small & medium enterprise (sme)
DESCRIPTION
SME in Reviving Economy.... and role of Management Accountants to revivify SME catergory business. (pakistan)TRANSCRIPT
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SMALL & MEDIUM ENTERPRISE (SME)
Presenter:
Aamir AliStage III
Institute of Cost & Management Accountants of Pakistan
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Turning Potential Into Profit . . .
Why SME
SME In Pakistan
Obstacles & Solutions
The Step To Future
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WHY SME ?
SME IS NOT A SECTOR OF ECONOMY
BUT
IT IS A CATEGORY OF ECONOMY
SME IS THE BEST REVIVER !
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POTENTIAL OF SME
Creates Large Scale, Low Cost Employment Opportunities
Uses Locally Available Inputs
Mobilizes Small & Scattered Savings
Develops Entrepreneurship
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SME IN PAKISTAN
SME POLICY DEFINES SME AS:
Business Category With :
. EMPLOYMENT SIZE up to 250 PERSONS
. CAPITAL `` Rs. 25 MILLION
. SALES `` Rs. 250 MILLION
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SME & EMPLOYMENT
1 < 5 6 <10 11< 50 51< 100 101 < 150 151 < 200 201 < 250 251 <MORE
% OF FIRMS ACCORDING TO EMPLOYMENT SIZE
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SME: GDP & EXPORTS
COUNTRY % OF GDP % OF EXPORTS
PAKISTAN 40 25
BANGLADESH 30 55
GLOBAL 40 - 50 --
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OBSTACLES
FINANCING
INFLATION
TARIFF ANOMALIES
RISK MANAGEMENT
LOW PRODUCTIVITY
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OBSTACLE: FINANCING
COMMERCIAL BANKS GAVE LESS THAN
12% OF TOTAL LOANS!!
GRAMEEN BANK’S EXPERIENCE
MANAGEMENT ACCOUNTANTS: POINT OUT LESS RISKY BUT MORE PROFITABLE BUSINESS
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OBSTACLE: INFLATION
SHUT DOWN BUSINESS
DECREASE PROFIT
INCREASE PRICES
BUT GLOBAL COMPETITION !!!
UNDESIRED
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INFLATION…
MANAGEMENT ACCOUNANTS TECHNIQUES:
MARKETING STRATEGY
PRICING STRATEGY
TRANSPORTATION MODELING
LINEAR PROGRAMMING
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OBSTACLE: TARIFF ANOMALIES
LACK OF KNOWLEDGE OF:1. TAXATION LAWS2. GLOBAL MARKET INFORMATION
MANAGEMENT ACCOUNTANTS ROLE:
TAX CONSULTANTSMARKETING MANAGERS
GLOBAL INFORMATION BUT LOCAL WISDOM
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OBSTACLE: RISK MANAGEMENT
45% DON’T ALLOCATE BUDGET FOR R&D
PHILOSOPHY: PRODUCE, SALE AND EARN
DON’T MAINTAIN FINANCIAL DISCIPLINE
MANAGEMENT ACCOUNTANTS ROLE:
BUSINESS ANALYSTS BUSINESS RISK MANAGERS
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OBSTACLE: LOW PRODUCTIVITY
36% SME FAIL WITHIN 5 YEARS !!!!!
MAJORITY IS NOT GETTING GOOD RETURN….
WHY?
MANAGEMENT ACCOUNTANTS:
“USE OF TRADITIONAL METHODS OF COST REDUCTION”
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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
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THE STEP TO FUTURE
CHALLENGES CAN BE MET PROFITABLY!!
“ IF STRATEGIC LEADERSHIP OF MANAGEMENT
ACCOUNTANTS” IS GIVEN THE TASK OF POLICY
MAKING AND MANAGING ECONOMIC AFFAIRS… TO
REVIVE THE ECONOMY.”
…