THE BUSINESS CHALLENGES ENCOUNTERED BY SMALL AND MEDIUM

ENTERPRISES IN BARANGGAY LAWAAN II

Authored by:

Naizell A. Reformado

John Ronald Bayno

Jaren Jay Benolirao

Joanna Jean Pagas

Grade 11 Senior High School Department

Accountancy, Business, and Management

Submitted In Partial Fulfillment

of the Requirements for the Subject

APPLD 02 – Practical Research 1

2nd Semester, School Year 2022-2023

Submitted to

Hanna Vin W. Juezan

Asian College of Technology

Bulacao, Talisay City, Cebu

 CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

1.1 Rationale of the Study

Every state has some form of business activity, albeit it varies greatly according on the

type of organization bureaucracy. Humans almost always start tiny businesses that grow into

medium-sized businesses since starting a SME (Small and Medium Business) just needs a

modest amount of capital. In addition to acting as retailers, SMEs also serve as a pressure point

for the financial boom and US economic growth. They play a crucial role in the city because it

offers Small enterprises and welfare opportunities.

Business is critical to the economy because it creates jobs and contributes to economic

growth. A small business is described as a privately held company, partnership, or sole

proprietorship with fewer employees and lower yearly sales than a full-fledged company or

enterprise. Although they might encounter distinct difficulties, small businesses can frequently

use the same quality management system as major corporations. For instance, small

organizations typically employ fewer teams of employees and make lower initial investments in

quality initiatives. Smaller businesses may, however, have higher senior management dedication

and accessibility, which facilitates internal communication.

 However, Small and Medium Business confront problems from rising competition, the

ability to respond to rapidly changing market demand, technological change, and capacity

restrictions linked to knowledge, innovation, and creativity. However, due to problems

associated to their small scale, such as for example a lack of resources, many SMEs frequently

do not reach their full potential.

Furthermore, a lot of small enterprises discover that their regional isolation gives them an

unfair competitive edge. Despite what many people perceive to be their weaknesses, SMEs have

not been eliminated by the processes of globalization and regional integration,rather, their role

and contribution have changed and evolved, allowing many of them to continue to compete

globally and collectively create a significant amount of jobs.

There is a possibility that small and medium enterprises can't satisfy their customers well

because they lack operational excellence, customer relations, and financial management. In the

broadest sense, operational excellence involves making continuous improvements to a company

to achieve a competitive advantage. In doing so, companies maximize value for the customer as

well as their financial benefits. With operational excellence, companies develop efficient systems

in which employees focus on fixing problems as soon as they arise. Melanie J. Martin (2021).

Your relationship with your customers is directly tied to the financial well-being of your

business. Building strong customer relations will develop customer loyalty and retain valuable,

long-term clients, increasing revenue from repeat purchases

Thus, the purpose of this study is for the researchers to take the time to recognize and

characterize the issue facing small businesses in order to be able to offer a solution that satisfies

those demands and aids in the organization's growth. It increases motivation in continuing this

research to evaluate and identify their shared issues and obstacles.

1.2 Theoretical Background

According to Yahya et al. (2016), there are numerous problems. Small medium

enterprises face a variety of challenges, including increased competition and a shortage of

capital. marketing initiatives, as well as limited financial accessresources. Some small medium

enterprises geographical isolation Another disadvantage added to the extensive list of obstacles

is location. encountered by these small and medium enterprises in terms of gaining easy access to

both the raw materials and final product market. Small medium enterprises are at the forefront of

innovation and advancement. are lagging far behind in a globalized market. These businesses

confront challenges in obtaining funds from a bank or capital market due to lack of accessibility

to the financial market. The a lack of understanding regarding prospective assets such as

infrastructure brand image, product display, management system, and everything else the

knowledge that influences supplier performance and Demanders are a major impediment that

Entrepreneurs encounter these days. The most essential foundation in a thriving business is

financial resources. Because of their modest size, these small medium enterprises do not have

enough business. Business links form a circle.

Financial institutions, for example both governmental and private, as well as individual investors

in general Examine the available resources and the position attained in the Before making

investment selections, a company will look at the market. Due to limited resources, the chances

of obtaining potential are reduced. Investing in small and medium-sized businesses small

medium enterprises (SMEs).

