An Assignment

on
The Contribution of SME in the Economy of Bangladesh

Course name: Management of Small and Medium Enterprise

Course code: MGT 306
Prepared by

Serial Name ID
1 MD Mehedi Hasan 024-025
2 K.M. Mehedi Hasan 024-030
3 Md Rafiul Islam 024-035
4 Jakibul Islam 024-036
5 Md Kaiyum Hossain 024-107
6 Md. Abdulla 024-040
7 Abdullah Al Noman 024-056
8 Md Jweel Hossen 024-057
9 Forhadul Alom 024-059
10 Anichur Rahman 024-055
BBA Program
(Mgt- 23rdBatch
Section-A)
Submitted to
Mr.Mohammad Abdul Jabbar
Assistant Professor
Department of Management
Faculty of Business Studies
University of Dhaka
Date of submission: 31-07-2019
Introduction

SMALL and medium enterprises (SMEs) are treated as the engines of growth and drivers of innovation
worldwide. They play a significant role in driving economic growth and generating jobs.
In Bangladesh, the sector is actually changing the face of the economy. SMEs are playing a vital role for the
country's accelerated industrialization and economic growth, employment generation and reducing poverty

Some specific contributions of small and medium enterprise are given below-

Achieving economic growth

SMEs are main indicators of a country's economic development. They have a significant impact on the social
development of a country. Recent empirical studies show that SME‘s contribute to over 55% of GDP and over
65% of total employment in high-income countries. Small and Medium Enterprises (SMEs) An Assignment
over 60% of GDP and over 70% of total employment in low-income countries, while they contribute over 95%
of total employment and about 70% of GDP in middle-income countries.

Earning foreign currency

The declining value of your currency can have a positive impact for small businesses- you may notice an
increase in sales worldwide. This is because customers may find that their money converts to be worth more of
your currency, meaning they can buy more products for the same amount.

Resolving unemployment problem

Small and Medium Enterprises (SMEs) represent over 50% of our economy and are therefore key players in
engendering regional development and inclusive growth, i.e. ensuring that the benefits of growth go to all
cohorts of society. According to the National Policy Framework for SME Development (2011), SMEs are
enterprises which employ less than 300 employees and which have an annual turnover not exceeding Rs.750
Mn – this broad definition also includes micro enterprises.

Reducing gender discrimination (Women entrepreneur)

In Bangladesh, today it becomes a great news that the women of Bangladesh are becoming more self-
dependent and involving more entrepreneurial activities. We know that setting up a business is a key means for
women to empower themselves and break out of poverty. But just as becoming an employee is harder for
women, so is becoming an entrepreneur.

Utilization of unused natural resources

Actually, the small business are formed on the basis of local raw materials and a proper supportive ambiance.
Resulting the local resources can be best used by the small business owners. In many developing countries,
small and medium enterprises (SMEs) are the backbone of economic and industrial activity, contributing to
approximately 75% of industrial activity.

Creation of low cost job opportunities

Unemployment problem has become a great curses for the people of Bangladesh .A lot of human resources
have become the burden for the development of our country. But, if we can convert these population as the
useful resources that will accelerate our economy growth. Our young generation can easily create their job by
involving small and medium enterprise.

Increasing per capita income

Development of small and medium enterprises (SMEs) is envisaged as a key element in this development
strategy. For achieving double digit growth in manufacturing, matching development of SMEs is considered
critical. Enhanced micro, small and medium enterprise activities in the rural and backward regions constitute a
key component of the strategy for rural development and reduction of poverty and regional disparity (GOB
2011.

Increasing PPP (Purchasing Power Priority)

Purchasing power parity (PPP) is an economic theory that compares different countries' currencies through a
"basket of goods" approach. According to this concept, two currencies are in equilibrium or at par when a
basket of goods (taking into account the exchange rate) is priced the same in both countries. Closely related to
PPP is the law of one price (LOOP), which is an economic theory that predicts that after accounting for
differences in interest rates and exchange rates, the cost of something in country X should be the same as that
in country Y in real terms

Contribution in raising GDP

According to Bangladesh Bureau of Statistics (BBS) data, Bangladesh will achieve a GDP growth of 7.65% in
the current FY, exceeding an earlier prediction of 7.4%.There are nearly a million small and medium
enterprises (SME) in Bangladesh. The contribution of these SMEs to GDP is an estimated 23%. Nearly 80% of
all the jobs in the industries sector are offered by the SMEs. Center for Policy Dialogue (CPD) Research
Director Khondaker Golam Moazzem said: “The BBS data clearly highlights the industries sector’s huge
contribution to GDP.ata also confirmed that the industries sector is the key driver of this projected growth.

Equitable distribution of income among the persons and region

A more equitable distribution of income may help accelerate growth and promote economic development.
Equitable doesn’t mean equal distribution 46 Small and Medium Enterprises (SMEs) An Assignment of
income. It refers to the distribution of income that is ‘fair,’ but the concept of ‘fair’ is subjective. Distribution
of wealth and income is the way in which the wealth and income of a nation are divided among its population.
Or the way in which the wealth and income of the world are divided among nations. An equitable distribution
of wealth gives all citizens a fair opportunity to become successful.

Change personal consumption

Demographic change is altering the demand for goods and services, even in the short term. Year after year, the
ageing of the population is shifting consumption patterns. But what does this mean for small and medium-sized
enterprises in Germany? A special analysis of the KfW SME Panel has revealed that demographic factors have
a significant impact on short-term turnover expectations of small and medium sized enterprises (SMEs). On
balance, the effects are positive and amount to annual growth contributions of EUR 24 billion between 2014
and 2016. Thus, roughly one fifth of the currently subdued turnover growth in the SME sector can be attributed
to demographic change on the sales markets. Ageing and immigration are proving to be important pillars of
growth for SMEs in the short term.

Change the traditional outlooks and values

A strategic approach to how small and medium sized enterprises (SMEs) use their marketing networks during
a time of change in their operating context is the focus of this article. SME networking is analyzed using the
structural, relational and usage dimensions associated with network frameworks. 48. Small and Medium
Enterprises (SMEs) An Assignment Specifically, the paper examines marketing network processes (MNPs)
that are investigated through the use of network behavior for SME management. The development of a
thematic approach in viewing a network as a strategic analytical construct allowed these MNPs to be studied in
relation to the specific theme chosen and how they do their strategic marketing

Increasing savings

So many development projects are being implemented by the government, donor agencies and NGOs in
different sectors of Bangladesh. There could be a development project to update existing technologies of
different SME clusters for increasing productivity and product quality. Government could allow sectorial
associations to import raw materials with bonded warehouse facility to facilitate export of SME products
producing in different clusters throughout the country. Government may consider allowing minimum import
duty on raw materials using SME clusters and give protection of SME products against importing. The central
bank have to inspire the scheduled commercial banks to offer tailor made loan products based on local needs in
different SME Clusters.
Reference

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supplements/24th-anniversary-the-daily-star-part-2/potential-small-and-medium-enterprises-70927