Republic of the Philippines

NUEVA ECIJA UNIVERSITY OF SCIENCE AND TECHNOLOGY

Atate, Palayan City

Submitted in partial fulfillment of the requirements for the Course

TRACK 4: MANAGING A SERVICE ENTERPRISE

CHALLENGES OF
MICRO ENTERPRISE IN PALAYAN CITY: 5 BLESSING MERCHANDISE BUSINESS

Prepared for:
KIM EDWARD SANTOS

Prepared by:

Neuda, Princess Mae

Rubio, Shiela Mae,
Delos Santos, Kristhine
Catacutan, Ejay
Santos, Reina
De Leon, Ren Ren
BS-ENTRE 4A
 CHAPTER I

I. INTRODUCTION

Global perspective

Small and medium enterprises (SMEs) play a significant role in the economic development

sector worldwide. Since the 1990s, researchers have been interested in investigating the role of

SMEs on the development platform because of the economic globalization (Slater and Narver

1990; Alfred and Wilson 1996), and during the period of economic globalization, changes in the

global economy have generated both challenges and opportunities for SMEs (Dominguez and

Mayrhofer 2017). Globalization is always discussed as a mode associated with the production

systems, cultures, and political processes in the modernized world (Aspers and Kohl 2015).

Additionally, globalization has encompassed the liberalization of trade, ushered in by the WTO

trade regime since 1995 (Martin 2001). The globalization concept emphasizes how economic

cultures and political systems are transmitted in terms of dependency modes. According to Todaro

and Smith (2015), globalization provides new feasibilities for eradicating global poverty. It could

also be advantageous for developing countries, directly and indirectly, via cultural, social,

scientific, and technological sharing, including trade and finance. Thus, the world economic

globalization could be identified as an opportunity for both developed and developing countries to

improve their economic prosperity by dealing with global trade (Ahmedova 2015; WTO 2016;

Prasanna et al. 2019). It has two key domains, namely, the globalization of production, which is

addressed as a source of goods from countries in the world to obtain benefits from social

differentiation in the cost of production, and the globalization of the market places that reduces the

cross-border trade constraints (Erixon 2018).

A heated debate concerning the relative roles and importance of large and small firms has

recently re- emerged. One view which has prevailed for the better part of this century is that small
firms do not play an important part in the economy and that their role will diminish in the future.

This has been the case especially in the manufacturing sector where large and even giant firms

dominated Western economies throughout the twentieth century. In country after country, official

policies favored large units of production and mechanisms of ownership. These goals were

pursued in free market and planned economies alike, as well as in developed and developing

countries. As John Kenneth Galbraith pointed out, there were strong reasons to believe that large

firms were superior to small ones in virtually every aspect of economic performance productivity,

technological progress, job security, and compensation.

Small and Medium Enterprises (SMEs) have been the backbone of economic growth of

many economies. In Malaysia too, SMEs have played a role in contributing to the economy as

Malaysia embarks on the journey towards achieving Vision 2020. However, SMEs contribution to

Malaysian GDP is still comparatively low. The Malaysian government launched several programs

and schemes to boost SMEs activities and development. Hitherto, however, the impact of these

programs and schemes are yet to be felt. One reason is that most of the government funding goes

to small and medium enterprises, while the largest contributor to SMEs-the micro enterprises have

hardly considerable financing assistance. Micro enterprises are considered risky and strict loan

conditions have been imposed on them such as collateral, proper support documents and good

business track record. Unfortunately, most of them cannot fulfil these conditions. Furthermore,

micro enterprises suffer from human resource deficiency. Most of them have less skilled human

capital resources with low level of education. Thus, the present study intends to critically survey

the literature on the subject. It uses explanatory analysis. Later, it proposes an Integrated Cash

Waqf Micro Enterprise Investment (ICWME-I) model as a solution for microenterprises. This

model is expected to effectively address their financial and human resource constraints and

enhance their contributions to the national income. The study concludes with some suggestions for

policy implications.
Local Perspective

Micro Business Enterprises (MBEs) is the lifeblood for economic development. Using a

descriptive quantitative research design, the study aimed to investigate the impact of MBEs to

economic development. As to impact, in general, it was of a moderate extent. Among the

indicators, technology has the highest mean interpreted to a high extent, while infrastructure

development scored the lowest mean score, which reflected a moderate degree. The study further

delved into the economic contribution and challenges encountered by MBEs. The findings

basically implied that MBEs were rooted in the entrepreneur's commitment to do business that

promotes progress and development to the local economy.

In view of rapid changes in the international trade and the growing complexity of the

global production system, this paper reviews the government’s small and medium enterprises

(SME) policies in the manufacturing sector. It shows that despite the number of policies and

programs to improve firm competitiveness, the performance of SMEs has not been vigorous

enough to boost the manufacturing industry. The deepening of high-technology industries has

remained weak due to limited backward linkages and low value added of high-technology export

products. The paper also draws on the findings of a survey of SMEs in the automotive, electronics,

and garments sectors. It highlights the importance of creating a separate government office that

would coordinate SME policies and programs to support the integration of SMEs in the global

production chain.

Small and medium enterprises (SMEs) have gained increasing recognition in national and

international discussions. In the Philippines, its importance paved the way for the passage to two

major laws that govern the promotion of SMEs: Republic Act (RA) 6977, or the Magna Carta for
Small Enterprises, as amended by RA 8289, and RA 9178, better known as the Barangay Micro

Business Enterprises (BMBEs) Act of 2002.

RA 6977 mandates the government to help SMEs by creating a conducive business

environment; improving access to financing, providing adequate business support; providing

training on entrepreneurship and worker skills; providing linkages between SMEs and large firms;

and strengthening government-private sector partnership in SME development. RA 9178, on the

other hand, encourages the formation and growth of BMBEs, or those with assets size of less than

PHP 3 million, by granting them fiscal and non-fiscal incentives and other benefits. The crucial

role in the growth of the Philippine economy is discussed by Leano (2006). Accordingly, the

Philippine government has embarked upon a comprehensive and integrated strategy for the

sustainable growth and development of SMEs in the economy. The Philippine strategy

encompasses all critical factors-technology, product development, finance, training, and

marketing, among others (Figure 1). Admittedly from the Bureau of Small and Medium Enterprise

Development of the Department of Trade and Industry, the Philippine government has consistently

extended support to SMEs by creating an enabling environment for them to realize their full

potential in the blueprint for national development. The importance of micro enterprises in the

Philippine economy cannot be understated. The role of micro enterprises vis-à-vis the SMEs is

discussed in this paper to constitute the MSMEs. This paper presents the MSMEs in the

Philippines in the light of the most recent available data. Also, the paper presents the challenges

and issues faced by them on account of emerging environmental issues.

