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Spring 2012 MGT601 SME management

Assignment # 1 Marks: 15
Submitted By, Basit Sharif ID # bc090402876 VIRTUAL UNIVERSITY OF PAKISTAN Topic: SME sector and its potential to solve socio-economic problems Requirement: 1. As mentioned above that SMEs are more critical for economic expansion of developing countries like Pakistan and environmental factors also support the fact that developing countries are more suitable for SMEs growth. You are advised to probe the issue and give at least ten (10) arguments in the favor of aforementioned the statement. (10 marks) Answer: Countries around the globe, the govt. officials and the stakeholders belonging to different school of thoughts now have become aware of the fact that SMEs sector possess a back-bone position in the betterment of any country especially in developing countries like Pakistan. One can have several arguments in support of the underlying fact; 1. Reduction of Unemployment: First and foremost argument in favour of SME sector is the creation of employment opportunities which will eventually shift the load of employment from public and private sectors. 2. Improved Family Life: Family life of individuals depends upon their economic stability. One can start married life when one is economically independent. Promotion of SME may improve the family lives of people in Pakistan especially young people in the age bracket of marriage. 3. Social Stability:

Busy, responsible and prosperous people enjoy good social relations with each other, hence SME may add to social stability. 4. Law and Order: When people are economically stable, they rarely commit crimes. Hence the rate of criminal activities can be minimized. 5. Physical and Mental Health: There will be marked improvement in mental and physical health of people when their living standard improves. 6. Literacy Rate: The citizens level of education increases with the increase in their income. So promotion of SME may lead to higher literacy rate. 7. Economic Expansion: A stabilize SMEs sector contributes in real GDP which is an indicator of economic growth of the country. 8. Energy Crises: The organized SME sector can put pressure on the Govt. regulatory authorities to improve the energy sector to overcome the energy crises in Pakistan. 9. Political Stability: The economically developed citizens lead towards political stability of the state. 10. Population Control: Employment of women will result in reduced fertility. 2. Why it is believed that SMEs growth can resolve many socio-economic problems faced by developing countries like Pakistan. Give at least five (5) arguments in the support of your answer. (5 marks) Answer: 1. SME Sector can produce items worth billion of dollars that is why SMEDA is quite right in stating its mission as Turning potential into profits. 2. With the growth of SME sector small businesses can produce nice products at low costs.

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SME development may check brain drain and flight of money from Pakistan. 4. This is also a fact that through SMEs we can convert our villages into new towns and sources of revenue and progress. 5. I would sum it up that no country can be urbanized without promoting and establishing SMEs and it definitely accounts jobs for hundreds of people across the country. Personal Recommendation: Pakistan has a great potential for small businesses in small towns and villages and this sector can serve as a realistic means to earn livelihood and improve standard of life. I would recommend that Federal Government should sanction money for SME in the Budget 2012-2013.

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