Welcome to the world of

ENTREPRENEURSHIP
DEVELOPMENT
REFERENCE:

1. Entrepreneurship Development, Small Business

Enterprises, Poornima Charantimath, (Pearson).
2. Entrepreneurial Development, S.S. Khanka, (S. Chand)
3. Entrepreneurship, Barringer BR, Ireland R.D., (Pearson)
4. The Dynamics of Entrepreneurial Development &
Management, Vasant Desai, (HPH).
5. Entrepreneurship, Hisrich, Peters, Shepherd, (TMH)
6. Entrepreneurship Management, Dr. Aruna Kaulgud,
(Vikash Publishing House).
ORIGIN OF ENTREPRENEURSHIP:
BARTER SYSTEM:
 Goods were exchanged for goods and there was no use of
money or other medium of exchange.
Difficulties:
 Principles of exchange of surplus product
 Surplus goods might not be accepted by all others
 Difficult to find out buyers and sellers whose wants
mutually coincided
The difficulties in barter system was the requirement
to think for entrepreneurship
 Few persons might have started to assemble all the
surplus goods from others and facilitate the exchange
process.
 Later on many individuals might have copied the idea and
gradually they could have brought many changes to the
idea to suit their convenience.
APPROACH TOWARDS ENTREPRENEURSHIP:
A common man:
 “Entrepreneurship is a means of earning livelihood.”
A rich person:
 “Entrepreneurship is a way of running a business to earn
higher profit.”
A customer:
 “Entrepreneurship is a medium through which goods and
services are made available to them to satisfy their
wants.”
An economist:
 “Entrepreneurship is a type of economic activity which
centers around production and purchase of goods and
services and supplying them to ultimate users ensuring a
fair remuneration to the person carrying on such activity.
DEFINITION OF ENTREPRENEURSHIP:
 “Entrepreneurship is a creative activity, the entrepreneur
being an innovator who introduces something new into
the economy, a new method of production not yet tested
by experiences in the branch of manufacture concerned, a
product with which customers are not familiar, a new
source of raw material or a new unexploited market and
other similar innovation.” : J. A. Schumpeter

 “Entrepreneurship is defined as the urge to implement

new ideas and take challenges, the need for independence
or autonomy and to improve the quality of life” : EDI,
Ahemadabad
WAGE EMPLOYMENT, SELF-EMPLOYMENT AND
ENTREPRENEURSHIP:
WAGE EMPLOYMENT:
 Contractual form of employment
 Employee and employer relationship
 Wages for service rendered and depends on skill,
knowledge, experience, expertise and productivity of the
employee.
 It provides job security, guaranteed income but limited
and there is no independence.
SELF -EMPLOYMENT:
 It is treated as best form of employment.
 It is the employment created by an individual for himself.
WAGE EMPLOYMENT, SELF -EMPLOYMENT AND
ENTREPRENEURSHIP…
 Government policies like PMRY and Jawahar Rojgar
Yojana emphasise the generation of self employment
for a solution to unemployment.
 A self employed person identifies opportunities,
selects a product, organises required factors of
production to produce it and sells the product in the
market to earn profit.
ENTREPRENEURSHIP:
 It is the extended form of self employment.
 As a self-employed person, an entrepreneur
generates employment for himself as well as for
others.
---
ENTREPRENEUR, ENTREPRENEURSHIP &
ENTERPRISE:
 Entrepreneur is the person, entrepreneurship is the
process of action and enterprise is the object.
ENTREPRENEUR: He is a person who creates an enterprise.
 The word ‘Entrepreneur’ has been taken from the French
word “ENTERPRENDRE” which means to undertake.
 It refers to those who undertake the risk of new
enterprise.
 In France, it was used to designate an organiser of musical
and other entertainments.
 According to Poornima Charantimath, the word
entrepreneur is derived from a Sanskrit word called
“ANTARPRERANA”. So, entrepreneur is an economic
leader who has the ability to recognise opportunities for
the successful introduction of his innovation. For this he
has to assemble the necessary factors of production and
ENTREPRENEUR, ENTREPRENEURSHIP & ENTERPRISE…
ENTREPRENEURSHIP:
 It is a process of action an entrepreneur undertakes to
establish the enterprise.
 It is a creative and innovative response to the
environment.
 Furthermore, it is the inclination of mind to take
calculated risk with confidence to achieve a predetermined
business activity.
ENTERPRISE:
The organisation which is created by an entrepreneur by
use of his entrepreneurship is known as enterprise.
RELATIONSHIP BETWEEN ENTREPRENEUR &
ENTREPRENEURSHIP
ENTREPRENEUR ENTREPRENEURSHIP
 Person  Process
 Organiser  Organisation
 Innovator  Innovation
 Risk-bearer  Risk-bearing
 Motivator  Motivation
 Creator  Creation
 Visualiser  Vision
 Leader  Leadership
 Imitator  Imitation
RELATIONSHIP BETWEEN ENTREPRENEUR &
ENTREPRENEURSHIP…
 The relationship between the two is just like the two sides
of the same coin.
 Entrepreneurship is concerned with the performance and
coordination of the entrepreneurial functions.
 It means entrepreneur precedes entrepreneurship.
---
THANK
‘U’
1. DIFFERENCE BETWEEN ENTREPRENEUR &
MANAGER

2. SIMILARITIES BETWEEN ENTREPRENEUR AND

MANAGER

3. ENTREPRENEURSHIP IN INDIA

4. CAUSES OF SLOW GROWTH OF

ENTREPRENEURSHIP
DIFFERENCE BETWEEN ENTREPRENEUR & MANAGER:
ENTREPRENEUR MANAGER
1.MOTIVE: 1.MOTIVE:
 An entrepreneur starts a  A manager renders his
venture by setting up an services in an enterprise
enterprise. already set up by an
 He understands the entrepreneur.
venture for his personal
satisfaction.
 He sets his own goals and
strives to achieve them. 2. STATUS:
2. STATUS:  A manager is the servant in
 An entrepreneur is the the enterprise owned by
owner of the enterprise. the entrepreneur.
DIFFERENCE BETWEEN ENTREPRENEUR & MANAGER…
ENTREPRENEUR MANAGER
3.RISK BEARING: 3.RISK BEARING:
 Being the owner he  Being a servant he does
assumes all risks and not bear any risk involved
uncertainty involved in in the enterprise.
running the enterprise.
4. REWARDS:
4. REWARDS:  A manager gets salary as
The reward an reward for the services
entrepreneur gets for rendered by him in the
bearing risks involved in enterprise.
the enterprise is profit  Salary of a manager is
which is highly uncertain. certain and fixed.
DIFFERENCE BETWEEN ENTREPRENEUR & MANAGER…
ENTREPRENEUR MANAGER
5. INNOVATION: 5. INNOVATION:
 He himself thinks over what and  He simply executes the plans
how to produce goods to meet prepared by the
the changing demands of the entrepreneur.
customers.
 He simply translates the
 He acts as an innovator , also
called as a change agent.
entrepreneur’s ideas into
practice.
6. QUALIFICATIONS:
 There is no need of formal
6. QUALIFICATIONS:
educational qualifications to be  He should possess
an entrepreneur. qualifications in terms of
 He should possess qualities and sound knowledge in
qualifications like High management theory and
Achievement Motive, Originality practice.
in Thinking, Foresight, Risk  He should be ‘Jack of all
Bearing Ability and so on.
Trades and Master of All’.
DIFFERENCE BETWEEN ENTREPRENEUR & MANAGER…
 It is clear that an Entrepreneur is different from a Manager
.
 At times, an entrepreneur can be a manger but a manager
can not be an entrepreneur.
 After all, an entrepreneur is an owner, but a manager is a
servant. ---
SIMILARITIES BETWEEN ENTREPRENEUR &
MANAGER:
 Entrepreneur and manager produce results through
people.
 Both of them take decisions and work under constraints.
 Entrepreneur and manager follow sound principles of
management.
 A successful organisation needs both Entrepreneurship
and Management.
 The Chief Executive and his team(Top-level Executives,
Middle-level Executives and Joint-level Executives) also
play the entrepreneurial role.
---
ENTREPRENEURSHIP IN INDIA:
 Entrepreneurship in Pre-British India
 Entrepreneurship during British period
 Entrepreneurship in independent India
ENTREPRENEURSHIP IN PRE-BRITISH INDIA:
 India was constituted mainly by villages and there were
cities, which are the capital of princely states.
 Villages were self-sufficient and the villagers were used to
satisfy their needs within the village.
 The village economy was constituted by farmers, artisans,
craftsmen and members of Gram Panchayat.
 The artisans, craftsmen used to produce various products
and provide necessary services .
 They represented the entrepreneurial culture and
possessed the characteristics of an entrepreneur.
ENTREPRENEURSHIP IN PRE-BRITISH INDIA …
 There was the barter economy.
 Members of the Gram Panchayat established law, peace
and order.
 Indian spices, jute, jute products, minerals, raw cotton and
handicrafts were exported to all over the world.
ENTREPRENEURSHIP DURING BRITISH PERIOD:
 Indian village economy faced stiff competition from the
British Industries.
 Mechanisation in the British industries initiated the
industrialisation process in Britain.
 British industries imported raw materials from Indian
agriculture and exported finished products to Indian
market
 Such goods received huge response in Indian market
ENTREPRENEURSHIP DURING BRITISH PERIOD…
 Indian markets were flooded with British goods
 There was complete destruction of Indian handicrafts and
village industries.
 Princely states were merged in the British Empire.
 Britishers introduced a new system of education.
 Value of labour was completely lost and the
entrepreneurial culture was submerged.
 During the British period there was the emergence of
employment oriented mentality among Indian artisans
and craftsmen.
 Risk bearing ability and confidence were substituted by
complete obedience to British Administration.
ENTREPRENEURSHIP IN INDEPENDENT INDIA:
 At the time of independence, India was described as an
underdeveloped country.
 Foreign exchange earnings were less than the foreign
exchange expenditure.
 Good infrastructural facilities like electricity, irrigation,
transportation, postal, communication etc. were not
available. The education system was faulty as it was not
designed as per the requirement of the economy.
 Since independence Govt. of India has taken several
measures to promote industrial growth in various parts of
the country.
 For this purpose , the Govt. came forward with its first
Industrial Policy in 1948.
 Then industrial policy has been revised from time to time
(1956,1977,1980,1990,1991, MSME Development Act-
2006) to boost entrepreneurship in our country. ---
CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP:
1. SOCIAL FACTORS
 Unfavorable family background
 Lack of education, aptitude and training
 Dual role of women
 Absence of motivation
 Lack of freedom to choose career based on skill/ability
 Influence of caste, custom, family burden etc.
 Unfavorable socio-economic conditions
CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP …
2. ECONOMIC FACTORS
 Inadequate infrastructure facilities
 Shortage of capital and technical knowhow
 Poor transportation and communication facilities
 Lack of regular supply of power, raw materials
3. ENVIRONMENTAL FACTORS
 Unstable government
 Lack of security
 Absence of ideal market condition and business
 Corruption in administration
---
NATURE OF ENTREPRENEURSHIP:

1.Economic Activity
2. Purposeful Activity
3. Functions of risks bearing
4. Organising functions
5. Gap filling function
6. Dynamic function
7. Innovative function
THANK
‘U’
IMPORTANCE OF
ENTREPRENEURSHIP/ ROLE OF
ENTREPRENEURSHIP IN
ECONOMIC DEVELOPMENT:

SOCIO-ECONOMIC BENEFITS
FROM ENTREPRENEURSHIP:
IMPORTANCE OF ENTREPRENEURSHIP /ROLE OF
ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT:
 Economic development means a process of increase in real
per capita income over a period of time.
 Entrepreneurship is a vital force in the process of
economic development of a country.
 The economic history of the developed countries supports
the fact that the economic development is the effect for
which entrepreneurship is the cause.
 The people of underdeveloped countries become
conscious of the significance of entrepreneurship for
economic development of the western countries
 It is only active and enthusiastic entrepreneurs can fully
explore the available resources, i.e., labour, technology
and capital.
IMPORTANCE OF ENTREPRENEURSHIP/ ROLE OF
ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT…
 J. A. Schumpeter visualised entrepreneur as the key figure
in economic development because of his role in
introducing innovations.
 It is the ability of the entrepreneur who perceives
opportunities which others can not see.
 The role of entrepreneurs in economic development varies
from economy to economy depending upon its
o resources,
o industrial climate and
o responsiveness of the political system to the
entrepreneurial function.
IMPORTANCE OF ENTREPRENEURSHIP /ROLE OF
ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT …
Entrepreneurship helps in the process of economic
development in the following ways:
1. EMPLOYMENT GENERATION:
 Growing unemployment particularly for educated youth is
the problem of the nation.
 The available employment opportunities from government
side can cater only 5 to 10% of the unemployment.
 Entrepreneur generates employment for himself and offer
jobs to others.
 Thus, entrepreneurship is the best way to fight the evils of
unemployment.
IMPORTANCE OF ENTREPRENEURSHIP /ROLE OF ENTREPRENEURSHIP
IN ECONOMIC DEVELOPMENT …
2. INCREASE IN NATIONAL INCOME:
 National income consists of the value of goods and services
produced in the country and the differential amount of export
and import.
 The goods and services produced are for the consumption in
the country and to meet the demand for export.
 Domestic demand increases with increase in population and
increase in the standard of living.
 The export demand also increases due to various reasons.
 An increasing number of entrepreneurs are required to meet
this increasing demand for goods and services.
 Thus, entrepreneurship increases the national income. On the
other hand the important advantage of small enterprises is
that they can be started with small capital and little or no
previous entrepreneurial background.
 In this way entrepreneurship promotes balanced regional
development.
IMPORTANCE OF ENTREPRENEURSHIP / ROLE OF ENTREPRENEURSHIP…
3. BALANCED REGIONAL DEVELOPMENT:
 The growth of industry and business leads to a lot of
public benefits like transportation facilities, health,
education, entertainment etc.
 When the industries are concentrated in selected cities,
development gets limited to these cities.
 Large and medium scale industries can only be started
with huge investment which is either available with big
industrialists or Govt.
 Promotion of large and medium industries does not help in
reducing income, wealth and regional disparities.
4. RAPID DEVELOPMENT OF BACKWARD AREAS:
 In view of increasing competition in and around cities, the
new entrepreneurs are forced to set up their enterprises in
the smaller towns away from big cities.
 This helps in the rapid development of backward regions.
IMPORTANCE OF ENTREPRENEURSHIP / ROLE OF ENTREPRENEURSHIP…
5. DISPERSAL OF ECONOMIC POWER:
 Industrial development leads to concentration of economic
power in a few hands.
 This concentration of power in few hands has its own evil in
the form of monopolies.
 Developing large number of entrepreneurs helps in dispersing
the economic power amongst the population.
 Thus it helps in weakening the harmful effects of monopoly.
6. BETTER STANDARD OF LIVING:
 Entrepreneurs are able to produce goods at lower cost and
supply goods at lower price to the community according to
their requirements.
 When the price of the commodities decreases the consumers
get the power to buy more goods for their satisfaction.
 In this way they can increase the standard of living of the
IMPORTANCE OF ENTREPRENEURSHIP / ROLE OF ENTREPRENEURSHIP…
7. CREATING INNOVATION:
 Entrepreneur always looks for changes. He introduces
new ideas and new combination of factors.
 He always tries to introduce new techniques of production
for his survival and better performance.
 Through his innovations entrepreneur makes the economy
more competitive in international market.
 In this way entrepreneurs bring economic development
through innovation.
IMPORTANCE OF ENTREPRENEURSHIP / ROLE OF ENTREPRENEURSHIP…
8. ECONOMIC INDEPENDENCE:
 Entrepreneurship is essential for national self-reliance.
 Entrepreneurs manufacture substitutes of imported
products and reduce dependence on foreign countries.
 They also export goods and services on a large scale and
earn foreign exchange for the country.
 Such Import Substitution and Export Promotion help to
ensure economic independence of the country.
9. CAPITAL FORMATION:
 Entrepreneurs mobilise the idle savings of the public
through the issue of shares and debentures.
 Investment of public savings in enterprise results in
productive utilisation of national resources.
IMPORTANCE OF ENTREPRENEURSHIP / ROLE OF ENTREPRENEURSHIP…
 Rate of capital formation increases which is essential for
rapid economic growth.
 Thus, an entrepreneur is the creator of wealth.
10. LINKAGE EFFECTS:
 An entrepreneur initiates change which has a chain
reaction.
 When an entrepreneur sets up an enterprise, it has several
backward and forward linkage effects.
 For example, the establishment of a steel plant generates
several ancillary units and expands the demand for iron
ore, coal, etc. These are backward linkage effects.
 By increasing the supply of steel, the plant facilitates the
growth of machine building, tube making, utensils
manufacturing and such other units. These are forward
linkage effects.
IMPORTANCE OF ENTREPRENEURSHIP / ROLE OF ENTREPRENEURSHIP…
 Entrepreneurs create an atmosphere of enthusiasm.
 The practice of entrepreneurship is important both for the
established firms and new firms.
11. HARNESSING LOCALLY AVAILABLE RESOURCES:
 India is rich in natural resources.
 In spite of more than six decades of planned development
a large number of states remained economically
backward.
 A few large scale industries are started by entrepreneurs
from outside the state in economically backward areas but
ultimately the real strength of industrailisation in
backward areas depend upon local entrepreneurs.
 Local entrepreneurs will use abundantly available local
resources.
SOCIO-ECONOMIC BENEFITS FROM ENTREPRENEURSHIP:
1. Entrepreneurship creates employment.
2. Entrepreneurship improves the quality of life.
3. Entrepreneurship contributes to a more equitable
distribution of income.
4. Entrepreneurship utilises the resources.
5. Entrepreneurship brings social benefits.
---
THANK
‘U’
WHO IS AN ENTREPRENEUR?

TRAITS/
CHARACTERISTICS/NATURE OF
AN ENTREPRENEUR:

MICSONCEPTIONS ABOUT
ENTREPRENEURS:
INTRODUCTION:
 From the business history of India, we find some
successful entrepreneurs like Late Dhiru Bhai Ambani of
Reliance Industries Ltd. , Azim Premji of Wipro, Narayan
Murthy of Infosys Technologies Ltd., Kiran Mazumdar
Shaw of The Biocon India Group, Verghese Kurien of
Gujarat Cooperative Milk Marketing Federation popularly
known as “AMUL” (Anand Milk Union Ltd.), Deepak S.
Parekh of HDFC and so on.
 Entrepreneurial profiles of some successful Indian
business men are quite fascinating. Some of them are
highly educated, others are school/college dropouts. Some
are inheritors and others are self made.
 Then the question arises is : What makes an entrepreneur
successful? Whether they had anything in common?
 After scanning of their personalities, it is found that there
are some commonalities which are regarded as their
characteristics.
WHO IS AN ENTREPRENEUR?
 Entrepreneur is a person who combines various factors of
production, processes the raw materials, converts the raw
materials into finished product and create utility in the product
and sells the product in the market in order to earn profit.
 According to Peter F. Drucker, “Entrepreneur is one who always
searches for changes, respond to it and exploit to it as an
opportunity. He states that innovation is the specific tool of
entrepreneurs”.
TRAITS/ CHARACTERISTICS /NATURE OF AN ENTREPRENEUR:
1. HARD WORK:
 Willingness to work hard distinguishes a successful
entrepreneur from unsuccessful one.
 Most of the successful entrepreneurs work hard endlessly,
especially in the beginning and the same becomes their
habit for their whole life.
In the Convocation Ceremony of EDII, well known
entrepreneur Hari Shankar Singhania told to the budding
entrepreneurs:
TRAITS/ CHARACTERISTICS OF AN ENTREPRENEUR…
 “Success comes only through 10% inspiration and 90%
perspiration. There is no substitute for hard work. One
must have a focus to achieve his vision. Nobody gets a
clean slate to write on and has to start with the dirty slate
he gets. If one waits for ideal situation, the time will never
come. ”
2. DESIRE FOR HIGH ACHIEVEMENT:
 The entrepreneurs have a strong desire to achieve high
goal in business.
 This high achievement motive strengthens them to face
the obstacles, suppress anxieties, repair misfortunes and
devise methods and set up and run a successful
enterprise.
 Sunil Bharati Mittal of Bharati Telecom is an excellent
example of Need for High Achievement.
 Sunil Mittal belongs to non business background.
TRAITS/ CHARACTERISTICS OF AN ENTREPRENEUR…
 1976: Manufacturing of Cycle parts in Ludhiana
(Just with a borrowed capital of Rs. 20,000/-). But things
did not work properly.
 1983-84: Manufacturing of Capsules
(It also did not work well due to Import-Export Policy of the
then Government)
 Then Sunil Mittal started to manufacture Push-Button
Telephone Sets. Since then there was no looking back.
 It is due to his High Need and Urge for Achievement. He
begged many first to his credit.
i. The first Push-Button Telephone Set
ii. The first Cordless Telephone
iii. The first Answering Machine
iv. The first Fax Machine
 1995: Entry to Mobile Sector with AIRTEL brand.
TRAITS/ CHARACTERISTICS OF AN ENTREPRENEUR…
3. HIGHLY OPTIMISTIC:
 The successful entrepreneurs have a positive approach
towards things.
 They do not get disturbed by the present problems faced
by them.
 They are highly optimistic for future that the situations
will become favourable to business in future.
How optimistic Thomas Alva Edison was?
 He lost his factory to fire in 1914. It had very little
insurance.
 He said, “There is a great value in disaster. All our mistakes
are burnt up. Thank GOD we can start a new.”
 Just after three weeks, in spite of the devastating
disaster, he invented ‘PHONOGRAPH’.
 It proves that how optimistic he was? and what a positive
attitude he had?
TRAITS/ CHARACTERISTICS OF AN ENTREPRENEUR…
4. INDEPENDENCE:
 Independence is one of the common qualities of the
successful entrepreneurs.
 Entrepreneurs do not like to be guided by others.
 They don’t like to follow the rules made by others.
 They resist to be pigeonholed and like to be independent
in the matters of their business.
5. FORESIGHT:
 Entrepreneurs have a good foresight to know about future
business environment.
 They visualise the likely changes to take place in market,
consumer attitude and taste, technological developments,
etc.
 They take necessary and timely steps according to the
likely changes what they are able to foresee.
Foresight of N.R. NARAYANMURTHY:
 He presents an excellent example of business foresight.
 He pursued a career in Computer Science when there were
not many jobs in this field.
 The Indian Industry had just about started appreciating
the role of computers.
 Today is the Era of Computers.
6. GOOD ORGANISER:
 Various resources required for production are owned by
different owners.
 It is the entrepreneur who brings together all required
resources for setting up an enterprise and then produces
goods.
 All depend on his ability, i.e., good organising capability.
TRAITS/CHARACTERISTICS OF AN ENTREPRENEUR…
7. INNOVATIVE:
 Production is meant to meet the customers’ requirements.
 In view of the changing requirements of the customers
from time to time, the entrepreneurs initiate research and
innovative activities to produce goods to satisfy the
customers’ changing requirements.
 The research institutes established by Tata, Birla,
Kirloskar, etc. are examples of the innovative activities of
our entrepreneurs.
Innovative quality of Late Dhirubhai Ambani:
 He started his Textile Company when the textile industry
in India was facing absolutely unfavourable environment.
TRAITS/ CHARACTERISTICS OF AN ENTREPRENEUR…
 Govt. Policy was in support of small power looms but it
was against the Textile Mills due to imposition of
Differential Tax Structure.
 He identified an opportunity even in such an unfavourable
environment.
WHAT HE HAD DONE?
 Late Dhirubhai realised that the small power looms could
produce high quality goods but they were finding it
difficult to market them.
 So, he decided to get high quality goods by these small
power looms as per his specifications at a relatively low
cost, got them duly processed and printed with exquisite
designs, and then sold them under his widely accepted
brand in the market.
 He earned huge margins of profits by this innovative idea.
TRAITS/ CHARACTERISTICS OF AN ENTREPRENEUR…
8. PERSEVERANCE:
 Successful entrepreneurs possess and exhibit tremendous
perseverance to their pursuits.
 They do not give up their effort even if they fail. They undergo
lots and lots of failures, but do not become disheartened.
 They take failure as learning experience and make more
dedicated and serious effort on the next time and ultimately
become successful. Sunil Mittal has shown his entrepreneurial
perseverance.
 Miss Fenny Hust is a creative writer and had a goal to get her
story published in the famous magazine of that time .
 Her 37 stories were rejected by that magazine but she
persisted in her efforts. Her 38th story was published by that
magazine.
 Form her story a play was produced and she earned lots of
royalties and afterwards she had not to look back. So,
Perseverance can make miracles happen.
TRAITS/ CHARACTERISTICS OF AN ENTREPRENEUR…
9. TEAM SPIRIT:
 The word ‘TEAM’ refers to T for Together, E for Every one,
A for Achieve and M for More.
 Successful entrepreneurs build teams and work with team
mates.
 Team is a group of individuals who work in a face-to-face
relationship to achieve a common goal.
 They share collective accountability for the outcome of
the team’s effort.
 Working in team creates synergy and achieves success in
its endeavour.
 In appreciation of the ‘Role of Team Spirit’ in success,
Henry Ford said, “Bringing people together is beginning,
keeping together is progress, and working with people is
success.”---
Story of HARE & TORTOISE illustrates the role of Team
Spirit in achieving success.
LESSONS OF THE STORY
1.“SLOW & STEADY WINS THE RACE”
2. “FAST AND STEADY ALSO WINS THE RACE”
3. “CORE COMPETENCE, SURELY, WINS THE RACE”
4. “INNOVATION & TEAM WORK SUCCESSFULLY WIN THE
RACE…. ANY RACE”
 A hare and a tortoise lived in Ahmadabad. They were good
friends.
 One day, in a light mood, the hare ridiculed tortoise for his
slow pace.
 The tortoise reacted by challenging hare to a Race from
Paldi to Navarangpura.
Story of HARE & TORTOISE…
 On the appointed day and time, they met at the starting
line and began the race.
 The Hare dashed off like a flash but after crossing the
midway mark, he felt that a short nap would do no harm.
 The short nap turned out to be a bit too long.
 The Tortoise crossed the hare and reached the
destination.
 The hare woke from his slumber and dashed of to
Navarangpura.
 He found the tortoise taking a nap at the finish point,
Navarangpura.
Lesson of the Story: SLOW & STEADY WINS THE RACE.
 The story does not end here.
 The hare went home and understood that COMPLACENCY
Story of Hare & Tortoise…
 He vowed not to repeat the mistake again. The hare
invited the tortoise to another race. The tortoise agreed.
They met on the appointed day and at the appointed hour.
 The race began and this time the hare dashed off to the
finishing line without a break and won the race
comfortably. The lesson of the story is “FAST AND
STEADY ALSO WINS THE RACE”.
 The story does not end here.
 The tortoise went home and thought hard. He was aware
that the hare could not be defeated by speed.
 He pondered over his Core Competence and invited the
hare to another race.
 This time the race was to be run from Paldi to Airport.
 The hare dashed off in a flash. Soon he arrived at the bank
of river Sabaramati.
Story of Hare & Tortoise…
 He did not know how to swim. The tortoise arrived at the
river bank, looked at the hare in sympathy and coolly
entered into the river water. He swam to other side and
reached the airport.
 The Lesson of the story is “CORE COMPETENCE, SURELY,
WINS THE RACE”.
 The story does not end here.
 The two friends, the Hare and Tortoise decided – enough
of racing against each other.
 They thought hard and found a way by which they could
together travel from Paldi to Airport in minimum possible
time.
 At the appointed time, they met at the starting point, the
tortoise sat on hare’s back and dashed off from Paldi.
 On the bank of river, Sabaramati, the hare got on to the
back of the tortoise. The tortoise swiftly crossed the river.
Story of Hare & Tortoise…
 On reaching the other bank the tortoise again climbed on
to the hare’s back.
 The hare ran as fast as he could to the Airport. Thus, they
both made it possible to reach the Airport in the fastest
and shortest possible time.
 The Lesson of the story is “INNOVATION & TEAM WORK
SUCCESSFULLY WIN THE RACE…. ANY RACE”.
-–X---
MISCONCEPTIONS ABOUT ENTREPRENEURS:
 Down the years many misconceptions and misunderstanding
about entrepreneurs and entrepreneurship have been created
which are discussed below.
 The purpose of discussing misconceptions about entrepreneurs
is to develop a healthy and confident approach towards
entrepreneurs and entrepreneurship.
1. Entrepreneurs are born and Entrepreneurship is hereditary:
 This belief prevailed for a long time in Indian society.
 This developed a sense of reluctance, indifference and negative
approach towards entrepreneurial career.
 This was the major hurdle in the entrepreneurship development
efforts in India. Consistent training in developing
entrepreneurial career and the surprising task performed by the
institutes like Entrepreneurship Development Institute of India,
National Institute of Small Entrepreneurship and Small
Business Development and National Institute of Small
Industries Extension and Training have disproved this belief.
 Now, it is believed that people from various strata of society
with different backgrounds can be identified, trained, equipped
and motivated to have entrepreneurial careers.
MISCONCEPTIONS ABOUT ENTREPRENEURS…
2. Entrepreneurs are Profit Hungry and Exploit Labour:
 This belief is the outcome of the disadvantages of
capitalism.
 In the earlier years of industrialisation in Britain, it was
believed that the owners of the productive resources,
particularly the capitalists exploited labour in order to
maximise profit.
 The capitalists were criticised as profit hungry people.
 This belief spread whenever industrialisation was
introduced. Now it is believed that entrepreneurs are
wealth creators.
 In the absence of entrepreneurship, converting the raw
material into products with utility for consumers would be
in difficulty. Entrepreneurs, with their distinct quality, have
accelerated the process of industrial development.
MISCONCEPTIONS ABOUT ENTREPRENEURS…