Reason

The researchers aim to know what kind of strategy the micro enterprises in Palayan employ

to cope with their struggles, how they handle those challenges, what motivates them to keep

operating, and what are the alternative places to boost the role of micro enterprises.
 Research Gap

These Recommendations are as follow:

Micro firms need a clear business structure in order to be able to make use of the time,

capabilities and resources to its full potential. With a clear business structures the firm will

overcome many of the internal challenges that have been presented in this study.

A micro firm that is a limited company gains more respect and trust from customers and

other firms in the market. Therefore, firms should as soon as possible try to change from a sole

proprietorship to a limited company.

If a firm does not possess the right knowledge or capabilities when it comes to regulations,

tax or accounting, one should make use of an external consultant. This will help the firm to save

time, money, keep the accounting in balance and also the control. The small cost that will occur

will easily be overweighed.

II. STATEMENT OF THE PROBLEM

This study will be conducted to give answer to the topic “Challenges of Micro enterprises in

Palayan City”. Specifically, it sought to answer the following.

1.How can the respondents be described in terms of:

1.1Age

1.2. Gender

2. How may microenterprises deal with operational challenges in terms of:

2.1. Financial problems

2.2. Management problems

 2.3. Strategic planning problems

2.4. Socio – Cultural problems

2.5. Accounting system

3. How may the employees of micro enterprises in Palayan City evaluate the challenges in the

field based on the following standards in terms of:

3.1. Performance efficiency

3.2. Reliability

3.3. Security

3.4. Accessibility

Questionnaire

Age: 20-25 26-30 31-35 36 and above

Gender: Male Female

Instructions: Read carefully. For each statement, please check whether your answer is Always,

often, rarely, or never.

Financial Always Often Rarely Never

Problems

1.I experienced
shortage of funds.

2.I raised enough

capital.
3.I have consistent
cash flow.
4.I manage my
expenses properly.
5. I have effective
marketing tactics.
Management
Problems
1. I had conflicts
among our
employees about
their jobs.
2. The performance
of our workers is
affecting our
business.
3. Our employees
are aligned with our
business goals.
4.Our business
group is able to rise
above other
business
competitors.
5. I experienced
difficulty hiring and
firing a worker.
Strategic
Planning
Problems
1.Our organization
distinguishes
between strategy
and operations.
2.The strategies
seem to be at odds
in your
organization.
3. Our organization
sacrifices important
issues for the sake
of control.
4. Our current
operations support
the achievement of
our strategy.
5. I feel relatively
safe and secure in
our community.
Socio –
Cultural
Problems
1.Our organization
adapts technology
to cater to higher-
class customers to
gain more profit.
2. Our organization
struggles to
communicate with
customers who
speak other dialects
or languages.
3. Our organization
requires employees
to be
knowledgeable
about the rules and
regulations that the
government
imposes.
4. Our organization
faces difficulties
accessing financial
institutions products
and services due to
low income and
capital.
5. Our organization
focuses on
providing local
customers with the
products and
services they
usually buy or
prefer to buy.
Accounting
System
1.The organization
is applying the
prescribed SCOPA
standards.
2.The accountant
regularly checked if
asset values had
been adjusted to
recognize the
reduction in value,
along with adjusting
the fair value of
specific assets and
liabilities.
3.The paychecks
are not calculated
correctly.
4.There are some
classification errors
in the cash flow
statement.
5.The accounting
system has limited
insight into our
business's
processes, such as
marketing and
sales, and relies too
heavily on human
labor and paper
records of
transactions.

Instructions :Read carefully. For each statement, please check whether your answer is Always,

often, rarely, or never.

Performance Always Often Rarely Never

Efficiency
1.This enterprise's
employees are
performing well.
2.This enterprise
achieves its
objectives.
3.The enterprise
makes higher sales
this year.
4.The enterprise is
only able to sell
good-quality
products and
services
5.This enterprise
adapts to changes in
trends and
preferences of
customers really
well.
Reliability

1.Employees have
the ability to
properly perform
their duties within
the business.
2. It is common for
employees to solve
a problem from a
particular
perspective.
3.The employees of
this business have
the ability to deal
well with the
customer, no matter
the situation.
4.Employees come
to work according to
their schedule.
5. Employees are
losing interest
during work and
becoming
unmotivated.
Security

1. The enterprise
had a poor
understanding of
cyber risks.
2.Have skilled
cybersecurity
professionals.
3. The enterprise
had footage released
by a security
camera.
4.Poor
communication
among security
personnel.
5.I do not easily
trust the information
I received.
Accessibility

1. The employees
have open access to
the workspaces and
facilities.
2.There is limited
access to technology
and a lack of funds
for research and
development.
3.There is a lack of
technological
advancement.
4.There is an
inadequate supply
of skilled workers.
5.There is a lack of
managerial skills
among
entrepreneurs and
inadequate technical
skills among
workers.
III. REVIEW OF RELATED LITERATURE

Foreign Literature

1. New challenges have emerged in both domestic and foreign markets as a result of trade

liberalization and technological advancements. Despite the fact that there are many huge

enterprises with modern technology, SMEs contribute significantly to economic growth. SMEs

have a vital role in the global economy, contributing significantly to the sector of economic

development in both developed and developing countries. SMEs are regarded as the most dynamic

companies and are crucial to enhancing human welfare globally. Recent data indicates that SMEs

account for 60% of employment and 90% of economic activity (Munro, 2013).

