Failure of Smes in Tanzania

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MZUMBE UNIVESITY
DAR ES SALAAM BUSINESS SCHOOL
MBA CORPORATE MANAGEMENT
TERM PAPER – JUNE 2012

COURSE TITLE: THEORIES OF ENTREPRENEURSHIP AND SMALL BUSINESS DEVELOPMENT

CODE: BUS 5042

QUESTION: There are arguments that despite the importance of SMEs in all economies, particularly in the less developing countries, the SME sector is met with reluctance both by the government as well as individuals in the sector.
When SMEs fail, which is a very common phenomenon governments point fingers to SME entrepreneurs and vise versa.
(I) With practical examples, make a critical discussion on the reasons for the failure of SMEs in Tanzania
(II) Come up with possible solutions so that a vibrant SME sector in the economy is achieved
AUTHER: Sophia
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Staff to undertake functions such as human resources management, marketing, accounting, Information and Communications Technology (ICT) auditing, purchasing and procurement, and quality control are either missing or inadequate in quantity and quality. This makes SMEs incompetent in matters that need a substantial degree of capability. For various reasons, including high training and re-training costs and high hiring and retention costs, most SMEs are unable to employ specialist managerial staff. They are obliged to employ non-specialist and unprofessional unqualified staff in order to save costs. This in turn makes them less competitive (in non-price terms) than those that are able to employ specialist managerial staff.those enterprises that adopt modern and professional business practices.

2. SMEs lack specialist managerial staff.
Staff to undertake functions such as human resources management, marketing, accounting, Information and Communications Technology (ICT) auditing, purchasing and procurement, and quality control are either missing or inadequate in quantity and quality. This makes SMEs incompetent in matters that need a substantial degree of capability. For various reasons, including high training and re-training costs and high hiring and retention costs, most SMEs are unable to employ specialist managerial staff. They are obliged to employ non-specialist and unprofessional unqualified staff in order to save costs. This in turn makes them less
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