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Roll : ZR 46, Name : Saleh Ahmed, Batch : 20

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Email : saleh_ahmed00@live.com, Phone: 01675123947
Group : A1, Industry : Plastic




Micro, small and medium sized enterprises (MSMEs) are playing increasingly
important role as engines of economic growth in many countries including
ours. MSMEs provide low cost employment opportunities and render
flexibility to the economy. Many of the MSMEs are engaged in export
activities suggesting that they are internationally competitive.
Considering the importance of MSME sector in the economy of Bangladesh,
we shall try to identify and explain the major challenges faced by these
enterprises using the nine dimensions of the Triple Triangle Framework (TTF)
model. :



Figure : Triple Triangle Framework Model


Firm Level Factors

Capital:
Case: Plastic Industry of Islambagh
Source: Group A1
At present, there are 3000 plastic manufacturing units, 98% of which belong
to the Small Medium Enterprises (SMEs). The plastic sector constitutes 1%
of GDP and provides employment for half a million people.Even then the
commercial banks are reluctant to give out loans to small plastic enterprise
owners. As a result it becomes difficult for them procure capital. And that is
why only people with own capital and land are entering the business.
Moreover due to crisis of capital they buy below standard second hand
machinery which does not provide proper output. This lack of credit facilities
is a great barrier that is preventing such MSMEs from flourishing.

Capacity:
Case: Plastic Industry of Islambagh
Source: Group A1
In Bangladesh cheap labor force is available unlike in other countries. This
should give us an upper hand in increasing output in our industries. But in
reality it does not happen because the workforce is not efficient enough to
compete with the foreign countries. The plastic enterprises of Islambagh are
doing quite a lot of business locally.But inspite of their immense potential,
they are unable to standout to bigshots like RFL and Bengal, let alone
foreign companies.the reason behind this is inexperienced workers,
moldmakers and unskilled technicians. The products made by them are
usually inconsistent in quality and performance. As a result their market is
limited to low earning customers who cannot afford brands.

Culture:
Case: Plastic Industry of Islambagh
Source: Group A1
Although the suppliers and customers mostly give positive vibes about the
work culture in plastic industry, the employees are not usually happy there.
Suppliers, owners and customers have friendly relations since most belong
to same areas (Old Town). The owners do not pay much heed to employees
as they tend to switch jobs frequently. They leave as soon as they find a job
paying higher wage. The owners do not worry much about this as adequate
manpower is available. As a result the environment is not that friendly in the
work premises.
One more thing that is noticeable about the culture is credit sales. Ismail Mia
, owner of Ismail PVC, told us that a lot of fraud and bad debt occurs as
most sales are done on credit.


Industry Level Factors:

Customers:
Case: Bakorkhani Industry in Old Town
Source: Group A5
The main difficulty faced by most MSMEs is in retainting customers.
Customer loyalty is highly necessary for prosperity of MSMEs. Bakorkhani
industry of Old Town was once very well off due to great popularity of the
special bread bakorkhani. People of all ages had bakorkhani with tea during
breakfast. But nowadays the demand for bakorkhani is decling
tremendously. Most of the young generation either do not know about
bakorkhani or do not prefer to eat it. As a result the industry is in a dire
condition.

Competitors:
Case: Dholaikhal Mini Motor Industry
Source: Group B2
Most stores have homogenous products and are closely clustered. As a result
the competition is quite high. Infact it is quite unethical and unfair due to the
plummeting sales in the recent years. Some business men have termed
others as predatory towards customers. If one shop offers parts at BDT
1000, an adjacent shop will offer BDT 900 and lure the customer away. Also
the problems with these small enterprises are that they lack customer
service quality and sales people with good communication skills for which
they lag behind in repeat purchase.

Collaborators:
Case: Mirpur Benarasi Industry
Source: Group A3
The value chain actors in this sector are not valued adequately by the
entrepreneurs. Rather they are neglected. Their contribution is hardly
acknowledged and there is no significant collaboration between the suppliers
and entrepreneurs. The lack of concern for the suppliers has contributed to
creating an inefficient supply chain system for the Banarasi industry. Some
shop owners clearly told us that all they care about is their own profit. Group
A3 found that this is a major reason behind the decrease of profit margin
from 15% to 10% in this industry.


Macro Level Factors:

Globalization and International Forces:
Case: Mirpur Benarasi Industry
Source: Group A3
Due to globalization, the Benarasi palli is rather being hampered than being
improved. The invasion of foreign culture specially indian tv serials and
movies is slowly making our heritage obsolete. Women are now interested in
sarees that come from India (based on actress worn sarees). Many shops in
the area are now selling indian sarees as well in order to remain with the
going trend. The shops which are still benarasi exclusive now tend to have
lesser profits than those which sell indian sarees as well.

Technology:
Case: Plastic Industry of Islambagh
Source: Group A1
Most enterprises in the plastic industry are using outdated machinery for
manufacturing the products. These machineries have lower processing
speeds and precision levels. As a result they cannot match up in competition
with bigger companies. The small-scale entrepreneurs prefer to buy old
second hand machineries from other local companies or import them from
abroad. These old machineries are of outdated technology and the plastic
manufacturers suffer from lower efficiency. The outdated technology
employed in the production process leads to higher defect rates. For the
plastic industry, the loss accumulated by defective products can become a
significant factor in reducing their profit margin.




State and policy:
Case: Plastic Industry of Islambagh
Source: Group A1
At present the plastic industry do not have any effective policies, it needs a
comprehensive and consistent policy guideline from the government to keep
up and accelerate the existing rate of growth. The plastics industry needs a
proper government arrangement of an uninterrupted power supply, the
single most important obstacle affecting industry growth. Furthermore, the
government should introduce favorable tax policy, establish of specialized
industrial zones and increase government purchase. These initiatives would
certainly give a huge boost to growth in this sector. The plastic industry does
not receive such benefits as tax concessions, better access to institutional
credit and other preferential facilities awarded to the industries that are
included in the first list of prioritized export-oriented Thrust Sectors.


MSMEs will continue to be the major driving force for income and
employment generation in Bangladesh. The future for entrepreneurship
appears to be very bright. We are living in the age of the entrepreneur, with
entrepreneurship endorsed by government, business community,
educational institutions, society, and corporations. Development of MSMEs in
Bangladesh is the need of the hour to raise the standard of living of the
people of our country. And in order to develop the MSMEs the above
mentioned challenges must be overcome.