2.Pakistan would be hardest hit by the worldwide COVID-19 epidemic, according to a

recent analysis from the United Nations Conference on Trade and Development (UNCTAD,

2020a). This makes it necessary to investigate how the COVID-19 epidemic has affected MSMEs

doing business in Pakistan. Additionally, because MSMEs are heavily reliant on the cash-based

economy, which has been negatively impacted by the epidemic, the ongoing pandemic crisis

would substantially hinder the operations of these enterprises (Williams & Schaefer, 2013).

3.According to the ONE UN Ethiopia (2020) assessment report, Africa (SSA), including

Ethiopia, is unlikely to escape the direct and indirect effects of the pandemic and the related global

problems. Although the COVID-19 trajectory is still in its early stages in the region, it has already

had a considerable impact elsewhere in the world. Understanding the scope, nature, and depth of

social and economic ramifications is essential for developing an appropriate and effective policy

and programmatic response to these situations, whether at the national, regional, or global levels.

As Ethiopia was affected by COVID-19, small businesses there also had some significant
difficulties. The macroeconomic and development situation was difficult, as evidenced by the

slowing but still significant growth, the threat of debt distress, the low levels of domestic resource

mobilization, the high inflation, the high unemployment, particularly among young people looking

for jobs in an economy with high levels of informality, the dearth of foreign exchange reserves,

and the significant pressure on the Birr's exchange rate. Conflict, the destruction of property and

lives, and, as of the last count, 1.7 million internally displaced people (IDPs) have resulted from

social unrest brought on by long-standing issues that could now be discussed in a more open civic

and political atmosphere.

4. It has been determined that a variety of factors affect SME’s in India, with the main ones

having to do with manufacturing, marketing, finances, the outside environment, infrastructure, etc.

These concerns and obstacles have all been discovered, and they are categorized into production,

marketing, finance, infrastructure, external issues, environmental issues, etc. Entrepreneurs in

SME’s are having trouble obtaining financing from banks, lenders, etc., learning about credit

schemes, dealing with an extended application process for bank loans, being ignorant of loan

programs, etc., as well as having insufficient working capital, among other issues. SME's are

facing production challenges such as a lack of power, a lack of resources, such as obtaining raw

materials, high raw material costs, a lack of raw material availability, a lack of technical

advancement, a lack of machinery and equipment, a lack of quality control measures, a lack of

information, a lack of facilities for research and development, a lack of demand, a lack of

production capacity, a lack of education, etc. SME's are dealing with marketing challenges such as

a lack of market information, promotion strategies, organized distribution channels, earnings,

networks, lengthy delivery times, a lack of information on channels of marketing, a lack of market

structure, a lack of awareness and experience, etc. They are also dealing with HRD-related issues

related to infrastructure issues and external environmental challenges such as the effects of climate

change.
 5. Due to the rapid rise in competition, economic globalization has presented several

difficulties for small and medium-sized businesses (SMEs). As a result, SMEs often fail soon after

starting out, at a reasonably high rate. As a result, SMEs must implement survival strategies and

strategic approaches to successfully address the myriad global problems that the SME sector is

currently facing. In order to understand how SMEs survive and evolve in the current competitive

business environment, this study critically reviewed the body of literature on worldwide problems

for SMEs. For this analysis, multilateral institutions' published information on the subject and 110

research publications from four reputable publishers were used, namely Emerald, Elsevier, Taylor

& Francis, and MDPI. Review findings highlighted significant global issues for SMEs in the

setting. These include trade dumping, international terrorism, religious conflicts, trade wars, global

market competition, financial and economic crises, information and communication technology,

the emergence of multinational corporations, and transnational corporations. In order to recognize

sustainability-related policies, the study also took into account the survival strategies of SMEs in

the industrial platform, emphasizing the need for a thorough theoretical analysis of these strategies

in the context of global issues.

In the era of economic globalization, a variety of difficulties have been studied by

academics. Among them, the literature has highlighted the questionof capital instability,

innovativeness, regulatory licenses and taxes, workers' rights, and competitiveness (Alauddin and

Chowdhury 2015; Hoque 2018; Hoque et al. 2018; Zhang and Zhang 2012; Chowdhuryet al. 2013;

Ibrahim and Masud 2016; Khan et al. 2012; Hoque et al. 2017; Hoque and Awang 2016; Andalib

and Darun 2018; Qureshi et al. 2011; Gregar et al. 2018). According to Noe et al. (2017), from the

perspective of company management, three competitive difficulties—the global challenge,

sustainability challenges, and technical challenges—were identified. The review initially divided

the global difficulties into eight theme areas by applying content analysis approaches to the chosen

literature because this study's focus is on the global challenge. Market rivalry, global capital

markets, and economic. The first is the market rivalry, the second the global financial and
economic crisis, the third information and communication technology, the fourth multinational

firms, the fifth transnational corporations, the sixth international terrorism and religious conflicts,

the seventh the worldwide trade war, and the eighth the international dumping.

6. Small and medium-scale micro firms are critical to the industrialization of any nation. In

this light, the purpose of this study was to experimentally compare the risks and returns of

microenterprises in North-Central Nigeria. The research was conducted in the states of Benue and

Nasarawa. The impact of risk and rate of return-on-investment decisions are of particular interest.

The way of calculating returns on investment decisions Both descriptive and empirical

methodological frameworks were used. The study investigated three industry types in ten (10)

centers, using mostly primary data: agriculture (livestock-dairy production), manufacturing (agro-

allied cassava processing), and services (automobile and repair services). In total, sixty (60)

respondents were questioned (six entrepreneurs in each center). Between December 2002 and

November 2003, the surveys were conducted. According to the survey's results, investing in the

dairy industry, which is a subsector of livestock, has a likelihood rating of 106. Investments in the

agro allied and services sub-sectors, which have probability rates of 7.94 and 13.0, respectively,

appear to be less risky than 48. As a result of the abundance of investment prospects in cassava

cultivation and processing, the study suggests that policies aimed at the formation of rural cassava

processing cottage businesses be put in place to entice potential investors in this subsector.