3. Entrepreneurs are Dishonest:

 Criticisms are labeled that entrepreneurs are greed
dishonest and do not believe in ethical values. But
wrong perception.
 Entrepreneurs, like J.R.D. Tata, believe in self estee
dignity of labour and maintain high level culture.
 But the growing materialism and urge to earn fast
is responsible for the deterioration of the value sys
Entrepreneurs are not responsible for the situation
4. Entrepreneurs are favoured by Luck:
 Luck plays a marginal role in the success of entrepr
 Other qualities like Hard Work, Persistence, Cons
Efforts, Intuition and Imagination are necessary t
achieve success.
 Luck is not the only factor that favours an entrepre
MISCONCEPTIONS ABOUT ENTREPRENEURS…
5. Only Rich People can become Entrepreneurs:
 Rich people possesses financial resources.
 Any business needs finance. Rich people have easy access
to money.
 It was believed that only rich people can become
entrepreneurs. But in order to develop entrepreneurship in
all the segments of the society, the Govt. provides all
financial assistance to the potential entrepreneurs
through banks and specialised financial institutions. Any
person with a viable business proposition can enter into
entrepreneurial career.
MISCONCEPTIONS ABOUT ENTREPRENEURS…
6. Entrepreneurship is Monopoly of certain Communities:
 People belonging to certain communities like Marwaris
and Gujaratis had the necessary qualities required for a
successful entrepreneur.
 Therefore, it was believed that entrepreneurship is a
monopoly of certain communities.
 But, now it is an accepted fact that irrespective of
communities, castes, regions, language, education, sex or
economic status, any person can become an entrepreneur.
---X---
THANK
‘U’
 FUNCTIONS OF
AN
ENTREPRENEUR
FUNCTIONS OF AN ENTREPRENEUR:
An entrepreneur performs all the functions necessary right
from the genesis of a business idea up to the establishment of
an enterprise. Major entrepreneurial functions are:
1. RISK BEARING: This is a unique function of an entrepreneur.
 He buys factors of production at certain prices in order to
combine them into a product with a view to selling it at
uncertain prices in future.
 A farmer pays to land lord, labourers and other factors of
production as per contract but he sells his product at
uncertain prices. Merchants make certain payments in
expectation of uncertain receipts.
 These persons are essentially risk-bearing agents of
production. Entrepreneurs are a group of persons who bear
uncertainty. Uncertainty is defined as a risk which can not be
insured. But risk can be reduced through insurance principle.
So, entrepreneur undertakes the responsibility of uncertainty
FUNCTIONS OF AN ENTREPRENEUR …
2. ORGANISING:
 Entrepreneur performs the functions of co-ordination,
organisation and supervision.
 By selling the produce in the market he pays interest on
capital, rent on land, wage to labourers and what remains
is his profit.
 Entrepreneur shifts economic resources from area of
lower productivity to area of higher productivity.
 Being an organiser, entrepreneur must possess the art of
superintendence and administration.
 An entrepreneur has also to perform a number of complex
operations like: Obstacles to be overcome, Anxieties to be
repressed, Misfortunes to be repaired and Methods to be
devised.
FUNCTIONS OF AN ENTREPRENEUR …
3. INNOVATION:
 Innovations may occur in any one of the following forms by
an entrepreneur:
 Introduction of a new product or a new method of
production
 Opening of a new market
 Discovery of a new source of supply of raw materials and
 Carrying out of the new form of organisation in any
industry.
 An inventor is one who discovers new methods and new
materials but an innovator utilises the inventions and
discoveries in order to make new combinations.
 An inventor produces the idea but that idea gets
converted into reality by an innovator.
FUNCTIONS OF AN ENTREPRENEUR …
4. PLANNING:
 Planning is a predetermined course of action to
accomplish the objectives. In other words, planning is
today’s projection for tomorrow’s activity.
 Planning pervades in all aspects of business. An
entrepreneur has to make plans as to:
ü What is to be done?
ü How it is to be done?
ü When it is to be done?
ü Where it is to be done?
ü By whom it is to be done? and so on.
 Planning ensures smooth and effective completion and
running of an enterprise.
 Absence of planning causes confusion which affects the
smooth performance of job.
FUNCTIONS OF AN ENTREPRENEUR …
5. STAFFING:
 Staffing involves human resource planning and human
resource management. Staffing function of an
entrepreneur includes:
ü Preparing Inventory of Personnel available
ü Requirement of Personnel
ü Sources of Manpower Recruitment, Selection of
Manpower
ü Remuneration to Manpower
ü Training & Development of Manpower
ü Periodic Appraisal of Manpower
 The business history points out that the success of the
enterprise depends upon the staff working in the
organisation.
FUNCTIONS OF AN ENTREPRENEUR …
 Andrew Carniege’s view in relation to staffing: “Take my
people and leave my factory, soon grass will grow on the
floor. Take my factory and leave my people , soon we shall
build a better factory.”
 He underlines the significance of staffing in the making of
an organisation. However, staffing function is crucial as
well as complex for the success of an organisation.
6. DIRECTING:
 The directing function of an entrepreneur actually starts the
setting up of an enterprise.
 Under this function, entrepreneur guides, counsels, teaches,
stimulates and activates his employees to work efficiently to
accomplish the set objectives.
 Directing function concerns the total manner in which an
entrepreneur influences the actions of his employees.
FUNCTIONS OF AN ENTREPRENEUR …
7. CONTROLLING:
 Controlling is the management function performed by the
entrepreneur.
 It means to see whether the activities have been
performed in conformity with the plans or not.
 Controlling is a comparison of actual performance with the
targeted performance and identification of variation
between the two, if any, and taking corrective measures
so that the target is accomplished.
FUNCTIONS OF AN ENTREPRENEUR …
8. IDENTIFICATION & SELECTION OF BUSINESS IDEA:
 Every entrepreneur wants to start the most profitable and
rewarding project.
 The selection of the most suitable business project
involves a process.
 The entrepreneur, based on his knowledge, experience,
and information, generates some business ideas which
can be examined and pursued as an enterprise. This
process is also known as “Opportunity Scanning and
Identification”.
 The generated ideas are analysed in terms of costs and
benefits associated with them.
 After having cost-benefit analysis of all ideas the most
beneficial idea is finally selected to start an enterprise.
FUNCTIONS OF AN ENTREPRENEUR …
9. PREPARATION OF BUSINESS PLAN:
 The entrepreneur prepares a statement called business
plan which is related to what he proposes to do.
 Business plan is a well evolved course of action devised by
the entrepreneur to achieve his objectives within a
specified period of time.
 It is just like an operating document.
 The preparation of business plan is very much useful for
the entrepreneur to establish his enterprise in an effective
and smooth manner.
 Business plan is required to get financial help from the
financial institutions or banks for the enterprise.
FUNCTIONS OF AN ENTREPRENEUR …
 Business plan contains:
ü Information about the entrepreneur
ü Location of enterprise
ü Requirement of land and building
ü Plant and machinery
ü Raw material
ü Utilities
ü Transport and Communication
ü Manpower
ü Requirement for Funds(Fixed and Working Capital)
ü Break-Even Point
ü Implementation Schedule of the project
FUNCTIONS OF AN ENTREPRENEUR …
10. REQUIREMENT OF FINANCE:
 The entrepreneur prepares requirement of funds with its
detailed structure.
 The financial requirement is also classified into short-
term and long- term separately.
 The sources of supply to acquire the required funds are to
be mentioned.
 The amount of Share Capital in terms of Equity and
Preference Shares and amount of Borrowed capital from
financial institutions and banks are clearly determined.
11. PRODUCTION FUNCTION:
 Once the enterprise is established, it starts producing
goods or offering services.
FUNCTIONS OF AN ENTREPRENEUR …
 Production function includes:
ü Decisions relating to the selection of factory site,
ü Design and lay out of factory
ü Types of product to be produced
ü Research and development and design of the product
 The ancillary activities in production function include
ü Production planning and control,
ü Maintenance and repair,
ü Purchasing,
ü Store-keeping and
ü Material Handling.
The effective performance of production function,
depends on the proper Production Planning and Control.
FUNCTIONS OF AN ENTREPRENEUR …
12. MARKETING:
 All production is basically meant for marketing.
 Marketing is the activities that direct the flow of goods
and services from producer to consumers.
 Marketing begins and ends with the customers.
 Marketing is not just selling, it is much more than selling
and selling is the last function in marketing activities.
 Marketing is related to a number of activities like Market
Research, Standardisation, Packaging, Pricing, Storage,
Promotional Activities, Distribution Channel etc.
 The success of marketing is linked with an appropriate
“Marketing Mix”.
 Marketing Mix refers to 7Ps like i. Product ii. Price iii.
Promotion iv. Physical Distribution v. Packaging vi. People
and vii. Process.
FUNCTIONS OF AN ENTREPRENEUR …
13. ACCOUNTING:
 The main objective of any business is to earn profit and
create wealth.
 Whether the business is fulfilling this objective or not is
ascertained through Accounting.
 Accounting is Classifying, Recording and Appropriate
allocation of expenditure for the determination of the
costs of products or services and for the presentation of
suitably arranged data for purposes of control and
guidance of management.
 In Accounting, Profit & Loss Account(P/L Account) is
prepared to know the financial position of business during
the accounting period.
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THANK
‘U’
 TYPES OF
ENTREPRENEURS
TYPES OF ENTREPRENEURS:

Entrepreneurs are classified on the basis of following

classifications.
1. TYPES OF BUSINESS
2. OWNERSHIP
3. GENDER
4. SIZE OF ENTERPRISE
5. CLARANCE DANHOF CLASSIFICATION
6. RECOMMENDATION OF BEHAVIOURAL SCIENTISTS
7. OTHER TYPES OF ENTREPRENEUR
1. TYPES OF BUSINESS:
i. TRADING ENTREPRENEURS:
 Trading entrepreneurs undertake the trading activities.
 They procure the finished products from the
manufacturers and sell these to the customers directly
or through a retailer.
 They serve as the middle men as wholesalers, dealers,
and retailers between the manufacturers and
customers.
ii. MANUFACTURING ENTREPRENEURS:
 Manufacturing entrepreneurs manufacture products.
 They identify the needs of customers and then explore the
resources and technology to be used to manufacture the
products to satisfy the customers’ needs.
 They convert raw materials into finished products.
iii. AGRICULTURAL ENTREPRENEURS:
 These entrepreneurs undertake agricultural pursuits.
 They cover a wide spectrum of agricultural activities like
cultivation, marketing of agricultural products, irrigation,
mechanisation of agriculture and technology related to
the field of agriculture.
2. OWNERSHIP:
i. PRIVATE ENTREPRENEUR:
 A private entrepreneur is one who as an individual sets
up a business enterprise. He is the sole owner of the
enterprise and bears the entire risk involved in it.
ii. STATE ENTREPRENEUR:
When the trading or manufacturing venture is undertaken
by the State Government or Central Government, it is
called State Entrepreneur.
iii. JOINT ENTREPRENEUR:
 When a private entrepreneur and the Government jointly
run a business enterprise, it is called “Joint Entrepreneur”
3. GENDER:
i. MAN ENTREPRENEUR :
When a business enterprise is owned, managed and
controlled by a man, it is known as man entrepreneur.
ii. WOMAN ENTREPRENEUR:
 Women entrepreneurs are those women who think of a
business enterprise, initiate it, organise and combine the
factors of production, operate the enterprise and
undertake risks and handle economic uncertainty involved
in running a business enterprise.
4. SIZE OF ENTERPRISE:
i. Micro Entrepreneur:
 An entrepreneur, who has made investment in plant and
machinery up to Rs. 25 lakhs, is known as micro
entrepreneur.
ii. Small-scale Entrepreneur:
 An entrepreneur, who has made investment in plant and
machinery up to Rs. 5 crore, is known as small-scale
entrepreneur.
iii. Medium-scale Entrepreneur:
 An entrepreneur, who has made investment in plant and
machinery above Rs. 5 crore but below Rs. 10 crore, is
known as medium-scale entrepreneur.
iv. Large-scale Entrepreneur:
 The entrepreneur who has made investment in plant and
machinery more than Rs. 10 crore is known as large-scale
entrepreneurs.
5. CLARENCE DANHOF CLASSIFICATION:
i. INNOVATING ENTREPRENEURS:
 These entrepreneurs introduce new goods, inaugurate
new method of production, discover new market and
reorganise the enterprise.
 Such entrepreneurs can work only when a certain level of
development is already achieved, and people look forward
for change and improvement.
II. IMITATIVE ENTREPRENEURS:
 These entrepreneurs do not innovate anything rather they
are ready to adopt successful innovations.
 They only imitate the technology innovated by others.
They bring new combination of factors of production
already existing in developed regions.
 Such entrepreneurs are suitable for the underdeveloped
iii. FABIAN ENTREPRENEURS:
 Such entrepreneurs want to adopt any change in their
enterprise with great caution and skepticism.
 They imitate only when it becomes clear that failure to do so
would result in a loss of the enterprise.
iv. DRONE ENTREPRENEURS:
 These entrepreneurs refuse to adopt opportunities to make
changes in production method even at the cost of severely
reduced returns relative to other like producers.
 Such entrepreneurs may suffer from losses but they are not
ready to make changes in their existing production method.
6. RECOMMENDATION OF BEHAVIOURAL SCIENTISTS:
i. SOLO OPERATORS:
 These entrepreneurs essentially work alone and if needed at
all they give employment to few employees.
 In the beginning, most of the entrepreneurs start their
ii. ACTIVE PARTNERS:
 Such entrepreneurs start an enterprise as a joint venture.
 In this joint venture all the entrepreneurs participate
actively in the business operation.
 But some times a few of the partners only contribute
funds to the enterprise but do not actively participate in
business operation. They are called simply ‘Partners’ or
‘Sleeping Partners’.
III. INVENTORS:
 Such entrepreneurs with their competence invent new
products for which they are known as inventors.
IV. CHALLENGERS:
 These are the entrepreneurs who push into industry
because of the challenges it presents.
 When one challenge seems to be met, such entrepreneurs
begin to look for new challenges.
v. BUYERS:
 Such entrepreneurs do not like to bear much risk.
 Hence, in order to reduce risk involved in setting up a new
enterprise; they like to buy the ongoing one.
vi. LIFE TIMERS:
 These entrepreneurs take business as an integral part of
their life.
 Usually, the family enterprises and businesses which
mainly depend on exercise of personal skill fall in this
category of entrepreneurs.
7) OTHER TYPES OF ENTREPRENEUR:
i. SEASONAL ENTREPRENEUR:
 Deals with seasonal products.
ii. LOCAL ENTREPRENEUR:
 Operates within a local limit.
iii. REGIONAL ENTREPRENEUR:
 Operates within a region or state.
iv. NATIONAL ENTREPRENEUR:
 Operates within a country
v. INTERNATIONAL ENTREPRENEUR:
 Operates across the globe
vi. SOCIAL ENTREPRENEUR:
 He is motivated by a desire to help, improve and
transform social, environmental, educational and
economic conditions, is known as social entrepreneur.
 He creates social value through the improvement of goods
and services offered to the community.
 His main aim is to offer a better service to the society so
he runs the enterprise as non profit organisation.
vii. SERIAL ENTREPRENEUR:
 A serial entrepreneur is one who continuously comes up
with new ideas and starts new businesses.
viii. NOVICE ENTREPRENEUR:
 A novice entrepreneur is someone who has just started to
run his own business and is still learning new things to
make it work successfully.
ix. INHERITANCE TYPE:
 These entrepreneurs inherit the family business through
inheritance.
 As they inherit family business, they are called as Second
Generation Entrepreneurs.
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CHARMS OF BEING AN ENTREPRENEUR:
 On completion of one’s formal education, one has usually
two career options, viz., wage employment and self
employment.
 Under wage employment, one joins and earns fixed
wages.
 The nature of income generation in wage employment is
of ‘self saturation’.
 In case of self employment, the scope for earning money is
also limited but in entrepreneurship it is unlimited. Other
than this the charms of being an entrepreneur has been
discussed below:
CHARMS OF BEING AN ENTREPRENEUR…
1. OPPORTUNITY TO CREATE ONE’S OWN DESTINY:
 An enterprise provides independence and opportunity to do
and achieve what is important to an entrepreneur.
 An entrepreneur knows that he is the driving force behind the
success of his enterprise.
 He wants to make his destiny high and bright and starts
earning as much as possible which he can materialise through
his enterprise.
 All the entrepreneurs believe in Swami Vivekananda’s dictum,
“You are the creator of your own destiny”.
2. OPPORTUNITY TO MAKE A DIFFERENCE:
 An entrepreneur starts an enterprise because he sees an
opportunity and he wants to show that he is different from
others.
 It may be providing Low Cost Houses to the middle class
families or establishing a recycling programme to preserve
the earth’s limited resources.
 Mr. Deepak S. Parekh, the CEO of HDFC is one such example
among Indian masses.
CHARMS OF BEING AN ENTREPRENEUR…
3. OPPORTUNITY TO REACH ONE’S FULL POTENTIAL:
 Owning a business gives entrepreneur a sense of
empowerment to do what they can.
 In the “Need Hierarchy Theory of Motivation” Abraham
Maslow termed it “Self Actualisation”.
 He knows that the only boundaries on his success are
those imposed by his own creativity, enthusiasm and
vision.
 Following Indian idols dared to dream big and transformed
their dreams into action and achievement to the highest
order.
i. N.R. NARAYAN MURTHY
ii. DHIRUBHAI AMBANI
iii. DR. KARSAN BHAI PATEL
iv. LAKSHMI MITTAL
v. SUBHASH CHANDRA
CHARMS OF BEING AN ENTREPRENEUR…
i. N.R.NARAYAN MURTHY:
 He left the job of a system programmer in the Indian
Institute of Management, Ahmadabad to start his own
business with three other partners.
ii. LATE DHIRU BHAI AMBANI:
 His life inspires us to dream and dare. He went to Mumbai
with Rs. 15,000/- to start his yarn business and lived with
his family of seven people in a one-room apartment in
Mumbai.
 He created Reliance Industries Limited, India’s biggest
private sector organisation.
CHARMS OF BEING AN ENTREPRENEUR…
iii. DR. KARSHAN BHAI PATEL:
 The Nirma Man was an ordinary factory chemist in Gujarat
Mineral Development Corporation.
 He started conducting experiments in his kitchen to offer
an affordable detergent especially to rural women.
 His efforts yielded a whitish-yellow detergent powder. He
named it ‘NIRMA’, after his daughter ‘Niranjana’.
 Today ‘Nirma’ is one of the worlds’ biggest detergent
brand.
 It sells over 8 lakh tons of detergent product annually.
 It holds 40% of the Indian market with a turn over of more
than Rs. 2,500/- crores.
CHARMS OF BEING AN ENTREPRENEUR…
iv. LAKSHMI NIWAS MITTAL:
 The son of a scrap dealer. He is an Indian steel magnet,
based in UK. He is the Chairman and CEO of ARCELOR
MITTAL, the world’s largest steel making company. He has
plants in 15 countries including India all over the world.
v. SUBHASH CHANDRA:
 Subhash Chandra is of Zee Television came to Mumbai
with only Rs.17/-. Today he is the owner of a Rs. 20,000/-
crores.
4. OPPORTUNITY TO REAP IMPRESSIVE PROFIT:
 Through their entrepreneurship entrepreneurs become
super-rich.
 Michael Dell, of ‘Dell Computer Corporation’ is one such
example of richness reaching the list of wealthiest people
in the USA.
 Late DhiruBhai Ambani and N.R.Narayan Murthy are
CHARMS OF BEING AN ENTREPRENEUR…
5. OPPORTUNITY TO CONTRIBUTE TO SOCIETY:
 Entrepreneurs by running their enterprise in an honest and
transparent manner and serving the customers faithfully earn
recognition and respect in their communities.
 They contribute to the well being of the society in the
following manners:
o By providing jobs to unemployed.
o By utilising idle resources
o By reducing the differences in the levels of development of
different regions.
o By providing goods as per the requirement of people.
o By providing services to the people in the society.
 The following fact shows how entrepreneurs contribute to the
well being of society.
 N.R.Narayan Murthy started ‘Infosys Foundation’ to render
services in the area of education and health care. Its chair
person, Sudha Murthy, wife of N.R, Murthy, says: “We have a
responsibility to give back to the society. Wealth is only a
means to an end and we are just trustees of that wealth.”
CHARMS OF BEING AN ENTREPRENEUR…
6. OPPORTUNITY TO DO WHAT ONE WANTS:
 Entrepreneurial history is full with the instances that most
of the entrepreneurs entered into business because they
have an interest in that line of work.
 They have made their avocations their vocations.
 For such entrepreneurs, Harvey McKay’s saying seems
worth quoting, “Find a job doing what you love, and you
will never have to work a day in your life. The journey
rather than the destination is the entrepreneur’s greatest
reward”.
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CHARMS OF BEING AN ENTREPRENEUR:
1.Financial freedom
2. Free Time
3. Job Security
4. Excitement and Satisfaction
5. Lack of employment opportunities
6. low entry barriers
7. Deregulation and privatisation
8. Increasing demand for variety
9. Government Incentives and Subsidies
10. Increasing flow of information
11. Easier access to resources
12. Entrepreneurial education
13. Return on innovation
CHARMS OF BEING AN ENTREPRENEUR…

