A Proposed Frame Work for Enhancing Competitiveness of Small and Medium Enterprises (SMEs)

Abstract

Small and medium enterprises (SMEs) are important agents of development throughout the world. Promoting a country’s SME sector plays a crucial role in maintaining high employment and income generation and is therefore critical for achieving sustainable grow by enhancing SMEs competitiveness. The general objective of this paper is to develop a theoretical frame work model for garment SMEs competitiveness that supports garment manufacturing small and medium enterprises (SMEs) to enhance their competitiveness by identifying the possible competitiveness factors. To achieve the presented objectives, a purposive sample basis on selected garments manufacturing SMEs found at three different clusters in Addis Abeba city administration is used. The data in this paper are both primary and secondary data. Primary data was collected though questionnaires, interviews and observations, while secondary data sources referred from company’s documents and several articles from reputable international journals. Both qualitative and quantitative approaches are used to analyse the collected data using various statistical programs. The results of the paper found that in garment manufacturing SMEs the main difficulties faced in performance dimension which is divided into financial performance and non-financial performance are the lack of collateral, the lack of proven track records, the lack of proper business plans and the need to show good sales turnover are the major financial performance parameters that deters the competitiveness. The SMEs do not have well established system to support effective and efficient implementation systems for productivity improvement. Finally the garment manufacturing SMEs are potentially wasting valuable and scarce resources since they don’t implement productivity improvement tools and techniques Lack of appropriate machinery and equipment are the main non-financial performance parameter that deters the competitiveness. To tackle the problems and enhance competitiveness of garment manufacturing firms, a theoretical conceptual model based on this requirement has been developed and the implementation requires a coordinated and well organized system among the actors (at macro and micro level) in the value chain. Some of the major problems such as lack of skilled manpower and infrastructure have to be tackled by the government and private sectors. And the other problems could be approached by using some modern management philosophies (such as just-in-time manufacturing, business process re-engineering, lean production) and scientific methods like production planning and control.