According to Eniola and Entebang (2015), SMEs in Oman are usually regarded as one of

the most crucial components of the country and aids in the management of the economy's level.

Furthermore, technological variances in Oman and consumer preferences People's online

marketing is one of the most common. problems in the era of technical progress. The absence of

each of them has an independent e-marketing website These companies are limited in their

ability to compete on a global scale. competition. This is a problem with sophisticated

technological deployments. focuses on another issue of the lack of technical skills among the

human resources that may be generated as a result of inadequate management of these

businesses.

1.3 Statement of the Problem

This study aims to determine the business challenges encountered by small and medium

enterprises in Barangay Lawaan II stands to significantly benefit though interpration and skills

development of its large yet unproductive ,informal sector. Fortunately inspirational

acknowledge the need to support.

Specifically this study will seek to answer the following question.

1.what is the profile of the respondent ?

a) Age:

b) Sex:

c) Socioenomic satatus?

2. What are the challenges affecting small to medium size business when it comes to affecting

their finance ?

3. What are the strategies that could help improve the challenges by small and medium

enterprises?

Scope and Limitation

The scope of this study is to analyze the business challenges encountered by small and

medium enterprises, in order to identify potential trends or patterns. The research will focus on

five main areas: marketing strategies and tactics customer loyalty programs product pricing and

positioning strategies financial performance management and innovative technology solutions.

This study will explore the business challenges encountered by small and medium enterprises.

The focus of this research will be on identifying key areas of difficulty, such as financing; access

to resources and markets legal issues with setting up a company dealing with competition in

increasingly globalized economies. It will take into account both current reality and potential

future trends that might further challenge those involved in small and medium enterprises.
A variety of sources including reports, surveys, interviews, articles and case studies may be used

to identify common business concerns faced by these organizations. Finally, based on the

findings from this literature review and additional analysis conducted where applicable,

recommendations towards mitigating difficulties experienced by small and medium enterprises

can be made.

This study has a few limitations. It is based solely on the responses of individuals from

small and medium enterprises, so it may not accurately represent the challenges encountered by

these businesses across all industries or regions. The limitations of the study include a lack of

data from certain countries due to restrictions in access, as well as limited resources for

conducting an exhaustive review of all relevant case studies. Also, since the primary purpose is

qualitative analysis, results are likely to be particularized within individual small and medium

enterprises rather than applicable across industries. The limitations of this study are mainly

related to the lack of detailed data and research on the business challenges faced by small and

medium enterprises. While there is some available information, much more research needs to be

done in order to understand the full scope and impact of these issues on small business success.

Additionally, many small businesses have unique operational characteristics which may not be

readily apparent from current studies. Lastly, cultural differences across countries could

influence local practices that affect business performance outcomes in different ways.
Significance of the Study

This study will provide insights into the business challenges encountered by small and

medium enterprises. It can be used to identify areas where businesses might need additional

support, such as access to finance or improved marketing practices. Additionally, it may help

policy makers understand what changes they should make in order to create an environment that

better facilitates the success of these companies. The findings from this research could play a

significant role in creating policies which help boost economic growth through increased

investment and output from these important contributors to society's well-being.

Definition of Terms

Business- an organization or enterprising entity engaged in commercial, industrial, or

professional activities.

Small and medium eterprises- enterprises which employ less than 250 persons and either have

an annual turnover not exceeding EUR 50 million or a balance sheet total not exceeding EUR 43

million.

Technology- the process of applying scientific knowledge to improve the quality of human

existence, or, as it is frequently referred to, to modify and manipulate the environment in which

humans live.

Consciousness - the interchangeable states of self-awareness and awareness with feeling

 CHAPTER 2

2.1 LOCAL REVIEW OF RELATED LITERATURE

Small and medium enterprises (SMEs) represent an important sector in the Philippines.