14. High regards for self-employment

15. Raising dissatisfaction at job
16. Acceptance of ex-entrepreneurs in the job market
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THANK
‘U’
ENTREPRENEURIAL
PERSONALITY
ENTREPRENEURIAL PERSONALITY:
 Personality is the collection of all possible ways in which
an individual reacts and communicates with others.
 Conversely, it can also mean how people influence others
as well as how they understand and view themselves.
 It includes their pattern of internal and external
measureable traits and interaction between person and
situation.
 Understanding the entrepreneurial personality is the most
common need among different scholars and sociologists.
 A persistent research has been conducted by the
researchers to check out the manner in which
psychological attributes of the entrepreneurs can be
associated to the success, or if not, to their venture.
 By developing new products or innovating new methods of
doing things, entrepreneurs help in solving different
problems. It is not possible without unique traits and
ENTREPRENEURIAL PERSONALITY...
 Different personality traits of entrepreneurs are as
follows:
1. SELF-CONFIDENCE:
 Entrepreneurs must have self-belief and confidence
towards their business, product and decisions.
 This can be achieved when one knows that they are
providing quality products at reasonable prices.
2. FLEXIBILITY:
 Entrepreneurs show flexibility in their decisions.
 They are always ready to modify their decisions in case of
adverse conditions.
 Usually, merits and demerits of each entrepreneurial
decision are analysed by ideal entrepreneurs and required
changes are applied in accordance with the prevailing
ENTREPRENEURIAL PERSONALITY...
3. VISION:
 Focusing on vision is the important requisite for successful
entrepreneurs.
 Instead of caring about tasks and operations of the
enterprise, successful entrepreneurs focus on vision.
 Vision implies the status that a particular organisation
wishes to achieve in future.
 In order to effectively communicate this vision to entire
workforce, leadership skills are required.
 The entrepreneur would be able to share his vision with his
team, and it would assist in the development of the new
venture.
 Through effectively communicating the vision, the
entrepreneur makes the process of achievement of shared
vision very simple.
ENTREPRENEURIAL PERSONALITY...
4. PASSION:
 Generally, pople assume that money is the motivational
factor behind entrepreneurship.
 But passion for doing things in a new way of developing a
new product/service just to solve a particular problem is
the main cause behind entrepreneurship.
 Entrepreneurs are passionate to change the standards of
life for every individual.
5. RELIANCE:
 The key personality trait of any entrepreneur is the
resilient nature.
 He/she is not affected by the failure or any other problem,
but remains firm and hope for the best. He/she is able to
fight back with the situation. Instead of losing hope or
belief, he/she tries to find the reasons of such conditions
or the failure. ---X---
 CORPORATE SOCIAL
RESPONSIBILITY(CSR)
‘or’
SOCIAL RESPONSIBILITY
OF BUSINESS(SRB)
CORPORATE SOCIAL RESPONSIBILITY(CSR):
INTRODUCTION:
 Business corporations are the sub systems of the society
as these are run within the society.
 They get inputs from the society and society gets goods
and services from them. In this way business corporations
and society are interdependent.
 Business corporation is a corporate citizen which has an
obligation towards the society as it receives inputs from
the society.
 A business corporation can run only when it is accepted by
the society. At present society needs socially conscious
entrepreneurs.
 The social responsibility of entrepreneur means the
responsibility towards customers, workers, shareholders,
government and society.
CSR…
 Entrepreneur depends on society for his existence and
development.
 Every decision he takes and every action he does have
social implications.
 Thus, he should think of projects of social significance.
WHAT IS CSR?
 Corporate Social Responsibility (CSR) denotes community
development efforts of organisations.
 This is an old concept but new term.
 CSR is defined as the obligation of the business enterprise,
which is beyond the requirement of Law and Economics,
to pursue long term goals which are good for the society.
WHY CSR?
 The notion that discharging corporate social responsibility
costs and, in turn, reduces profits, has proved wrong.
 Discharging corporate social responsibility strengthens the
foundation of corporation to earn profit.
FACTS ON CSR:
 Maruti Udyog Limited(MUL) is an example which kept
social welfare ahead of its interest.
 In the year 1977, MUL recalled about 50,000 ‘Maruti 800’
cars from the market because they suspected them to be
made of inferior steel.
 This action of MUL shows how concern for social welfare
strengthens its foundation, i.e., “organisational character”,
in turn it will affect its profit earning capacity.
FACTS ON CSR…
 Character is the foundation of over all prosperity. As
SWAMI VIVEKANANDA said, “First build character,
everything else will follow.”
 The logic behind CSR is that social involvement of business
provides following benefits to the organisation which
compensate its cost.
ü A positive consumer image
ü A more dedicated and motivated work force
ü Strong public confidence
ü Social acceptance and
ü Less interference from regulating agencies
 CSR is a company’s ‘Dharma’ that enables the company to
survive and flourish for long.
FACTS ON CSR…
 Just as any untruth is short lived , so is an unethical
business too.
 It is confirm that no business can survive without the
acceptance of the society.
 Without social sanction, business is sure to struggle and
perish.
JUSTIFICATIONS FOR CSR:
 Corporations being socially responsible might be rewarded
with more satisfied customers while irresponsibility may
result in boycott by customers. ‘PEPSI’ and ‘COCACOLA’
experienced such boycott from customers in India in 2007.
1. Employees are attracted and committed to corporations
that show socially responsible behaviour.
2. CSR is a long-term investment in creating a suitable
business environment to do business.
JUSTIFICATIONS FOR CSR…
3. Corporations cause some social problems like pollution,
dirtiness, etc.
They have a moral responsibility to solve these problems
and also make efforts to prevent such problems.
4. Corporations use scarce social resources in responsible
manner for the benefit of the society.
In reality, corporations rely not only on the contributions of
share holders but also stake holders such as consumers,
suppliers, local communities, etc.
Hence, corporations have a duty to take into account the
interests and goals of share holders as well as other stake
holders. ---
FORMS OF CSR:
1. RESPONSIBILITY TOWARDS SHARE HOLDERS:
The entrepreneur should be able to safe guard the capital of
the share holders and to provide them a reasonable dividend.
2. RESPONSIBILITY TOWARDS EMPLOYEES:
Dissatisfied employees means the death of the business.
Entrepreneurs who want to see their business flourishing
must be aware of their responsibilities towards their
employees.
Responsibilities of entrepreneurs towards employees are in
the following form:
ü Fair selection, training and promotion of employees
ü Fair wages and adequate incentives to employees
ü Safe and comfortable working conditions
ü Proper recognition, appreciation and encouragement of special
skills and capabilities of workers.
FORMS OF CSR…
3. RESPONSIBILITY TOWARDS CONSUMERS:
 The customer is the foundation of a business.
 If any business can not create customers, it falls.
 So, business has highest responsibility towards the
consumers.
 Consumer satisfaction should be the foremost goal of any
business enterprise.
4. RESPONSIBILITY TOWARDS COMMUNITY:
 Community means people residing in and around the area
where the enterprise is located and also the society at
large.
 The responsibilities of an entrepreneur towards
community includes Prevention of environmental
pollution, Overall development of locality, Giving jobs to
the local people, Promotion of small scale and ancillary
industries and Promotion of health, education, etc. in that
FORMS OF CSR…
5. RESPONSIBILITY TOWARDS GOVERNMENT:
It includes the following points:
ü Complying with all government regulations and legal
requirements.
ü Paying taxes honestly
ü Executing Government contracts
ü Working as a willing partner with government in pursuit of
public welfare
 Hence, it is clear that an entrepreneur must be alert to
social repercussion of his actions.
 He may invent new products and new methods of
production. He may innovate new ways of doing things. All
these actions have social consequences, entrepreneurs
should keep his social obligation in mind before thinking
any action. ---
ENTERPRISE AND SOCIETY:
 Existence of enterprises is the sign of a civilised and
developed society.
 Development of a society depends on the existence of a
good number of enterprises of various types.
 Enterprises cater to the needs of the society.
 Enterprises not only bring economic development but also
bring social, educational and cultural development.
 A society is dull if there is no production of goods and
services followed by their consumption.
 A society is enriched by the existence of enterprises.
 There is a good relation between the society and
enterprise.
 Enterprises are considered as the pillars of society and
entrepreneurs are considered as the assets of a society.
How enterprises are linked to a society are described
BENEFITS OF ENTERPRISES TO THE SOCIETY:
1. Enterprises provide goods and services to the members of
the society as per their requirements
2. Enterprises provide both direct and indirect employment
opportunities to the members of the society.
It reduces unemployment problem to some extent.
The enterprises utilise the idle man power which in turn
creates economic development.
3. Products produced by many segments of the society like
agriculture, fisheries, horticulture, handlooms, etc. are
used by enterprises as raw materials to produce many
useful products for the society.
4. Enterprises bring economic development and also
development in other areas like; social, educational,
cultural, agricultural, etc.
BENEFITS OF ENTERPRISES TO THE SOCIETY…
5. Establishment of enterprises in a locality attracts many
facilities like; better road, electricity, telephone, markets,
banks, insurance, hospitals, schools, colleges, hotels, clubs,
transport, etc. which enhances the social life of the people
of the locality and standard of living increases.
A remote area becomes a town and later on a city due to
the presence of some enterprises.
6. Enterprises are responsible for the distribution of national
wealth among various people through various activities.
In simple words, there will be flow of money to the people
through various means.
7. Enterprises create entrepreneurs and further enterprises,
thus, increase entrepreneurial population in the society.
BENEFITS OF ENTERPRISES TO THE SOCIETY…
8. Existence of enterprises creates social revolution by
creation of many opportunities and ideas for others to
generate income.
9. Growth of various types of enterprises at different places
in the society creates balanced economic growth of
various regions.
10. There is the creation of entrepreneurial culture in the
society due to the presence of enterprises.
---
HAZARDS OF ENTERPRISES TO THE SOCIETY:
Enterprises not only bring good things to the society and
its people but also they are responsible for many social
evils like,
1. Enterprises are responsible for air pollution, water
pollution, noise pollution and overall environmental
pollution to a large extent thereby making life difficult
and even shorter.
2. Due to the presence of enterprises, there is the large
scale inflow of people into that locality and concentration
of people in that locality will cause congestion and it will
create many other social problems like criminal and
criminal activities.
Poor people can not bear the unprecedented rise in price
of essential commodities due to increased demand and
short supply in the area.
HAZARDS OF ENTERPRISES TO THE SOCIETY…
3. Enterprises are mainly responsible for the economic
imbalance in the society, i.e., rich become richer and poor
become poorer.
4. Enterprises also create regional imbalances by developing
few regions and keeping other regions backward.
5. Enterprises attract people from various fields like
agriculture, handicraft, art, fisheries, etc. as a result
traditional professions will have a natural death.
6. Waste generated by the enterprises are usually not
treated properly and is left at the mercy of the nature and
the worst sufferers are the local inhabitants.
7. Presence of various types of enterprises in any locality
causes various health related problems to the people,
agriculture and to all other living beings in the locality.
---
THANK
‘U’
 ENTREPRENEURIAL
SUCCESS & FAILURES
ENTREPRENEURIAL SUCCESS:
 A business is started with the aim of achieving success but
success is not always guaranteed.
 For a small business, uncertainties prevail all the times.
 A good entrepreneur should be able to forecast
uncertainties and take appropriate steps to remain away
from such uncertainties or convert the uncertainties into
certainties.
 Hence, success in entrepreneurship largely depends on the
strength of the entrepreneur.
 Entrepreneurship requires a lot of dedication and success
of an entrepreneur depends on following factors:
1. THINK SUCCESS:
 To attain the kind of success that the entrepreneur
wants, he needs to dream big.
ENTREPRENEURIAL SUCCESS…
 He has to dream big for himself.
 He needs to have clear vision of what he wants to
achieve but it does not stop in dreaming alone.
 One should actively visualise success in his mind that he
can almost feel it, touch it or it is within his reach.
 Play this image back at every opportunity.
 Successful entrepreneur possesses an attitude of
openness and faith that he can have what he wants.
 Management Gurus have taught us the power of
visualisation - seeing yourself in your mind as having
accomplished your dreams.
 If some one wants to be a successful writer, visualise
himself signing books for a throng of people who have
lined up to have his autograph.
ENTREPRENEURIAL SUCCESS…
 If he wants to be rich, picture himself in luxurious
surroundings holding a fat bank account.
 And the process of visualising success for him should be a
constant activity.
 Entrepreneur needs to think that he will be successful in
every single working hour.
2. BE PASSIONATE WITH WHAT YOU DO:
 Entrepreneur starts business to change his life.
 To attain this change, he needs to develop an intense
desire to change the way things are and to live life to the
fullest.
 Success comes easily if he loves what he does.
 He will achieve peak performance only if he is doing
something that interests him.
ENTREPRENEURIAL SUCCESS…
 Entrepreneur, who succeeds, does not mind the fact that
he is putting in 18 hours a day to his business because he
absolutely loves what he does.
 Success in business is all about patience and hard work
which can only be attained if he is passionate and crazy
with his tasks and activities.
3. FOCUS ON STRENGTH:
 Entrepreneur has his own strengths and weaknesses.
 To be effective, he needs to identify his strengths and
concentrate on that.
 He will become more successful if he is able to channel his
efforts to areas that he does best.
 For example, in business if he knows he has good
marketing instincts, then he should harness this strength
and make full use of it.
ENTREPRENEURIAL SUCCESS…
 He should seek assistance in the areas that he may be
poor at such as accounting or book-keeping. To transform
his weakness to strength, he has to take some formal
training.
4. NEVER CONSIDER THE POSSIBILITY OF FAILURE:
 As entrepreneur, he needs to fully believe in his goals and
that he can do it.
 He should think that what he is doing will contribute to
the betterment of the environment and his personal self.
 He should have a strong faith in his idea, his capabilities,
and himself.
 He must believe that he has the ability to succeed.
 The more he can develop faith in his ability to achieve his
goals, the more rapidly he can attain it.
ENTREPRENEURIAL SUCCESS…
 However his confidence should be balanced with
calculated risks that he needs to take to achieve greater
rewards.
 Successful entrepreneur is he who analyses and minimises
risk in the pursuit of his goals.
5. PLAN ACCORDINGLY:
 Entrepreneur should have a vision and he has enough faith
in himself to believe that he can achieve his vision.
 To achieve his vision, he should have concrete goals which
will provide the stepping stone towards his ultimate
vision.
 He has to put his goals in writing, not doing so just makes
them as intangible fantasies.
 Entrepreneur needs to plan each day in such a way that his
every action contributes to the attainment of this vision.
 Intense goal orientation is the characteristics of every
ENTREPRENEURIAL SUCCESS…
 His ability to set goals and make plans for the
accomplishment of goals is the skill required to succeed.
6. WORK HARD:
 A successful entrepreneur works hard.
 No one achieves success just by sitting and staring at the
walls every single day.
 Working hard will be easy if entrepreneur has a vision,
clear goals, and are passionate with what he does.
7. WILLINGNESS TO LEARN:
 To succeed, entrepreneur must be willing to ask
questions, remain curious, interested and open to new
knowledge.
 This willingness to learn becomes more crucial given the
rapid changes in technologies and ways of doing business.
ENTREPRENEURIAL FAILURES:
 Failure is an orphan because of limited resources, high
levels of uncertainty, inexperienced management and
employees.
 New enterprises suffer from a high rate of mortality which
is much higher than that of larger and well-established
firms. The important reasons for entrepreneurial failure
are :
1. LACK OF EXPERIENCED MANAGEMENT:
 One of the main problems faced by new enterprise is that
the management is usually very new to this role.
 The entrepreneur and his top management officials
usually have no prior record of being in-charge of the
fortunes of a whole company.
 Even when the management has some individuals who have led
a company in the past, they face with a new situation where
ENTREPRENEURIAL FAILURES…
2. FEW EXPERIENCED MANPOWER:
 Shortage of skilled and experienced manpower is faced by
new ventures, which represent a riskier opportunity.
 Most people prefer to work with a well-established
organisation employing hundreds of employees and
having a stable track record.
 New entrepreneurs are also reluctant to train their
manpower and also reluctant to invest on new employees
for improving their skill and efficiency.
 Lack of experienced and skilled manpower may lead to a
general drop in productivity and quality of out put.
 The absence of quality manpower is felt particularly during
a crisis.
REASONS OF ENTREPRENEURIAL FAILURES…
3. WEAK MARKETING EFFORTS:
 Entrepreneurs are very reluctant to spend on marketing
efforts.
 Investing in marketing campaign is not going to give one
assured returns and the link between the marketing
expenditure and the sales is not very easy to establish.
 An investment of Rs. ‘X’ in raw material will give an
entrepreneur ‘Y’ Kg. of output but a similar investment of Rs
‘ X’ in a news paper advertisement will not give an
entrepreneur a sale of ‘Y’ units.
4. LACK OF INFORMATION:
 Even in this era of free-flowing information, the quality of
information available to large enterprises is far superior to
that available to new small enterprises.
REASONS OF ENTREPRENEURIAL FAILURES…
 There is a cost to information and small enterprises may
not be able to invest so much in getting the high quality
information.
 For example, before entering a new market, the new
entrepreneur may send some salespersons to take
interview of some customers, shopkeepers and
wholesalers.
 On the other hand, the large enterprise may engage the
services of a market-research firm and carry out a
thorough investigation of the potential customers,
shopkeepers and wholesalers, and the problems of the
new market.
5. POOR FINANCIAL MANAGEMENT:
 Operational issues keep an entrepreneur busy and as a
result, financial management is likely to get neglected.
 Often, the entrepreneur may find it difficult to go into the
REASONS OF ENTREPRENEURIAL FAILURES…
 Common errors in financial management may lead to bad
management, unproductive investment and poor
budgeting decisions.
6. LACK OF VISION:
 The entrepreneur on the path to failure is the one who can
never think of tomorrow.
 If one can not see himself and the business far into the
future beyond today, then he is on the path to destruction.
---
THANK
‘U’
 WOMAN
ENTREPRENEURS
INTRODUCTION:
 Women constitute around half of the world population. So
in India also. Therefore, they are, regarded as the better
half of the society.
 In traditional society, they were confined to the four walls
of houses performing household activities but in modern
society, they have come out of four walls and participate in
different spheres of activities like academics, politics,
administration, social works and so on.
 Now women have entered into industry and running their
enterprises successfully.
 The Planning Commission of India realised that economic
development of our country can take place only when
women are brought into the mainstream of economic
development.
WOMAN ENTREPRENEURS…
 For which there is the need for Entrepreneurship
Development Programmes for women to enable them to
start their own small-scale industries.
 Accordingly, the focus on economic development made
women the ‘subjects’ rather than ‘objects’ of development
and ‘change agents’ rather than ‘welfare recipients’.
 Women become empowered to gain control over their
own lives.
DEFINITION OF WOMAN ENTREPRENEURS:
 Woman entrepreneurs are those women who think of a
business enterprise, initiate it, organise and combine the
factors of production, operate the enterprise and
undertake risks and handle economic uncertainty involved
in running a business enterprise.
FUNCTIONS OF WOMAN ENTREPRENEURS:
Woman entrepreneurs have to perform the following
functions involved in establishing an enterprise.
 Idea Generation and Screening,
 Determination of Objectives,
 Completion of Promotional Formalities,
 Raising Funds,
 Procuring Men, Machine, and Materials and
 Operations of Business.
All these functions can be classified into three categories:
Risk Bearing, Organising and Innovations.
---
REASONS BEHIND THE ENTRY OF WOMEN INTO
ENTREPRENEURIAL CAREER:
1. Limited job opportunities
2. Pressing needs to earn to supplement the family income
due to high cost of living
3. Social pressure of increasing standard of living
4. Utilisation of spare time
5. Increasing socio-economic awareness
6. Impact of role model in the industry and business
7. Self Esteem Need
8. Impact of media
9. Motivation by Government institutions through attractive
incentives, subsidies and schemes.
---
TYPES OF WOMAN ENTREPRENEURS IN INDIA:

i. Forced Entrepreneurs:
Women who are compelled by circumstances or family
business responsibilities to take up career in business
and industry are known as forced entrepreneurs.
ii. Chance Entrepreneurs:
Women who enter into business by luck or chance
without any preparation are known as chance
entrepreneurs.
iii. Created Entrepreneurs:
Women who are specifically identified, motivated,
trained, equipped and developed as entrepreneurs are
known as created entrepreneurs.
---
OPPORTUNITIES FOR WOMAN ENTREPRENEURS IN URBAN
AREAS:
 Computer service and information dissemination
 Trading in computer stationary
 Computer training at various level
 Computer maintenance
 Travel and tourism
 Quality testing, quality control laboratories
 Sub-assembling of electronic products
 Nutrition Club in Schools and offices
 Library
 Recreation centers for old people
 Culture centers
 Screen printing, photography & video shooting
OPPORTUNITIES IN URBAN AREAS…
 Stuffed soft toys, wooden toys
 Distribution and trading of household provisions
 Job contract for packaging of goods
 Beauty parlours
 Communication centers like STD booths, cyber cafes etc.
 Crèches
 Catering Service
 Health clubs ---
OPPORTUNITIES FOR WOMAN ENTREPRENEURS IN
SEMI-URBAN AREAS:
 Production of liquid soap, soap, detergent powder
 Office stationeries
OPPORTUNITIES FOR WOMAN ENTREPRENEURS IN
SEMI-URBAN AREAS…
 Readymade and instant food products, pickles, spices,
papads
 Different types of training and coaching classes
 Child care centers and culture centers for children
 Nursery class
 Garments and Communication Services ---
OPPORTUNITIES FOR WOMEN ENTREPRENEURS IN
RURAL AREAS:
 Agro-based products
 Fruit and vegetable processing industry
 Traditional medicines preparation
 Food items ---
GROWTH OF WOMAN ENTREPRENEURSHIP IN INDIA:
 Our society is male-dominated and women are not
treated as equal partners both inside and outside four
walls of the house.
 In fact, they are treated as weak and dependent on
men.
 Indian women enjoy a disadvantageous status in the
society.
 The literacy rate among women is 40% but the
literacy rate among men is 60%.
 The work participation rate among women is 28% but
the work participation rate among men is 52%.
 In India the percentage of women entrepreneur is
31.6% where as in USA, it is 45%, and in UK, it is 43%.
GROWTH OF WOMAN ENTREPRENEURSHIP IN INDIA…
 This comparison reveals that the development of
entrepreneurship is largely caused by the availability of
supporting conditions in a country.
 Entry of women into business in India is an extension of
their kitchen activities mainly to 3Ps: Pickles,
Powder(Spices) and Papad.
 Entry of women into business in India is due to both Pull
Factors and Push Factors.
 Pull factors refer to the factors which encourage women
to start enterprise(s) with an urge to do something
independently but push factors refer to those factors
compel women to take up their own business to tide over
their economic difficulties and responsibilities.
GROWTH OF WOMAN ENTREPRENEURSHIP IN INDIA…
 With growing awareness about business and spread of
education among women over the period, women have
started shifting from 3Ps to 3Es, namely, Engineering,
Electronics, and Energy.
 Women entrepreneurs have excelled in these activities.
 Women entrepreneurs manufacture Solar cooker in
Gujarat, Small foundries in Maharashtra and TV capacitor
in Odisha.
Famous women entrepreneurs of India: Kiran Majumdar
Shaw: Biocon India Group, Sumati Morarji: Shipping
Corporation, Yamutai Kirloskar: Mahila Udyog Limited,
Nina Malhotra: Exports, Sahanaz Hussain: Beauty Clinic,
Nainalal Kidwai: Banking, Jaswantiben Jamndas Popat:
Food (Lijjat Papad). In Kerala and Gujarat, an increasing
number of women are entering into the business.
PROBLEMS OF WOMAN ENTREPRENEURS:
Generally woman entrepreneurs encounter the following
problems:
1. PROBLEM OF FINANCE:
 Finance is regarded as ‘Life Blood’ for any enterprise.
 However, woman entrepreneurs suffer from shortage of
finance on two counts:
 Firstly, women do not have property on their names to
use them as collateral for obtaining funds from external
sources. Thus, their access to external sources of finance
is limited.
 Secondly, the banks also consider women less credit-
worthy and discourage women borrowers on the belief
that they may leave their business at any time. In such
situations, woman entrepreneurs are bound to rely on
their own savings and loans from friends and relatives.
 Thus, woman entrepreneurs fail due to the shortage of
PROBLEMS OF WOMAN ENTREPRENEURS…
2. SCARCITY OF RAW MATERIALS:
 Most of the woman enterprises are plagued by the scarcity
of raw material and other necessary inputs.
 Added to this, the other two important problems are:
Ø High prices of raw materials and
Ø Getting raw materials at minimum discount.
3. STIFF COMPETITION:
 Woman entrepreneurs do not have organisational set up
to pump in a lot of money for canvassing and
advertisement.
 Thus, they have to face stiff competition for marketing
their products with both organised sectors and their male
counterparts.
 Such a competition ultimately results in the liquidation of
PROBLEMS OF WOMAN ENTREPRENEURS…
4. LIMITED MOBILITY:
 Women mobility in India is highly limited due to various
reasons.
 A single woman asking for a room is still looked upon
suspicion.
 Cumbersome exercise involved in starting an enterprise
coupled with the officials’ humiliating attitude towards
women compels them to give up the idea of starting an
enterprise.
5. FAMILY TIES:
 In India, a woman’s duty is to look after the children and
other members of the family.
 Man plays a secondary role in this regard. Woman has to
strike a fine balance between her business and family.
PROBLEMS OF WOMAN ENTREPRENEURS…
 Her total involvement in family leaves little or no energy
and time to devote for business.
 Support and approval of husband seem necessary
condition for woman’s entry into business.
 Accordingly, the education and family background of
husband influence woman’s entry into business.
6. LACK OF EDUCATION:
 In India, 60% women are illiterate. Illiteracy is the root
cause of all socio-economic problems.
 Due to lack of quality education, women are not aware of
business, technology and market knowledge.
 Also, lack of education causes low achievement
motivation among women. Thus, lack of education creates
problems for women in setting up and running of
PROBLEMS OF WOMAN ENTREPRENEURS…
7. MALE-DOMINATED SOCIETY:
 Male-chauvinism is still the order of the day in India.
 The constitution of India speaks of equality between sexes
but in practice, women are looked upon as weak in all
respects. This in turn serves as a barrier to women’s entry
into business.
 We are doubtful about women’s role, ability and capacity
and are treated accordingly.
8. LOW RISK-BEARING ABILITY:
 Women in India lead a protected life.
 They are less educated and economically not self-
dependent.
 All these reduce their ability to bear risk involved in
running an enterprise. Risk-bearing is an essential
HOW TO DEVELOP WOMAN ENTREPRENEURSHIP?
 Now, women are increasingly participating in academics,
politics, administration, business and industry.
 The consensus is that promotion of women entrepreneurs
should form an integral part of all developmental efforts.
 Several national and international organisations have
appreciated the need of developing women entrepreneurs.
 The Govt. of India has been assigning increasing
importance to the development of women entrepreneurs
and suggested:
i. To treat women as specific target groups in all
development programmes.
ii. To provide vocational training facilities for women.
iii. To promote appropriate technologies to improve their
efficiency and productivity.
HOW TO DEVELOP WOMAN ENTREPRENEURSHIP…
v. To involve women in decision making process.
vi. The Govt. of India further stressed special
entrepreneurship development programmes for women.
vii. Product and process-oriented courses are also
recommended by the Govt. of India for women to start
small-scale industries.
 Nationalised banks, State Financial Corporations, State
Industrial Corporations, District Industries Centre and
voluntary agencies have been engaged in protecting and
developing women entrepreneurs in the country
 National and international women associations have been
set up to create a congenial environment for developing
women entrepreneurship in rural and urban areas.
---
INTRAPRENEUR:
 Now a new breed of entrepreneurs is coming up in large
industrial organisation who are known as ‘intrapreneur’.
 According to Gifford Pinchot, “Intrapreneur is an
entrepreneur within an already established organisation.”
 Intrapreneur is an employee of a large organisation. He
uses his entrepreneurial skills to develop a new product or
a new line of business as a subsidiary of the existing
organisation.
 The top executives are encouraged to develop new ideas
and then convert these into products within the
framework of the organisation.
 Intrapreneurship has become very popular in America.
 Now many intrapreneurs are leaving their jobs and are
starting their own enterprises. Sometimes intrapreneurs
INTRAPRENEURSHIP:
 It is the use of entrepreneurial techniques within the
existing organisation by the intrapreneurs.
 Intrapreneurship allows the employees to freely use their
innovative ideas to create new products, new services or
entirely a new division of the existing organisation for their
employer.
ADVANTAGES OF INTRAPRENEURSHIP:
 Intrapreneur is able to stay in a friendly and well known
environment.
 He can practise his skills within the organisation where
involvement of risk is very low.
 He uses company’s resources, good name and knowledge
to materialise his new ideas.
 Intrapreneur will have the access to customers and
infrastructures of the organisation.
---
DISADVANTAGES OF INTRAPRENEURSHIP:
 Intrapreneur may not be rewarded up to his satisfaction.
 Intrapreneur’s innovation may not be appreciated
accordingly by the entrepreneur.
 He can be innovative but to a certain limit.
 Intrapreneur is not his own boss.
ADVANTAGES OF ENTREPRENEURSHIP:
 Entrepreneur is his own boss.
 Income increases according to his efforts.
 In entrepreneurship there will be a chance to be original
and special.
 In entrepreneurship there will be a lot of possibilities.
 Entrepreneur decides his own salary.
---
DISADVANTAGES OF ENTREPRENEURSHIP:
 In entrepreneurship, there will be money pressure as he
has already given up the security of a regular pay cheque.
 Entrepreneurship is less beneficial particularly when the
business is new.
 Entrepreneur has to work for long hours. He has to take all
decisions alone.
 The mistakes of the entrepreneur are magnified.
DISTINCTION BETWEEN ENTREPRENEUR &
INTRAPRENEUR:
i. DEPENDENCY: An entrepreneur is independent in his
operation but an intrapreneur is dependent on the
entrepreneur.
ii. RAISING OF FUNDS: An entrepreneur himself raises
funds required for the enterprise but intrapreneur can
not raise funds.
DISTINCTION BETWEEN ENTREPRENEUR & INTRAPRENEUR

