Page 216 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 14: Sickness in Small Business Enterprises

14.2.1 Mismanagement Notes

A mismanaged unit is, in fact, a sick unit. Management must be intelligent, brilliantly capable,
decisive, innovative, very efficient and assuring. In most of the sick units, management fails to
take proper decisions on routine matters. Important decisions regarding site selection, production
process, promotion avenues, marketing management, etc., are often ignored.
Compared to large-scale industry, management in small business is inherently more difficult
and complex due to its nature of single management band. Mostly, small industry is managed
by an entrepreneur having experience in only one or two functions, usually production and
selling. He is, therefore, most likely to err in other core operational areas like auditing, human
resource management, planning, finance, etc. As all these activities require highly specialized
skills, it becomes almost impossible for a single man to specialize in all of these fields. As a
result, all areas of small business are not effectively managed. Hence, inefficient management
makes the small-scale units highly prone to sickness.
Moreover, dynamism in management is generally found missing in these units. The ancestral
and traditional businesses are mostly reluctant to introduce change.

Example: M/s Ashgar Ali Mohammad Ali prefers to sell their much-in-demand rose
water in the same crude, old fashioned bottles with old sampling method. Generally, the senior-
most (old) man takes decisions regarding the product and he would generally stick to the same
old set pattern. The unit would not respond to the changing environment of the market. Under
such static conditions, the unit is bound to become sick. As a word of caution, the introduction of
change does not mean that the management should become over-dynamic or over-enthusiastic
and start diversifying the product or the whole business indiscriminately.

14.2.2 Marketing

Most of the sick units suffer from inefficient marketing management. Small business generally
adopts a traditional way of marketing where ‘more’ is regarded as ‘better’. If marketing places
a continuous reliance on the promotion of material consumption, it would lead to a prosperous
stage of industrial growth. This notion had served well initially, but with rising constraints such
as limited resources, economic factors, environmental factors, etc., moving on the same, traditional
paths of marketing appears questionable. The traditional marketing system is one of the major
cause of sickness in SSIs.
Most small-scale industries become sick mainly because of their inability to market their products
for various reasons such as poor quality of products, lack of market informations, poor
advertising, obsolete technical back-ups, less competitive potentials, lack of professionalism,
etc. Though the government has been quite protective in reserving around 860 items exclusively
for SSIs, the sector still faces some serious marketing handicaps. Most of the SSIs that act as
ancillaries to large industry, are forced to restrict their sales to the local market only, which
leads to accumulation of stock coupled with lack of demand and deficiency of working capital to
procure raw material and other physical resources to keep the unit moving. The restrictive
marketing scenario thrust on SSIs compels them to restrict their scale of operations, and forgo
economies of scale that could lead them to optimum position.

Example: The ancilliary industries often face various problems of marketing like;
(1) absence of a structured pricing system,
(2) inadequacy of technological support,
(3) delayed payments by their parent units,

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