A Dissertation Submitted in Partial/Fulfillment of the Requirements for Award of the Degree of Master of Business Administration (MBA – Corporate Management) of Mzumbe University 2013ABSTRACT This study seeks to analyse the factors that influence the challenges of Small Medium Enterprises (SMEs) specifically in Mwanza city. Specific research objectives were; to assess the challenges encountered by SMEs in Mwanza city, to identify the causes of these challenges, and to propose remedial actions given the causes of these challenges. The study applied a case study design whereby Mwanza city was a case study and conducted in Mwanza. The population of the study was SMEs clients of Mwanza city. The study involved a sample of 40 respondents. The researcher used judgmental selection in a non-probability method. Data were collected from respondents by means of forty structured questionnaires (twenty for successful firms and twenty for unsuccessful firms) consisting of 20 questions. Twenty four of the questionnaires were returned of which fifteen were from successful firms and nine from unsuccessful firms. The sample was drawn from a list of all the SME owners in Mwanza city. Through an analysis of theoretical information and empirical results it is possible to establish how to facilitate more innovative and effective development that is much needed in developing countries, such as Tanzania. Findings of the study indicate that there is a problem of business failure in Mwanza city. Although business owners of successful and unsuccessful businesses recognise the support from the government, most unsuccessful business owners feel that the lack of proper governmental assistance is still one of the most critical factors that led to failure. Finally the major recommendation of the study highlights the issue that the government should come up with strategic measures (such as business incubators) that will prolong the survival of SMEs.