International Journal of Academic Research and Development

International Journal of Academic Research and Development

ISSN: 2455-4197, Impact Factor: RJIF 5.22
www.academicsjournal.com
Volume 1; Issue 9; September 2016; Page No. 29-33

A study on problems and challenges faced by micro small and medium enterprises: A special
reference to manufacturing sector in Coimbatore district
Sangeetha S
Ph. D Research Scholar, Chikkanna Government Arts College, Tiruppur, Tamil Nadu, India
Assistant Professor, PSGR Krishnammal College for Women, Coimbatore - 641004, Tamil Nadu, India

Abstract
MSMEs, as a major contributor towards growth of domestic economy and employment generation, should get adequate support in
terms of policy framework, incentives and other relevant aids. There are 35 million enterprises in various industries, employing 69
million people. Together, these account for 45% of the industrial output and 40% of the exports. Although 95% of Micro, small
and medium enterprise units is informal in nature, the contribution of the sector to India’s GDP has been growing consistently at
11% per annum, higher than overall GDP growth of 7-8%. Nationwide, Micro, Small and Medium enterprises (MSMEs) have
been acknowledged as the engine of economic acceleration and for promoting unbiased progress. The finest benefit of this sector
is employment generation for the development of Indian Economy by increasing of standard of living of the people. In this
background researcher made an attempt to study the role of Small, Micro and Medium Enterprises in inclusive growth of Indian
Economy. Steps like providing infrastructure facilities, developing various industrial parks and technology incubators under
MSME cluster development programmes, creating networks of organizations that help provide training to skilled workforce to
improve productivity, encourage entrepreneurship and competency in management, funding R&D investments, technology
advancement may work for the betterment of the sector. This paper focuses on the prospects of MSME and the major challenges
for sustained growth.