iii. RISK:
Entrepreneur bears risk involved in the business while
there is no personal risk involved in case of an intrapreneur.
iv. OPERATION:
An entrepreneur operates from outside. On the contrary,
an intrapreneur operates from within the organisation
itself. ---X---
THANK
‘U’
ENVIRONMENTAL
DYNAMICS
AND
CHANGE
MEANING OF BUSINESS ENVIRONMENT:
 Here environment means persons, things, even
atmosphere which surrounds a business enterprise.
 The business environment refers to all external forces
which have a bearing on the functioning of a business.
 It is said that business is not spontaneous, so
entrepreneurship is not a spontaneous process.
 Entrepreneurship is the creation of its environment.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP:
1. Social Environment 2. Economic Environment
3. Cultural Environment 4. Facilitating Environment
5. Compelling Environment 6. Psychological Environment
and 7. External Environment
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
1.SOCIAL ENVIRONMENT:
 Social environment is made up of the Attitude, Desires,
Expectations, Degree of intelligence and education,
Beliefs and Customs prevailing in a society.
 Social desires, expectations and pressures give rise to
laws and laws in turn influence entrepreneurship.
 Social environment encourages entrepreneurship.
 Social environment includes:
i) Willingness and Ambition to Work:
 Willingness and ambition to work affect entrepreneurship.
 The people with achievement motivation are prepared to
work hard for money or wealth.
 So, attitude to accumulate wealth is a determinant of
entrepreneurship development.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
ii) Family Background:
 Family background affects entrepreneurship.
 Joint family influences entrepreneurship more than the nuclear
family.
 If father is a businessman, the son is likely to adopt the same
occupation.
 The relatives, friends and teachers also affect the
entrepreneurial environment.
 The prospective entrepreneur would discuss his ideas with
them and seek their advice while starting a new venture.
 No doubt, education and intelligence also influence
entrepreneurial growth.
iii) Buying & Consumption Factors:
The buying and consumption factors like habits of people, their
language, beliefs, values, customs, traditions, tastes and
preferences affect the business environment.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
iv) Social Status:
 Social status has its own role to play.
 People work hard to improve and maintain their status and
thus it contributes to their entrepreneurial growth.
v) Social Mobility:
 Social mobility includes both social and geographical mobility.
 A high degree of social mobility would help in the emergence of
entrepreneurial class.
vi) Social Inertia:
Social inertia comes in the way of the promotion of certain
products, services, or ideas, e.g., use of bio-gas for cooking.
vii) Demographic Factors:
Many demographic factors such as the age and sex
composition of population, family size, religion, etc. also
influence the entrepreneurship.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
viii) Social Responsibility:
Social responsibility of the business, vigilance of the
customers and society also influence the growth of
entrepreneurship.
2. ECONOMIC ENVIRONMENT:
It refers to the following economic factors which have
effects on entrepreneurship.
i) Growth Strategy:
 The growth strategy of a country has much to do with
the growth of entrepreneurship.
 In India, the growth strategy, that is, the saving rate
should be increased to a considerable height.
 And growth rate of the economy could be increased by
investing heavily in the capital goods and heavy industry
sectors at the expense of consumer goods sector.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…

ii) Economic System:

 This also determines the scope of entrepreneurship.
 There are three economic systems, namely, Capitalism,
Socialism and Communism.
 These three economic systems in their own way affect the
environment of entrepreneurship.
 Another type of economic system, i.e., Mixed Economy,
which we find in developing countries like India, is
favourable to the growth of entrepreneurship.
 The Govt. prepares and implements plan integrating the
private sector with public sector.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
iii) Economic Planning:
The main purpose of economic planning is to achieve a higher
growth rate along with less backlog of unemployment, narrow
gap between rich and poor, etc. All these affect
entrepreneurship.
iv) Industrial Policy:
The provision of cottage, micro, small, medium and large scale
industries in industrial policy help for the growth of
entrepreneurial class in a country.
v) Human Resources:
 Human resources play a crucial role in an economy.
 Economic prosperity depends on the quality of human
resources.
 People work to produce goods and services.
 People provide markets for goods produced.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
vi) National Income and Per capita Income:
 The rate of growth of the national income is an indication
of the pace at which the economy has been growing.
 A high level of national income indicates high per capita
income which in turn implies the economy is developed
and the overall environment is favourable for the growth
of entrepreneurship.
vii) Agriculture:
 Agriculture constitutes the back bone of an economy.
 It provides food to the industrial workers and also raw
materials for industrial manufacturing.
 So, growth of agriculture favourably affects the growth of
entrepreneurship.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
viii) Monetary and Fiscal Policies:
 The monetary and fiscal policies of a country go a long way
in the growth of entrepreneurial class.
 Price stability and foreign exchange rate stability can be
maintained with the help of monetary and fiscal policies.
 These are indispensable for entrepreneurial growth.
ix) Economic Reforms:
 Lastly, economic reforms have much to do with the
environment of entrepreneurship.
 In India during 1991, reforms were made in the form of
liberalisation, privatisation and globalisation.
All these have helped the entrepreneurial class to come up
with new ventures.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
3. CULTURAL ENVIRONMENT:
 Cultural environment has a crippling effect on
entrepreneurial growth.
 It consists of Tangible man-made objects like furniture,
buildings, etc. , and Intangible concepts like laws, monk,
knowledge, Values and Behaviour acceptable within the
society.
 America is a capitalistic country, Russia follows a socialist
pattern, democracy has no touch in China, but Indian
culture encourages democracy and accepts Mixed
Economy.
 At the time of independence, India was in such a state
that the economy could not be left in the hands of people.
 The Govt. had to intervene and chalk out plans to take the
country towards development
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
 Culture of Hindus is to worship “Ganesha” before
undertaking any financial affair, whether it is a
superstition or not is a debatable point.
 It is in our culture to seek the recommendations of priests,
pundits or sufis while we are going to perform a wedding
ceremony or while going on a long journey or before
launching business enterprise.
4. FACILATATING ENVIRONMENT:
 There is a lot of reluctance from the elders when an
inexperienced young fellow declares his decision to
become an entrepreneur.
 The elders are resistant to permit to become an
entrepreneur due to the following reasons:
Ø Lack of Experience
Ø Difference between present occupation and prospective
occupation
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
Ø Uncertainty about the prospects of entrepreneur
Ø Arrangement of finance
Ø Fear of occupational and geographical mobility
Ø Publicity of entrepreneurial failure
Ø Sacrificing the lucrative job, if already in service
Ø Under-estimation of capabilities and talents of the child
Ø Fear of giving freedom
Ø Fear of getting deceived in a new business and
Ø Lack of training
These are the various obstacles which have to be faced by
a first-generation entrepreneur.
Parents should reduce the extent of their reluctance and
encourage their young sons and daughters to adopt the
entrepreneurial career.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
 Parents can be brought under the influence of success stories
of first-generation entrepreneurs.
 In addition to the lessons of political leaders, social reformers
and religious leaders the success stories of entrepreneurs may
be incorporated in Indian school curriculum.
 In the advance and competitive era, the parents should
understand that their children are not expected to carry on the
existing business or profession against their choices.
5. COMPELLING ENVIRONMENT:
 Many a times, it is a compulsion rather than willingness which
force one to become entrepreneur whether he succeeds or
fails.
 Sometimes, the family circumstances force a person to jump
out of the present occupation and pursue a different one. Non-
resident Indians, educated unemployed, newly married couples
supported by in-laws, etc. belong to this category.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
 Sometimes Govt. incentives and concessions act as drive
for them.
 It is seen that many entrepreneurs start their own
enterprises to use their technical and professional skills.
 Excess fund lying idle may encourage one to become an
entrepreneur.
 Responsibility of maintaining a large family may also be a
compelling factor to become an entrepreneur.
6. PSYCHOLOGICAL ENVIRONMENT:
 According to the ‘Need for Achievement Theory’, of
Mc. Clelland, achievement means a drive to overcome
challenges.
 The ‘Need for Achievement’ is a major determinant of
entrepreneurship development. This need is not born but
it can be developed through various training programmes.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
 In India, Entrepreneurship Development Institute of
India(EDII), National Small Industries Extension and
Training Institute, and Small Industries Service
Institute(SISI) and some other institutes are extensively
conducting Entrepreneurship Development Training
Programmes and make hundreds of young entrepreneurs.
 Mc. Clelland explains that people with Low Need for
Achievement are prepared to work hard for money but
people with High Need for Achievement work for status.
 He argues that people with High need for Achievement
possess the following attributes:
Ø They prefer to take personal responsibility for the
decisions what they have taken.
Ø They are moderate risk taker. They possess interest in
concrete knowledge of the results of the decision taken
earlier.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
7. EXTERNAL ENVIRONMENT:
External environment includes the following factors:
i. Financial Assistance from Institutional Sources:
 Liberal financial assistance from institutions encourage
young entrepreneurs to set up new enterprises.
 For seeking assistance from the financial institutions the
entrepreneur should have some financial base.
 Banks and other financial institutions provide facilities in
the form of finance, consultancy, purchase of land,
availability of plant and machinery on hire-purchase,
installments, etc.
 The Govt. has floated various schemes which grant finance
to the entrepreneur on low rate of interest.
 Some institutions like IFCI, IDBI, ICICI, SFCs, SIDCs, etc.
have been promoted to cater the needs of entrepreneurs.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
 The practices of bankers to grant loans and advances to
entrepreneurs have been changed.
 Policy support and incentives have been extended to
create a conducive environment for entrepreneurial
growth.
 Various types of subsidies, concessions and facilities are
given especially in backward areas to attract
entrepreneurs to set up their enterprises.
ii. Accommodation in Industrial Estate:
 Industrial Estate Scheme is successful in achieving the
growth of entrepreneurship.
 The industrial estates provide facilities like, common
production and testing facilities, availability of ready made
buildings at subsidised rates, proximity of other industrial
units, etc. which act positive factors in the growth of
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
iii. Machinery on Hire-Purchase:
 Entrepreneurs do not have strong capital base and they
lack resource to buy expensive machineries and land.
 The Government assist them through National Small
Industries Corporation(NSIC) by supplying machinery and
equipment on hire-purchase basis with liberalised terms
and conditions and also at lower rate of interest.
 NSIC also assists them in procuring govt. orders for
supplying various items to government.
 Entrepreneurs from backward areas have to pay lesser
amount of Earnest Money as compared to others.
iv. Raw Materials:
 Shortage of raw materials affect the entrepreneurial
environment.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
 Shortage of raw materials, inferior quality of raw materials
and high price of raw materials result in high cost of
production which ultimately brings bad name to small
enterprises.
 Without raw materials no enterprises can run and no
entrepreneurship would come up.
 If the availability of raw materials for small enterprises will
be favourable, then it will have better influence on
entrepreneurial growth.
v. Market:
 The role and importance of market and marketing should
never be under estimated for the growth of
entrepreneurship.
 If the entrepreneur does not possess marketing
knowledge and various marketing techniques, his survival
will be difficult.
ENVIRONMENTS CONTRIBUTE TO ENTREPRENEURSHIP…
 The size and composition of market both influence
entrepreneurship in their own ways.
 Improved and healthy market conditions are required for
rapid entrepreneurial growth.
 In German and Japan rapid entrepreneurial appearance is
possible only due to improvement in market.
v. Labour Conditions:
 The quality rather than quantity of labour is another factor
which influences the emergence and growth of
entrepreneurship.
 The availability of low cost labour positively affects
entrepreneurship.
 For the growth of entrepreneurship, the mobility of labour
should be improved by offering them facilities, incentives
and concessions in every remote corner of the country.
---
THANK
‘U’
ENTREPRENEURIAL
MOTIVATION
What motivates an entrepreneur…
Entrepreneurial Motivation is one of the most important
and widely studied topics in the field of human behaviour.
MEANING OF MOTIVATION:
 The word ‘Motivation’ originally comes from the Latin
word ‘Movere’, which means ‘to move’.
 The term ‘motivation’ has been derived from the English
word ‘motive’.
 Motivation is an inner state of our mind that directs our
behaviour towards the goal.
 Motivation gives direction to human behaviour to achieve
the goal.
 It is always internal to us and is externalised via behaviour.
 Motivation is defined as one’s willingness to exert high
level of efforts towards accomplishment of goal.
MEANING OF ENTREPRENEURIAL MOTIVATION:
 It is defined as the process that activates and motivates
the entrepreneur to exercise higher level of efforts for the
achievement of his entrepreneurial goals.
 It is described that Organisation is the Vehicle,
Entrepreneurship is the Driving Force and Motivation is the
Fuel.
NATURE OF MOTIVATION:
The nature of motivation can be expressed as follows:
1. MOTIVATION IS INTERNAL TO MAN:
 Motivation can not be seen because it is internal to man.
 It is externalised by behaviour.
 Motivation activates the man to move towards his goal.
NATURE OF MOTIVATION…
2. A SINGLE MOTIVE CAN CAUSE DIFFERENT BEHAVOIUR:
A person with a single motive to earn prestige in the
society may move towards to join politics, attain
additional education and training, join identical groups and
change his outward appearance.
3. DIFFERENT MOTIVES MAY RESULT IN SINGLE
BEHAVIOUR:
 It is also possible that the single behaviour may be caused
by different motives.
 For example, if a person buys a car, his such behaviour may
be caused by different motives such as to look attractive,
be respectable, gain acceptance from similar group of
persons, differentiate the status, and so on.
NATURE OF MOTIVATION…
4. MOTIVES COME AND GO:
 Like tides, motives can emerge and then disappear.
 Motives emerged at a point may not remain with the same
intensity at other point of time.
 For instance, an entrepreneur is concerned with
maximisation of profit earning during his initial years but
he may turn towards philanthropic activities like social
service, health and education and contribute for the same
once he starts earning sufficient profit.
5. MOTIVES INTERACT WITH THE ENVIRONMENT:
 The environment in which we live at a point of time may
either trigger or suppress our motives, e.g., the intensity of
a person’s hunger is picked up when he smells the scent of
food.
NATURE OF MOTIVATION…
 One may desire the first position in the examination but
he may be sensitive to being shunned and disliked by his
classmates if he really performs too well and gets too
much appreciation from his teacher.
Thus, all these indicate that human behaviour is the result
of several forces.
---
MOTIVATIONAL PROCESS:
 Motivation is a process aimed at accomplishing some goal.
 The basic elements in the motivational process are:
1.MOTIVE, 2. GOAL and 3. BEHAVIOUR.
These are discussed as follows:
MOTIVATIONAL PROCESS…
1. MOTIVE:
 Almost all human behaviour is motivated.
 It requires no motivation to grow hair, but getting a hair
cut needs our motivation.
 Motives prompt people to action.
 Hence, motives are the very heart of motivational process.
 Motives provide an activating thrust towards reaching a
goal.
 For example, the need for friends become a motive for
affiliation.
2. GOAL:
 Motives are directed towards goals.
 Motives generally create a state of physiological and
psychological imbalance.
 Attaining goals restores balance.
MOTIVATIONAL PROCESS…
 For example, a goal exists when the body of a man is
deprived of food and water.
 A goal exists when one’s personality is deprived of friends.
3. BEHAVIOUR:
 Behaviour is a series of activities to be undertaken.
 Behaviour is directed to achieve a goal. For example,
Cutting hair is the goal. So, the man goes to saloon to cut
his hair.
 Earning profit is the goal. So, the entrepreneur establishes
his enterprise to earn profit.
 Human behaviour is characterised by following three
factors:
Behaviour is caused, i.e., Needs.
Behaviour is motivated, i.e., Drive.
ENTREPRENEURIAL MOTIVATING FACTORS:

 The factors which motivate entrepreneurs to start

enterprises have been classified as Internal Factors and
External Factors.
1. INTERNAL FACTORS:
These factors are:
i. Desire to do something
ii. Became independent
iii. Achieve what one wants to have in life
iv. Be recognised for one’s contribution
v. One’s educational background
vi. One’s occupational background and experience in the
relevant field.
ENTREPRENEURIAL MOTIVATING FACTORS…

2. EXTERNAL FACTORS:
 These factors are:
i. Government assistance and support
ii. Availability of labour and raw materials
iii. Encouragement from big business houses
iv. Promising demand for the product
---x---
THANK
‘U’
 1. ENTREPRENEURIAL PROCESS

2. STEP BY STEP APPROACH TO

ENTREPRENEURIAL START UP

3. DECISION FOR ENTREPRENEURIAL

START UP

4. BUSINESS OPPORTUNITY & ITS

ELEMENTS
ENTREPRENEURIAL PROCESS:
 Starting an enterprise and becoming an entrepreneur is
not an easy task. One has to approach this problem in a
systematic manner.
 Before starting an enterprise one has to decide the steps
to be taken timely otherwise some of the steps may be
forgotten and the entire exercise has to be repeated.
 The steps to be taken by an entrepreneur have to be
planned and activities involved in each and every step
should be decided carefully.
 There is the need of performing activities in the line
decided so as to save time, energy and resources. A proper
sequencing of the activities shall be helpful to realise the
goal easily.
 The process of starting a new venture is known as
entrepreneurial process.
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP:
 It involves following activities to start a small enterprise:
1. PRELIMINARY STEP:
 This step shall lay the foundation to make entrepreneur
and start entrepreneurship.
 It will strengthen the determination of an individual to
undertake entrepreneurship as his career.
 Under this, an entrepreneur has to develop entrepreneurial
competencies.
 Success in entrepreneurship depends on this step.
 Majority of the works in entrepreneurship will be done in
this step.
 Once the preliminary works are completed, all other
activities will not be much difficult.
 This will enrich an entrepreneur to overcome all
possible hurdles in entrepreneurship.
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…
 Under this step, there is the need of extensive travel,
meeting varieties of people, visiting various places and
collecting lot of information from various sources.
 This step is quite time consuming.
 Studying business environment, and Searching business
opportunities are also included in this step.
2. DECISION MAKING STEP:
 Under this step, an individual will take various decisions
relating to enterprise and entrepreneurship.
 Taking decision includes Analysing information and data,
Comparison of information and Making conclusions
 Decision will be based on the suitability of the alternatives
to the situations.
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…
 Instead of taking the best decision, best suited decisions
should be taken.
 Decisions should be taken based on the reality and
consultation with various experts.
 Decisions taken are not usually reverted; hence decisions
should be taken carefully.
 There may be some provisions for making adjustment or
alternation depending on situation in future.
 Room for some sort of flexibility may be there to adjust
the decision to future conditions.
 Decision making is related to the following aspects:
ü Selecting the Business Opportunity
ü Consulting various agencies such as DICs, MSME
Development Institutes, banks, consultants, licensing
authorities.
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…
ü Deciding the size, type, technology, etc. of the project.
ü Decide the location, survey the site and select the exact
site.
ü Prepare the Preliminary Project Report.
ü Study the project from technical, managerial, financial,
marketing and organisational point of view.
ü Decide the Product Policy, Marketing Strategy and Pricing
Policy.
ü Decide the Sources of Finance
3. PLANNING STEP:
 After the decision making step, preparing plans to
implement the decisions is important.
 Under this step, there is the need of filing of applications
to different authorities for different activities.
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…
 Some documents like Preliminary Project Report,
enclosures, etc. have to be attached with applications
based on which application will be considered by the
appropriate authorities for getting clearance , permission,
license, no objection, etc.
 Planning step is also associated with following steps:
ü Application for acquisition of land at the exact site
ü Application for provisional registration with the DIC
ü Application for No Objection Certificate(NOC)
ü Assurance from bankers and Application for loans and
arrange capital
ü Application for electricity connection
ü Enquiry for the source and preparation of plans for
acquiring plant, machineries, tools, equipments, furniture
and fixture
ü Preparation of plans for factory building
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…
4. IMPLEMENTATION STEP:
 In this step, plans are implemented and actual activities
are started as per the plans prepared.
 By this time, all the permissions, licenses and NOCs might
be in the hand of an entrepreneur. Actual execution of
plans will start in this stage.
 Now the enterprise will be given life by collecting different
resources and placing them at the appropriate places in
the enterprise.
 This is the tough task for an entrepreneur and at this
stage maximum financial resources will be spent. This is
the real foundation of an enterprise.
 Implementation period is known as ‘Gestation Period’.
 Different stages of the implementation step are:
ü Acquire the land and Develop the site
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…
ü Construct buildings, develop road and other infrastructure
ü Place orders for plant and machineries, tools, equipments
and fixtures and Install plant and machinery and make trial
running
ü Arrange electricity and water
ü Make recruitment, training and placement of manpower
ü Procure raw materials and other inputs
ü Finalise the marketing channel, distribution policy and
decide the middlemen and their commission
ü Carry on trial production and test marketing
5. MANAGERIAL STEP:
 Managerial activities start at the construction of
enterprise, i.e., Project Management.
 After the implementation stage is over, the real
production of goods and services will take place.
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…
 To start commercial production the entrepreneur has to
give emphasis on following types of management:
ü Human Resource Management
ü Production Management
ü Financial Management
ü Material Management
ü Safety Management
ü Marketing Management, etc.
 In this step, the entire activities are aimed at the
achievement of goal.
 The different activities of the managerial step are as
follows:
ü Evaluate the field performance of the product and
examine the consumer response.
ü Appoint wholesalers, dealers, retailers, agents, arrange
STEP BY STEP APPROACH TO ENTREPRENEURIAL START UP…