Yet, their productivity remains low compared to larger firms, due in part to limited market

access. Small and medium-sized enterprises (SMEs) have an essential economic role. sector in

developing countries, as it accounts for a sizable proportion of the overall number of enterprises

and employment. In the Philippines, around 99.5 percent of firms are categorised as micro,

small, or medium, and their combined contributions are significant. Approximately two-thirds of

employment and 35% of Gross Value Added (GVA). It has been shown that business

associations can help SMEs build capacity, gain market access and grow. Using a survey of 530

SMEs and a series of key informant interviews with SMEs and business associations, this paper

studies 1) the challenges faced by SMEs in accessing markets and 2) the role of business

associations in SME development. The results of this study show that the primary obstacles to

market access among Philippine SMEs are: 1) inadequate business operations, 2) human

resource constraints, 3) difficulties complying with international standards and government

regulations, 4) an inability to compete with competitors, 5) marketing and branding constraints,

6) inadequate infrastructure and distance to markets, 7) lack of access to finance, 8) lack of

access to market information, and 9) shifting consumer preferences.

Membership in business associations provides benefits such as access to expanded markets,

increased access to supplies and inputs, improved pricing information, assistance in complying

with international standards and government regulations, lobbying and policy advocacy,

branding and advertising, networking, coaching, and shared services.( et.Al, Francisco, 2020)

In addition, beginning a small business in the Philippines can be difficult, particularly for

individuals with minimal finances. Many small business entrepreneurs struggle to secure

appropriate licenses and permissions, obtain finance, and recruit competent and experienced

workers.Furthermore, small businesses frequently compete with larger corporations that can

offer lower prices and more established brand recognition. Small enterprises, on the other hand,

form the backbone of the Philippine economy, and many Filipinos are naturally enterprising.

Small business owners can overcome these obstacles and achieve success with dedication and

hard work. However, the challenges that small businesses face are not only economic. Another

small business difficulty is centered on the digital realm. Social media and the rise of e-

commerce have also altered the scene, making it easier for consumers to find and buy things

without ever entering a physical store. This transition has harmed more than half of small firms

that offer physical goods, as they now compete with much larger online shops. (Dalida, 2022)
2.2 INTERVIEW REVIEW OF RELATED LITERATURE

According to the study of finance and technology , key challenges faced by small and
medium enterprises (SMES) in Oman, entrepreneurs are the backbone of every country since
they are continually looking for new business possibilities, and Small and Medium Enterprises
(SMEs) are the key boosters for a country's economy. They have an impact on the country's
economy and society. Many countries claim that SMEs play a significant role in job creation and
wealth generation in their respective countries. SMEs are not restricted to a single industry or
service; they are active in manufacturing, processing, trade, import-export, distribution, retailing,
rental, and services, among other things. It is accurate to state that SMEs play a critical role in
increasing a country's revenue by acting as power engines.

Every country has begun to pay attention to the growth of SMEs in order to achieve national
development and sustainable economic growth by accelerating this sector, and this is the primary
reason that most countries have begun to analyze the difficulties and opportunities. SME
limitations are hampering their expansion. The Sultanate of Oman is no exception, grasping this
fact and recognizing the relevance of SMEs in the development of national economic growth, the
sector is accorded the highest priority and importance. The study's aims were to critically
research the issues faced by SMEs, assess SMEs' difficulties while adopting new technologies,
and critically investigate the difficulties in the form of legislation and regulations. Based to the
findings of the study, the majority of respondents experienced delays in starting their businesses
due to a lack of funds. It is also shown that SMEs are in desperate need of technical support from
the start of their businesses, as well as assistance in establishing IT infrastructure. (et.alAl
Buraiki,2018)
 Another study,the challenges faced by SMEs in obtaining credit in Ghana," seeks to
emphasize the difficulties that these SMEs have in obtaining financing from financial institutions
in order to function and grow their operations. Based on the responses received through the
questionnaires circulated, it became evident that SMEs in Ghana like most SMEs in other
countries are faced with major challenges in accessing credit. These challenges were revealed by
the study to include, the inability of SMEs to provide collateral and other information needed by
banks such as audited financial statement couple with the high cost of loan in terms of high
interest rates make it extremely difficult to access bank loans Due to these constraints, which
relate to access to bank loans and the difficulties SMEs have in managing their receivables,
primarily due to delays in receiving payment for goods and services rendered, SMEs in Ghana
are not able to mobilize cash as quickly as they should to grow and expand. They are still tiny
and have not expanded their operations to other parts of the country, despite the fact that SMEs
have expressed a willingness to do so when they receive the necessary financial help. ( et.al
Ackah,2011)