Keywords: MSME, R & D, HRD

Introduction Review of literature

For a developing economy like India which is often faced Ernani Hadiyativ (2015) [1], examined there are several
with chronic problem of unemployment and severe ways to measure the success of the government’s role in
foreign exchange crunch, sustained development of tiny the empowerment of MSMEs. The success is the
and small firms offers an idea opportunity and a real development of national and local economics
challenge. It also holds the promise of fulfilling the performance through Gross Domestic Product and Gross
cherished goals of planners. The generation of adequate Regional Domestic Product, generating employment and
employment is to achieve near full employment by the contributing to the revenue of non-oil exports.
turn of this century. Ashu Katyal and Betsy Xaviour (2015) [2] , endeavored to
analyze the current status of HR operations in MSME,
Objectives find out the contribution of MSMEs in economic
 To study about the scenarios of MSMEs in development of the country, challenges confronting by
Coimbatore District. MSME and finding out ways to overcome the challenges
 To study on major challenges are faced by Micro, in MSME and issues related to HRM. The results
Small and Medium Enterprises. revealed that lack of formalization in the management of
HR Issues. This is in contrast to multinational companies
Research methodology operating in India who have adopted structured and
The present study based on both primary and secondary formalized HR systems. As the studies showing very less
data. The primary data are collected through the personal MSME’s have formal HR department and in new small
discussion with manufacturing sectors owner. Secondary business unit’s owners only handling the HR practices.
data are collected from the annual reports published by So the business owners or HR managers should ensure
the MSMEs and various national and International good HR practices in their organizations to remain
Journal. The study covers the period from 2013 – 2016. competitive.
The Study concentrated from one region in Tamil Nadu N. Aruna (2015) [5] focused that the role of MSMEs
i.e. Coimbatore District. The sample size was 25. helped in economic restructuring and development of
India. Empirical data showed that hurdle like financial
Tools for Analysis constrain and issues relating to power, raw material
The data collected through primary sources. The tools procurement should be more effectively dealt by the
used for the analysis were as Chi-square analysis and government. The data collected revealed that overall
ANOVA globalized business environment of India has been
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average favorable for the growth of micro and small scale to become more vibrant and significant player in
industries. development of the Indian economy the Government of
Abhijeet Biswas (2015) [3], highlighted the technology up India has taken various initiatives. The study concludes
gradation and innovative schemes for the MSME sector that the MSMEs need to be educated and informed of the
and to identify the barriers to Technology development latest developments taking place globally and helped to
among Indian MSMEs. In order to enable MSMEs tide- acquire skills necessary to keep pace with the global
over the problems of technological backwardness and developments. It also aims at motivating the companies
enhance their access to new technologies, it is imperative to follow TQM principles in future.
to offer them a conductive environment, which in the
present context of globalization, calls for approach with Challenges for Sustained Growth
knowledge playing a predominant role. Listen to Market place
Dr. K. Balasubramaniyam (2015) [4], brought out that the The real challenge was production, no matter what the
Khadi and Village Industries Programme holds great costs were. Even to-day our cost of production in many
potential for generating gainful employment industries is about three times the international prices.
opportunities for the rural poor, arresting migration of The challenge today is termed as ‘myopic vision’ and
rural unskilled workers to urban areas and for promoting make the firms market driven. The manufacturers must
the strategy of sustainable development. It can also be a understand that the needs and desires of the market
viable and effective social safety net to enable the poor to precede and not follow the product.
ward off the adverse impacts of structural adjustment and
economic reforms on their wellbeing. Technology –The Key to Growth
Ravin Kadian and Aarti Chahal (2015) [6], this study High Technological obsolescence leading to shorter
focuses on the role of MSMEs in the “Make in India” product life cycles (PLCs) is one of the major causes of
initiative. Quantitative data regarding this has been business failures. “Small business firms produce two and
collected using various reports like RBI Database on a half times as many innovations as large firms, relative
Indian Economy, Database of Department of Industrial to the number of persons employed”.
Policy and Promotion and report of CII’s 13 th Opt for Technology Based Products and Services
manufacturing summit 2014. It has been analyzed that the While many new firms start up each year, very few reach
key area of progress for India would be the development to the commercialization stage. Nearly half of them are
of its MSMEs to achieve and manage scale effectively. out of business within 18 months. It adds, “Excessive
Our supply chains are over-dependent on MSMEs. The sickness in the small scale sector has been on the
MSME sector employs over 80 million people in 36 increase”.
million units, and contributes 45 percent of the
manufacturing output. However our MSMEs are Promotion is a serious business
struggling due to lack of access to investment. “If a man writes a better letter, book, preach a better
Bilas S. Kale (2015) [7], the study shown that there is a sermon, or make a better mousetrap than his neighbor,
continuous growth of number of units. The growth of though he builds his house in the woods, the world will
these sectors enhances employment, investment and make a beaten path to his door”. One of the biggest
exports of the state as well as in our country. constraints facing a small business firm is the scarcity of
Entrepreneurship development is considered as a key funds in general and for promotion in particular. Very
factor to fight against unemployment, poverty and often the promotional budget is allocated on a residential
achieve overall socio economic growth in our state. Last basis.
but not the least, growth rate of MSMEs is very good and
healthy sign towards progress and prosperity of Use profit as a Barometer
Maharashtra. Profits are the life sustaining force for MSME business.
Suliyanto, Weni Novandari and Sri Murni Setyawati If profits are insufficient, the business cannot succeed.
(2015) [8] , the purpose of this study to investigate the The entrepreneur must raise his sights and be on the
effect of economic motive, negative job perception and lookout for newer opportunities. The entrepreneur has to
artistry in painting batik on job Loyalty. Data were create the market for the new product. At times what
collected using in-depth interviews and questionnaires. appear to be non-existent market, are really situations of
Survey data were collected among 120 artisans of dormant demand.
painting batik MSMEs in Purbalingga Regency –
Indonesia. Data analysis using Structural Equation Experts are Fallible
Modeling (SEM) is based on the analysis concluded that Many entrepreneurs choose the short cut of obtaining
economic motive and artistry in painting Batik have expert opinions before starting the units. Expert opinions
positive effect on Job loyalty, while negative job are always welcome but to rely solely on individual
perception have no effect on Job loyalty. opinions can land the entrepreneurs in trouble. Consider
M.V. Rawlani and Dr. A.M. Vaidya (2016) [9] , showed several supposedly expert opinions regarding the
that the MSMEs sector contributes significantly to practicability of then new technologies. There is no short
manufacturing output, employment and exports of the cut to marketing research. Decision based on
country. It is estimated that in terms of value, the sector entrepreneurs egos or on recommendations of friends is
accounts for about 45% of the manufacturing output and one of the major causes of business failures.
40% of total exports of the country. To make this sector
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International Journal of Academic Research and Development

Make Government an active partner in your Business assistance and aid in securing government business on
Our Government Central, State and Local are dedicated preferential basis. But unfortunately Governments
to the development of a strong, healthy and profitable throughout the world have been criticized and accuse d of
business. Various development agencies provide excessive regulation.
management assistance at no charge, offer financial

Analysis and Interpretation

Relationship between the Scale of operation and challenges

Challenges faced by owner while running the business
Access to technology Access to knowledge
Access to Access to Access to Access to Total
and environmental in regulatory
finance markets infrastructure people
compliance framework
Micro Scale 9 1 3 1 4 2 20
Scale of
Small Scale 1 0 3 0 0 0 4
operation
Medium Scale 0 0 0 0 1 0 1
Total 10 1 6 1 5 2 25

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 11.000 a 10 .358
Likelihood Ratio 10.201 10 .423
Linear-by-Linear Association .404 1 .525
N of Valid Cases 25

The Chi-square table reveals that the probability value there is no significant relationship between scale of
(0.358) is greater than 0.05, Null Hypothesis is accepted operation and challenges faced by owner while running
at 5% level of significance. Hence, it is concluded that the business.