ü Carry on commercial production

ü Carry on advertising and marketing activities
ü Carry on distribution and selling
ü Manage the enterprise
ü Create facilities like canteen, hospital, school, clubs,
residential facilities, etc.
ü Create the marketing networks
ü Ensure growth, cost effectiveness and generate profit
ü Start repayments of loans and interest
---
DECISION FOR ENTREPRENEURIAL START UP:
 Every body can not become an entrepreneur although
potentiality is hidden within him/her.
 In majority cases, potentiality hidden is not exposed and
as a result one can not become a good entrepreneur.
 Good entrepreneurship needs a lot of Determination,
Devotion, Interest and Hard work, etc.
 Decision to become an entrepreneur and start an
enterprise should be one’s own.
 If one is going to start an enterprise on other’s advice,
there may be a lot of problems ahead.
 Although, the decision may be of own, yet, one has to
collect a lot of information from various sources and take
advices of a large number of persons. This will help him in
taking decisions.
DECISION FOR ENTREPRENEURIAL START UP…
 To be an entrepreneur and start an enterprise, one has to
take a number of decisions.
 Some of the decisions are petty decisions and some are
important decisions with longer implications.
 To take decisions means to answer a number of
questions, such as:
Ø What to do?
Ø When to do?
Ø How to do?
Ø Where to do?
Ø By whom to be done?
Ø Whom to control for what?
Ø From where to collect information?
Ø How to market?
DECISION FOR ENTREPRENEURIAL START UP…
 One has to take a lot of such decisions in a systematic
manner till the successful running of an enterprise.
 All such decisions should be realistic and they are the
foundation of an enterprise and entrepreneur. Once such
foundation is strong, it will withstand any business quake.
 Entrepreneurs are good decision makers and promptness
in taking decisions is the key to the success of an
entrepreneur.
 Decisions should be taken carefully. If the core decision is
wrong, all other subsequent decisions shall also be
inappropriate and one can not go back to change the
decision.
 Decision taken once should not be changed frequently.
 If, later on, it is found that decision is defective, corrective
DECISION FOR ENTREPRENEURIAL START UP…
 Decision making requires
ü Collection of authentic information from appropriate
sources,
ü Analysing the information,
ü Linking information with future conditions, and
ü Drawing conclusions for an anticipated future
 As far as practicable, the decisions taken may be recorded
for future reference.
 Some provisions for adjustment in future may be kept for
the refinement of the decisions.
 An entrepreneur has to take the following important
decisions at the initial stage:
Ø Identification and Selection of business opportunities
DECISION FOR ENTREPRENEURIAL START UP…
Ø Decision on project report
Ø Assessing the viability
Ø Deciding a location
Ø Deciding the size of the project report
Ø Decide the finance pattern
Ø Decide the market
Ø Decide the launching of the project
Ø Decide the plans and programmes.
---
BUSINESS OPPORTUNITY:
 Business opportunity means a good scope for
conducting business to earn profit and ensure future
growth.
 Success of an enterprise largely depends on the right
selection of a business opportunity.
 Such a scope is visible to a prospective entrepreneur.
 An entrepreneur has to decide the business to be carried
on very carefully.
 Decision should not be biased or taken hastily without
proper evaluation.
 There must be some strong logic behind such a decision.
The entire burden of entrepreneurship rests on the right
selection of a business opportunity. It is the launching pad
for an enterprise.
ELEMENTS OF BUSINESS OPPORTUNITY:
A business opportunity has following six elements:
1. ASSURANCE OF AN ATTRACTIVE MARKET SCOPE:
 The product or service thought by a prospective
entrepreneur must have an assured market scope.
 Determination of assured market scope must take into
account the demand and supply position of the product or
service.
 There must be a positive demand and supply gap.
 If the demand is more than the supply, it is considered as a
positive gap and if the supply is more than the demand, it
is a negative gap.
 If the present demand and supply gap is positive, it is likely
that it may become negative very soon. Under such a
situation it is not considered a good market scope.
ELEMENTS OF A BUSINESS OPPORTUNITY…
 Not only the present demand and supply gap but also the
future demand and supply gap has to be taken into
account to consider it to be a good market scope. These
require study of future business condition.
 Correctness of forecasting is also a determinant in
deciding the good market scope.
 The positive demand and supply gap may become
negative due to the upcoming units of other
entrepreneurs in the same region or other regions.
 The gap is also influenced by inter-regional flow of goods
and services in which the surplus goods and services of
another region will inflow to the region as there is scarcity.
 The situation will also be affected with the outflow of
goods and services of the region to other deficit regions.
ELEMENTS OF A BUSINESS OPPORTUNITY…
 There is also the need of studying the demand and supply
position of alternative and substitute products and
services because they also influence the demand and
supply of the product or services thought by the
prospective entrepreneur.
 Difficulties involved in marketing the goods and services
are also important considerations in deciding the market
scope of a product.
2. ATTRACTIVE RATE OF RETURN ON INVESTMENT:
 The rate of return on investment is an important
motivating factor for the entrepreneur.
 Rate of return on investment means the percentage of
earning of the entrepreneur in relation to the amount of
investment to be made.
 If the rate of return is not attractive, it is not a business
opportunity even if there is a good market scope.
ELEMENTS OF A BUSINESS OPPORTUNITY…
 The rate of return should be such that it is able to cover a
fair rate of remuneration for the entrepreneur, interest on
own capital and borrowed capital, payment of installment
to repay the borrowed capital within a specified period so
that the business runs on its own capital.
 The rate of return should be such that, it covers something
extra for the modernisation, expansion, diversification,
launching of new products and projects.
 It should also meet unforeseen contingent expenses and
losses.
 If the rate of return is able to cover all the above
ingredients, it is the minimum rate.
 But it is not desirable to start business on a minimum rate
of return; it should be much above the minimum so that it
does not fall to the minimum level or even below the
minimum.
ELEMENTS OF A BUSINESS OPPORTUNITY…
 There is the need of studying the rate of return in the past,
present and future.
 The trend of the rate of return is also to be considered.
 If the trend is on a falling tone, it may be risky and if the
trend is increasing, the rate of increase is also to be
considered.
 There is also the need of studying the rate of return on
investment on the substitute and alternative products.
3. FEASIBILITY OF THE BUSINESS OPPORTUNITY:
 The business opportunity thought by an entrepreneur
must be feasible.
 If the opportunity has all the ingredients but can not be
put to operation, it is of no meaning.
ELEMENTS OF A BUSINESS OPPORTUNITY…
 It may also happen that the idea may be attractive but the
conditions are not conducive to start the implementation.
 Opportunities can be encashed under favourable
conditions and one has to wait till such conditions prevail.
4. COMPETENCE OF THE ENTREPRENEUR:
 There may be a large number of business opportunities
visible to a prospective entrepreneur but he may not be
competent to convert an opportunity into economic
activities.
 The entrepreneur needs certain skills, knowledge, talent,
and ideas on the matter.
 All these require time to acquire but during the time the
opportunity may become a dull one.
ELEMENTS OF A BUSINESS OPPORTUNITY…
 Some of the business opportunities require specific
experience and exposure to certain business situations
and conditions.
 A new entrepreneur may not be able to take the
advantages of the opportunities. If one is going ahead
with such a proposal, there may be a lot of hurdles and
difficulties which may not be within the reach of a new
enterprise.
5. ASSURANCE FOR FUTURE GROWTH:
 An entrepreneur should be futuristic all the time and he
can start an enterprise if future is bright.
 There must be hope of a steady growth of the enterprise.
 If all the ingredients of a good business opportunity are
there but if future is doubtful, it is not desirable to go
ahead with such a business opportunity. So, an attractive
business opportunity must have an assurance for a
ELEMENTS OF A BUSINESS OPPORTUNITY…
6. SOCIAL DESIRABILITY:
 The business opportunity must be socially desirable.
Society needs such type of business activities.
 The business proposal should not be harmful to the
society and should not invite social protest.
 It should try to protect the interest of the people and
society at large. It should care for the environment.
 After all, the business enterprise should be an asset for
the society.
Considering these elements, the entrepreneur should
select an opportunity which will give adequate return in a
sustainable manner and can be diversified according to the
changing needs of time.
---
THAN
K
‘U’
 Ideas, Creativity, Innovation,
Markets and Entrepreneurship
Module 2
 The difference between creativity and
innovation
• People often get confused about the difference between creativity
and innovation and use the terms synonymously.
• Creativity can be defined as the ability to develop original concepts
and ideas. Aesthetic flair is an important factor when it comes to
creativity.
• Innovation is the ability to create offshoots, create changes to, or
build on already existing ideas, services, and products.
• Essentially, creative concepts are usually new and original that take
inspiration from outside sources, while innovative concepts are
usually built upon a pre existing idea. Inventions would be ideas,
products or concepts that are entirely new and never seen before.
They represent a leap in forward-thinking and, often, technology
 Entrepreneurs and creativity
• Creativity helps entrepreneurs with one of the most important steps in their
business journey: coming up with a business idea. Entrepreneurs with high levels
of creativity are often able to come up with exceptionally creative business ideas
that fill a niche gap in the market.
• Entrepreneurial creativity and artistic creativity are very similar in that
entrepreneurs may find inspiration from their favourite books, TV shows, nature,
conversations, as well as existing products and services. Brainstorming and mind
mapping are the two main methods in which entrepreneurs may use creativity to
come up with ideas (coming up with ideas is also known as ideation).
• But creativity does not only assist entrepreneurs in the initial stages of coming up
with a business idea. Creativity will also be highly valuable in terms of:
• Coming up with branding and marketing ideas
• Ideas for blogs, other SEO-related content
• Finding creative solutions to everyday business problems
• Fun and exciting social media strategies
• A good balance of linear and lateral thinking
• Does an entrepreneur need to possess high levels of creativity to be successful? Of
course not, but it definitely helps! Creativity is all around us, and when you start
noticing it, it is hard not to be inspired! Creativity can be found in fine art, nature,
advertisements, and so much more.
• But remember, creativity is practically useless if it is not properly harnessed and
implemented.
 Entrepreneurs and innovation
• Innovation is a change that adds value to an existing idea, product, service
or concept. Many business ideas are innovations of things that already
exist..
• Innovation is often a response to changes in the market as well as
progressions in outside markets. It should be noted that all innovations
are purely creative, and many can be primarily logical in their conception.
• Having a good hold on innovation is very important for entrepreneurs. We
live in a fast-paced and ever-changing society, with new advances in
technology occurring all the time. If an entrepreneur can embrace these
changes and find ways to add additional value to them, they are bound to
find success in their respective field.
• Not only will an innovative mindset be advantageous in coming up with
products, services, and business ideas, it will also be exceptionally helpful
when it comes to adapting to change and finding new and improved ways
of doing things in your business structure.
• Disruptive innovation should also be mentioned. Disruptive innovation is a
process of innovation that significantly affects the market by making a
certain product more accessible and affordable to more consumers and
has the ability to reshape an entire industry. A great example of this would
be Uber.
 More than just creativity and
innovation
• While innovation and creativity play a big role in the
potential success of an entrepreneur, entrepreneurs also
need to possess somewhat opposing skills such as
organisation, analytical mindset, attention to detail, etc.
An entrepreneur cannot only be a dreamer. They need to
have the practical skills to bring their dreams and great
ideas to life.
• What many creatives lack is a sense of direction, as well
as a hard work ethic. They can often be somewhat lazy
and procrastinate when it comes to putting ideas into
motion.
• On top of personal skills, they’ll also need to gain
knowledge on how the economy works, be aware of their
competition and know about the regulations surrounding
starting up a business. Only then will they know which
ideas can be implemented successfully.
The Creative Process: The Five Stages
of Creativity
• Raw creativity and an affinity for lateral thinking may be
innate, but creative people must refine these skills in order
to become masters in their respective fields. They practice
in order to apply their skills readily and consistently, and to
integrate them with other thought processes and emotions.
Anyone can improve in creative efforts with practice. For
our purposes, practice is a model for applied creativity that
is derived from an entrepreneurial approachIt requires:
• Preparation
• Incubation
• Insight
• Evaluation
• Elaboration
• Preparation
Preparation involves investigating a chosen field of interest,
opening your mind, and becoming immersed in materials,
mindset, and meaning.. During the preparation stage, you
can begin to see how other creative people put meaning
into their products, and you can establish benchmarks
against which to measure your own creative work.

• Incubation refers to giving yourself, and your subconscious

mind in particular, time to incorporate what you learned
and practiced in the preparation stage. Incubation involves
the absence of practice. A change of environment is key to
incubating ideas
• Insight
Insight or “illumination” is a term for the “aha!” moment—when
the solution to a creative problem suddenly becomes readily
accessible to your conscious mind. The “aha!” moment has been
observed in literature, in history, and in cognitive studies of
creativity. Insights may come all at once or in increments. They are
not easily understood because, by their very nature, they are
difficult to isolate in research and experimental settings. For the
creative entrepreneur, however, insights are a delight
• Evaluation
Evaluation is the purposeful examination of ideas. You will want to
compare your insights with the products and ideas you
encountered during preparation. You also will want to compare
your ideas and product prototypes to the goals you set out for
yourself during the preparation phase. Creative professionals will
often invite others to critique their work at this stage. Because
evaluation is specific to the expectations, best practices, and
existing product leaders in each field, evaluation can take on many
forms. You are looking for assurance that your standards for
evaluation are appropriate.
• Elaboration
The last stage in the creative process is elaboration, that is, actual
production.
Elaboration can involve the release of a minimum viable product
(MVP). This version of your invention may not be polished or
complete, but it should function well enough that you can begin to
market it while still elaborating on it in an iterative development
process. Elaboration also can involve the development and launch
of a prototype, the release of a software beta, or the production of
some piece of artistic work for sale.
Many consumer-product companies, such as Johnson & Johnson
or Procter & Gamble, will establish a small test market to garner
feedback and evaluations of new products from actual customers.
These insights can give the company valuable information that can
help make the product or service as successful as possible.

• **At this stage what matters most in the entrepreneurial creative

process is that the work becomes available to the public so that they
have a chance to adopt it.
 Recognizing Opportunities and
Generating Ideas
The Differences Between Opportunities and Ideas
Essentially, entrepreneurs must be able to recognize an
opportunity and turn it into a successful business.
Opportunity is where we can create a new product. An
entrepreneur recognizes an opportunity gap and create
a business to address the problem or fill the identified
gap.
Opportunity and idea is diferrent. An idea is a thought
or impression and idea is needed to meet the criteria
of an opportunity. It’s important to know wheter the
idea fills a need and meets the criteria for an
opportunity.
 Three Ways to Identify Opportunities
1. Observing Trends
The first approach to identifying opportunities is to observe trends. The most important
trends to follow are economic trends, social trends, technological advances, and political
action and regulatory changes.
Economic Forces
Understanding economic trends is helpful to determining areas for business area, as well as
areas to avoid. It’s important to evaluate who has money to spend and what they spend it on.
Social Forces
An understanding of the impact of social forces on trends and how they affect new product,
service, and business ideas is a fundamental piece of the opportunity recognition puzzle.
Changes in social trends change how people and businesses behave and how they set their
priorities.

Technological Advances along with economic and social changes can create opportunities.
Another aspect of technological advances is that once a technology is created, products often
emerge to advance it.

Political and regulatory changes also provide the basis for business ideas. Political change also
create a new business and product opportunities. An entrepreneur should learn more about
the trend in an effort to shape and mold their idea when the environmental trend is changed.
2. Solving a Problem
The second approach to identifying opportunities is to recognize
problems and find ways to solve them. Problems can be recognized by
observing the challanges that people encounter in their daily lives.
Commenting and noticing on this problem can lead to recognizing
business ideas. If you’re having difficulty solving a particular problem,
try to find an instance where a similar problem was solved and then
apply that solution on your business.

3. Finding Gaps in the Marketplace

Gaps in the marketplace are the third source of business opportunities.
There are many examples of products that consumers need that aren’t
avaiable.
A simple technique to find the gaps in marketplace is recognize when
people become frustrated because they can’t find a product or service
that they need. One thing that entrepreneurs must remain mindful of
in pursuing business opportunities is finding the gaps in the market
place and fill the consumers needs.
 Idea Generation in Entrepreneurship

• Entrepreneurship is being able to create and run

a business. In entrepreneurship, idea generation is one
of the main factors that lead to its success. The idea
thought of here should be able to solve a problem.
• And along with being unique, the idea should also be
easy to execute. For example, let’s suppose you feel a
lot of people have a problem understanding legal
jargon and legal proceedings.
•
• So, in this case, your entrepreneurial idea could be
setting up a platform that caters to all the legal needs
of people and helps them understand it easily.
 Idea Generation in Product
Development
• Idea generation is the first step for any product
development. This requires you to look for feasible product
options that can be executed. It is a very important step for
organizations to solve their problems.
•
• It requires you to do market research and SWOT analysis.
You should aim to come up with an idea that is unique from
your competitors and can be used profitably.
•
• For example, self-sanitizing door handles can be a product
that you look at. It is unique and would be in high demand
because of the current shift towards a healthy lifestyle.
 Idea Generation Process
The process may be different for different organizations and
different people. But there are three main steps in the process. It
starts with the identification of the question or the problem we
need to solve.

After which we need to come up with ideas and probable solutions.

Finally, in the third stage, we select the most suitable idea and
execute it. For example, let’s suppose you are opening up a
restaurant.

So firstly, you need to identify what question you need to answer.

Let’s assume you want to decide upon a name for the restaurant.
Now you will use different techniques (brainstorming, mind
mapping, etc) to come up with ideas for names.

In the last step, you will choose the most appropriate name from
the different names you came up with within the second step.
Idea Generation Techniques
 Mind Mapping
It is a technique of presenting information. Here we show the links between
the different elements or the pieces of information. The links or
connection is usually shown with the help of lines and arrows. It’s a visual
way of presenting the information.

For example, let’s suppose you want a name for your new application. You will
start by writing the main topic in the center of a paper, which here is the
name for your new application.

From the center point, you will have arrows pointing out. These arrows will
point to the main things to be kept in mind while thinking of a name like
guidelines, visualization, productivity, etc.

Now from every key aspect, there will be more arrows pointing out. These
arrows will describe the key aspect in detail. Like ‘guidelines’ will talk
about the name being able to express what the application does, following
the naming scheme, etc.
 Mind Mapping
It is a technique of presenting information. Here we
show the links between the different elements or
the pieces of information. The links or connection is
usually shown with the help of lines and arrows. It’s
a visual way of presenting the information.

For example, let’s suppose you want a name for

your new application. You will start by writing the
main topic in the center of a paper, which here is the
name for your new application.

From the center point, you will have arrows pointing

out. These arrows will point to the main things to be
kept in mind while thinking of a name like
guidelines, visualization, productivity, etc.

Now from every key aspect, there will be more

arrows pointing out. These arrows will describe the
key aspect in detail. Like ‘guidelines’ will talk about
the name being able to express what the application
does, following the naming scheme, etc.
 Reverse Thinking
As is very clear from the name itself this technique asks us
to think oppositely. Instead of working on the problem in
front of us, we work on the exact opposite of it.

For example, let us assume you want to know ‘how to

increase your followers on social media platforms.
According to this technique, you will instead think of ‘how
will I not increase my followers on social media platform’.
To this question, you will get answers like, by not posting
regularly, or posting low-quality content, etc. Now you just
have to reverse your answers.
So, to increase followers on a social media platform you
should post high-quality content regularly. This idea
generation technique works on the concept that it’s easier
to come up with negative suggestions.
 Brainstorming

This technique is quantitative meaning that you come up

with a large number of ideas. Here a group comes up with a
different probable solution to the problem.

For example, if you along with some of your colleagues are

trying to come up with a tagline for your product. And each
one of you gives your ideas, then that is called
brainstorming.
SCAMPER

• The word SCAMPER is an acronym.

• S -Substitute
• C – Combine
• A – Adapt
• M – Modify
• P – Put to another use
• E – Eliminate
• R – Reverse

• Bob Eberle developed this technique. Each part of the acronym helps us
think and ask questions, which results in generating ideas.

• For example, if you are a clothes manufacturing company you can think of
‘substitute’ your current material with a sustainable, eco-friendly option.
You could also ‘put it to other uses’ by recycling the waste material.
Synectic
George M. Prince and Willian J. J. Gordon developed this technique. In this technique, we take apart a
thing and then put it back together. This helps us get a better understanding of how things work.

Role-Playing
In this technique, the participants take up roles to play. These roles are different from the ones they
usually play. It adds an element of fun and helps get innovative ideas.

For example, you could take up the roles of customers and discuss your expectations and what you
want from products. This could lead you to stumble upon some good ideas.

Storyboarding
This technique refers to the process of making storyboards to generate ideas. Storyboards use
pictures, illustrations, and other information to better present the ideas.

For example, suppose you are working on an idea for an advertisement. You can portray the different
scenes in the form of a storyboard. This helps you in better visualization and you can make changes
accordingly.

Brainwriting
In this technique, a group of people writes their ideas on a piece of paper. After the designated time
for writing is over the paper is given to a different person.

Now this person reads the ideas on the paper they got and adds their ideas on the paper. This
continues until everyone has put their ideas on all the papers. And following this, there is a discussion
on each idea.
Forced Relationship
This technique helps to come up with unique ideas. Here you take two unrelated things and
imagine putting them together to see what new thing you can come up with.
For example, take a calculator and a pencil, these are unrelated to each other. Now try
putting them together. You might get some interesting ideas like a calculator with a touch
screen and a pencil to write on it and a lot more.
Collaboration
This technique is self-explanatory. Here you collaborate with others to come up with ideas. If
you collaborate with a diverse group of people your ideas will be more unique.
This happens because every person brings a different perspective. For example, if you want
to increase the sale of a particular product you might want to collaborate with industry
experts, specialists, or people working in domains other than sales.

The 5 W’s
Who, What, Where, When, and Why are the five W’s. Answering these five W’s helps us
achieve a very holistic view of the topic under discussion. And it is an efficient way to come
up with solutions and ideas.

For example, suppose you want to create a new product or a service. You can do so by asking
questions like, who would use the product, why would people buy it, what would it do, etc.
• Listening
• People prove to be a very good resource when you are trying to
generate ideas. Even those who aren’t your employees and
customers can be very resourceful.
•
• So, you must always go beyond your immediate circle and invest in
listening. Socializing with people in your immediate social circle and
even those beyond it can be very effective.
• Accidental Genius
• This idea generation technique believes that writing can help you
come up with good ideas. Here writing is believed to be a trigger for
ideas. This technique asks you to write freely without any editing.
•
• So, whatever problem you are facing just start writing the answer
without being concerned about the right or wrong aspect of it.
Visualization
In this technique, we approach the problem visually. This is because visualization makes
things easy to understand. And as a result, we can come up with ideas and solutions easily.
For example, suppose you want a new setup for your production unit.

You can have pictures taken of the current setup and work on it. Looking at the pictures will
give you a better idea. You will be able to make changes to the setup so that it increases
productivity and saves on time.

Removing Assumptions
There are a lot of assumptions about how things work. This technique requires us to list all
the assumptions and then start removing them one by one.

These assumptions work as stimuli for us to come up with new ideas. For example, suppose
you want to open a new school with innovative features. First list down all the assumptions
you have about a school,

There should be physical classrooms

A fixed curriculum decided beforehand
More emphasis on theoretical knowledge

Now remove each assumption one by now. Let’s remove the need for a physical classroom.
You could open a school that has online classes or has classes outdoors. In this way doing
away with an assumption will help you explore new ideas.
• Idea Generation Tools
Technology has made our work easier and continues to do the same. We can make use of tools and
technologies to generate ideas as well. Today there are many such tools available to us.
For example, there is Pinterest, Mindmeister, Freeplane, Idea Generator, Stormboard, Mindomo. Where
Mindmeister helps you to make mind maps, Stormboard has features like whiteboards, sticky notes, and
others that make brainstorming very efficient.

• Sources of Idea Generation

Sources of idea generation are the people and places from where you get your ideas. Several internal and
external sources help to generate ideas. Employees and the research & development department of the
company are great internal sources.
Whereas, external sources are also very helpful. These are customers, suppliers, competitors, distribution
channels, government, educational institutions, and focus groups.

• Examples of Idea Generation

Ideas are present all around us. We see a lot of big and successful companies doing well.
They all started with an idea. For example, Airbnb was started when two designers had spare
space and hosted travelers.

With Uber it was two entrepreneurs, trying to figure out how to reduce transportation costs.
• Importance of Idea Generation
Idea generation is a very important activity, without which we would have nothing to work on. This activity also proves to be
very beneficial for all the parties involved.

