Diversity in Challenges for SMEs & Large Corporations in Pakistan

SMEs which can also be termed as small and medium sized enterprises are auxiliary separate
organizations having lesser capacity of employing a specific number of employees. The figures might
fluctuate depending upon the origin, country or region. But according to European Union, the upper
limit of an SME to be designated is 250 employees. Whereas some region consider a company an
SME which have lesser than 200 employees and as per United States laws, a firm having lesser than
500 employees can be consider as an SME.

A firm with lesser than 50 employees can be termed as a small firm. While, a firm with lesser than 10
employees can be considered as micro enterprise.

We can also define SMEs by considering financial assets. The revenue of a firm which is medium-
sized should not pass the figures of fifty million euros, whereas for a small firm it should not be
more than ten million euros and for a micro firm the limit is two million euros.

According to SBP, a small enterprise is an organization having lesser than 50 employees working in
a single organization along with the annual revenue not more than 150 million PKR. While for a
medium enterprise, the definition varies depending upon the industry. For a trading venture, the
employees limit is from 50 to 100. Whereas, for a services or manufacturing enterprise, the figures
are from 50 to 250 employees including those employees who are on contractual basis. The annual
revenue for a medium-sized enterprise varies from 150 to 800 million PKR. The extension of
finances for a small enterprise if not more than 25 million PKR and for a medium enterprise is 24 to
200 million PKR, respectively.

Large Corporation or a large enterprise is an organization meeting two factors. Either a firm having
minimum 5 thousand employees falls in the category of a large corporation or a company having a
balance sheet of over EUR 2 billion along with the annual revenue of more than EUR 1.5 billion also
fits in the category of a large enterprise. We can also say that an organization which is greater than
the figure of an SME is somehow a large organization.

There is no definition of a large corporation available in reference to Pakistan, but we can consider it
as an organization having employees and annual turnover more than that of a medium enterprise.\

Challenges for SMEs in Pakistan:

Pakistan is always been in its developing stages economically because of its unstable SMEs sector
and the problems they are facing on genuine basis. A lot of challenges arises for a small and medium
enterprise which is thus acting as major obstacles in their survival and sustainability. Let’s highlight
some main problems which are been faced by SMEs in Pakistan on consecutive basis:

 Electricity: The problem of electricity load shedding is always been a vital challenge and
problem when it comes towards a small business as it always troubles the deadlines to meet
on timely basis.
 Sui Gas: The discontinuity of natural gas in winter season for small companies is also a
major issue which thus effects the production.
  Finance Structure: The finance structure provided by the SBP is also a great hurdle which
should be revised as lack of finances may increase the risk.
 Government Policies: The policies provided by the government are not allowing our SMEs
to grow.
 Financial Investor: There are lesser opportunities while coming towards the investors as
few investors are available because of the strict plan provided by SBP.
 Law & Order Situation: The complex law and order situation of the country is also a giant
problem which is not allowing the SME sector to even survive.
 Currency Devaluation: The rapid decrease in our currency is also demotivating our SME
sector which creates a lot of trouble in terms of wages, inventory, transportation etc.

Challenges for Large Corporations in Pakistan:

While consider a large organization, there are also a huge list of problems which are being tackled in
this economically country Pakistan. A list of some main problems are:

 Production Issues: The problem arises when enterprises face over production, unavailability
of raw material and defects in the products.
 Managerial Failure: It is considered that the upper management are not working on proper
strategies to overcome a demand and to grow by changing trends.
 Outdated Technology: The companies here in Pakistan are using those medium of
technology which are been obsoleted on other countries.
 Lack of Marketing: Marketing below the box is also a major issues for a large organization.
It minimizes the access to the target market.
 Human Resource: Lack of skills while coming towards the man power is also a giant issue.
Our labor are not skilled enough to input their best.

Conclusion:

There are a lot of problems been face by our SMEs and Large Corporations both which is also
effecting the growth of Pakistan. Some of the problems are effecting both SMEs and Large
Enterprises. But that effect is small on an SME whereas it is too big for a large corporation.

Name: Hassan Mehmood.

University: AIFD.

Subject: Entrepreneurship.

Student ID: 7202.