Challenges Faced by SMEs: A Business Development Report

This report examines the multifaceted challenges faced by Small and Medium Enterprises (SMEs). The analysis begins with an introduction that highlights the importance of managerial staff contributions. It delves into the financial challenges SMEs face, such as high interest rates on loans and difficulties in securing credit. The report then addresses marketing challenges, including the difficulty of developing market positioning and competing with larger companies. It further explores the technological challenges, such as the high cost of adopting advanced technologies. The report emphasizes the need for government support and entrepreneurial initiatives to help SMEs overcome these hurdles and contribute to economic growth. References to relevant literature are included to support the analysis.

Running Head: CHALLENGES FACED BY SME
CHALLENGES FACED BY SME
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Author Note

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Introduction
The major topic of this research is to explore the contributions made by the
managerial staff in the progress of an organization. The SME or the Small and Medium
Enterprises face a variety of challenges before the bigger firms. This paper discusses these
issues and looks into the ways in which the managerial staffs, comprising of the human
resource management, the customer service team and the accounts and finance
department who can work together to enhance the company’s market value and revenues
earned.
Discussion
Many a times, the administrative sets challenges for the upper management bodies to
achieve a certain goal or target within the structure of the organization. Achieving these goals
by the upper management heads, require greater help from the managerial staff and the
employees. However, there are challenges to the situation when the management faces
external issues like availability of financial support in the market structure, lack of resources
or assets to support such requirements of capital and lack of advanced technologies.
Financial Challenges:
In one of these situations, an example of bank loans provided by India Banks charges
an interest of about 10-20 percent, which is significantly high. More so, because it rests in a
time when the economy faces huge gaps and fluctuations in these gaps between the supply
and demand (Kumar. 2019). This creates a difficult situation for the SMEs to acquire
credit facilities or financial support. In such situations, the human resource management
team of an organization must incorporate in the inclusion of strategists and by adding not
only a value but also uniqueness in the organization. (Sani &Worlu, 2018). Realization of the
absorptive capacity of the firm by the managers is also essential to put the best foot forward

2CHALLENGES FACED BY SME
by maximum exploration and exploitation of knowledge besides assessment, evaluation and
acquisition of knowledge from external sources (Naqshbandi, 2016).
Marketing Challenges:
In addition to the above factor, the larger companies that have a considerable amount
of resources and opportunities of marketing due to already developed market positioning.
While it is difficult for the SMEs to develop such linkages faster if, they do not have proper
marketing opportunities and vice-versa. Hence, the SMEs get trapped in such cycles often
face rigid market competitions from their rivals who are better off (Lundin, 2018).
Development of marketing strategies through communications via new media or social media
and using the same as a platform for advertisement could also benefit in creating awareness
and market positioning of the company with very less or no capital investment at all
(Dwivedi, Kapoor, & Chen, 2015).
Technological challenges:
Another field that poses a hindrance to the SMEs is the technological advancements.
SMEs cannot compete with their rivals is in the field of advanced technology. Advance
technologies help in reducing the cost of labor and thereby, the cost of products and
improves on their quality (Melanie. 2018). However, availing such technologies is an
expensive investment, even though beneficial in the long run. SMEs are unable to compete
with such methods, as they do not have sufficient funds. Hence, they have to depend on
human resources and manual labor for the continuation of the production process. Hence,
such crucial situations require efficient operational management and that is where the SMEs
depend on. Scientific innovations and providing a platform to merge or connect with other
SMEs for such cases, can add to a betterment of the situation. Innovation and entrepreneurial
skills can help in such investments and improvisation of the situations to increase the profit
margin.

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Conclusion
SMEs are surfacing many challenges due to their scarce resources and difficult
situations to compete with their rivals firms, who are well-established big companies. SMEs
do not receive easy loans because of poor market status or low assets and revenue returns.
SMEs also lack in their investment in technological growth and upliftment of the
organization. The fail to reach an efficient status where the organization puts all its resources
to earn the maximum revenue. The competitive market structure is difficult to survive in,
with bigger and greater companies in a position of power, who drive market scenarios based
on their situations of benefit or loss. SMEs also have to depend on human resources as they
lack employment modern technologies that can help with overall efficiency. Observations
from the above analysis makes it clear that SMEs require government support, across nations
and around the world, to add to the culture of entrepreneurship and a boost in the economy,
so that they can overcome such hardships and rigid challenges posed by the age of
competition and globalization.

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References
Dwivedi, Y. K., Kapoor, K. K., & Chen, H. (2015). Social media marketing and advertising.
The Marketing Review, 15(3), 289-309.
Kumar, A. (2019) Challenge of financing SMEs. Retrieved from:
https://www.thehindubusinessline.com/opinion/Challenge-of-financing-SMEs/
article20254951.ece
Lundin, K. (2018) The 5 Biggest Small Business Marketing Challenges. Retrieved from:
https://www.advertisingweek360.com/the-5-biggest-small-business-marketing-
challenges/
Melanie, (2018) Technology Challenges for SMEs. Retrieved from:
https://www.unleashedsoftware.com/blog/technology-challenges-small-medium-
sized-enterprises
Naqshbandi, M. M. (2016). Managerial ties and open innovation: examining the role of
absorptive capacity. Management Decision, 54(9), 2256-2276.
SANI, S. A., & WORLU, G. O. (2018). HUMAN RESOURCE MANAGEMENT
PRACTICES AND MANAGERIAL PERFORMANCE OF MANUFACTURING
FIRMS IN NIGERIA. HUMAN RESOURCE MANAGEMENT, 4(4).