The organization gets a lot of innovative ideas to work upon, the employees get to be a part of the bigger picture. There’s an
increase in creativity and a lot of effective solutions are generated.

• Idea Generation Activities

There are a lot of activities that help stimulate idea generation. These different activities are of two types,
Internal and External activities. For internal activities, there are online and offline platforms where you can
have discussions.
We can also conduct timely sessions and workshops. These activities broaden our knowledge and with
this increased understanding we can think better. Participation in events, doing courses, and conducting
competitions are external activities.

These external activities are helpful because they expose us to a lot of different people and different ideas.
This, in turn, helps us come up with ideas of our own.

• Idea Generation Workshops

Workshops consist of discussions and activities of any given topic like public speaking, watercolor painting, etc. So,
when we talk about idea generation workshops, they have activities that help stimulate our idea of generating
abilities.

These workshops help improve your skills to come up with good ideas. Many companies conduct idea generation
workshops for their clients. Some of these companies are edge+, Lighthouse, and MTI^2.

• Conclusion
Ideas are the building blocks for all innovation. They are what we work on, so the first step of starting with
anything new is finding that idea. We must make use of the different tools and techniques available to us
to come up with quality ideas.
 How To Protect A Business Idea?
• In recent years, there has been an increase in interest in
entrepreneurship. Consequently, there is much demand for innovative
ideas able to create something of value to society and to generate a
good financial performance. What many of these do not know is that
when they are faced with a business idea Must protect it at all costs.
Yet, start ups still struggle on securing an idea.
• Entrepreneurs should understand the basic principles of Intellectual
property (PI) for protect your ideas aggressive competition. This is
suitable for all companies, regardless of their size or the sector in which
they are embedded, whether technology is a more traditional industry.
• The rights of intellectual property They can be about a brand, logo,
corporate identity, products, services or even processes that differentiate
the commercial offer. These are the most valuable assets that a company
can own.
• Today, almost all companies bet and benefit from
communication marketing digital in order to get their products to a huge
audience and at relatively low cost, which in a more traditional method
would be impossible. But also increases the likelihood of business
idea be stolen by third parties. That's why the intellectual property
protection It is essential to the success of business and entrepreneurs
should understand their rights, duties and securing an idea.
 Importance of intellectual property
• intellectual property It plays an essential role for the business success. Especially in the case
of a startup where innovation of the idea and the risk on investment and success of this are
united.
The various advantages that this protection features, is highlighted in the following:

• Is the exclusive right by preventing third parties to produce, manufacture, sell or to

economically exploit the developed solution, without the permission of the holder;
• Facilitates business growth as this is protected legally impossible competition to adopt the
ideas;
• It demonstrates the commitment of entrepreneurs for their ideas;
• Values ​the investment for the development of products or services;
• It allows for differentiation from competitors by offering customers something new and
innovative;
• It generates money by selling or licensing the product or service;
• Transmits security, credibility and commitment to the customer by the holder.
• At first glance, this process protection of their ideas It can seem quite complex and
complicated, leading to many entrepreneurs ignore this step. However, it is simpler than it
appears and is an asset to any company or entrepreneur, worth the time and effort devoted.
• The good news is that there are certain rights intellectual property which are automatically
protected by law. However, there are also other types of protection cool that the
entrepreneur should ask.
• When starting a business you need to confirm that there is no longer patented. This process
avoids having to deal with the possibility of proceeding by the holder. Similarly, you must
verify that the intellectual property your idea is not being violated. It is up to the
entrepreneur to exercise since no one else will do it.
 Types of protections

• The kind of intellectual property protection an

entrepreneur or business can get depends on the
setting in question. Thus, it is necessary for them
to decide which of his ideas fall into which of the
options available and that action is taken as soon
as possible in order to reduce the likelihood of
losing protection.
• There are four main types of business ideas
protection: Patent, trademark, copyright and
design registered.
 Patents

• If the entrepreneur is facing an invention may consider

protect it with a patent. A patent grants property rights to
an invention, new products and innovative processes. That
is, this gives the holder the right to prevent others from
making, using, importing or selling these without your
permission.
• This type of protection It is granted by the government,
making the idea of ​property holder. Usually remains in
effect for 20 years, should be renewed regularly. It also
allows the holder to license third parties to use their
invention, generating royalties (periodic payment to the
holder for the use of the product or service) thereby
providing an important source of revenue for your
business.
 Trademark

• This type of protection are signs that distinguish the products or services
of one trader from another. They can take many forms, such as, words,
slogans, logos, shapes, colors, sounds, symbols, distinct product names or
marks or even a combination of these elements.
• Trademarks are registered for specific products of a certain class. It is
possible that other companies or entrepreneurs register their marks that
are identical or similar, provided that they belong to different classes of
brands already registered.
• For a holder to apply for this type of protection, It must have a clear
representation of the mark as well as identified the class of products for
which the mark is applied. This mark must not be descriptive, include
common last names, geographical names, registered company names or
any indication of royal patronage.
• A trademark lasts 10 years and that the holder can renew it indefinitely
 Copyright

• Copyrights protect original works of authorship. Examples of these

are literary works, music, sound recordings, dramatic works,
pantomimes, and cinematic choreography, sculptural works,
pictorial and graphic, architectural works, software, web content,
among many others.
• A company or entrepreneur automatically owns the copyright in
any work that they or their employees create. That is, your
registration is voluntary. With this protection, The holder has
exclusive rights and can decide how their work can be modified,
performed, licensed, displayed or copied by others.
• To qualify for copyright registration, the work should be
represented in a tangible means of expression, such as a piece of
paper. The duration varies according to the type of work, when and
where it was created. Thus, the company should seek information
on securing an idea.
 Trade secrets

• A trade secret is something that companies keep secret in order to provide an advantage over its
competitors. This kind of protection may include, but are not limited to the following, formula,
process, device, business information, list of customers or suppliers, financial data, computer
algorithms, programs, techniques.
• Unlike other types of intellectual property, a protection by trade secret is not registered. Its
duration depends on the measures taken by companies to control the dissemination and use of
information. Thus, companies use confidentiality agreements, restricted access to confidential
information, post-employment restrictive agreements, regular meetings with employees to keep
them aware of what can not be transmitted outside the company and other security practices to
keep information important within the company.
• Innovative ideas allow many companies to succeed. This is because develop new and better
alternatives that already exists in the market, offering a competitive advantage. THE intellectual
property It is essential to ensure safety to the entrepreneur and facilitates a possible
internationalization of the business.
• Before boarding no product developmentShould confirm that there is no patent or other form
of protection already registered, you can limit the planned development of the business idea.
• If you need or feel better, the entrepreneur should seek professional help from lawyers, for
example in order to determine the best protection that fits business and securing an idea. The aid
of experienced entities can help the entire application process is done correctly.
 Market Survey Definition

• Market survey is the survey research and analysis of the market for a particular
product/service which includes the investigation into customer inclinations. A
study of various customer capabilities such as investment attributes and buying
potential. Market surveys are tools to directly collect feedback from the target
audience to understand their characteristics, expectations, and requirements.
• Marketers develop new and exciting strategies for upcoming products/services but
there can be no assurance about the success of these strategies. For these to be
successful, marketers should determine the category and features of
products/services that the target audiences will readily accept. By doing so, the
success of a new avenue can be assured.
• Most marketing managers depend on market surveys to collect information that
would catalyze the market research process. Also, the feedback received from
these surveys can be contributory in product marketing and feature enhancement.
• Market surveys collect data about a target market such as pricing trends, customer
requirements, competitor analysis, and other such details.
 Purpose of Market Survey
• Gain critical customer feedback: The main purpose of the market survey is to offer
marketing and business managers a platform to obtain critical information about
their consumers so that existing customers can be retained and new ones can be
got onboard.
• Understand customer inclination towards purchasing products: Details such as
whether the customers will spend a certain amount of money for their
products/services, inclination levels among customers about upcoming features or
products, what are their thoughts about the competitor products etc.
• Enhance existing products and services: A market survey can also be implemented
with the purpose of improving existing products, analyze customer satisfaction
levels along with getting data about their perception of the market and build a
buyer persona using information from existing clientele database.
• Make well-informed business decisions: Data gathered using market surveys is
instrumental in making major changes in the business which reduces the degree of
risks involved in taking important business decisions.
 Market Survey Templates
• Product Surveys: New products/concept testing survey templates offer questions
to obtain insights about products and concepts. These survey questions are
curated by market research experts and can help in analyzing which kind of
products or features will work in a market.
• Conference Feedback Surveys: Conference feedback survey templates provide
questions that can be asked to participants of a conference. An organization
can organize better conferences by implementing feedback received from these
surveys such as enhancing overall conference management, improved IT
infrastructure, better content coverage or other such factors.
• Focus Group Surveys: Focus group survey templates can be implemented during
and after the recruitment of the focus group. Gaining insights from a dedicated
group of 8-10 people can be done easily with this existent survey template.
• Hardware And Software Surveys: Hardware and software survey templates offer
editable questions about software product evaluation, hardware product
evaluation, pre-installation procedure, technical documentation quality and other
such factors.
• Website Surveys: Website survey templates are customizable as per application
and consist of questions pertaining to website customer feedback, visitor profile
information, online retail information etc
 Importance of Market Survey

• There are 5 factors that depict the importance of a market survey.

• 1. Understanding the demand and supply chain of the target market: A product is most likely to be
successful if it is developed by keeping in mind the demand and supply of the target market. This
way, marketers can obtain insights about market capabilities to absorb new products and concepts
to develop customer-centric products and features.
• 2. Developing well-thought marketing plans: The World is a target market for an organization,
especially a well-established one. Getting data from the target market through thorough market
research using market surveys and segmentation can be a source of creating concrete and long-
term marketing plans.
• 3. Figure out customer expectations and needs: All marketing activities revolve around customer
acquisition. All small and large organizations require market surveys to gather feedback from their
target audience regularly, using customer satisfaction tools such as Net Promoter Score, Customer
Effort Score, Customer Satisfaction Score (CSAT) etc. Organizations can analyze customer feedback
to measure customer experience, satisfaction, expectations etc.
• 4. Accurate launch of new products: Market surveys are influential in understanding where to test
new products or services. Market surveys provide marketers a platform to analyze the scope of
success of upcoming products and make changes in strategizing the product according to the
feedback they receive.
• 5. Obtain information about customer demographics: Customer demographics form the core of
any business and market surveys can be used to obtain intricate and sensitive details about
customer demographics such as race, ethnicity or family income.
Types of Market Survey with Examples

• Multiple types of market surveys are used by enterprises to collect

data depending on the objective of their market research. The
information collected can be used to study various aspects of the
market to address topics such as the right time to launch the
product/service, to understand the trends in the market, to
measure customer loyalty, to study their competitors and many
more.
• There are various types of market surveys out of which we will talk
about the top 10 to get information from customers about their
demands, expectations and what they opine about the competitors.
Each one of these market surveys has a different approach and has
a marking impact on the various aspects of a business.
• In order to conduct various types of market surveys, successful
enterprises in today’s world, use powerful market research survey
software to get actionable market insights through real-time data
collection and robust analytics.
 10 types of market surveys that are
conducted by successful enterprises.
• 1. Market Surveys for segmentation: An organization can spot existing and
prospective customers and understand why the customers have chosen their
products/services and the prospects have not yet made a purchase. This can lead
to a structured market segmentation and analysis.
• 2. Market Surveys for exploring various aspects of the target market: Get
information about factors such as market size, demographic information such as
age, gender, family income etc. to lay out a roadmap by considering growth rate of
the market, positioning, and average market share.
• 3. Market Surveys to probe into purchase procedure: How does a customer
deciding on making a purchase? What are the factors that convert product
awareness into sales? This type of market survey will unveil awareness,
information, free trial, purchase, and repeat.
• 4. Market Surveys to establish buyer persona: These surveys are to build a buyer
persona by knowing about customer preferences, inclination, and capabilities of
purchasing a product.
• 5. Market Surveys to measure customer loyalty: What is the degree of loyalty that
the customers have towards and organization? The answer to this question can be
obtained by conducting a market survey.
• 6. Market Surveys to analyze a new feature or concept: It is essential for an organization to include
market-compliant features and concepts. By carrying out a market survey to understand which
features to launch, will help all the teams involved in the feature development process to do that
with proper research.
• 7. Market Surveys for competitor analysis: Healthy competition is always good for an
organization’s progress. Market surveys done with the motive of competitor analysis will produce
results about how does the target market weigh the organization’s products/services in comparison
to the others in the market.
• 8. Market Surveys to understand the impact of sales activities: Sales activities are the backbone of
an organization and it becomes crucial to keep track of these activities. Market surveys for sales
activities will produce a report of the impact of sales activities, whether their frequency needs to
increase or any changes the audiences think should be inculcated in the sales process.
• 9. Market Surveys to assess prices for new products/services: Affordability of products also is an
aspect that drives the market for organizations. Price ranges, product variants to cater multiple
price ranges, target customers for each of the products etc.
• 10. Market Surveys for evaluation of customer service: Good customer service can lead to
enhanced satisfaction levels among customers. Factors such as time taken to resolve issues, the
scope of improvement, best practices of customer service etc.
Business Plan

Module 3
 Business Plan
• In simple words, business plan is a written
statement of what an entrepreneur proposes
to take up. It is a kind of guide frost or course
of action what the entrepreneur hopes to
achieve in his business and how is he going to
achieve it.
• In other words, business plan serves like a
kind of big road map to reach the destination
determined by the entrepreneur.
 Few definitions
• Mar J. Dollinger has defined the business plan as “the
formal written expression of the entrepreneurial vision,
describing the strategy and operations of the proposed
venture.”
• According to Jack M. Kaplan, “The term business plan
means the development of a written document that
spells out like a roadmap where you are, where you
want to be, and how you want to get there.”
• Thus, a business plan or project report can best be
defined as a well evolved course of action devised to
achieve the specified objective, i.e. setting up a small
business enterprise within a specified period of time. So
to say, business plan is initially an operating document.
• The business plan is termed by different
names by its different intended interest
audience. For example,
• when presented to a bank, it may be called
‘loan proposal.’
• A venture capital group might call it the
‘venture plan’ or ‘investment prospects’
• A common man may term it ‘project report.’
• Let it be called by any name, its basic
purpose is the same, i.e. to serve as a road-
map in setting up a business enterprise.
 A good project report or business plan
should contain the following contents:
1. General Information:
Information on product profile and product details.
2. Promoter:
His/her name, educational qualification, work experience, project related
experience.
3. Location:
Exact location of the project, lease or freehold, locational advantages.
4. Land and Building:
Land area, construction area, type of construction, cost of construction, detailed
plan and estimate along with plant layout.
5. Plant and Machinery:
Details of machinery required, capacity, suppliers, cost, various alternatives
available, cost of miscellaneous assets.
6. Production Process:
Description of production process, process chart, technical knowhow, technology
alternatives available, production programme.
7. Utilities:
Water, power, steam, compressed air requirements, cost estimates, sources of utilities.
8. Transport and Communication:
Mode, possibility of getting, costs.
9. Raw Material:
List of raw material required by quality and quantity, sources of procurement, cost of raw
material, tie-up arrangements, if any, for procurement of raw material, alternative raw
material, if any.
10. Manpower:
Manpower requirement by skilled and semi-skilled, sources of manpower supply, cost of
procurement, requirement for training and its cost.
11. Products:
Product mix, estimated sales, distribution channels, competitions and their capacities,
product standard, input-output ratio, product substitute.
12. Market:
End-users of product, distribution of market as local, national, international, trade practices,
sales promotion devices, and proposed market research.
13. Requirement of Working Capital:
Working capital required, sources of working capital need for collateral security, nature and
extent of credit facilities offered and available.
14. Requirement of Funds:
Break-up of project cost in terms of costs of land, building, machinery, miscellaneous assets,
preliminary expenses, contingencies and margin money for working capital, arrangements for
meeting the cost of setting up of the project.
15. Cost of Production and Profitability of first ten years.
16. Break-Even Analysis
17. Schedule of Implementation
 Significance of Business Plan:

• Arguments are made for and against writing a business

plan. The argument advanced against writing business
plan is that it involves costs especially when some
outside consultant or accountant or lawyer is hired to
write the business plan.
• One of the reasons for not writing business plan is the
fear of prematurely closing off the new venture.
• The major argument made in favour of writing business
plan is reducing anxieties and tensions in running
business enterprise.
• Writing business plan is especially useful for the
entrepreneurs who require financial help from the
outside sources like banks and financial institutions.
 Significance of Business Plan contd:

• The reason is that the outside sources advance funds

to entrepreneurs based on the soundness of their
enterprises as reflected in business plans.
• In nutshell, writing a business plan is not without its
costs and sacrifices, nonetheless the benefits of it
outweigh its costs.
• An objective without a plan is just a dream. Until
committed to papers intentions are seeds without soil,
sails without winds or mere wishes which do not lead
to execution and without execution there is no payoff.
• The preparation of a business plan or project report is
of great significance for an entrepreneur.
• The business plan serves the two essential functions:
• First and most important the business plan is like a road map. It
describes the direction the enterprise is going in, what its goals are,
where it wants to be, and how it is going to get there. It also
enables an entrepreneur to know that he is proceeding in the right
direction. Some hold the view that without well spelled out goals
and operational methods/tactics, most businesses flounder on the
rocks of hard times.
• The second function of the business plan is to attract lenders and
investors. Although, it is not mandatory for the small enterprises to
prepare business plans, yet it is useful and beneficial for them to
prepare the project reports for various reasons.
• The preparation of business plan is beneficial for those small
enterprises which apply for financial assistance from the financial
institutions and the commercial banks. It is on the basis of business
plan or project report that the financial institutions make appraisal
if the enterprise requires financial assistance or not.
 7 essential steps to writing a
successful Business Plan
• Executive Summary
• Business Description
• Market Analysis
• Marketing/Sales Strategies
• Staffing and Operations
• Funding Requirement
• Appendices
• Executive Summary
• The executive summary of a business plan
is where all promoters involved in the
business should be introduced and the
reasons behind the preparation of the
business plan.
• This is arguably the most important step of
the business plan as potential Investors will
often make a provisional judgement based
on the executive summary. Their decision
to continue reading the main body of the
business plan will depend on the
information presented here.
 Business Description
• When you are writing a business description you should be as detailed as possible
and cover the four main headings; People, Product, Objective and SWOT Analysis.
• People – This includes listing the promoters, the shareholders and a breakdown of
the management structure. Any financial or legal advisors should also be included
in the description.
• Product – When describing your product/service, clearly explain what it is and
what exactly it does. It is important to cover all the main points such as the
background to its development, the unique selling point, benefits and features and
future developments.
• Objective – This is basically a projection of where you see your business going over
the next 5 years. You should state specific milestones to be achieved by your
business and include sales forecasts, employment and product development.
• SWOT Analysis – A SWOT Analysis is an extremely useful technique for identifying
and analysing the internal and external factors that can have an impact on a
product/service. This technique assists you with analysing the strengths and
weaknesses of your product/service, the opportunities that exist and the threats
to the viability of the product/service.
• Market Analysis
• This section should cover market research and competitor
analysis. You must demonstrate that you have carried out
market research to justify the projections made in your
business description and it must prove that there is a
viable market for your product/service. There are four
main headings to cover in this section:
• Target Market- This is the market segment to which you
are planning to sell product/ Service.
• Market Trends – Is the market growing or declining? You
will need to show any recent changes in the market,
future predictions and your plans to meet future
demands.
• Profile of Competitors – What are the competing
products/services? List the key players in your market and
include their turnover, profits and market share.
• Competitive Advantage – This is the reason(s) why
potential customers will choose your product/service
rather than your competitors.
• Marketing/ Sales Strategy
• This section should detail your strategies for reaching your target
market and developing their interest in your product/service. You
should also include a sales strategy to demonstrate how you will
sell your product/service to your target market.
• Marketing Strategy – This heading should answer questions such
as, Who will do the marketing? What strategies will be used to
reach the target market? How will they position the product/
service in the market and differentiate it from its competitors?
• Sales Strategy – Describe how you will sell your product/ service to
the target market. Include whether or not it will be directly, through
a distributor, through a website or other channels. Analyse the cost
involved for each sales method and both the advantages and
disadvantages of each method.
• Communications Strategy – Describe the methods you will use to
promote your product/ service in the marketplace. Detail your
advertising plans, both online and offline as well as any exhibitions
or conferences you intend to promote at.
• Staffing and Operations
This is where you will outline the intended structure of
the company in terms of management, number of
employees, and the physical operational requirements
to produce or supply the product/ service. There are
three main headings to cover in this section:
Management Organisation Chart
Staffing
Training Plans

• Funding Requirements
• This is where you need to clearly state the total funding
requirements of the business. You should describe how
you intend to get funding and include a detailed
breakdown of how these funds will be spent.
• Appendices
• The appendices of your business plan should hold
the relevant documents to support the
information given within the main text of the
plan. Included documents in the appendices vary
from business to business, but usually include a
selection of the following:
• Curriculum Vitae’s
• Financial Assumptions
• Receipts
• Testimonials
• Terms sheet for potential investors
• Details of the company website
 Presenting your business plan
• Presenting your business plan is an art and a
science to which you must devote time if you are
going to be successful as an entrepreneur.
• When presenting your business plan, it’s
important to keep your audience in mind and
target your content appropriately.
• As you seek to finance your business, your
audience can be broken down into two groups:
Potential investors and potential lenders. You
should of these two groups and be ready to
answer their questions.
 What investors are looking for

• What investors are looking for

• Investors look into the future to a time when they can cash in, hopefully at
a high multiple to their initial investment. Therefore, they are concerned
with your growth potential.
• Is there a growing market for your product or service?
• Does it involve breakthrough technology or is it merely a me-too product?
• What would be the exit strategy?
• How much return can investors make on this investment, and when?
• Investors typically won’t see an entrepreneur more than once and often
will want to listen to you present your business for no more than a couple
of minutes.
• Prepare a brief, compelling presentation that tells your story, describes
your business and explains how you will fulfill a customer want, need or
desire. Tell them what you have achieved and why it’s a good idea to
invest with you.
 What lenders are looking for

• Lenders are more concerned with risk and the return of their money with
interest. So they look more at revenue, expenses, and other cash flow
issues.
• Bankers prefer one clear and complete idea over many excellent but vague
possibilities. So make sure your presentation is focused and fact-based.
• Is your product priced right for its market niche?
• Can company management control expenses?
• Does the company have the ability to repay its loan and still grow?
• How much are company owners willing to share the risk?
• In its risk assessment, a bank will not only look at your ability to execute a
project and repay the loan. Your banker will also consider the project itself
and ask: “Is this the right decision for this company? Will it contribute to
its profitable growth in the years to come?” Therefore, the business plan
for the project you want to fund must be clear and succinct.
• If your new business doesn’t have substantial
revenue or isn’t generating positive cash flow, it is
even more fundamental to demonstrate you are
a credible and worthwhile risk.
• That means having all the pieces in place—deep
market knowledge, a competitive product or
service offering, and the self-confidence to
overcome the inevitable setbacks.
• You will have to demonstrate you have the
experience, skills, determination and self-
confidence to successfully build your company or
carry out the project for which you’re borrowing
money. If you don’t believe in yourself, your
business and your project, why should others?
• Here are some points to keep in mind when you meet investors and
bankers to discuss your business plan.
• Use facts and figures—Support every conclusion and claim with
research from third-party sources. If you mention trends or
evaluate your market potential, make sure you’ve done the
research to back your claims.
• Be clear—Your banker or potential investor probably isn’t an expert
in your field, so avoid industry jargon, acronyms and technical
details.
• Show you’ve done your research—Demonstrate you’ve looked at
your project from every angle and prepared contingency plans.
Discuss how your previous experience and achievements will help
in this case.
• Stick to business—Focus on proving your case. It’s good to be
passionate about your business, but it’s your facts and figures that
will get you the money.
• Be realistic—Your forecasts should clearly show how your business
or project will be profitable for both you and your counterpart.
These forecasts must be rational and backed up by solid data. Be
careful about making claims that you’ll be the next Google or
Amazon.
 TECHNO ECONOMIC FEASIBILITY OF
PROJECT REPORT
• Introduction
• As a prospective entrepreneur , you are required
to decide at the outset the product that you have
to manufacture .If you decide to get into
service sector , you must decide the type of
‘service activity’ for your venture. Having made
such a decision tentatively, you must answer
certain questions before you spend time and
resources required to make a detailed study of
project for getting financial assistance.
 1 What is a preliminary project
report?
• Preliminary project report, in short PPR, is simple brief
data – sheet that gives you an insight into the
following:
(i) How much money, man-power & material would be
required to setup project?
(ii) What type of machines would be required?
(iii) What are sources of technology that would be
required? And
(iv) What would be the economic gains from the project?
In short, PPR is a brief outline of the project that tells
you quickly about the viability of the project, so as to
help you decide whether it is pursuing further or not.
 2. Why preliminary project report?
• At the stage of preparing a PPR you may have in mind not just one
venture/product, but 3 or 4 ideas to choose from. Since it calls for
considerable time and resources to prepare a Detailed Project
Report (DPR) it would not be advisable to prepare a DR for every
product ideas that may be floating in your mind.
• Even if you could prepare DPR for all the product ideas that you
have in mind, the time required to do so would be so much that it
would make the first DPR obsolete or outdated by the time you
complete all DPRs.
• Further, the money, time and information required to prepare DPRs
for all the product ideas that you have in mind only to examine their
viability may make the very exercise of DPR preparation unviable.
This does not mean that PPR can substitute a DPR. It only means
that is desirable to prepare a PPR prior to spending resources on
preparation of a DPR.
• i. You get enough data quickly to fill up the required for provisional
registration of your unit with the stage government. It is a must
before commencing various times consuming formalities connected
with planning and setting up of a small-scale unit.
• ii. The data you get from PPR will help you in completing certain
formalities in anticipation of setting up a project. For example, if
you want to set up an electronic unit, you have to your production
programme approved from the concerned State/Central
Government department. For this you have to supply data about
the projected production level and raw-material requirement,
which you could get from PPR.
• iii. The data collected by preparing a PPR forms a good take-off
point for preparing a DPR when you desire to do so.
• iv. It will help you identify in advance the infrastructural
requirement for your project and sound the concerned government
agencies accordingly so that you can get necessary facilities such as
land / shed at the right time.
• v. Finally, the major contribution of a PPR at the nascent stage of
your entrepreneurial career is that it instils confidence in you and
motivates you to stare the time-consuming process of data
collection and preparation of a DPR.
 Detailed Project Report
• Meaning of detailed project report
• After the planning and the designing part of a project
are completed, a detailed project report is prepared.
A detailed project report is a very extensive and
elaborative outline of a project, which includes
essential information such as the resources and tasks
to be carried out in order to make the project turn into
a success. It can also be said that it is the final blueprint
of a project after which the implementation and
operational process can occur. In this comprehensive
project report, the roles and responsibilities are
highlighted along with the safety measures if any issue
arises while carrying out the plan.
The following points play an essential role in deciding whether a
project turns into success:
• Completion of the project within the stipulated period
• Priority to client satisfaction by delivering quality product
after the completion of the project
• Completion of the project within the set limits of escalation of
cost
• The blueprint design's focus has to be to convert the
corporate investment into a project idea that gives good
monetary returns.
• A detailed project report depicts a practical viewpoint for the
implementation of the project. The requirements and risks
should also be highlighted in a detailed manner to prevent
any troubles that can delay or halt the execution of the
project. Hence effective measures must also be stated so that
the execution of the project can be carried out hassle-free
 Contents of a Detailed Project Report

• A Detailed Project Report must include the following information:

• Brief information about the project

• Experience and skills of the people involved in the promotion of the
project
• Details and practical results of the industrial concerns of the promoters of
the project
• Project finance and sources of financing
• Government approvals
• Raw material requirement
• Details of the requisite securities to be given to various financial
organizations
• Other important details of the proffered project idea include information
about management teams for the project, details about the building,
plant, machinery, etc.
• A detailed project report is extremely important in order to turn the idea of your
project into a reality. A DPR acts as a ladder towards success to make your project
reach great heights. If the project report is prepared by putting a tremendous
amount of effort into details, you will surely get good results later.