Relationship between the Scale of operation and strategy for sustained growth
strategy for sustained growth
Listen to Technology - Opt for technologies Promotion is Use profit Experts Make government
Total
market The key to based products and serious as a are an active partner
place Growth services business barometer fallible in your business
Micro Scale 1 4 4 1 5 2 3 20
Scale of
Small Scale 1 2 0 0 0 1 0 4
operation
Medium Scale 0 1 0 0 0 0 0 1
Total 2 7 4 1 5 3 3 25

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 8.750 a 12 .724
Likelihood Ratio 10.053 12 .611
Linear-by-Linear Association 2.533 1 .111
N of Valid Cases 25

The Chi-square table reveals that the probability value there is no significant relationship between the scale of
(0.724) is greater than 0.05, Null Hypothesis is accepted operation and strategy for sustained growth.
at 5% level of significance. Hence, it is concluded that

Relationship between the Nature of activity and challenges faced by owner while running the business
Challenges faced by owner while running the business
Access to technology Access to knowledge
Access to Access to Access to Access to Total
and environmental in regulatory
finance markets infrastructure people
compliance framework
Textiles and Garments 3 0 2 0 1 1 7
Nature
Fabrication 0 0 1 0 1 0 2
of the
Jewelers Making 2 0 0 1 0 0 3
activity
Engineering Works 5 1 3 0 3 1 13
Total 10 1 6 1 5 2 25

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International Journal of Academic Research and Development

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 13.384 a 15 .573
Likelihood Ratio 12.643 15 .630
Linear-by-Linear Association .044 1 .835
N of Valid Cases 25

The Chi-square table reveals that the probability value there is no significant relationship between nature of
(0.573) is greater than 0.05, Null hypothesis is accepted activity and challenges faced by owner while running the
at 5% level of significance. Hence, it is concluded that industry.

Relationship between the nature of activity and strategy for sustained growth
strategy for sustained growth
Opt for Make
Listen to Technology - Promotion Use profit
technologies Experts are government an Total
market The key to is serious as a
based products fallible active partner in
place Growth business barometer
and services your business
Textiles and Garments 0 2 1 0 2 2 0 7
Nature
Fabrication 0 0 0 0 0 0 2 2
of the
Jewelers Making 0 1 1 0 1 0 0 3
activity
Engineering Works 2 4 2 1 2 1 1 13
Total 2 7 4 1 5 3 3 25

Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 22.068 a 18 .229
Likelihood Ratio 17.763 18 .471
Linear-by-Linear Association 1.842 1 .175
N of Valid Cases 25

The chi-square table reveals that the probability value there is no significant relationship between the nature of
(0.229) is greater than 0.05, Null hypothesis is accepted activity and strategy for sustained growth.
at 5% level of significance. Hence, it is concluded that

ANOVA Table for Profile of the enterprises and Strategy for sustained growth.
Sum of Squares df Mean Square F Sig.
Between Groups 1.679 6 .280 1.032 .437
Scale of operation Within Groups 4.881 18 .271
Total 6.560 24
Between Groups .545 6 .091 .780 .596
Form of the Organization Within Groups 2.095 18 .116
Total 2.640 24
Between Groups 6.773 6 1.129 .567 .752
Nature of the activity Within Groups 35.867 18 1.993
Total 42.640 24
Between Groups 1.169 6 .195 .726 .635
Sources of finance Within Groups 4.831 18 .268
Total 6.000 24
Between Groups 2.919 6 .487 1.237 .334
age of the enterprises Within Groups 7.081 18 .393
Total 10.000 24
Between Groups 4.776 6 .796 1.277 .317
Capital Within Groups 11.224 18 .624
Total 16.000 24

There is no significant difference between scale of ensure their sustainable growth. The need today is also to
operation, nature of activity, sources of finance, age of manage on modern technologies to harness human
the enterprise, capital, form of organization and strategy capability through the process of increased
for sustained growth. Hence, Null hypothesis gets communication, cooperation and linkages, both within
accepted. the enterprise as well as across enterprises and
knowledge producing organizations.
Suggestions
There is a need to understand and assess the real needs of Conclusion
the MSMEs and accordingly devise approaches that It is necessary to support the MSMEs, educate and give
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power to them to make optimum utilization of the

resources, both human and economic and informed of the
latest developments taking place globally and helped to
acquire skills necessary to keep speed with the global
developments. It concludes that simple and clear policies
and acts are to be made so that these enterprises can
understand them and make use of as well as implement
them in the business for compliance and secure benefits.
There are many government schemes but from the study
it was observed that most of these enterprises are not
aware and do not understand how they can benefit out of
them.

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