers at Pakistan Sialkot, proper training is provided to the craftsmen's that are engaged in the respective activity. perhaps, working as labourer in a manufacturing industry does not require any sort of certification or degree. It simply needs the capabilities and skills to produce equipments.
In the view point of Author, in order to start any sort of business in a particular field, the owners must have the knowledge and experience of the same. Likewise, in the case of manufacturers or owners of surgical instruments they must have the knowledge and idea top make the particular equipment. In this way they render training to their subordinates or craftsmen's which are further engaged in manufacturing the same. In addition to the above, it has been stated that the secrets to produce such tools is passed onto different generation and the business is preceded in this manner.
Factors that motivate the people in SME manufacturer of surgical instruments
Author demonstrates that brand management and development is the major composite of SME. However, building the same takes lots of efforts and consideration on the part of management and its key people. These include the manufactures, investors, suppliers, exporters and craftsmen's. In order to motivate the key people of the small scale firms, it is essential to identify the factors that is most likely to instigate them at work which further leads to high brand image in the minds of the customers.
Author purports that past experience, education, personal life are some of the key motivating factors which cause the manufacturers and other people to get motivated at workplace. For instance if the entrepreneurs and other personnels are educated and have gained relative degree in the medical field are able to motivate the employees and craftsmen's to function with more efficiency. The major goal and objective of the SME is to gain prominence in the international market. This could only be achieved when the goods are produced on the basis of quality standards set by the government. However, the key people that are involved in producing the surgical instruments are young children's and women that have low or no education. Therefore, motivating them to gain relative knowledge that could further aid in developing the industries is the best option. However, Author asserts that, spreading the education and the knowledge that has been gain by the entrepreneurs internally is more beneficial as it will render into fruitful results. For instance, in the case of Acumen surgical, when the supervisors or other managers spread the knowledge regarding the brand management in the international market through effective functioning then its will motivate the workers to function with more efficiency. Furthermore, the quality will be achieved, employees will be motivated as well as the objective of getting industrialized will also be attained.
In contrast to the above, Author states that past experience of the entrepreneur is the key towards the success of industrialisation. The history of the surgical industry in Pakistan is quite inspiring which can easily motivates the labourers and other employees at workplace. Through collective meeting like in the case of agenda meeting being held in the dynamic enterprises, SME can also make its workforce aware about the past experience of owner. The past experience of owner regarding the manufacturing of surgical instruments could be very inspiring for the persons that are engaged in SME. Furthermore, the enumerated past stories of the producers could inspire the key people of small scale firms to produce new and innovative surgical instruments. Along with that these can be manufactured using the latest and innovative methods of production which would render higher profitability in the future.
Author states that in order to develop a strong brand image in the foreign market, then the personal motivating factors are also very important part of the process. This would include, the past achievements and mis-happenings or bad times that caused the manufacturer to turn into a successful entrepreneur. As already described above that Sialkot is small and backward town located in the outskirts of Pakistan. The people of the city are very hard working and truly dedicated towards their work. Therefore, it becomes easy for the small sized entrepreneur to motivate the people engaged in the production department. For instance, the manufacturer or the entrepreneur of the Acumen Surgical Pvt Ltd by demonstrating it past story regarding the manner in which he derived the education, the way he entered into the respective field, his personal experience towards the life would also help in motivating the employees and other key people such as suppliers, exporters to assist the company in developing its brand image in the international market thereby gaining high amount of prominence in the market.
Importance of export and import for SME
In the view point of the Author, global trade and industrialization is the life blood of every nation. It further states that no country or region is self sufficient in itself. Every land is not rich in resources there are some that has wide range of trained personnels that assist companies in making significant decision regarding investment and other processes, while on the other hand some encompasses of rich in minerals, natural resources,etc. Therefore, in order to facilitate growth and development of each of the country import and export are the best means of technique through which the free flow of goods and other resources can take place between diverse regions. In the words of Author, Import and export can be defined as that phenomenon wherein the government is engaged in enhancing the economies of scale through exchange of goods and services so as to facilitate the companies to carry out the operations without any hindrance. However, in order to preserve the region from excessive exploitation by other countries, the government impose certain restrictions in form of trade barriers and tariff.
Author has denoted a major significance of import and export for the small scale firms which includes interacting and making bonds with foreign firms. The main aim of the SME is to develop its brand image in the international market through supplying goods and services to host nations. Therefore, exports and imports are the most spectacular ways in which these companies can interact with other large organizations that provides a vast opportunity to expand its business globally. In order to enter into global market.
- The impact of import/export upon SME's operating in the surgical industry
- Role and importance of chamber of commerce in encouraging SME to enhance their business functions
- Benefits of EXIM policy in going beyond national boundaries
- Ways through which surgical instruments industry could enter into international market
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