SICKNESS IN SMALL SCALE INDUSTRIES

INTRODUCTION
In order to tackle the problems in the small industries, it is important to understand
first what is behind those sickness, the causes of those sickness among small scale
industries.
There are 2 different factors behind the sickness in small scale industries. Those
can either be internal factors or external factors.
The main external factors are:
1.
2.
3.
4.
5.
6.

Political and legal constraints

Marketing constraints
Finance constraints
Personnel constraint
Natural disaster
Business cycle

The above factors are beyond the control of the industry. There is little a small scale
industry can do it about them. For example , a company has no control over the
weather and behaviour of nature. It can just observe.
At the other hands, there are internal factors which can be controlled by the company. The company is in total control of those factors and they mainly include:
1.
2.
3.
4.
5.
6.

Lack of Good Management

Marketing Problems
Poor Implementation
Technical/Operational Problems
Bad Production Policies
Inappropriate Personnel Management

To save a sick industry, it is important to figure out those causes, as trying to remedy the sickness without understanding the causes may not be efficient.
REMEDIES

External Factors
A company has little to do when it comes to external factors. But there are few
steps it can take to prepare itself from those external factors.

1. Remedies against Political and legal constraints

A company may find itself in a position where it has to shut down due a new policy
or a new government. The company can either be in line with the new regulations
to save itself or it can simply shutdown.
In some cases, the new government or the government might have to do whatever
it takes to protect small scale industry. It must adopt laws that encourage small
scale industry and provide the mean to save companies which are in bad shape.
Some of those measures are:
- Reduce the tax liability of the sick industry
- Provide necessary funds for those companies
- Provide tax advantages for any company willing to take over the sick company.
- The government can buyout the sick company
2. Remedies against Finance and Personnel constraint
It is difficult for a company to deal with this situation as it is beyond its control. The
company can take up few measure hoping to overcome those constraints. The
most common remedy for the company is to go beyond its borders. US companies
once upon a time found themselves in a shortage of skilled engineers. They decided to look beyond USA and went on hiring spree in Asia specifically in India, South
Korea, Japan and China.
The same can be applied to overcome the finance constraints. while also the government can provide fundings to those companies and inject money in them
through development banks.
3. Remedies against business cycle and natural disasters.
There is no solution here for a business if it didn't prepare itself for such events.
many companies keep some cash aside so that they can survive these kind of situation.
In a scenario characterised by the lack of preparation, the sick company just has to
request help for external partners such as its existing investors, government, or
crowdfunding.

Internal factors
Those are situations that a company can effectively deal with it has the proper
team. Those are within its control and hence the company can implement remedies
to overcome these issues.

1. Remedies against Poor management

There are many stories of companies that go bankrupt because of a poor leadership. Those are mostly within the small scale industries. In most of the cases it is
due to lack of experience of its management. There is only one solution. Bring in
new managers and leaders while removing the old ones. Theres saying that goes
by: If the head is sick, the entire body is sick or will be sick soon.
2. Remedies against Poor implementation
A company may have great leaders, a great plan and visions but the plan may be
poorly executed or implemented. A company may suddenly blame the leadership
for the problems, but as long as the entire company hasn't figured out a way to implement a strategy, it will keep failing. In these kind of situation, the organisation
brings all the people responsible for the implementation and try to figure out the
best way to conduct the implementation. It should be kept in mind that In corporate
world, someone has to pay for the problems being faced by the company. And in
his situation, the CEO may or may not be fired but someone in the organisation will
be asked to leave.
3. Remedies against lack of finance
This can either be an internal or external factor. It is internal when it is due to the
mismanagement of finances by the company. A company which mismanage the
funds at its disposal is doomed to fail.
Hence, the remedy is to reorganise the need of the company as well as evaluating
the area which really needs to be invested in. A change in management might also
help, but the company should strive to reduce the cost of its activities.
4. Remedies against bad production policy
The choice of the location is critical for the company survival. The place where to
acquire raw materials, the location of its plant can decide the fate of a company.
If a company has already done those mistakes, a reorganisation might be needed.
Generally it consists of moving its operations next to the plant but also next to customers. Above all, it should have a proper product policy. It should proceed a product only after finding that theres a demand for that particular product in the market.

5. Remedies against marketing constraint

A product that no one wants is destined to fail. THeres no debate about it. There
are companies who start manufacturing process without proper marketing research.
Small scale industries are known to have limited resources, hence they cannot
avoid making such mistakes. There are times it happens, and a company start feeling the heat, and experiencing built-up inventory.
The marketing department might have to be fired. The product produced needs to
be dumped, external financing required to continue and a total reorganisation of the
firm.