Study on Factors of Capital Structure Decisions

Survesh Rawat
Student Id- 77161693
Research
Proposal
To analyse the factors affecting the International
expansion of Indian Small and Medium Enterprises

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Significance of the research......................................................................................................2
Aim and objectives of the study:..............................................................................................2
Problem statement.....................................................................................................................2
LITERATURE REVIEW................................................................................................................4
Introduction................................................................................................................................4
Meaning and role of SMEs in India.........................................................................................4
Indian SME market – Opportunities and Recent trends..............................................................5
Challenges faced by the SMEs at the global level or expansion:...........................................6
Reasons for expansion by SMEs...............................................................................................8
Theoretical Framework................................................................................................................9
RESEARCH METHODOLOGY..................................................................................................10
Research Design........................................................................................................................10
Research philosophy..................................................................................................................10
Research approach.....................................................................................................................11
Research Type...........................................................................................................................11
Data types and Collection..........................................................................................................12
Sampling and sample size..........................................................................................................12
Data Analysis.............................................................................................................................12
Ethical Considerations...............................................................................................................13
Research limitations...................................................................................................................13
Timescale...................................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Small and medium enterprises play an essential role in the development of economy.
They are contributing towards the growth and development of the nations. It is evident that
micro, small and medium enterprise contributes almost 37% in GDP of India and it employs 805
lacs Indian. It further assists is rising the standard of living along with elevating poverty (SME
Street. 2015). In this context, small scale can be refer to a company which has investment of Rs.
25 lacs to Rs. 5 crore in plant and machinery. Contrary, big enterprises are the one that has
investment of more than Rs. 10 crore in plant and machinery (Chand, 2015). Considering this,
SME are responsible for creating many employment opportunities for the people. The customers
are getting wide range of products and services. The production scales are rising for these firms
and it leading high growth and profitability. These firms operate on small scale but gradually
their contribution becomes high. The challenges for the company depends upon the size and
scale of the business. The higher the scale, higher will be the difficulties (Azam, 2015). It could
be easy for an SME to operate within the domestic conditions. At the global level the conditions
become different. In the present context, even the business environment for SMEs have become
highly competitive. Due to the increasing size and needs of customer, firms are looking for
expansion in their products and services. They expect to increase their size of business that is
taking the operations at the global level. Government of various nations also emphasize on the
development of small and medium enterprises. It is because they are the source of innovation and
growth for the country (Brines, Shepher and Woods, 2013). Many of the SMEs have been held
responsible for new discoveries in different business sectors. For example AMP Americas is a
small company in U.S. which produces compressed natural gas. It is a very innovative business
in the category of alternative fuel market. This is because fuel is converted from the cow manure.
It is giving benefits to the firm, government as well as the customers within the society.
Globalization can be understood by the term of internalization. Indian companies are looking for
more global customers for their businesses. They should internationalize because more
customers means more sales and more profit (Canaan, 2011). There are many opportunities
waiting for the SMEs in the international market such as high demand of handicraft and hand
made products, creative art products, high growth rate, etc. It is giving them the platform to
create awareness about the products and services that they are selling. However, along with the
opportunities, there are many challenges also which are faced by the SMEs. In this context,
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major challenges that been faced domestically by Indian SME are less support from government
as regulatory bodies focus more on large scale companies, high competition from giant
organization, limited reach in the market, poor marketing activities, irrelevant strategies, lack of
professional knowledge, inappropriate banking and financial products, low production capacity,
huge constraint over expansion and series of other challenges. In addition to it, challenges lies in
international context are low capital, poor knowledge of product and buyer, low knowledge of
new market, no idea about latest market trends and related. These factors certainly affect the
growth of Indian SME and hence make a direct impact on GDP as well. This research study has
been undertaken for the purpose of analysing the factors influencing the expansion of SMEs in
the international market.
Significance of the research
Every research holds a certain significance. In the present context, every firm whether
small or big size, is looking for expansion in some terms. Expansion is essential to enhance the
level of sales and profitability. This expansion could be in domestic form or could be beyond the
boundaries of the nation. However, the expansion is not easy as there are many economic,
political, social factors which puts an impact on the business activities. This research study
defines the role of SMEs for the development of the economy. It find outs how these small scale
firms can give big contribution to the country. The main focus is on finding the challenges faced
by the SMEs in the journey of international expansion. Further, it could be an interesting
research for the economists and scholars who wants to deal with such kind of subjects.
Aim and objectives of the study:
The major aim of the research is to analyse the factors affecting the expansion of Small and
Medium Enterprises in the international market within the context of Indian SMEs. In order to
achieve the above aim following objectives have been framed:
 To examine the role of SMEs in the economic development of India.
 To find out the opportunities for Indian SMEs in international market.
 To identify the challenges faced by the SMEs while expanding at global level.
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