AN ASSIGNMENT
ON
RESEARCH PROPOSAL
“Competitiveness, Challenges and Prospects of SMEs in Bangladesh for Internationalization”

Course no: BA-412 Course name:Business Research Methodology

Submitted to:
Eijaz Ahmed Khan
Assistant Professor
Business Administration Discipline.

Submitted by:

Pioneer II
Group Members
Mahmudul Hasan Siddiqui
ID # 040308

Tasmin Islam
ID # 040316

Zahir Abdullah
ID # 040320

Salma Begam
ID # 040328

Mohammad Ali
ID # 040342
4th Year, 2nd Term

Business Administration Discipline
Khulna University, Khulna.

Date of Submission: 13 July, 2008

“Competitiveness, Challenges and Prospects of SMEs in Bangladesh for Internationalization”

1. Introduction:
The Least Developed Countries (LDCs) in the east have started refocusing their attention on SMEs to enhance their role in bringing about structural changes in their economies. For Bangladesh SMEs have assumed special significance for poverty reduction programs and potential contribution to the overall industrial and economic growth through SMEs internationalization process. This research uses some studies to identify some competitiveness, challenges and prospects of SMEs in Bangladesh for Internationalization as well as some constraints that have been hampering SME growth and to provide some pointers for the future.
In Bangladesh this SME sector is contributing more than 25% of the total GDP. So the economic escalation and poverty alleviation of this country becomes the opposite side of a coin with SMEs development. With this potentiality if we consider the trade liberalization or internationalization then this sector becomes very lucrative for generating much more profit to the successful Entrepreneurs. With this great opportunity for internationalization the situation will be very competitive and challenging for the owners of SMEs to survive in the market in the battle of price war, product offering, and product quality and so on.

2. Literature Review:
In this research, an attempt will be made to examine the current situation of the SMEs in Bangladesh. Still the pace of SME in the international competition is minimal. From the late 1980s and mid-1990s, when the giant industries became increasingly dominant, small and medium size enterprises remained unchanged and even increased slightly in absolute terms. There seems to be an inconsistency between the increased heavy industries and the unsatisfactory growth of SMEs.
The economy of Bangladesh is at the crossroads. Rapid liberalization has put most existing industries specially SMEs under severe strain because of their inability to compete with consumer goods being freely imported after the withdrawal of quantitative restrictions and the drastic reduction of import tariffs. There are no estimates yet about likely losses to the domestic trade and economy of the country from the flood of imported consumer and industrial products - cosmetics and toiletries, food and beverages, textiles and apparels, footwear and leather goods, chemicals and pharmaceuticals, light engineering products, machine tools, hand tools and so on. All these products (all under the SME category, and the rate at which the glittering multistoried shopping malls are springing up in Dhaka and other major cities of the country is perhaps a good indicator of the rate of displacement of domestic products by imported merchandise. Although some producers have been successful in improving their products and significantly increasing external market access, most are languishing.

For internationalization the adverse effects that present SMEs are facing cannot be stopped rather it needs to compete with the foreign products in domestic as well as international market. To be competitive, some ways need to find out strategically for SMEs to be competitive for internationalization.

SME participation in global value chains has to be placed in the broader context of SME internationalization. The reorganization of production at the international level and the development of global value chains are having significant effects on SMEs, in particular by expanding their business opportunities. This is important when considering that reaching international markets is a problematic step for SMEs.

Declining costs of information and communication technology, globalization and changing conditions for innovation and entrepreneurship are bringing new opportunities as well as challenges for countries and business alike around the world. In this rapidly evolving playing field, the role of large and small firms is changing. Large firms are downsizing, outsourcing and off-shoring while raising productivity around a narrowing core business. Small and medium sized enterprises (SMEs), on the other hand, account for a growing share of the work force in most countries. In parallel, SMEs are becoming more important for economic growth, exports, local development and innovation.

The international joint venture (IJV) is an important mode in the internationalization of small and medium-sized enterprises (SMEs). Internationalization in turn is an entrepreneurial behavior in the pursuit of growth. Partnering strategies in the formation of IJVs can have significant effects on the outcome of SMEs’ international expansion. SMEs’ IJVs with local partner(s) may be associated with decreases in longevity, especially when SMEs acquire host country knowledge.

In Bangladesh, a sustained level of development of small and medium enterprises (SMEs) is highly needed to reach the targets set by the United Nations (UN) in the Millennium Development Goals (MDGs) to alleviate poverty. This urgency is reflected in the government’s pro-poor policies, especially in the poverty reduction strategy paper (PRSP). Considering the country’s level of economic growth, composition of resources, level of global integration, urbanization etc., there is ample scope for development of diversified and non-traditional SMEs in the country. However, low productivity, lack of access to information, high import of finished products etc. put the SMEs in a challenging situation. In this context, the role of the government both in terms of policy and operations is strongly felt.

