small Business

• The story of organizations today is the story of

managers inventing and reinventing organizations.

Across the World:

• Organizations come and go: Pennsylvania Railroad, Nash, the
Civil Aeronautics Board, the World Football League, and Pan
American World Airways have disappeared from the landscape.

• Others have been swallowed up into other organizations:

People Express, the Baltimore Colts, the Seattle Pilots, and
Republic Airlines are cases in point.

• Many more organizations are undergoing changes, as

managers wrestle with questions about products, markets,
organizational forms, global competitive pressures, and so on.
Failed car & bike brands that left India:

• GM, Datsun, Daewoo, Fiat, Mitsubishi, Hindustan Motors, LML,

Opel (GM), Chevrolet (GM), San Motors.

Other MNCs that left India:

• GOI revealed in Parliament in Dec ‘22 that 2,783 foreign

companies and their subsidiaries ceased operations in India
between 2014 and November 2021.

• Some of the notable exits include: Cairn Energy, Holcim,

Daiichi Sankyo, Carrefour, Henkel, Harley Davidson and Ford.
small business
• Small business plays a central role in our lives because we
conduct much of our own personal economic activity with people
running small businesses. (Bicycle repair, hair cut, dentist, Mom
and Pop/kirana store/provision store).

• Small business refers to businesses locally owned, often with

very few employees working at a single location.

• There are 13 million kirana stores in India, contributing to 90%

of the food and grocery retail. (1% of India’s pop)

• Small business is easy to overlook as you think about the world

of organizations and management. You are not alone if the
names of such large organizations as IBM, Exxon come to mind
more readily than do those listed as small businesses.
small business
But small business is where it all begins. Consider this:

1. More than 36 million Americans work for organizations with

fewer than 100 employees. (USA Pop of 333 million July 2023)

In 1992, 53% of all jobs in America were held by people working

in organizations with fewer than 500 employees – small
businesses.

Between 1988 to 1990, while large organizations accounted for a

net loss of 500,000 jobs in the USA, organizations with fewer than
20 employees accounted or a net gain of 4 million net new jobs.
small business
2. According to a Dun & Bradstreet analysis of the 2 million
businesses formed in 1991, 20% were one person or two person
operations, a significant increase from past patterns.

As was observed: a tremendous shift to self employment is under

way. Some of this growth is driven by people who are concerned
about the downsizing (or rightsizing) of large corporations. Some
have started their own businesses after having been laid off.
Others are interested in the freedom of being one’s own boss.
small business
3. Wal-Mart, AT&T. and General Motors (GM) had humble
beginnings.

Wal-Mart began as a single store that Sam Walton opened in 1962

in Rogers, Arkansas.

AT&T had its beginnings in the tinkering of Alexander Graham

Bell, who was a teacher, not a financier or business tycoon. With
the telephone patent that the he received in 1876, Bell and his
advisers awarded franchises to people with the money and local
political clout necessary to start local telephone systems.

In 1930s that AT&T took the organizational shape that endured as

a unique monopoly for 50 years.
small business

Alfred Sloan, who is credited with shaping and leading the modern
General Motors, started out with Hyatt Roller Bearings in Newark,
New Jersey, after his graduation from MIT.

Hyatt had 25 employees, and one ten horse power motor ran the
factory’s machinery. 25 years later, Sloan moved into upper
management at GM.
MSMEs in India: A quick overview
• As per some estimates, there are about 63.05 million small
industries, and about 5,000 medium enterprises in the country.

• The state of UP has the largest number of estimated MSMEs with

a share of 14.2% of the total MSMEs in the country.

• West Bengal comes as close second with a share of 14%,

followed by Tamil Nadu and Maharashtra at 8%.
MSMEs in India: A quick overview
• On July 15, 2022, the Ministry of State for small small and
Medium Enterprises stated that MSMEs contributed to 36% of
India’s total manufacturing output in 2020-21, albeit down from
36.7% in 2019-20.

• As per a recent Assocham-Crisil report titled MSMEs back to the

grind, MSMEs provide employment to about 111 million people
in India and contribute to approximately 50% of overall exports
from the country. (The Associated Chambers of Commerce
and Industry of India is a non-governmental trade association
based in New Delhi, that represents the interests of trade and
commerce in India, and acts as an interface between issues and
initiatives). (Credit Rating Information Services of India
Limited. CRISIL is an Indian consulting firm offering ratings,
analysis, risk and policy advice and is a branch of S&P Global, an
American corporation).
How do you qualify as an MSME in India?
• MSMEs account for 27% of India’s GDP and serves as the
backbone of the economy.

