Cuuses of Sickness

A. Internal Causes
(1) Planning
(a) Technical feasibility
Inadequate technical know-how
Locational disadvantage
Outdated production process

Sickness in Small-Scale Industries Reasons and Remedies 705

 () Economic viabili
High cost of inputs
Break-even point too high
Uneconomic size ot project
Under-estimation of financial requirements
Unduly large mvestent in fixed assets
Over-estimation of demand
(2) Implementation
Cost overmuns resultmg from delays in getting licences and sanctions etc.
Inadequate mobilisation of tinance.
(3) Production
(a) Pmduction management
Inappropriate product-mix
Poor quality contro
Poor capacity utilisation
High cost of production
P'oor inventory management
Inadequate maintenance and replacement
Lack of timely and adequate modernisation etc.
High wastage
(b) Labour management
Excessively high wvage structure
Inefficient handling of labour problems
Excessive manpover
Poor labour productivity
Poor labour relations
Lack of trained skilled labour or technically competent personnel
(c) Marketing management
Dependence on a single customer or a limited number of custorners/single or a limited nmber of prodiu
Poor sales realisation
Defective pricing policy
Booking of large orders at fixed prices in an inflationary market
Weak market organisation
Lack of market feedback and market research
Lack of knowledge of marketing techniques
Unscrupulous sales/purechase practices
(d) Financial management
The road to business is paved with bad financial decisions. More often, the entrepreneur's
mismanagement is responsible for a host of problems.
Poor resources management and financial planning
Faulty costing
Minimal capital
Liberal dividend policy
General financial indiscipline and application of fimds for unauthorised purposes
Poor liquidity
Deficiency of funds
Over-trading
Unfavourable gearing or keeping adverse debt-equity ratio
Inadequate working capital
Absence of cost conscousness

The Dynamics of Entreprerneurial Development and Management

706
 Lack of ettective collection machiner
Poor cash control

No plan "B in sight

Throwing IT around
Delaying Debt
Borrowing Blind
Leaving lenders out
Thin reserves

Jnderestimation of
expenses like
import and
Excessive investment in
infrastructure transport costs
Ignoring the lender like SIDBI

Administratrve management
Over centralisation
Lack of professionalism
Lack of teedback to
Lack of controls management (Management Information System)
Lack of timely diversification
Excessive expenditure on R&D
Dividend 1oyaies wnere the same
management has interest in more than one unit, cases are knoWn
mited companies wo aiso Owm
private ownership firms tend to
wherePO
look after the interests of the latter, often at the cost ot tne
ormer).

Dissension within the

management
Incompetent management
Dishonest management
B. External Causes
(a) Infrastructural bottlenecks
Non-availability of
irregular supply of critical raw materials other
Chronic power shortage
or inputs
Transport bottlenecks
Financial bottlenecks
Non-availability of adequate finance
) Government controls and policies, etc.
Government price controls
Fiscal duties
Abrupt change in Government policies
Procedural delays on the part of the financial licensing other controlling or regulating authorities (Banks. Reserve Bank
India, financial institutions, Government departinents, ncensing autnorites, Monopolies and Restrictive
Trade Practices
Roard. etc.)
() Market constraints
Market saturation
advances rendering one s products obsolete
Revolutionary technological
(e) Extraneous factors
Natural calamities
well as international)
Political situation (domestic
as

War
Sympathetic strikes
labour unions.
Multuplicity of