• Managing the budget - Managing the budget or expenditure is not an easy task,
especially when you have to look at so many aspects of your project. Hence a DPR
comes to your rescue and helps your plan and manage your budget in such a
manner that you do not go over your set budget.
• Minimizing risks - Sometimes, despite giving great attention to details, risks, and
issues arise during the implementation of the project. Hence it is crucial to identify
and reduce these risks as much as possible so that the project is implemented
without any hassles. It is reporting the risks to the project manager before the
implementation that makes room for improvement.
• Project progress follow up - One of the most important aspects of a detailed
project report is to have a control on the project progress. Accordingly, one can
keep track of the schedule of the project and eliminate the problems, if any.
• Holdover the project - Project reporting maintains hold of the higher authority,
such as managers, over the project so that they can keep a check on progress and
eliminate factors that cause a halt in the progress of the project. The performance
of the team members and their quality of work is also checked.
• A detailed project report has innumerable
benefits in order to drive a project towards the
path of success. Hence it is vital to get a DPR
prepared from an experienced person/firm that
holds relevant experience and skillset to leave no
stone unturned. It is also important that the
person who is a part of the team for the project
has relevant expertise in the field so as to take up
the task of handling the project. Putting the DPR's
preparation task into the hands of an
inexperienced person can also cause you to lose a
lot of money, so choose wisely.
 What are Projects?

• Projects are the cutting edge of development.

Projects are an investment activity
• in which financial resources are expended to
create capital assets that produce
• benefits over an extended period of time.
• UNIDO defines a project as a proposal for an investment to create and develop
• certain facilities in order to increase the production of goods/services in a
• community during a certain period of time.
• The Chartered Management Institute define a project as "an activity that has a
• beginning and an end which is carried out to achieve a particular purpose to a set
• quality within given time constraints and cost limits".
• A project may be defined as an activity for which money will be spent in an
• expectation of returns and which logically seems to lend itself to planning
• financing and implementation as a unit. It is the smallest operational element
• prepared and implemented as a separate entity in a national plan of programmes
• of development.
• The preparation of a project entails consideration of many
aspects. The major
• aspects to be considered in preparation of a project are:
• 1) Technical
• 2) Institutional
• 3) Organizational
• 4) Managerial
• 5) Social
• 6) Commercial
• 7) Financial
• 8) Economic
 Methods of Project Appraisal
1) Technical Aspect
The technical aspect of any project considers the
technical feasibility of any project. It concerns with the
technical aspect of a project form both input supply
side and output delivery side.
For example if you want to take up an agricultural project
in a region, you may have to examine the soil type of
the region, water availability, crops grown, livestock
breed suitable for the area, pests prevalent in the area
etc. This information can be used in estimating the
possible yield and income from agriculture.
2) Institutional Aspect
The institutional aspect of a project deals with the
framework within which the project will have to operate.
A complete knowledge of the institutional aspect helps
identifying the components of institutional framework that
will have a bearing on the project.
Some of the elements that constitute the institutional
Programme Planning framework include government
institutions, Project authority, corporate bodies, land
tenure systems, banking and credit institutions, religious
customs, practices and social mores. There is a need to
understand the administrative system of the region where
the project has to be undertaken.
 3) Organizational Aspects
Here the term organization refers to the structure if the body that would undertake
the task of project execution.
The proposed organization must have the capacity to carry out the assignments given
to it.
Some of the basic principles to be followed
include:
1) There must be clear lines of authority running from top to bottom of the
organization and the chain of command should be clear.
2) The responsibilities of each authority should be clearly defined in writing.
3) The decision making power should be placed as near as possible to the scene
of action.
4) The number of levels of authority should be kept at minimum.
5) The organization should be kept as simple as possible and should be flexible
to adjust to changing conditions.
4) _Management 'The main task of management is to implement the project
objectives within the
framework of organizational structure. For good management, a clear definition of
functions and activities are required. There is also a need for allocating
responsibilities to various agencies for various project activities. A suitable
mechanism for coordination of the activities of participating agencies should
also be developed. Besides, proper staffing also comes under the purview of the
management.
5) Social Aspects
It is very important to assess the social patterns, customs, culture, traditions and
habits of the clientele. Various aspects like changes in living standards, material
welfare, income distribution etc. In selecting some projects, weights are assigned
for income distribution so that the projects which benefit the lower income group
are benefitted. The adverse effect of the project on particular group is also
examined. Preserving the environment and wildlife habitats is given high priority.
6) Commercial Aspects
The commercial aspects of a project involves the arrangements of marketing the
output produced bv t!~pro ject and ensuring supply of inputs needed for the
project to operate. There is a need to assess the effective demand of the project
output and the prices that may prevail under the demand and supply situations.
The analyst also needs to cautiously evaluate the impact of product supply on
the price of the product and the viability of the project under such changed price
situation.
7) Financial Aspects
Decisions about undertaking any project depend a lot on financial analysis of a
project. As there could be many beneficiaries/participating agencies of any project,
there is a need for separate financial analysis each.
 FINANCIAL
MANAGEMENT
• Mr. Anil Singh has been running a restaurant for the last two years. The
excellent quality of food has made the restaurant popular in no time.
Motivated by the success of his business, Mr. Singh is now contemplating
the idea of opening a chain of similar restaurants at different places.
However, the money available with him from his personal sources is not
sufficient to meet the expansion requirements of his business. His father
told him that he can enter into a partnership with the owner of another
restaurant, who will bring in more funds but it would also require sharing
of profits and control of business. He is also thinking of getting a bank
loan. He is worried and confused, as he has no idea as to how and from
where he should obtain additional funds. He discusses the problem with
his friend Ramesh, who tells him about some other methods like issue of
shares and debentures, which are available only to a company form of
organisation. He further cautions him that each method has its own
advantages and limitations and his final choice should be based on factors
like the purpose and period for which funds are required. He wants to
learn about these methods.
• Business is concerned with the production and distribution of goods
and services for the satisfaction of needs of society. For carrying
out various activities, business requires money. Finance, therefore,
is called the life blood of any b u s in s s . The requirements of
funds by business to carry out its various activities is called business
finance.
• A business cannot function unless adequate funds are made
available to it. The initial capital contributed by the entrepreneur is
not always sufficient to take care of all financial requirements of the
business. A business person, therefore, has to look for different
other sources from where the need for funds can be met. A clear
assessment of the financial needs and the identification of various
sources of finance, therefore, is a significant aspect of running a
business organisation.
 Business Finance Meaning

• Business finance is the funds required to establish,

operate business activities, and expand in the future.
Funds are specifically required various purchase type of
tangible assets such as furniture, machinery, buildings,
offices, factories, or intangible assets like patents,
technical expertise, and trademarks, etc.
• Apart from the assets mentioned above, other things
that require funding are the day-to-day operational
activities of a business. This activity includes
purchasing raw materials, paying salaries, bills,
collecting money from clients, etc. It is essential to
have sufficient amount of money to survive and grow
the business.
Financial Plan
 What is a financial plan?

• A financial plan is simply an overview of your

current business financials and projections for
growth. Think of any documents that
represent your current monetary situation as
a snapshot of the health of your business and
the projections being your future
expectations.
 Why is a financial plan important for
your business?
• As said before, the financial plan is a snapshot of the
current state of your business. The projections, inform your
short and long-term financial goals and gives you a starting
point for developing a strategy.
• It helps you, as a business owner, set realistic expectations
regarding the success of your business. You’re less likely to
be surprised by your current financial state and more
prepared to manage a crisis or incredible growth, simply
because you know your financials inside and out.
• And aside from helping you better manage your business, a
thorough financial plan also makes you more attractive to
investors. It makes you less of a risk and shows that you
have a firm plan and track record in place to grow your
business.
 Components of a successful financial
plan
• All business plans, whether you’re just starting a
business or building an expansion plan for an
existing business, should include the following:
• Profit and loss statement
• Cash flow statement
• Balance sheet
• Sales forecast
• Personnel plan
• Business ratios and break-even analysis
PREPARATION OF FINANCIAL STATEMENTS:
• Preparation of financial statements is vital to a small
business enterprise.
• As per Income Tax Act and Company Act an
entrepreneur has to prepare financial statements for
providing yearly information to different authorities.
• Financial statements preparation assists entrepreneur
to do complete analysis of the financial issues.
• Financial statements service providers guide to solve
the financial problems quickly.
• Based on financial statements, a business enterprise
formulates its strategies for Revenue enhancement,
Cost economies, Efficiency improvement, Restructuring
of its operations and Further expansion for enhancing
wealth.
---
TYPES OF FINANCIAL STATEMENTS:
1. BALANCE SHEET:
• A balance sheet is a statement of assets and
liabilities of an enterprise at a given date. It is
prepared at the end of the accounting period after
the Trading Account and Profit & Loss Account are
prepared.
• It shows the financial position of the business at the
end of the accounting period.
2. PROFIT & LOSS ACCOUNT (P/L ACCOUNT):
• It is also known as Income Statement which
summarises the financial results of a company
during a particular accounting period (a
financial year).
• It focuses on Revenues/Incomes (Creation of
assets, inflow of cash or accounts receivables
that result from the sale of goods and services
to customers) and Costs/Expenses (Out flow
of resources those are required to generate
revenues).
 P/L ACCOUNT…
• When revenues exceed costs, it results in profit and
when costs exceed revenues, it results in loss. Thus, the
P/L Account highlights the profit or loss of a firm.
3. CASH FLOW STATEMENT:
• An enterprise needs cash to make payments to its
suppliers, to incur day-to-day expenses and to pay
salaries, wages, interest and dividends, etc.
• In fact, what blood is to a human body, cash is to a
business enterprise. It is very essential for a business
enterprise to maintain an adequate balance of cash.
• It enumerates net effects of the various business
transactions on cash.
• It is a statement of changes of financial position in
business due to inflow or outflow of cash. ---
INVESTMENT DECISIONS:
• Investment decision is an important area of
Financial Management. Generally investment
decisions are related to long-term investment.
• The long term investment is made in the in the fixed
assets like land, building, machinery, equipments,
furniture and fixtures.
• Certain analytical methods like Present Worth
Method, Future Worth Method, Annual Equivalent
Worth Method, Rate of Return Method and Pay
Back Period Method are used by entrepreneurs to
assess the profitability of the project and to select
the best project.
FINANCIAL RATIOS:
• Financial ratios are the scientific tools for financial
analysis through which one can measure the real
worth, performance and pitfalls of an enterprise.
• Financial analysis is significant due to wide spread
interest of various parties like creditors, potential
suppliers, debenture holders, commercial banks, other
financial institutions, potential investors, trade unions,
customers, wholesalers, retailers, taxation authorities
and Government.
• Financial Ratios provide the information (margin of
profit, ability to pay for all expense, How fast the
debtors pay money to firms and how soon the firm
pays the creditors?, efficiency of invested funds in the
business, possibility of default and liquidation) to
measure the performance of an enterprise.
---
TYPES OF FINANCIAL RATIOS:
1. LIQUIDITY RATIO:
• Liquidity ratio is meant for the analysis of short-term financial
position of the firm.
• It reflects the ability of the firm to meet the short term
obligations out of its short-term resources. It helps to
determine the solvency of the firm.
• Liquidity ratio is of two types such as Current ratio/Working
capital ratio and Acid test ratio.
2. LEVERAGE RATIO:
• Leverage ratio measures the contribution of entrepreneur
compared to finance provided by the outsiders.
• Incase entrepreneur provides very small proportion of total
financing, the risks of the enterprise are borne mainly by the
creditors.
• Leverage ratios are of three types such as Debt-Equity
ratio/External-Internal Equity Ratio, Assets coverage ratio and
Debt-service coverage ratio.
TYPES OF FINANCIAL RATIOS…
3. ACTIVITY RATIO/TURNOVER RATIO/ASSET
MANAGEMENT RATIO:
• Activity ratio measures how efficiently the
resources are employed by the firm. This ratio
together with the Leverage ratio of the firm is a key
factor in determining profitability.
• Activity ratio is of four types such as Inventory
turnover ratio, Debtor velocity ratio, Creditor
velocity ratio and Fixed asset turnover ratio.
4. PROFITABILITY RATIO:
• Profitability ratio indicates business efficiency.
• It is necessary to use more than three ratios to
measure profitability because any single ratio
has severe limitations.
• Profitability ratio is of three types such as
Gross profitability ratio, Net profitability ratio
and Return on equity ratio. ---
IMPORTANT FINANCIAL RATIOS:
i. CURRENT RATIO/WORKING CAPITAL RATIO:
• Current Ratio = Current Assets/Current Liabilities
• Current Assets include Cash in hand and Cash at bank,
Marketable Securities, Short term High Quality Investments,
Prepaid Expenses, Work-in-progress, Inventories, etc.
• Current Liabilities include Sundry Creditors, Bills Payable,
Accrued Expenses, Income Tax payable, Bank overdraft, etc.
• Current Ratio indicates the ability of the business to meet its
current obligations.
• Higher the current ratio, more will be the ability of the firm to
meet current debts, fixed interest charges and to absorb
operating loss.
• Current ratio less than one is unacceptable to bankers.
• Current ratio of 2:1 is the standard liquidity of a business.
IMPORTANT FINANCIAL RATIOS…
ii. ACID TEST RATIO: This is used to supplement the information given by
the current ratio.
• Acid Test Ratio is used to know whether the firm can generate funds
quickly to pay off its creditors.
• This ratio indicates a fair measure of liquidity.
• Acid Test Ratio = Liquid Assets/ Current liabilities.
• Liquid Assets = Current Assets – (Stock + Work-in-progress).
iii. DEBT EQUITY RATIO/ EXTERNAL INTERNAL EQUITY RATIO: It is the
ratio of Debt to Equity. Debt includes all long-term and short-term
borrowings. Equity consists of Preference Shares, Equity Shares,
Capital Reserve and Retained Earnings.
• Debt Equity Ratio = Debt/Equity ‘OR’ Outsiders’ Fund/ Shareholders’
Fund
• A Debt Equity Ratio of 2:1 is ideal but for Capital Intensive Projects,
Debt Equity Ratio up to 4:1 is also allowed. ---
IMPORTANT FINANCIAL RATIOS…
iv. DEBT SERVICE COVERAGE RATIO(DSCR): It is important for creditors
because it highlights the long term solvency of the company.
• DSCR = (Net Profit + Depreciation + Interest on Term Loan)/(Amount
Repayable on Loan + Interest on Loan)
• This ratio indicates whether the business earns sufficiently for
payment of long term debt with interest. Debt Service Coverage Ratio
of 2:1 is satisfactory but it should not below 1.33:1.
v. INVENTORY TURN OVER RATIO (ITR)/ STOCK TURNOVER RATIO: ITR =
Cost of Goods Sold/ {1/2X(Opening Stock of Goods + Closing Stock of
Goods)}.
• It reflects the efficiency of inventory management.
• A higher ITR indicates better inventory management and quick
turnover. A lower ITR reflects dull business, over investment in
inventories, incorrect inventory resulting from the inclusion of
obsolete and unsalable goods.
•
IMPORTANT FINANCIAL RATIOS…
vi. FIXED ASSET TURNOVER RATIO:
• Fixed Asset Turnover Ratio = Net Sales/ Fixed Assets
• A higher ratio indicates effective utilisation of fixed assets such
as plant and machinery.
• It also indicates better inventory management, production
planning and control.
vii. GROSS PROFIT RATIO/NET SALES RATIO:
• This ratio is the Gross Profit as a percentage of Sales. So, Gross
Profit Ratio = (Gross Profit/Net Profit)X 100
• Gross Profit is the difference between Net Sales and Cost of
Goods Sold.
• Net Sales are obtained after deducting the values of goods
returned by the customers from the total sales.
• This ratio is useful in working out “Break-Even level of
operation”.
• Break-Even Sales = (Gross Profit X Sales)/ Total Fixed Cost
IMPORTANT FINANCIAL RATIOS…
• Gross Profit Ratio is important for comparison between
two similar business units and between two different
accounting periods.
• A low Gross Profit Ratio indicates large production
expenses, Wrong Pricing Policy, Wasteful Expenditure,
High Interest Burden, High Level of Borrowings, etc.
• An improving Gross Profit Ratio indicates Better
Capacity Utilisation, Reducing Unit Fixed Cost, Better
inventory Management and Better Production
Management.
• Thus, it is a reliable evidence of efficient management.
---
IMPORTANT FINANCIAL RATIOS…
viii. NET PROFIT RATIO:
• Net Profit Ratio = Net Profit/Sales
• Net Profit is arrived at after deducting general, administrative and
selling expenses, taxes, interest paid from Gross Profit.
• A high Net Profit ratio over a period of years confirms better control
over expenses.
• When Net Profit Ratio is fluctuating then it means margin of profit is
changing or company is not able to exercise proper control on
expenses.
• In this case, the aspects like Pricing Policy, Inventory Holding, Quality
Control, Detailed Analysis of Selling, General & Administrative
Expenses and Interest paid should be examined to eliminate
wasteful expenditure.
 Break-even Analysis
• A break-even analysis is a financial calculation that
weighs the costs of a new business, service or
product against the unit sell price to determine the
point at which you will break even. In other words,
it reveals the point at which you will have sold
enough units to cover all of your costs
• How to calculate your break-even point
• When determining a break-even point based on sales
dollars: Divide the fixed costs by the contribution
margin. ...
• Break-Even Point (sales dollars) = Fixed Costs ÷
Contribution Margin.
• Contribution Margin = Price of Product – Variable
Costs.
• A break-even analysis is a financial tool which helps a
company to determine the stage at which the company, or
a new service or a product, will be profitable. In other
words, it is a financial calculation for determining the
number of products or services a company should sell or
provide to cover its costs (particularly fixed costs).
• What is a Break-Even Analysis
• Break-even is a situation where an organisation is neither
making money nor losing money, but all the costs have
been covered.
• Break-even analysis is useful in studying the relation
between the variable cost, fixed cost and revenue.
Generally, a company with low fixed costs will have a low
break-even point of sale. For example, say Happy Ltd has
fixed costs of Rs. 10,000 vs Sad Ltd has fixed costs of Rs.
1,00,000 selling similar products, Happy Ltd will be able to
break-even with the sale of lesser products as compared to
Sad Ltd.
• Components of Break-Even Analysis
• Fixed costs
Fixed costs are also called overhead costs. These overhead costs
occur after the decision to start an economic activity is taken and
these costs are directly related to the level of production, but not
the quantity of production. Fixed costs include (but are not limited
to) interest, taxes, salaries, rent, depreciation costs, labour costs,
energy costs etc. These costs are fixed irrespective of the
production. In case of no production also the costs must be
incurred.
• Variable costs
Variable costs are costs that will increase or decrease in direct
relation to the production volume. These costs include cost of raw
material, packaging cost, fuel and other costs that are directly
related to the production.
• Calculation of Break-Even Analysis
• The basic formula for break-even analysis is derived by dividing the
total fixed costs of production by the contribution per unit (price
per unit less the variable costs).
• an example:
Variable costs per unit: Rs. 400 Sale price per
unit: Rs. 600 Desired profits: Rs. 4,00,000 Total
fixed costs: Rs. 10,00,000 First we need to
calculate the break-even point per unit, so we will
divide the Rs.10,00,000 of fixed costs by the Rs.
200 which is the contribution per unit (Rs. 600 –
Rs. 200). Break-Even Point = Rs. 10,00,000/ Rs.
200 = 5000 units Next, this number of units can
be shown in rupees by multiplying the 5,000 units
with the selling price of Rs. 600 per unit. We get
Break-Even Sales at 5000 units x Rs. 600 = Rs.
30,00,000. (Break-even point in rupees)
Institutional finance to entrepreneurs
• Institutional support refers to the support to
the entrepreneurs by different types of
institutions. It also refer to formulate policies
provide support regulate and facilitate to
develop manufacturing and service
enterprises with the help of many institutions.
 What is the role of institutional finance?

• The primary role of financial institutions is

to provide liquidity to the economy and
permit a higher level of economic activity
than would otherwise be possible. According
to the Brookings Institute, banks accomplish
this in three main ways: offering credit,
managing markets and pooling risk among
consumers.
• Financial Institutions are the backbone of any
economy. These are the institutions that facilitate
all financial transactions in a country. Basically,
these institutions carry a broad range of financial
activities, including giving loans, accepting
deposits, facilitating investment and more.
Moreover, they help to connect an individual with
the nation’s financial system and financial
resources. Thus, almost every individual deals
with one or more types of financial institutions
on a regular basis.
• Some financial institutions offer services to the
general public, but some deal only with specific
clients, or with other financial institutions.
 Types of Financial Institutions

• There are twelve major types of financial institutions that

usually cover all the financial companies in a country.
Following are the major types of financial institutions:
• Investment Banks
• These are the institutions that offer a range of financial
services to companies, agencies, other institutions, as well
as governments. One of their most popular services is
helping companies go public, or manage their IPOs (initial
public offerings). Their other services include underwriting
debt, helping with mergers and acquisitions, broker for
institutional clients and more. A point to note is
that investment banks do not generally accept deposits.
• Retail and Commercial Banks
• They are the most crucial part of any economy as they
connect citizens with the banking or financial system. Retail
and Commercial banks accept deposits from the public, as
well as offer loans. These banks primarily earn revenue
from the interest on loans they offer to their customers.
These banks work with individuals, as well as with
businesses. Moreover, these banks also help the
government to carry out its financial policies.
• Brokerages
• These companies act as a financial intermediary between
the buyers and sellers of securities. Generally, a brokerage
company will offer portfolio management services and
manages funds of the individuals and public at large,
execute the trade on behalf of clients, give investment
advice, and more such services. Such companies have
exposure to an array of securities, including shares, mutual
funds, bonds, options and more. Brokerage companies
charge a commission or fee for their services.
• Investment Companies
• These are the corporations or trusts that facilitate people seeking
professional management and diversification. These companies
pool the resources from investors and then invest in a well-
diversified investment portfolio as per the risk appetite of the
investors and/or specifics objectives of the scheme. These are
managed by professionally experienced managers. Apart from
traditional investment companies, the advent of the internet has
given rise to a new breed of investment company – Robo-advisors.
Such companies use mobile technology to offer investment services
to a larger audience base and that too at very less cost.
• Insurance Companies
• These companies collect premiums from people and companies to
offer them protection against unforeseen future events, including
fire, car accidents, death, disability, disease and more. Primarily,
insurance companies assist individuals and businesses in managing
contingencies and risks. Almost every individual and business avail
one or more kinds of insurance. Different types of insurance
products are life insurance, health insurance, property-casualty
insurance and more. One insurance company can offer one or more
kinds of insurance products.
• Central Bank
• It is undoubtedly the most important type of financial institution in an
economy. A central bank is primarily responsible for managing and
overseeing all other banks in the county. Moreover, it is the central bank
that develops monetary policy and helps the government in implementing
its financial policies. A central bank does not deal with the general public.
However, it does remain the banker for the Government. The Federal
Reserve Bank is the central bank in the U.S.
• Internet Banks
• These are relatively newer types of financial institutions. Such banks offer
the same services as retail and conventional banks. But, unlike the brick-
and-mortar structures of conventional banks, internet banks have a virtual
presence. There are two categories of internet banks – Digital and Neo-
banks. Digital banks are affiliates of traditional banks but are online-only
platforms. Neo-banks, on the other hand, are pure digital native banks
that do not have affiliation with any other bank.
• Credit Unions
• Such institutions help to extend financial and banking services to a specific
section of society, such as teachers, military personnel and more. These
institutions work similarly to retail banks but offer relatively fewer
services. Mostly, these institutions are owned and managed by the
members of the respective demographic. Thus, credit unions operate only
for the benefit of their members.
• Savings and Loan Associations
• These institutions are held mutually and depend upon collaborative efforts to
achieve their financial objectives. Moreover, individuals can also use the services
of these institutions to make deposits, take a loan and avail other services.
• Mortgage Companies
• The primary function of these institutions is to originate and fund mortgage loans.
Most mortgage firms offer services to the individual consumer market. But, there
can also be mortgage companies that serve clients with real estate transactions
only, individual and organizations both.
• Advisory Firms
• These companies include experienced financial advisors. Such companies assist
individuals and businesses in making better financial decisions. The financial
advisors analyze their clients’ risk level and financial objectives to recommend
them the best assets to invest in as also to avoid and manage risks. Moreover, they
continuously monitor their clients’ investment performance and offer correction, if
necessary.
• Trust Companies
• These are legal entities that work as agents on behalf of an individual or business.
Trust companies mainly help with the management and transfer of assets. Other
services they provide are wealth management, brokerage services, real estate
planning, inheritances and asset-management services on behalf of their clients.
These companies charge fees depending upon the size of their trust.
 Classification of Sources of Funds

• 1. Based on Period – The period basis is further divided into three

dub-division.
• Long Term Source of Finance – This long term fund is utilized for
more than five years. The fund is arranged through preference
and equity shares and debentures etc. and is accumulated from the
capital market.
• Medium Term Source of Finance – These are short term funds that
last more than one year but less than five years. The source
includes borrowings from a public deposit, commercial
banks, commercial paper, loans from a financial institute, and lease
financing, etc.
• Short Term Source of Finance – These are funds just required for a
year. Working Capital Loans from Commercial bank and trade credit
etc. are a few examples of these sources.
 2.Based on Ownership –

• This sources of finance are divided into two categories.

