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MGT601 - SME Management, GDB # 2, Starting Date July 29, 2015, Closing Date July 31, 2015

MGT601 - SME Management

Question Title :

SMEs & Recruitment process.

Question Description: 

SMEs are considered the backbone of economy in any country. In Pakistan SMEs constitute nearly 90% of all the enterprises in Pakistan and employing 80% of the non-agricultural labor force and their share in the annual GDP is 40% (approximately). However, unlike large enterprises in the formal sector, a small and medium enterprise is constrained by financial and other resources. This inherent characteristic of an SME makes it imperative that there should be a mechanism through which it may get support in different functions of business including technical up gradation, marketing, financial and human resource training & development.


Consider the case of laiba enterprises, which is indulged in the marble processing and had capacity to make supplies in local market. Laiba enterprises are doing well in the market due to its high quality products, reasonable prices along with timely delivery. Mr. Hassan, the owner of Laiba enterprises is thinking of expanding its business on modern basis through acquiring high-tech machinery and expansion of market through offering a variety of products. The task could not be achieved without the help of an efficient work force, who could able to take this challenge and obviously these all, would be managed within the limited resources of Laiba enterprise.


At this point Mr. Hassan has to take decision to opt among available methods of recruitment (internal recruitment or external recruitment) for their enterprise. Being a student of SME Management and having in depth knowledge of recruitment & selection process, which method would you suggest to Mr. Hassan for recruiting staff and why? Discuss logically and support your answer with solid arguments.

10 Marks 

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Replies to This Discussion

This Graded Discussion Board will cover first 31 lessons.

Recruitment – synonymous with "hiring" in American English – refers to the overall process of attracting, selecting and appointing suitable candidates for jobs (either permanent or temporary) within an organization. Recruitment can also refer to processes involved in choosing individuals for unpaid positions, such as voluntary roles or unpaid trainee roles. Managers, human resource generalists and recruitment specialists may be tasked with carrying out recruitment, but in some cases public-sector employment agencies, commercial recruitment agencies, or specialist search consultancies are used to undertake parts of the process. Internet-based technologies to support all aspects of recruitment have become widespread.

Recruitment: Internal v External Recruitment

A business can recruit in two different ways:

  • Internal recruitment is when the business looks to fill the vacancy from within its existing workforce
  • External recruitment is when the business looks to fill the vacancy from any suitable applicant outside the business

Of course, the option to use BOTH internal and external recruitment can be used. This is often the case for senior management appointments.

Internal recruitment


  • Cheaper and quicker to recruit
  • People already familiar with the business and how it operates
  • Provides opportunities for promotion with in the business – can be motivating
  • Business already knows the strengths and weaknesses of candidates


  • Limits the number of potential applicants
  • No new ideas can be introduced from outside
  • May cause resentment amongst candidates not appointed
  • Creates another vacancy which needs to be filled

External recruitment


  • Outside people bring in new ideas
  • Larger pool of workers from which to find the best candidate
  • People have a wider range of experience


  • Longer process
  • More expensive process due to advertising and interviews required
  • Selection process may not be effective enough to reveal the best candidate

Recruitment :

The process of finding and hiring the best-qualified candidate (from within or outside of an organization) for a job opening, in a timely and cost effective manner. The recruitment process includes analyzing the requirements of a job, attracting employees to that job, screening and selecting applicants, hiring, and integrating the new employee to the organization.

well done kiran

The task could not be achieved without the help of an efficient work force ...that is current

so it is needed external recruitment

 I choose external bcz internally to sab apna best dairhy hain.

The task could not be achieved without the help of an efficient work force ...that is current

so it is needed external recruitment

1. Wider Choice With the availability of large pool of qualified candidates, the selection process becomes more competitive in choosing the best suited candidate.

2. Qualified Personnel
External sources of recruitment provide a pool of talented candidates for selection purpose. With the large pool of potential candidates, it introduce new blood in the organization.

3. Fresh Talent
External recruitment facilitates the entry of fresh talents in an organization. It encourages the inflow of new ideas, knowledge and skills required to perform the tasks.

4. Competitive Spirit
External recruitment creates an environment for healthy competition in between internal employees and external members, who are supposed to be more trained and efficient.

5. Environmental Adaptation
Since external recruitment encourages the entry of new skills, knowledge and ideas in the organization, it helps in accompanying environmental changes.

6. Fairness
Being an open process, external recruitment provides opportunity to all prospective candidates to apply for the vacant position in the organization. This, in turn, widens its options of selection.


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