7.In the northeastern region of Trinidad, the study looked at the connections between

microcredit, microbusinesses, and the social welfare of the rural underprivileged. The researchers

conducted 45 semi-structured interviews with active participants or clients using a case study

research design guided by the key ideas of social capital theory. The findings demonstrated that

Helping Others Prosper Economically's (HOPE) access to microcredit had a modestly beneficial

impact on their microenterprises and social welfare. The results also showed that the network's
fractured social relationships, conflicts, mistrust, and the program's ad hoc structure limited the

influence of their access to microcredit on social welfare as well as the financial potential of the

lending organization, HOPE. Therefore, the thesis of this research is that such dubious social

interaction dynamics "steal the promise of communal social networks as they are engaged through

resource development and kindness. It is explored what this finding means for future research and

its potential directions.

8. One of the fundamental ideas in the business environment is financial management. This

study was done to determine how SMMEs' usage of financial statements affected the success of

their companies. The researcher describes the context of the research problem in Chapter 1 of the

study. There is also discussion of the study's goals. The major ideas used in the study are outlined,

and the research questions are highlighted. The researcher provided the study's findings before

concluding the chapter with a summary. The second chapter reviewed the relevant literature and

consulted several sources to discuss financial management in SMMEs. The study's goals were

reiterated and heatedly debated. The researcher described the difficulties he ran into while doing

his investigation. A summary chapter was used to wrap up the chapter. The technique and design

of the research were covered in Chapter 3. In this chapter, the study's justification is laid out. This

chapter covered the target population, sample, types of study, research designs, and research tools.

Also described were the questionnaire's design and its components. A comprehensive explanation

of the research procedure was provided, and the chapter was finished with a summary. The

contrasts between qualitative and quantitative data analysis were covered in Chapter 4's discussion

of data analysis. The discussion also included the results from other documents. A summary was

provided to wrap up the chapter. Chapter five provided a summary of all the chapters by giving

9.It is clear that micro and small businesses are essential for a country’s economic

development, the creation of jobs, and the reduction of poverty. They are also the means by which
developed countries have achieved rapid industrialization and accelerated economic growth. This

study’s objective was to evaluate how the strategy (policy framework) for small and micro firms in

Bahir Dar, Ethiopia, specifically with regard to the manufacturing enterprise sub-sector,

contributed to resolving their issues. Simple random sampling and the descriptive survey approach

were employed. 138 sample respondents’ answers to a questionnaire with mostly closed-ended and

a few open-ended questions served as the source of quantitative data. The availability of capital,

distribution of working space, access to facilities (electricity, water, telephone, etc.), and legal

framework were the most important factors that influenced the development of small and micro

enterprises in Bahir Dar city, despite the fact that the government and other stakeholders have

made efforts to improve the working environment of these businesses. Although the creation of the

policy framework has been praised, the policy’s design alone cannot promote the development of

the sectors or resolve the issues facing small and microbusinesses. Therefore, it is determined that

in order to address the issues that small and micro firms encounter, their strategy must be fully

implemented. The survey’s findings also urge the provision of facilities including roads, water,

and electrical services, as well as real, coordinated regulatory and institutional support in

workplaces.

10. Although it has repeatedly been demonstrated that information technology (IT) may

enhance business performance and operations, microenterprises are still lagging behind in utilizing

IT to grow their businesses. Research on social networking has changed its emphasis to factors

that influence how actively microbusinesses use IT, including social networking sites, and if

adoption leads to better company success. This is a result of concerns that information technology

projects are severely limited in their availability and efficacy for small firms. This study was

conducted to learn more about the factors that affect how microenterprises use social networking

as a business platform and the connection between social networking use and performance. A few

TAM and UTAUT domains were altered and combined with findings from past social networking
and microenterprise studies to theorize the proposed model. The creation and empirical

confirmation of five hypotheses: A survey was utilized to collect the information, and the replies

of 115 microenterprise operators were collected. The study's conclusions indicate that an

individual's propensity to use social networking sites for business reasons is determined by social

pressure, perceived value, and enabling circumstances, and that doing so actually results in a

considerable improvement in company performance. This study highlights how crucial it is for

firms, particularly microenterprises, to understand how to utilize social networking sites as readily

accessible, reasonably priced technology.

11.. MSEs have a tough time getting credit since their greater risk profile is thought to be a

hindrance. For a variety of reasons, lending institutions view MSEs as riskier businesses,

including: an unstable business climate; insufficient accounting systems; a more unpredictable

operating environment in developing and emerging markets; improperly registered assets; delayed

payments for the goods and services provided; and a lack of adequate human and financial

resources to withstand economic downturns. Resources (Van Aardt & Fatoki, 2012).

12. The main issue facing small and micro firms is almost always identified as a lack of

access to financial facilities. Most of the time, even when banks are the only source of credit,

entrepreneurs may not have as much freedom of choice since the lending requirements of the

banks may require the acquisition of bulky, immovable equipment that can be used as collateral

for the bank. In Kenya, where the capital market is underdeveloped, credit restrictions take many

different forms, forcing enterprises to rely on self-financing or borrowing from friends and family.

Micro, small, and medium-sized businesses are forced to rely on expensive short-term financing

because they lack access to long-term financing (Wanjohi & Mugure, 2008).
 13. According to SME International Malaysia (2013), some advanced economies have

succeeded because small and medium-sized businesses, which make up over 98% of all

establishments and contribute over 65% of employment as well as over 50% of the gross domestic

product, are an essential component of the economies. Although there may be fewer SMEs in

Malaysia, they have the ability to significantly boost the country’s economy and establish a solid

foundation for the expansion of new industries while bolstering those that already exist. Since

SMEs account for more than 90% of Malaysia’s manufacturing sector, strengthening them

requires significant improvements in the manufacturing industry.

14. According to Bizomer (2009), Pakistan’s whole economy is heavily reliant on the

speed and productivity of SMEs, despite the fact that this sector has only contributed a small

amount to the country’s economic growth to date. Out of Pakistan’s 3.2 million businesses, 95%

have 99 or more employees in the private industrial sector, which accounts for around 78% of all

non-agricultural employment. SME business activities result in SMEs contributing 25% of

manufacturing exports and 30% of GDP. In Pakistan, small and medium-sized enterprises (SMEs)

will be the key drivers of innovation and poverty reduction in the years to come.