• From July 1, 2020, the GOI has implemented the new

categorization MSMEs in India:

• The definition of who qualifies as an MSME in India is based on

investment and turnover and applies to entities both in
manufacturing and services sectors:

• micro: Enterprises with investment up to INR 10 million,

turnover up to INR 50 million are defined as small units.
• small: Enterprises with investment up to INR 100 million,
turnover up to INR 500 million are defined as small units.
• Medium: Enterprises qualify as medium-sized units if they have
investment up to INR 200 million and turnover up to INR 1
billion.
Lakhs Crores Million Billion Trillion
10 1

100 1 10

10 100

100 1000 1

1000 1
MSMEs opportunity areas in India:
Telecommunications
• Domestic manufacturing of low-cost mobile phones, handsets,
and devices
• Manufacturing of telecom networking equipment, including
routers and switches
• Manufacture of base transceiver station equipment
• Mobile customer data analytics – services oriented toward
analytical solutions
• Development of value-added services

Healthcare
• Manufacturing of personal protective equipment (PPE)
• Manufacturing of low-cost medical devices, and medical
accessories, such as surgical gloves, scrubs, and syringes
• Telemedicine
• Diagnostic labs
MSMEs opportunity areas in India:
Electronics

• Domestic manufacturing of low-cost consumer electronics,

consumer durables
• White goods (AC and LED)
• Nano-electronics and smallelectronics
• Electronic Systems Design and Manufacturing,
including semiconductor design, electronic components design
and hi-tech manufacturing under India’s ‘National Electronics
Mission
• Strategic electronics, as the government is keen on encouraging
the domestic manufacturing of products needed by the security
forces
MSMEs opportunity areas in India:
Pharmaceuticals
• In July 2022, India launched three schemes under the banner
‘Strengthening Pharmaceuticals Industry‘ (SPI) for strengthening
MSMEs in the pharmaceutical sector to upgrade technology, set
up common research centers and effluent treatment plants in
pharma MSME clusters, and create a database for the domestic
pharmaceutical and medical device industry.
• The states of AP, Gujarat, Maharashtra, and Goa are major
pharmaceutical manufacturing clusters in India.
• The pharma sector is also a Production Linked Incentive Scheme
(PLI) beneficiary.
Other areas
• tourism; sustainability; hyper-automation - artificial intelligence
(AI); machine learning (ML); and advanced analytics; information
technology (IT) and IT-enabled services; automotive; chemical;
renewables; gems and jewelry; textile; food processing;
drones-as-a-service; and agriculture.
Characteristics of Small Scale Industries
Characteristics of small scale industries in India:

• Small scale industries generally have a single ownership, which

means it either has a sole proprietorship structure or a
partnership.
• The management of the small scale industries rests with the
owners and therefore, the owner plays an active role in the day
to day functions of the business.
• Small scale industries are very much labor intensive, hence there
is limited use of technology.
• Small scale industries are flexible and adaptable to a changing
business environment, unlike the large industries.
• Small scale industries work in a restricted area which makes
them able to meet local and regional requirements.
• Small scale industries use resources that are local and readily
available, which helps the economy fully utilise the natural
resources and bear minimum wastage.
Characteristics of Small Scale Industries
Objectives of small Scale Industries

• To create job opportunities for the population.

• To help in the development of the rural areas of the economy.
• To play an active role in reducing the regional imbalances in the
nation.
• To help in improving the standard of living for people in rural
areas.
• To ensure there is equal distribution of wealth and income
Characteristics of Small Scale Industries
Role of small Scale Industries in the Indian Economy

• They are the major sources of employment for the people living
in rural areas and therefore, play a vital role in generating
employment in an economy.
• small scale industries account for almost 40% of the total goods
and services in India hence, is a very important contributor to
the economy.
• small scale industries help in promoting the Make in India
initiative which helps in increasing demand for local made
products.
• Majority of the export materials are provided to the Indian
companies from the small scale industries. It is estimated that
around 50% of all the material exported are produced from such
industries.
Characteristics of Small Scale Industries
Examples of small Scale Industries

• Paper Bags industries

• Leather belt manufacturing industries
• Small toys manufacturing industries
• Bakeries
• School stationeries
• Water bottles manufacturing industries
• Beauty parlours
• Pickle manufacturing industries
• Incense stick manufacturing industries
• Paper plate manufacturing industries
Key differences: Micro, small and medium enterprises
Composite Criteria: Investment in Plant & Machinery/equipment and Annual
Turnover [1]
Classification Micro Small Medium
Investment in Plant Investment in Plant
Investment in Plant
and Machinery or and Machinery or
and Machinery or
Manufacturing Equipment: Equipment:
Equipment:
Enterprises and Not more than Rs Not more than Rs
Not more than Rs 1
Enterprises 10 crore and 50 crore and
crore and Annual
rendering Services Annual Turnover Annual Turnover;
Turnover not more
not more than Rs not more than Rs
than Rs 5 crore
50 crore 250 crore