Learning Area: Business Studies

Level: Form 5

CALA Type : Size and growth of business

Name: Abigail T Chitongo

School: Mufakose 2 Secondary School

Class: Lower 6 Commercials

Candidate Number:

Centre Number: 010146

 CALA Component A

Learning Area: Business studies

Level : Form 5

CALA Type: Pen and paper

Syllabus Topic: Business and its Environment

page8

CALA Title: Small to Medium Enterprises

Background: It was observed that small firms often

encounter different problems in their operations despite
their contribution to the economy. Research on the problems
faced by SMEs.
CALA Description

Part A
SMEs are firms which have a labor force of 200 or less and operate at a
small scale.
As they do their business they encounter a lot of problems which may
result in losses being made. SMEs lack capital to start their business as
they are not offered loans by banks. Some of the SMEs lack inputs for
them to produce for example those who carry out agricultural activities
are having problems due to lack of adequate inputs for their crops to
grow. SMEs face stiff competition from larger firms which reduces their
capability to expand or to maximize profits. This can be as a result of
operating at a small scale. Most SMEs lack the skills of managing and
controlling their business, so they face the risk of being taken over by
larger firms.
To add on, SMEs incur heavy taxation from the government . This can
limit their profit and also decrease their growth rate. SMEs lack
reasonable premises. This is due to lack of capital to start their business
and not being able to afford the premises for doing their business. They
do not enjoy economies of scale that are enjoyed by larger firms. They
lack continuity because once the owner of the business dies , the
business struggles to survive. Moreover, there is the problem in raising
both short term and long term finances due to lack of collateral security.
 Interview guide
Abigail Chitongo is a name. I am researching on the problems
faced by SMEs and I would like your help in doing so.

1. Does the government assist you and how?

_________________________________________________
_________________________________________________
2. Are you facing any challenges during the business?
_________________________________________________
_________________________________________________
3. How do you raise your capital?
_________________________________________________
_________________________________________________
4. How are you copying up with the competition of larger
firms?
_________________________________________________
_________________________________________________
5. Do you sell goods on credit?
_________________________________________________
_________________________________________________
6. How long have you been doing this business?
_________________________________________________
_________________________________________________
7. Do you produce your own products?
 _________________________________________________
_________________________________________________
8. Do you wish to expand your business and why?
_________________________________________________
_________________________________________________

Part B
SMEs get assistance from the government by being given capital to start
their business. They are also given premises for them to conduct their
business .The government trains the small firms on how to manage their
and control a business through universities and polytechnic colleges.
This gives small firms managerial skills and knowledge about doing
business. To add on, the government gives SMEs licenses for trading
with other countries on the international trade which brings in the much
needed foreign currency. The government can issue out embargos which
is the total ban of foreign trade within our country with neighboring
countries. This can encourage local people to purchase more goods from
SMEs thus ensuring their survival. Moreover, the government can
reduce the taxes imposed on SMEs. The government can offer loans to
SMEs to ensure their continuity and survival.
Therefore, SMEs can be assisted by the government as it provides them
with financial as well as advices and solutions to their problems.
Part C
SMEs contribute a lot in the economy by creating employment for the
local people. This is improving the standards of living of people as they
are now having a source of income. SMEs also increase the tax base of
the government through corporate tax and income tax which result in
more developed infrastructure from the government. The small firms
contribute to the efficiency of goods being produced as they create
competition with larger firms and also goods being affordable as the
prices are reduced due to the competition which is a benefit to the people
in the economy. SMEs bring in the much needed foreign currency in the
country by exporting their goods. This can contribute to a much
developed economy. SMEs produce a variety of goods which results in
consumer choice. SMEs provide raw materials for the larger firms. This
shows their significance in the economy. Moreover, they break the bulk
making goods affordable to customers. Therefore, SMEs can be assisted
by the as it provides them with financial as well as advices and solutions
to their problems.