15.Alauddin and Chowdhury (2015) stated that SMEs experience some common

challenges such as difficulties in procurement of raw materials, low technological capacities,

costly administrative procedures, lack of entrance to relevant business information and policies,

and regulations that promote market share. Also, they mentioned SMEs of Bangladesh have faded

to ensure the quality of products and services owing to lack of national quality policy, quality

certification authority, and sufficient support system.

 Local Literature

1.Microbusinesses play a critical role in the Philippine economy’s expansion.

Microbusinesses offer a way to create jobs, opportunities for employment, and perhaps even

alleviate poverty. The Micro Business Enterprise Act of 2002 was subsequently created as a result

of this. Juan Flavier, a former senator, wrote this legislation. The act was approved by the former

president Gloria Macapagal-Arroyo on November 13, 2002, according to dti.gov.ph. The DTI

Administrative Order No. 1 Series of 2003, which was published on February 7, 2003, contained

the implementing regulations and procedures for this act. Such was printed in the Manila Bulletin

on February 11 and February 26 of the same year.

2.According to Chin & Nor (2015), the majority of micro entrepreneurs won’t initially be

able to pay the start-up costs of their micro companies out of their own pockets. In order to

provide these entrepreneurs with access to microcredit with a predetermined amount and

predefined terms for beginning the new microbusiness, it is therefore evident that the best option is

to collaborate with a microcredit company. In its most basic form, microcredit includes providing

low-income people with access to capital in the form of tiny, interest-bearing loans without

collateral.

3.MSMEs are particularly significant for developing nations, according to Choudhury

(2018), partly because of their capacity to create jobs. MSMEs have been acknowledged as

engines of economic progress, according to India’s eleventh five-year plan, a national economic

program. The MSES are more than just contributors to the GDP; they are tools for inclusive

growth that have an impact on the lives of the most marginalized and at-risk people. In addition to

being the second-largest employer after agriculture, large-scale businesses rely on them for raw
materials, essential components, and backward connections. This industry aims to give individuals

the tools they need to end the cycle of exploitation and poverty.

4.According to Shaper and Volery (2007), small businesses are crucial to the expansion of

the national economy. Small businesses play a very important role in the economic framework of

any nation. The book listed the potential benefits and noteworthy contributions that a small

business may make to the economy. First, small businesses give people job chances. In addition to

the owner, the employees, or workers, also work (are self-employed). Second, the next wave of big

businesses will be tiny businesses. The existence of small businesses will enable new prospective

huge enterprises in the future if the small businesses survive and prosper, because it is

conventional for large corporations to not last forever.

5. Since the majority of business incentives were concentrated on large organizations,

Kosci (2007) claimed that small businesses had been overlooked by present policy. Kosci

attempted to incorporate a state tax credit to reimburse small businesses for bank expenses they

pay when closing loans that are guaranteed by the Small Business Administration. He continues by

saying that this project would be tiny compared to others allocated for the benefit of large

corporations. Furthermore, he maintains that even though this initiative may appear to be tiny, it

will allow the government to demonstrate its willingness to help small businesses, which are

similarly vital to the country's economy.

6. Aldaba(2012) says firms are forced to borrow due to a lack of required collateral and a

lengthy processing time for loan applications. Micro, small, and medium-sized businesses find that

the short repayment time and loan modification are difficult. Financial institutions impose
exorbitant in, (2011); Arun & Kamath There are three problems access to market, credit and

capital which are faced by micro, small and medium Enterprises. Inadequate suitability among

funds Accessed by the SMEs. There is no systematic approach To MSMEs, transaction cost is

high, procedure of Granting loan is lengthy but at the end loan Disbursement is small amount.

Inadequate access to Formal source of funds terest fees and restrict access to venture capital funds

and startup funding. Financial institutions view borrowers from MSMEs as being at high risk. The

bank believes that MSMEs lack the ability to handle their finances.

7. To take advantage of new market opportunities, farmers are rapidly diversifying their

agribusinesses, and for many of them, this has meant providing farm experiences to visitors.

Results from thematic analysis of interviews with 15 farmers indicate that microentrepreneurs are

driven by the flexibility to structure their time and to be outside. The aim of this study was to

investigate the motivations and constraints of farm tourism microentrepreneurs in North Carolina,

USA. Farmers expressed a commitment to preserving their farming tradition and educating visitors

about their profession and sense of community. Obstacles to micro entrepreneurship included

disease, aging, and a lack of support from government organizations. Micro entrepreneurship

success was defined as the capacity to maintain ownership of farms.

8.International Finance Corporation, (2000) Capital is needed for companies so that they

can meet the requirement of fixed and variable cost. Many Companies face the difficulty of

inadequate capital in Establishing and operating firm so they have to borrow the money. The

dependence on debt depends on size of Firms. If firm is small there will be more debt

Dependency. As a primary source of early and growth Stage micro enterprises is dependent on

debt. Services Related small firms have the tendency of transacting in Cash and keeping less
 records. Manufacturing Enterprises and order-driven services requires more Money as they have

longer worked capital cycle and more capital expenditure.

9.Why do small businesses in developing countries embrace sustainable business practices

and what are the effects on their performance? We address these questions by drawing on the

natural-resource based view of the firm to argue that the environmental sustainability orientation

of small businesses can be explained by their entrepreneurial orientation. Our study of 197 small

businesses in the Philippines shows that an entrepreneurial strategic orientation enables them to

develop a more proactive stance toward environmental sustainability practices which lead to

superior firm performance. The implications of the findings for future research and for public

policy for small businesses are also discussed.

10. Agritourism establishments were open to the public, operated by families, connected to

groups involved in both agriculture and tourism, and met all legal requirements for facilities and

security. There were both domestic and foreign visitors from all walks of life. Their primary

service offerings included classes, seminars, workshops, and excursions. The best practices were

found to have a referral mechanism, a hands-on approach, and stringent financial oversight. The

challenges of operating agritourism farms at the same time included a labor shortage, the fact that

the industry was still in its infancy, price volatility, the seasonality of farm goods and services, a

lack of people with the necessary expertise, and high startup costs.

