International Postgraduate Research Conference (IPRC)

Permanent URI for this communityhttp://repository.kln.ac.lk/handle/123456789/155

Browse

Subject: search.filters.subject.Small and Medium Enterprises

Search Results

Now showing 1 - 2 of 2
  • Thumbnail Image
    Item
    Business Failure of Small and Medium Enterprises - A Review
    (International Postgraduate Research Conference 2019, Faculty of Graduate Studies, University of Kelaniya, Sri Lanka, 2019) Jayasekara, B.E.A.; Fernando, P.N.D.; Ranjani, R.P.C.
    Small and Medium enterprises are back born of developed and developing economies around the world. However the sector has not provided desired level of contribution and suffers from high failure rate in worldwide. The main purpose of this study is to critically evaluate the causes of failure of SMEs based on literature. The objectives of this study is to determine the causes of failure of SMEs, critically evaluate the literature on small and medium business failure theories as well as lessons that could be learnt from the existing literature and to determine the methods of improving the business success to achieve sustainable economic development. The methodology used this study to review literature systematically using sample of 95 studies selected from most relevant articles published from 1968-2016 and critically appraised and synthesized findings qualitatively. The Small and Medium business can be failed due to an inability to achieve certain goals due to activating opposition forces, tensions between assets against liabilities, limited access to finance, unbeatable competition, isolation, inadequate staff, wrong pricing, lack of co-operation, technical insolvency, inability to satisfy principal stakeholder’s aspirations, losses to creditors, cessation of operations, termination due to under performance, involuntary change in both the ownership and management of the business owing to poor performance, unable to meet liabilities, not made profit for the previous three years, sale of the firm or personal decision by the owner to accept employment with another firm, fall in revenue, rise in expenses becomes insolvent ,unable to attract new debt or equity funding, cannot continue to operate under the current ownership and management, exiting the economy or not meeting the “performance threshold” of the market, owner’s personalized management style, end state, liabilities exceeds the value of the company’s available assets, decline and deterioration of financial performance, revenue does not sufficiently exceed costs, decline performance, deviation from goals, continuous performance lapses, inability of a business to meet its financial obligations, economic failure, venture failure, outcomes less than the expectations, poor management practices, overtrading, lack of additional resources, resource insufficiency, unbalance of the resources and opportunities in the organizational life stages, lack the necessary skills or versatility, entrepreneurs lack of strategic management knowledge, entrepreneur’s lack of vision, threat rigidity, strategic persistence, lack of will, lack of turnaround strategies and inability to respond effectively and make necessary adjustments to reverse the downward spiral of decline triggered by external factors. The literature recommend, failures can be mitigate through improving business management skill of the entrepreneurs, continuous concentration on cost reduction, quality improvements, service / product innovation; breakdown organizational barriers between departments; create close relationship with customers and suppliers, eliminating layers of management ,creating flatter organizational hierarchies, transform to advanced latest technology, global focus and enhancing human resource skills and obtain decisions based on the group discussions. The findings of the study useful in identifying practices to be avoided and in aiding educators, consultants, and SME business support agencies in meeting the needs of the business community
  • Thumbnail Image
    Item
    The Working Capital Management Practices of Small and Medium Enterprises (SMEs) in Sri Lanka
    (Faculty of Graduate Studies, University of Kelaniya, 2015) Rathnasiri, U.A.H.A.
    Small and Medium Enterprises (SMEs) play an important role in any economy as they are capable of generating employments, promoting the growth of Gross Domestic Product (GDP), embarking innovations and stimulating all other economic activities. This sector is said to be the backbone of all developed and developing nations. Therefore the development of SME sector is paramount important for any country irrespective of their level of development. The purpose of the study is to explore the Working Capital Management (WCM) practices adopted by Sri Lankan Small and Medium Enterprises (SMEs) and to study the usage of such practices in prevailing information systems and financial reporting practices. The sample of the study is 60 SMEs which are operating their businesses in the manufacturing sector and limited to the western province in Sri Lanka. The study focused on the main working capital components such as cash, trade receivable and inventory management of SMEs. A questionnaire was used to explore the adoption of cash, receivable and inventory management practices of SMEs. Descriptive statistics were used to analyze the data in order to examine the said purpose of the study. The findings revealed that recording of cash, inventory and accounts receivable practices of SMEs were not conducted in a formal manner and used to continue WCM practices in an adhoc basis. Findings of receivable management practices identified that selling products on credit basis is a common trend in Sri Lankan SMEs and the length of accounts receivable and the credit term policy depends on the owner‘s prior experience and perception on customers. Findings on inventory management practices and level of cash in hand demonstrated that owner/manager‘s experience found to be more important in determining the inventory levels, the amount of cash in hand and preparation of inventory and cash budgets. The above findings are consistent with the empirical results of the literature. Accordingly the ad-hoc working capital management practices of SMEs‘ leads to the excessive level of working capital resulting low level of profitability or low level of working capital exposing problems that disturb day to day operations of SMEs. In overall study validated that the adoption of working capital management practices among Sri Lankan SMEs is low as a result of lack of knowledge and the negative perception of cost benefit analysis on implementing a good WCM practices. Thus it is important to provide platform for training SME owners on how to adopt and implement WCM practices to ensure long term survival of SMEs in Sri Lanka.