2.3 RELATED STUDIES

Small and medium-sized firms (SMEs) have recently garnered a lot of attention as
important driving forces for a country's economic growth. Furthermore, they have a
disproportionate subsidy to a developing country's local and state income. Individual
proprietorship, entrepreneurial abilities, and empirical knowledge are all greatly encouraged by
SMEs. Furthermore, they can quickly adapt to changing market conditions, create jobs, aid in the
expansion of economic activities, and formulate a significant contribution to export trade. Small
and medium-sized firms (SMEs) create more job possibilities and so contribute to a country's
national economy. Bangladesh's footwear SMEs have been highlighted as a rising economy
confronting a number of issues. There have been few studies that have focused on the challenges
of SMEs' company growth.
 However, there has been no literature that has specifically focused on the challenges of
footwear SMEs and discussed how to overcome these challenges. There study shows that, 16
critical challenges are identified among which lingering in cash flow (F3), fierce market
competition (E1), access to finance (F2), unfavorable bank loan policy (F1), and poor supply
chain management (E2) have been ascertained as the top five critical challenges,
respectively. (Ali, 2021)

The study of on Issues and Challenges faced by SMEs shows that, SME's are also

confronted with HRD issues, infrastructure issues, and external environmental challenges such as

a lack of skilled labor, a lack of training, a lack of motivation, a lack of water, a lack of

transportation, political challenges, social challenges, cultural challenges, a lack of market

information, a lack of awareness about government schemes, competition, and a lack of city

councils, among other things. SME's face several challenges and issues as a result of both

internal and external variables affecting SME success. External SME challenges comprise any

sociocultural elements that influence an individual, such as education, caste, religion, family

history, and networks. Internal variables encompass all management-related aspects such as

production, marketing, human resource development, financial and infrastructure considerations,

and so on. (Syamala Devi Bhoganadam et al., 2017)

CHAPTER III

RESEARCH METHODOLOGY

This chapter provides the design of the study, the environment where will the

study be conducted, the research respondents, the instruments used, data gathering,

and its treatment. 

Research Design

The research design to be utilized in this study is a Qualitative ethnographic design that

aims to collect data from different SME challenges and how they are addressing these

challenges. The researcher will collect data through observation, interviews, and document

analysis. The study's findings will provide insights into the challenges faced by SMEs and the

strategies they use to overcome them, contributing to knowledge about small and medium

enterprise.

Data collection instruments.

a.In-depth interview guide: The interview guide will be used to collect qualitative data from SME

owners/managers. The questions will be open-ended and will cover the following areas: business

challenges encountered, strategies used to address these challenges, and the effectiveness of these

strategies.

b. Questionnaire: The questionnaire will be used to collect quantitative data from SMEs. The questions

will be close-ended and will cover the same areas as the interview guide.

Data analysis plan

a. Qualitative data analysis: The transcribed interviews will be analyzed using content analysis. The main

themes and sub-themes will be identified and coded.

b. Quantitative data analysis: The data collected through the questionnaire will be analyzed using

descriptive statistics such as mean, standard deviation, and frequency distribution

References:

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from

Ackah, J., & Vuvor, S. (2011). The Challenges faced by Small & Medium Enterprises (SMEs) in

Obtaining Credit in Ghana. (Ackah & Vuvor, 2011)

Hande Karadağ. (2015). Financial Management Challenges In Small And Medium-Sized Enterprises: A

Strategic Management Approach. 5(1), 26–40. (Hande Karadağ, 2015)

Garg, A., & Erich Van Weele. (2012, April 26). Succession Planning and Its Impact on the Performance

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Kumara Rajapakshe. (2020). A Review of Global Challenges and Survival Strategies of Small and

Medium Enterprises (SMEs). (Gamage et al., 2020)

‌Al Buraiki, A., & Khan, F. R. (2018, July 7). Finance and Technology: Key Challenges Faced by Small

and Medium Enterprises (SMES) in Oman. Papers.ssrn.com. (Al Buraiki & Khan, 2018)

Jamil, D., Francisco, P., & Canare, T. (n.d.). THE CHALLENGES TO SME MARKET ACCESS IN

THE PHILIPPINES AND THE ROLE OF BUSINESS ASSOCIATIONS. (Jamil et al., n.d.)
‌