IV. SCOPE AND DELIMITIONS

The coverage of this study is only the employees and other workers of the 5 Blessing

merchandise store in Palayan City, Nueva Ecija. Who are working under the enterprise to know

the challenges of the particular enterprise that they are facing. The covered of the study is sales
 lady, sales man, guard, cashiers, managers and office members only. The time frame of the

researchers is October 23 to November 3, 2023 at only in the vacant time of respondents.

The study focused on determining and correlating the challenges faced by micro enterprises.

The study will evaluate including their financial challenges, regulatory hurdles, competition,

market access, and operational difficulties.

The delimitation of the research paper is only the regular employees of the 5 Blessing store.

V. SIGNIFICANCE OF THE STUDY

The significance of studying these challenges lies in identifying strategies and policy

interventions that can support the growth and sustainability of microenterprises. Addressing these

issues might help in the development of targeted initiatives by politicians, business owners, and

support organizations to remove the barriers to the expansion of microbusinesses, which in turn

helps to reduce poverty.

The following people will benefit from this research paper:

Entrepreneurs: since they are the main focus of the study, they will benefit from this.

Managers need to know and understand the challenges of the enterprise.

Consumers: The result of this study will inform consumers that their feedback and

relationship with the business have a big impact on the performance and competition of the

enterprise in facing those challenges.

VI. DEFINITION OF TERMS

There are several terms used in this study. These terms were defined operationally and

conceptually.

Accessibility: This refers to the quality of being simple to acquire or employ.

Business: A business is defined as an organization or enterprising entity engaged in commercial,

industrial, or professional activities.

Competition: This refers to the act of competing, or rivalry. a contest in which a winner is

selected from among two or more entrants.

Entrepreneur: This refers to a person who manages and operates a firm or business while taking

on more than usual financial risks.

Entrepreneurship: this refers to the activity of setting up a business or businesses and taking on

financial risks in the hope of profit.

Globalization is the process by which businesses or other organizations develop international

influence or start operating on an international scale.

Microenterprise: The term microenterprise, also known as a microbusiness, refers to a small

business that employs a few people. A microenterprise usually operates with fewer than 10 people

and is started with a small amount of capital advanced from a bank or other organization.

Product: A product is an object, system, or service made available for consumer use as per

consumer demand; it is anything that can be offered to a market to satisfy the desire or need of a

customer.

Return on investment (ROI) is a performance measure used to evaluate the efficiency

or profitability of an investment or compare the efficiency of a number of different investments.

Small and Medium Enterprise or SME - Small and midsize enterprises (SMEs) are businesses

that have revenues, assets, or a number of employees below a certain threshold.

 CHAPTER II

VII. METHODS AND PROCEDURE

This study evaluated and described the characteristics of the population or topic during the study

using a descriptive research methodology. To address the different difficulties the Palayan City

microbusiness is experiencing the researchers employed a number of procedures, such as

interviews, questionnaires, and observation, to collect the data.

REASEARCH DESIGN

Adopting the case study research approach, the study chose a descriptive research design.

According to Mayer and Fantz (2004), descriptive research examines and provides a case study of

an event's current state or its historical course. It addresses the difficulties faced by small

enterprises in Palayan City, particularly those working in the retail sector at Blessing Shop. The

difficulties that commercial organizations encounter will be discussed after this study is

completed. Because this study aims to look into how the entrepreneurs developed their strategies

through time, a descriptive research methodology was considered acceptable for the nature of the

topic during research.

VIII. LOCALE OF THE STUDY

The location of our research is the 5 Blessing merchandise store in Caballero, Palayan City.

IX. RESPONDENTS

There were 40 respondents in the study. The respondents are composed of 10 sales ladies, 10

salesmen, 5 cashiers, 5 helpers, 5 guards, and 5 office staff.

X. SAMPLE AND SAMPLING PROCEDURE

In this study, the sample is composed of saleswomen, salesmen, cashiers, and office employees

of the 5 Blessing stores. In this study, a purposeful procedure is used to aim for the main target of

the study to evaluate the challenges to the 5-blessing microenterprise that they are facing. The

sales ladies, salesmen, guards, cashiers, helpers, and office employees will be the participants able

to gather data and information that will be useful in making this study successful.

Category No. of Respondents

Sales lady 10

Sales man 10

Cashier 5

Helper 5

Guard 5

Office staff 5

Total 40

XI. DATA GATHERING INSTRUMENT

Primary and secondary data sources were used to collect the data for this investigation.

The use of a questionnaire was the main method of gathering data for this study. To gather

firsthand information for use in addressing the research topics, questionnaires were given to SME

owners and/or operators. Three components made up the questionnaire. Chapter A. focused on the

respondent companies' biographical information, particularly

• The company's age

• Definition of ownership

• Nature of the firm

• Number of employees of the firm

 • The company's average monthly turnover

XII. DATA GATHERING PROCEDURE

With the intention of collecting the data, the researchers had to obtain permission from the

manager of a microbusiness in Palayan City, where the study was being conducted. After receiving

permission, the researchers then requested the assistance of the management of the businesses

managing the respondents who were chosen to participate in the data collection process. The

researchers provided the respondents with the questionnaire after making a plan to execute the

study. The questionnaire's contents were fully discussed by the researchers themselves. The

questionnaires were gathered by the researchers. After being collected, the data were evaluated by

statistical analysis. Finally, the researchers went on to analyze the data and create conclusions and

suggestions.