In general, SMEs of Bangladesh are currently undergoing structural transformation because of various linkages at domestic and international levels. This structural transformation contributes to making changes in product composition, degree of capitalization, and market perpetration through the adjustment of changes in technology, market demand and market access. However, growth of SMEs has been largely retarded by a number of constraints, of which financial constraint is mentioned at first. Besides, there are constraints in the cases of legal, administrative, regulatory, technological, infrastructural, and human resources. Government’s pro-poor policies should focus sufficiently on these constraints and various budgetary measures should emphasize on the improvement of these constraints.

3. The Conceptual Model
This part of the study will chart out the conceptual and measurement issues of SMEs internationalization. SMEs internationalization through Competition and Challenges can be interpreted according to following model (See Figure:1). Which describes the process of SMEs internationalization is considered to be an essential part in the competitive advantages especially in competition and challenge. It is believed that the SME Cluster model increases the competitiveness of the SMEs of Bangladesh and thereby eliminates the potential problems in the process of SMEs internationalization.

[pic] Figure1: SME Cluster Strategy Model
There may be many methods to measure the extent to which the SMEs of Bangladesh are becoming internationalized. In this research some methods will be chosen for addressing the competitiveness and challenges through SME internationalization.

4. Research Methods
The descriptive research study will provide some guidelines and recommendation that are important for the internationalization of Bangladeshi SMEs. In addition, an attempt will be made to examine the performance of the SMEs whether they are getting success or not for poverty alleviation of Bangladesh.

4.1 Information to be obtained
To serve the research study lot of information will be needed relating with competitiveness, challenges and prospects factors, such as price war, product offering, and product quality and so on. It is assumed that for internationalization of the Bangladeshi SMEs those factors might have been important.

4.2 Sources of information and data collection
Most of the information will be collected from field survey. Personal interviews method may be perfect for collecting information. At the time of collecting information several criteria needs to be keep in mind to fulfill the research objective such as flexibility of data collection, diversity of information, control of respondents, control of field force and data collection environment, higher response rate and quantity of data.

4.3 Questionnaire design, measurement and scaling procedures
Questionnaire design will be formulated as a series of steps. At first needed information will be specify once again. The socio economic characteristics of the respondents are not much diversified so that only one type questionnaire may be appropriate for the research study. In personal interviews, respondents see the questionnaire and interact face to face with the interviewer. Thus, lengthy, complex, and varied questions can be asked. Besides, sometimes the respondents may be unable to articulate certain types of responses. So respondents will be given aids, description to help them articulate their responses.

Seven point Likert scale-ranging forms ‘strongly disagree’ to ‘strongly agree’ will be used for measuring the respondent’s attitude toward SMEs internationalization through competitiveness, challenges and prospects of Bangladeshi SMEs. It is easy to construct and administer. Respondents readily understand how to use the scale, making it suitable for personal interview.

4.4 Sampling process and sample size
The target population will be defined in terms of respondents, sampling unit, extent, and time. In this research study whose business has fallen under the definition of SME will be considered as respondent. Sixty three samples will be picked up.

4.5 Data processing and statistical tools
After collecting entire data, process will be guided by the Statistical Software SPSS. Statistical adjustment of the data may be necessary to make them representative of the population of the interest.
5. Time and Cost Estimation
5.1. Time: Three Months
| |3 Weeks |5 Weeks |2 W |1 |1 |1 |
| | | |e |Week|Week|Week|
| | | |e | | | |
| | | |ks | | | |
|Literature review | | | | | | |
|Duration of Survey | |
|Principle investigator |5000 |
|Researcher |3000 |
|Research associate |2000 |
|Books and Journals | 800 |
|Survey (3 surveyors) |3000 |
|Computer operator |500 |
|Photocopy and others |200 |
|Total |14500 |

6. Expected Output From the research study it would be found that the internationalization process of Bangladeshi SMEs through competition, challenge is working well. Here the research study will describe some recommendation for the development of our SMEs in the competition and some guidelines on how to become competitive and face the challenges. The challenges that SMEs of Bangladesh are currently facing and the challenges that are coming in future, government budgetary support should be increased in these activities. However, there are administrative, infrastructural and other constraints, which should be addressed more and more in the budget and more fund should be allocated for the improvement of these aspects, which will enhance productivity and efficiency of the SMEs. Finally a holistic approach is much needed to eliminate these bottlenecks for the battle of Internationalization

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Advocacy networks

SME’s network build for international support

Business forms partnership with corporations’ supply chain and international funding system that open channels to international markets

SME create local business cluster & production alliance

From peer-to-peer support groups & business networks by SMEs

SME could influence WTO negations and trade policies impact on local small business

Viable business cluster meet local market demand