An Enterprise/Organization is faced various problems since its very inception. Various problems remain continuously from the start of a lifecycle of an enterprise to the end of its life cycle. 🙂
These Top 8 Problems faced by an Enterprise or Organization
There are many challenges faced by entrepreneur today. So, the role of the entrepreneur in a business is very important.
1. Problems Related to Objectives
An enterprise operates under economic, social, political, and cultural environment. Each entrepreneur has to decide the objectives of his enterprise looking to the variant environment. The problem of objectives arises on account of different objectives of an enterprise and they are contradictory to each other.
The maximization of profit with the improvement in the quality of a product keeping the price low and expansion of market as the sum of mutually contradictory objectives. An Enterprise has the objectives of meeting social responsibilities, protection of national interest and political stability. Keeping in view the contradictory of these objectives coordination among these objectives is a must.
2. Problems Relating to Location and Size of the Plant
An entrepreneur has to select the place of his plant. The determination of place is affected by several factors such as availability of raw material, the supply of labour, nearness of sources of power, measures of the market, availability of means of transport, the location of Banking, Financial, Institutions. While selecting the place of a plant an entrepreneur keeps all these factors in his mind.
Therefore, The size of firm or plant is an important problem. Whether the size of a plant or firm is small or large he has to study the various aspects relating to technology, managerial, marketing, and financial. He should be realistic while taking all these decisions.
3. Problems relating to Physical facilities
After selecting the location and size of an enterprise, an entrepreneur has to select various physical facilities. He has to take the decision regarding the process of production and basic infrastructure.
Production involves division of labour and specialization which involve complicated machinery and process. Its selection depends on comparative cost and efficiency. He has to allocate the shape of the plant, building, and each activity.
4. Finance Problems
In an enterprise not only physical planning is adopted but the financial planning is also adopted. Financial planning consists of the following elements:
- Determination of demand for a product and cost of the product.
- Determination of Necessary funds for physical planning.
- Forecasting of profit and its calculation on the basis of capital structure.
- Determination of period.
5. Problems relating to organization structure
An enterprise is faced with the problems relating to its organizational structure. An Enterprise has to divide its total function into two different departments on the basis of specialization and each activity is sub-divided into sub-process and each sub-process is completed by the group of workers.
Division of work of each department, accountability, the delegation of authority and coordination are concerned with it. In the absence of clear out division of work, duties, and relationship no enterprise can work efficiently.
6. Problems Relating to Marketing
The success and development of an enterprise depend on the proper marketing of products. Markets are searched out and customers for different products are also found out. Where the customers are residing and what are there necessities.
After finding out all these things an entrepreneur has to take the following decisions:
- Share, characteristics, and utility of the product.
- To take decisions relating to social contact, individual sales, advertisement and publicity in order to encourage marketing.
- Price, concessions, and discount etc.
- Selection of place of stores, distribution of products and place.
7. Problems relating to legal formalities
Whenever an enterprise is set-up, operated and closed down a large number of formalities are accomplished. These formalities are relating to different types of taxes to be paid namely corporate tax, excise duties, sales tax, custom duties, keeping accounts, supply of various types of information, compliance of various laws and rules namely selection of place, Environment protection, pollution control, size, wages, bonus, working and living conditions.
8. Problems relating to Industrial Relations
The modern production system is very large and complicated. Under such system, the entrepreneur has to take several steps so that the corporation of workers employed in a large scale enterprise is sought. The interest of capital and Labour are contradictory. A slight doubt between the two parties leads to industrial unrest resulting to go slow tactics, lockouts, strikes etc. in an enterprise.
There is an urgent need to maintain cordial relationship between Labour and capital through the coordination of trade unions, prevention, and settlement of industrial disputes and democratic participation in the management.
Thus, these top 8 Problems faced by an Enterprise or Organization are very challenging.