XIII. DATA ANALYSIS TECHNIQUES

In this study, descriptive analysis will be used as a method of data analysis. This includes a

number of steps that make use of the data received from respondents and lead to the identification

of how microbusinesses in Palayan City handle and assess operational issues. From the

participant's demographic profile, a total based on frequency and percentage calculations will be

determined. While employing weighted mean and ranking for the respondents' evaluation of how

they deal with operational issues and for employees' evaluation of challenges in the field of micro-

enterprise, researchers will mathematically and scientifically analyze the data summary. The

following formula will be used to evaluate the data: proportion: p = f/N; percentage: % = (f/N) x

100, where f = frequency, or the number of cases in any category, and N = the total number of

cases.
IX. ETHICAL CONSIDERATION

Over the course of the study, a researcher will not be in any way connected to the personal lives

of the participants in the aforementioned research. Whatever limitations the researchers may have,

they must be respected. Individual perspectives, traditions, culture, or beliefs may be violated by

researchers when conducting research. It is the duty of researchers to protect information that

should be kept secret. In order for the team to properly convey the study they will conduct and tell

the pertinent parties; the researchers are prepared to follow the correct processes. This work is only

regarded as a study project designed to address a specific business-related issue affecting society.

CHAPTER 3

Presentation and Interpretation of Data

This chapter present the analysis and interpretation of the findings in the study of

Challenges of Micro enterprise in Palayan City selected at Palayan City 5-Blessing merchandise

store.

1. Profile of the respondents

Table 1 shows the age description of the respondents.

Age Frequency Percentage

20-25 3 7.5%

26-30 16 40%

31-35 18 45%

36 and above 3 7.5%

Total 40 100%
The majority of participants fall within the range of 26 to 35 years old, with the highest percentage

(45%) observed in the 31-35 age group. The 26-30 age group also exhibits a significant presence

at 40%, emphasizing the prominence of respondents in their late twenties and early thirties. While

the age categories of 20-25 and 36 and above each constitute 7.5% of the total respondents

Table 2. Age distribution of respondents

Table 2 shows that highest percentage or 45% of the respondents are on the age 31-36 and

the least are on the age from 20-25 and 36 and above with 7.5%.

Table 3 shows the gender distribution of the respondents.

Gender Frequency Percentage

Male 20 50%

Female 20 50%

Total 40 100%
 Table 3. Gender of the respondents

Weighted Mean Verbal Interpretation

3.40-4.19 Never

2.60-3.39 Rarely

1.80-2.59 Often

1.00-1.79 Always

As to gender, table 3 shows the findings that 50% of the respondents are males and the

50% are females which the survey is equally distributed. Each gender constitutes 50% of the total

sample, indicating a concerted effort to include diverse perspectives and experiences in the study.

Table 4 shows the challenges of micro enterprise in terms of financial problem

variable.

Financial Weighted Description Rank

Problems mean

1.I 3.23 Never 3

experienced
shortage of
funds.
2.I raised 3.65 Never 1
enough
capital.
3. 3.I have 3.45 Never 2
consistent
cash flow.
4.I manage 3.9 Rarely 4
my expenses
properly
5. I have 3.08 Rarely 5
effective
 marketing
tactics.
Total 3.46 Never

The data presented in Table 4 provides insights focusing on financial problem variables. The

variable "I raised enough capital" stands out with the highest weighted mean of 3.65, earning it the

top rank. The variable "I have consistent cash flow" has a relatively high weighted mean of 3.45,

earning it the second rank. "I manage my expenses properly" is rated with the highest weighted

mean of 3.9 but is ranked fourth. The total weighted mean for all financial problems is calculated

at 3.46. This comprehensive measure reflects the average severity of financial challenges faced by

micro-enterprises, considering all the variables. The "Never" description in the total row implies

that, on average, respondents rarely or never encounter these financial challenges.

The table 5 shows the number of respondents answers the Management problems variable.

Management Weighted Mean Description Rank

Problems

1. I had conflicts among 1.35 5 Always

our employees about
their jobs.
2. The performance of 3.22 1 Rarely
our workers is affecting
our business.
3. Our employees are 3.8 2 Rarely
aligned with our
business goals.
4.Our business group is 3.6 3 Rarely
able to rise above other
business competitors.
5. I experienced 1.86 4 Often
difficulty hiring and
firing a worker.
Total 2.77 Rarely

Table 5. Management Problems

The data in Table 5 provides insights into the management problems perceived by respondents.

The highest rank and a weighted mean of 3.22 categorized as "Rarely," respondents believe that

the performance of workers is not frequently affecting the business, The second-highest rank

coupled with a high weighted mean of 3.8 and categorized as "Rarely" The third-highest rank and

a weighted mean of 3.6 in the "Rarely" A moderate weighted mean of 1.86 and the "Often"

description suggest that respondents encounter some challenges in hiring and firing workers The

low weighted mean of 1.35 and the "Always" description suggest that conflicts among employees

regarding their jobs are perceived to be a frequent issue The overall weighted mean of 2.77,

categorized as "Rarely," suggests that, on average, respondents perceive management problems to

occur infrequently.

Table 6 shows the total number of respondents answer Strategic Planning Problems

variable.

Strategic Planning Weighted Description Rank

Problems
Mean

1.Our organization 4.53 Never 1

distinguishes between
strategy and operations.
2. The strategies seem to 3.5 Rarely 3
be at odds in your
organization.
3. Our organization 2.15 Often 4
sacrifices important
issues for the sake of
control.
4. Our current operations 3.55 Never 2
support the achievement
 of our strategy.
5. I feel relatively safe 3.55 Never 2
and secure in our
community.
Total 3.46 Never

Table 6. Strategic Planning Problems

The data in Table 6 reveals insights into Strategic Planning Problems based on respondents'

perceptions, as indicated by the Weighted Mean. overall Weighted Mean of 3.46, characterized as

"Never," the highest rank with a Weighted Mean of 4.53 and a "Never", the second and fifth

variable with a Weighted Mean of 3.55 and described as "Never", the third variable with a

Weighted Mean of 2.15 and an "Often" the overall perception is that strategic planning problems

are infrequent, there are specific areas, such as aligning strategies with operations and addressing

trade-offs for control, that may require attention to enhance the effectiveness of strategic planning

within the organization.

Table 7 shows the total number of respondents that answer Socio-Cultural problems

variable.

Socio – Cultural Weighted Description Rank

Problems
Mean

1.Our organization adapts 3.03 Rarely 3

technology to cater to higher-
class customers to gain more
profit.
2. Our organization struggles 1.45 Often 5
to communicate with
customers who speak other
dialects or languages.
3. Our organization requires 3.6 Rarely 2
employees to be
knowledgeable about the
rules and regulations that the
government imposes.
4. Our organization faces 2.4 Often 4
difficulties accessing
financial institutions
products and services due to
low income and capital.
5. Our organization focuses 3.65 Never 1
on providing local customers
with the products and
services they usually buy or
prefer to buy.
Total 2.83 Rarely

Table 7. Socio-Cultural Problems

Table 7 shows the findings

Table 8 shows the total number of respondents answer Accounting System variable.

Accounting Weighted Description Rank

System
Mean

1.The organization is 3.23 Rarely 1

applying the prescribed
SCOPA standards.
2.The accountant 2.55 Rarely 2
regularly checked if
asset values had been
adjusted to recognize the
reduction in value, along
with adjusting the fair
value of specific assets
and liabilities.
3.The paychecks are not 1.7 Always 5
calculated correctly.
4.There are some 1.33 Always 4
classification errors in
the cash flow statement.
5.The accounting system 1.65 Always 3
has limited insight into
our business's processes,
such as marketing and
sales, and relies too
 heavily on human labor
and paper records of
transactions.

Total 2.09 Often

Table 8. Accounting System

The table 9 shows the Challenges on Micro enterprise in terms of Performance Efficiency.

Performance Weighted Description Rank

Efficiency
Mean

1.This enterprise's 3.9 Often 4

employees are
performing well.
2.This enterprise 3.53 Never 3
achieves its
objectives.
3.The enterprise 3.65 Never 2
makes higher sales
this year.
4.The enterprise is 4.45 Never 1
only able to sell
good-quality
products and
services
5.This enterprise 3.8 Rarely 5
adapts to changes
in trends and
preferences of
customers really
well.
Total 3.87 Never

Table 9. Performance Efficiency

Table 10 shows the total number of respondents answer Reliability.

 Reliability Weighted Description Rank

Mean

1.Employees have 3.7 Rarely 3

the ability to
properly perform
their duties within
the business.
2. It is common for 3.03 Rarely 4
employees to solve a
problem from a
particular
perspective.
3.The employees of 3.88 Never 1
this business have
the ability to deal
well with the
customer, no matter
the situation.
4.Employees come 3.48 Never 2
to work according to
their schedule.
5. Employees are 2.48 Often 5
losing interest
during work and
becoming
unmotivated.
Total 3.31 Rarely

Table 10. Reliability

Table 11 shows the total number of respondents that answer Security.

Security Weighted Description Rank

Mean

1. The enterprise 1.35 Always 2

had a poor
understanding of
cyber risks.
2.Have skilled 3.08 Rarely 3
cybersecurity
professionals.
3. The enterprise 3.65 Never 1
had footage
released by a
security camera.
4.Poor 1.78 Always 4
communication
among security
personnel.
5.I do not easily 3.65 Never 1
trust the
information I
received.
Total 2.70 Rarely

Table 11. Security

Table 12 shows the total number of respondents that answer Accessibility.

Accessibility Weighted Description Rank

Mean

1. The employees 3.3 Rarely 1

have open access
to the workspaces
and facilities.
2.There is limited 2.8 Often 3
access to
technology and a
lack of funds for
research and
development.
3.There is a lack of 2.35 Often 2
technological
advancement.
4.There is an 2.35 Often 2
inadequate supply
of skilled workers.
5.There is a lack of 2.35 Often 2
managerial skills
among
entrepreneurs and
inadequate
technical skills
among workers.
Total 2.63 Rarely

Table 12. Accessibility

CHAPTER IV

Summary of Findings, Conclusion, and Recommendation

 References:

 Acs Z. (1992). Small Business Economics: A Global Perspective. Vol. 35, No. 6 , pp. 38- 44 (7

pages). Retrieve on August 15, 2023, from: https://www.jstor.org/stable/40721390Mohd

 Ahmedova, S. 2015. Factors for Increasing the Competitiveness of Small and Medium-Sizes

Enterprises (SMEs) in Bulgaria. Procedia-Social and Behavioral Sciences 195: 1104–12.

 Alauddin M. D., & Chowdhury M. M. (2015). Small and medium enterprise in Bangladesh-

Prospects and challenges. Global Journal of Management and Business Research, 15(7), 11.

 Aldaba, R., Philippine Review of Economics 46(1) 2010

 Aldaba, R. M. (2012). Small & Medium Enterprises Access to Finance:Phillipines. Discussion

Paper Series No 2012-05 .

 Alphonso Van AardtSmit and OlawaleOlufunsoFatoki, (2012). Debt financing to new small

ventures in South Africa: The impact of Collateral, ethics and the legal system. African Journal of

Business Management 6,(3), 1136-1146.

 Ashgate, Pettit, R. R., & Singer, R. F. (1985). Small Business Finance:A Research

Agenda. Financial Management , 14 (3), 47-60.

 Bizomer. (2009). [Online] Available: http://www.bizomer.com/role-of-smes-in-pakistan.html

 Bhoganadam, S. D., Dr. Rao, Nụne Srinivasa R., Dr. Rao, Dasaraju Srinivasa A study on Issues

and Challenges faced by SMEs : A Literature Review Research Journal of SRNMC – Vol. 1 ISSN

2395 – 7085

https://www.researchgate.net/publication/

346073062_A_Review_of_Global_Challenges_and_Survival_Strategies_of_Small_and_Medium_

Enterprises_SMEs

 Mayer and Fantz (2004),

 Mohd Thas T. , Mohamed A,., Mustafa O., 2 nd International Conference on Islamic Economics

and Economies of the OIC Countries, 29-30, 2013

 Quingco E., Leonoras, C, Philippine Social Science Journal 2(2), 107-222, 2019

 Samar, E., 2011

 Weinzimmer, L. G. (1997), „Top management team correlates of organizational growth in a small

business context: A comparative study‟.Journal of Small Business Management 35(3), 1–9.*

GROUP 2

Leader:

Neuda, Princess Mae P.

Members:

Rubio, Shiela Mae

Delos Santos, Kristhine

Catacutan, Ejay

Santos, Reina

Piadozo, Alehandra

De Leon, RenRen