• Owner’s Fund – This fund is financed by the company
owners, also known as owner’s capital. The capital is raised
by issuing preference shares, retained earnings, equity
shares, etc. These are for long term capital funds which
form a base for owners to obtain their right to control the
firm’s management and operations.
• Burrowed Funds – These are the funds accumulated with
the help of borrowings or loans for a particular period of
time. This source of fund is the most common and popular
amongst the businesses. For example, loans from
commercial banks and other financial institutions.
 3. Based on Generation
• This source of income is categorized into two
divisions.
• Internal Sources – The owners generated the
funds within the organization. The example for
this reference includes selling off assets and
retained earnings, etc.
• External Source – The fund is arranged from
outside the business. For instance, issuance of
equity shares to public, debentures, commercial
banks loan, etc.
CAPITAL:
• The money invested in business in order to yield an
income is known as capital.
• Capital is needed for Purchasing of fixed
assets(Building, Equipment, Machinery, Tools,
Furniture, etc.), Purchase of raw materials and other
inputs, meeting the day to day expenditure (Wages of
Workers, Selling and Distribution Expenses, Equipment
and Plant Maintenance Cost).
• Capital is the life blood of any business. Production
without capital is not possible.
• Productivity is mainly due to extensive use of capital,
i.e., machinery, tools or implements in the productive
system.
• Economic development is not possible without the use
of capital.
CLASSIFICATION OF CAPITAL:
Capital may be classified as follows:
i. FIXED/BLOCKED CAPITAL
The funds required for acquisition of the fixed
assets (Land, Building and other installations, Power
and electric supply installation, Water supply and
drainage fittings, Machinery, material handling
equipments, Tools, jigs, furniture and fixture,
Administrative office and equipment, Patents, etc.)
which are to be used over and over again for a long
period of time.
• Firms engaged in trading and banking need less but
manufacturers of heavy and capital goods need
more fixed capital.
 ii. WORKING CAPITAL/ CIRCULATING CAPITAL :
• Capital which is required to meet the expenditure for
day to day working of the business is known as working
capital.
• It includes cost of raw materials, spare parts and
materials required for producing finished goods, Wages
and salary bills, Cost of maintenance, service activities,
fuel, property taxes and insurance, Cost of
advertisement, shipping services and credit extension
to customers.
• The components of working capital are inventories (raw
materials, work-in-progress, finished goods, stores and
spares), debtors (bills receivables and sundry debtors),
cash & bank balances and advances to suppliers of raw
materials.
NEED FOR WORKING CAPITAL:
• Working capital is required to operate business without
interruptions.
• The objective of any business is to earn profit. The main
factor affecting profit is the volume of sales.
• However, the sales can not be converted in to cash
immediately.
• There is a time lag between the sales of goods and
realisation of cash. Therefore, working Capital is
required to fill up the gaps.
• The working capital is constantly circulating for which it
is also known as circulating capital.
• The working capital cycle converting cash in to sales
and sales in to cash, is shown in the following figure.
WORKING CAPITAL CYCLE:

CASH

RAW
DEBTORS
MATERIALS

WORK-IN-
SALES
PROGRESS

FINISHED
GOODS
WORKING CAPITAL CYCLE…
• Cash is required for purchasing raw materials, then some amount
of cash on labour and factory overheads to convert the raw
materials in to work-in-progress, and ultimately finished goods.
• When the finished goods are sold on credit basis get converted in
the form of sundry debtors.
• Sundry debtors are converted to cash only after the expiry of
credit period. Working capital cycle goes itself again and again.
• Cash is converted to cash again after following the stages of Raw
Materials, Work-in-Progress, Finished Goods, Sales and sundry
Debtors. Thus, a time gap is required for this cycle.
• Working capital is needed to fulfill the requirements of funds
during this time gap, and the quantum of working capital needs
varies as per the length of this time gap.
• Thus, some amount of funds is blocked in raw materials, work-in-
progress, finished goods, sundry debtors and day-to-day cash
requirements.
THANK
‘U’
HRM
• Labour laws are a set of compliances that set the tone for the
treatment of the labour force in the workplace. Labour is the
greatest asset for an organisation and to ensure that their rights are
protected and to safeguard them against any exploitation, labour
laws are enforced. It regulates the companies, workers, and trade
unions. Non-compliance with the laws can lead to punitive action
towards the organisation.
• Labour Laws are imposed by the State as well as the Central
Government. The labour law compliances are not just restricted to
filing returns, but these records serve as evidence for the
compliance of the laws and must be produced to the authorities in
case of any discrepancies. There are laws that are enforceable only
for certain work environments. And there are some laws that are
enforceable to all organisations.
RELEVANT LABOUR LAWS FOR SMALL BUSINESS
ENTERPRISES:
• An entrepreneur has to abide by certain acts, rules and
regulation enacted by the government which help the
entrepreneur to maintain smooth and cordial relations with
the workers.
• To safeguard the interests of workers and avoid any unlawful
situation at work place and to mobilise the workers to achieve
the goal, the government has provided a set of acts.
• The important acts are discussed below:
1. CONTRACT LABOUR (Regulations and Abolition) Act, 1970:
• In many industrial units, instead of employing permanent
workers, jobs are given on a contract basis.
• If an entrepreneur has given jobs on contract and 20
employees or more are working in the enterprise as contract
labour, then the enterprise is covered under the Contract
Labour Act,1970.
CONTRACT LABOUR (Regulations and Abolition) Act, 1970…
• In case the entrepreneur does not directly employ
contract labour but employs a contractor who
employs 20 or more workers for the job of the
entrepreneur, then the entrepreneur has to ensure
that the contractor has a proper license which he
has obtained after making a payment of the
necessary security deposit for each employees.
• It is essential for the entrepreneur to ensure the
welfare and health of the contract labour. The
entrepreneur must ensure the welfare activities like
drinking water, Latrines, Urinals, Washing facilities,
Rest rooms, First aid box, etc.
• The entrepreneur has to ensure that the
contractor pays the wages to his employees. If he
does not pay full wages and deducts a part of it
for any reason, the entrepreneur will be held
responsible as the ultimate employer.
• To overcome the drawbacks of the Workmen’s
Compensation Act, 1923 and to prevent the
victimisation of the employees by the employers,
the govt. introduced the Employees’ State
Insurance Act, 1948.
• If the factory is non-seasonal, runs with power
and employs ten or more workers, this act is
applicable to the employees.
 2. EMPLOYEES’ STATE INSURANCE ACT, 1948:

• All workers, supervisors, manual laboureres, clerks,

and workers engaged through contractors whose
remuneration does not exceed Rs. 1,600/- per
month are covered under this act.
• This wage ceiling has been increased to Rs. 7500/-
per month with effect from 1st April 2004. The
employer contributes 5 percent of the wages and
the employees contribute 2.25 percent of the total
wages and the employer deposits this amount with
the ESIC.
EMPLOYEES’ STATE INSURANCE ACT, 1948…
• Individuals insured under this Act get benefits in
case of sickness, maternity, disablement,
dependents’ benefits and medical benefits.
• They also get benefits for injuries during
employment and death.
• The expenses for the funeral are also covered as per
the provisions of the Act.
• The insured person claiming the benefits should
observe the following conditions:
o
EMPLOYEES’ STATE INSURANCE ACT, 1948…
o The insured person shall remain under the medical
treatment in the hospitals/clinics/institutions approved
by the Act. The person has to act according to the
instructions of the concerned medical officer.
o During the period of treatment, the insured person
should not do anything which might retard the chances
of recovery.
o The insured person shall not leave the hospital without
the permission of the medical officer.
• The act is administered by the Employees’ State
Insurance Corporation(ESIC) which is an autonomous
body set up by the Central Government.
---
3. MINIMUM WAGES ACT, 1948:
• The need for a minimum wage-fixing machinery was stressed
by the International Labour Organisation in 1928. Twenty
years later, India passed the Minimum Wages Act, 1948.
• The government passed this act as the workers’ unions were
poorly developed and their bargaining power was also very
poor.
• The objective of the act is to determine the minimum wages
in the industry and trade where trade unions are either non-
existent or ineffective.
• This Act is applicable to all employees engaged in skilled,
unskilled, manual or clerical work in a scheduled
employment.
• This Act also includes revision of minimum wages and
ensuring the rights of employees working in an enterprise.
---
4.WORKMEN’S COMPENSATION ACT, 1923:
• Workmen’s Compensation Act, 1923, is one of the social
security laws which consists of preventive, promotional and
protective measures for labour welfare.
• This act is the first legislation towards social security.
Specially, it deals with compensation for workers who are
injured in the course of duty.
• A number of accidents take place when machineries are
installed in a factory or when the machines are not properly
maintained or when proper safeguards are not provided to
workers.
• If personal injury is caused to the worker at the factory, an
entrepreneur has to pay compensation to workers.
• This Act is applicable to all factories, mines, plantations,
transport establishments, and construction works in India.
WORKMEN’S COMPENSATION ACT, 1923…
• However, the Act does not apply to those
establishments which are covered under Employees’
State Insurance Act. It is also not applicable to casual
workers working in the factories.
• This act has made provisions for payment of
compensation if the injury is caused by accident
occurred out of employment.
• The injury has caused either death of the employees or
partial or total disablement for more than 3 days.
• The Act also provides for compensation for
occupational disease which are given in the Schedule-III
of the Act.
• There are also provisions in the Act regarding time and
method of payment of compensations of appeal and
obligations and rights of workers and employers.
WORKMEN’S COMPENSATION ACT, 1923…
• Workmen’s Compensation Act, 1923 classifies injuries
as Death, Permanent total disablement, Permanent
partial disablement and Temporary disablement
(total/partial) and makes provision for compensation.
• The entrepreneur is not liable for the payment of
compensation if:
the injury results in a partial or total disablement of the
worker within three days of employment.
the injury is directly attributed to the worker having been
under the influence of drinks or drugs.
the injury can be directly attributed to the willful
disobedience by the workers of an order expressly
given.
willful removal or disregard of any safety guard. ---
5. FACTORIES ACT, 1948:
• This Act defines the factory as a place, where 10 or
more workers are employed and the manufacturing
process is carried out with the aid of power.
• If manufacturing is carried out without power and 20 or
more people are employed, the enterprise is also
covered under this Act.
• The objective of this Act is to protect the workers in the
factory against industrial and occupational hazards.
• According to this Act the entrepreneur maintains
cleanliness in the premises, makes arrangements for
the treatment of wastes, Proper ventilation and
circulation of fresh air, Comfortable temperature and
artificial humidification as per the prescribed standards.
• The Act suggests for sufficient space (minimum 500
cubic feet) per worker, sufficient lighting, prevention of
glare and avoidance of shadows.
FACTORIES ACT, 1948…
• The entrepreneur is expected to provide clean drinking water,
latrines, urinals and spittoons.
• Any machinery which may cause injury to employees should
be fenced.
• Precautions should be taken while working on or near the
machinery which is in motion
• Persons working on dangerous machines should be given
proper training.
• Individuals below the age of 18 should not be allowed to
work with such machines.
• Persons operating dangerous machines should possess
sufficient knowledge and experience to operate machines.
• They should work under the supervision of a person who
possesses knowledge and experience of such machines.
FACTORIES ACT, 1948…
• If hoists and lifts are used, they should be of a standard
quality and should be properly maintained.
• If any revolving or rotating machine is used in the
factory, the speed limit should be mentioned.
• All floors, stairs and other accesses should be free from
slippery substances.
• The entrepreneurs should provide necessary
safeguards to protect the workers from dangerous and
poisonous fumes, gases, fragments, particles, dust, etc.
Eyes of the workers should be protected from
hazardous elements.
• An entrepreneur should ensure that there is a means of
escape in case of fire and a warning alarm system in
case of accidents. Conditions of the building should be
safe.
FACTORIES ACT, 1948…
• Suitable facilities for washing and sitting arrangements
should also be provided to the workers. First Aid Box
should also be available in the factory.
• Normal working hours should not exceed 48 hours in a
week. A rest day should be given every week. An
employee should not be allowed to work more than
nine hours a day.
• He should be given an interval of rest for at least half an
hour after five hours of work.
• Employees should be given annual leave with wages if
they work for 240 days or more in a year.
• If the enterprise is covered under this act, it is essential
for the entrepreneur to get approval for the factory
plans from the Chief Inspector of the Factories.
FACTORIES ACT, 1948…
• The Act fixes the minimum age of a person who wants
to join the factory for work.
• Persons below 14 years are not allowed to work. A
qualified surgeon must certify the age and such a
certificate should be available for inspection.
• Children between the age group 14-17 are allowed to
work maximum for five hours a day. Night shifts are
prohibited for children.
• The Act prohibits the employment of women in the
factories between 6 P.M and 7 A.M.
• Thus, the factories Act 1948, imposes many restrictions
on entrepreneurs in order to protect the interests of
the workers.
---
6.EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS
PROVISIONS ACT, 1952.
• The Employees’ Provident Fund and Miscellaneous Provisions
Act, 1952 was enacted to provide social security to the
industrial workers.
• The objective of this Act is to provide security in old age after
retirement or for the dependents in the case of his early
death.
• The Act covers all factories and establishments employing 20
or more employees. Any establishment employing even less
than 20 persons can be covered voluntarily under this Act.
• According to this Act, both the employer & employee have to
pay 6.25% to 8% of the basic pay as a provident fund
contribution. An equal amount is to be contributed by the
employees. This percentage has been changed to 12% with
mutual agreement, both the employer and employees can
contribute a higher percentage also.
 EPF & MISCELLANEOUS PROVISIONS ACT, 1952…
• Recently, it has been decided to raise the wage ceiling
to Rs. 15000 from Rs 6500/- per month by amending
EPF and Miscellaneous Provisions Act, 1952. This Act
provides following schemes:
i. EMPLOYEES’ PROVIDENT FUND SCHEME:
• An account of each contributing member is
maintained by the provident fund organisation.
• Interest is calculated on the basis of the rate declared
every year by the central government in consultation
with the board of trustees. The fund with accruing
interest becomes payable at the time of
superannuation or death
ii. EMPLOYEES’ PENSION FUND SCHEME:
• This scheme provides pension to the employee on
superannuation or retirement and on disablement.
EPF & MISCELLANEOUS PROVISIONS ACT, 1952…
iii. EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME:
• It provides life insurance benefits to employees who
are members of the Employees’ Provident Fund
Scheme.
• The Employees’ Provident Fund is administered by a
board of trustees consisting of the representatives of
the central government, state governments, the
employers and the employees.
• The Central Provident Fund Commissioner functions as
the CEO and Secretary of the board.
• There are Regional Provident Fund Commissioners, one
in each state, to administer the scheme under the
supervision and control of the central commissioner.
---
7. THE PAYMENT OF GRATUITY ACT, 1972:
• The objective of this Act is to provide social security measures
to the persons employed in industrial and commercial
establishment.
• Gratuity is a lump sum payment in recognition of the long and
meritorious services rendered by an employee.
• The Act is applicable to all factories, mines, oil fields,
plantations, ports, railway , shops and establishments in
which 10 or more persons are employed.
• A shop and establishment once covered under the gratuity
Act will continue to be covered even if the number of
employees falls below ten at a later date.
• The main provisions of the Act are:
❖ payment of gratuity to all those employees who are in 5 years
of continuous service at the time of termination of service,
which may be due to death, disability, resignation or
retirement.
THE PAYMENT OF GRATUITY ACT, 1972…
❖the gratuity is payable at the rate of 15 days’ wages
as last drawn for every completed year of service or
part there of in excess of six months.
❖rules regarding the maximum limit of gratuity to be
paid.
❖nomination for the payment of gratuity and
obligations and rights of employees and employers.
• It is important to mention that gratuity is not liable
to attachment in execution of any order of civil
court/ revenue court/ criminal court. ---
8. INDUSTRIAL DISPUTES ACT, 1947:
• Industrial disputes like strikes and lockouts have become common
in industrial units.
• In 1947, the government introduced the Industrial Disputes Act.
This Act has made a provision for investigation and settlement of
the industrial disputes.
• It covers all workers and supervisory staff but it excludes all
managerial and administrative staff.
• According to this Act, an entrepreneur can not make any change in
conditions of service, wages , allowances, hours of work, leave
with wages and holidays, and classification of employees without
giving 21 days notice to the employees concerned.
• A strike or lockout would be illegal if the matter is pending before
the labour court or tribunal or during any period which a
settlement is in operation.
INDUSTRIAL DISPUTES ACT, 1947…
• Illegal strike or lockout is prohibited under this Act.
• If less than 50 workers are employed, lay-off
compensation is not payable. Otherwise, it is
payable to the employees who have completed one
year of continuous service at the rate of 50% of
basic wages and dearness allowance.
• Lay-off compensation is not payable to those
employees if they refuse to accept an alternative
employment.
• An entrepreneur can not retrench any employee
who has completed a year’s service without giving
him a month’s notice in writing, indicating the
INDUSTRIAL DISPUTES ACT, 1947…
• Retrenchment compensation is also to be paid to him
in the case of closure or transfer of an undertaking.
• In case of change of ownership, the employees can be
re-employed.
• The principle to be followed by an employer is that the
person employed last should be retrenched first.
• If an entrepreneur is to close down his business, he has
to give at least 61 days notice to the appropriate
government authority when he employs more than 50
persons.
• If he is in the construction business, he is not required
to give any notice.
---
 Human Resource Challenges in India
Today
• A company and its success stories are made
up of its people. It’s the Human Resource
department which sets the pace and acts as
an intermediary between the company and its
human resources. Managing and laying the
foundation does not come without its set of
challenges.
• 1. Shortage of skilled talent pool – That’s the question organisations
seems to be asking as the demand for experienced professionals burgeons
forth. The primarily reason for this is human capital flight or brain drain.
Every year students are picked up from top Indian institutes for high flying
dollar and euro jobs.
• Catch them early- The best way to overcome the crunch in the talent pool
is that organisations’ should hire more qualified freshers and train them
with a long term perspective. Right talent has to be identified and
nurtured. This will ensure that organisational goals are synergised with
individual ambitions.
• 2. More than salary- Though compensation may be the initial reason to
switch over companies but when it comes to making a long term
commitment, employees are looking beyond the pay packages. Employees
built their perception about a healthy organisation on the basis of its
overall work culture and the value the HR initiatives add to it. If these
initiatives reflect that the organisation “cares”, they will surely think twice
before moving on. It is therefore pivotal that the HR initiatives focus on
making the employees feel truly valued in the organisation.
• 3. The engaged employee- Employee engagement is a major “food for
thought” in our times. With many top companies losing a vast majority of
its employees to its competitors, to yet others trying to boost their
revenue figures drastically high, corporate India today is constantly
adopting varied measures to intensify employee engagement.
• 4. A work life balance - Candidates today make a
decision on choosing a particular organisation based
on the work life balance preached in the organisation.
A healthy work life balance directly impacts on the
retention of top executives in any company. Today
there are many who would gladly forgo a better pay
option to spend quality time with their family. The
main focus should hence be on understanding what is
really important to employees and to demonstrate a
caring culture through healthy work-life balance.
• 5. Long working hours- Spending extra hours at the
office seems to be the most common thing in all fields
in India today. It is reported that an average Indian
spends about nine to eleven hours every day at office
and often takes work home to finish. This is not a
healthy scenario. It will lead to exhaustion and stress
among employees and will only mount to less
productive hours at the office.
• 6. Rewards and promotions- Good work and good performance should
not only be
encouraged but also acknowledged and rewarded. An award given at the
right time, to the right person for a meritorious job goes a long way in
raising the moral of the individual and becomes a source of inspiration for
others. However it is a double edged knife, in the sense that the reward
given to a non deserving person, surpassing a proper system can lead to
demoralisation of many. Hence a challenge for HR is to have a fool proof
selection criteria in place to ensure that the rewards are fair and are
through a transparent system.
• 7. Retention– Organisations’ needs to ensure that the opportunities
provided to the employees are lucrative enough. Be it opportunity for
vertical growth, competitive compensation or better work life climate. In
today’s dynamic market conditions, there are always lucrative offers
afloat. Under these circumstances it becomes even more important that
HR heads in organisations ensure that employees see a long term career
progression and association with the company.
• 8. Mechanism for redressal of grievances- It has been stated that even a
small grievance in the mind of an employee can sometimes lead to
withdrawal from the system and finally separation from the organisation.
It is hence becoming more and more important that the HR of an
organisation ensures that there is a proper mechanism or forum in place
where an employee can freely share his grievances. The very fact that
there is someone at the work place who cares and is ready to listen is
redressal in itself.
• 9. Compassion and Human approach- Everything is not only rules
and regulation. Flexibility in implementation of rules with a human
approach and compassion is the key. The majority of the work force
in most companies today comprises of the younger strata. It is
important to understand and adopt their needs in the
organisational climate.
• 10. Encouragement of new ideas- An employee is not just a pair of
hands, hired for a particular set of jobs; he is also an ideating being,
capable of newer and better ways. It is very important that an
employee feels involved in all aspects of the organisation.
Developing a culture where an employee feels part of the system
and is able to express a new idea will ensure better employee
engagement and sustainability. Today, hatching and harvesting
ideas from the collective intelligence within an organisation will add
to competitive advantage.
• In today’s highly volatile and competitive business environment,
technology, trends and human force are in a state of constant flux. It
is therefore important that HR initiatives are ever evolving and apt
for the challenges that lay ahead.
THANK
‘U’
 MARKETING
MANAGEMENT:
PROBLEMS
&
STRATEGIES
INTRODUCTION:
 Production without consumption is meaningless.
 We know that customer is the king in the market. So,
everything can not be sold in today’s market but only what
are required by the customers.
DEFINITION OF MARKETING:
 Marketing is the business activities that direct the flow of
goods and services from producer to customers.
 It is a process which identifies, anticipates, and satisfies
customer needs efficiently and profitably.
 A large-scale business has its own formal marketing network,
media campaigns, and sales force, but a small business unit
has to depend on personal efforts and resources.
 The success of small business enterprise is based on the
ability to build a growing body of satisfied customers.
DEFINITION OF MARKETING…
 The marketing concept for a small enterprise states that:
o All policies and activities should be aimed at satisfying
customers’ needs.
o Profitable sales volume is a better goal than maximum sales
volume.
 To use the marketing concept, a small enterprise determines:
o The needs of the customers(Market Research),
o Analysis of the competitive advantage(Market Strategy),
o Selection of specific market to serve(Target Marketing) and
o How to satisfy customers’ needs(Marketing Mix). ---
DISTINCTION BETWEEN MARKETING & SELLING:
People use marketing and selling as synonyms but these two terms
have different meanings in Marketing Management.
Selling is an activity which converts the product into cash but
marketing is the process of satisfying the needs of the customers.
Marketing consists of activities like Product Planning, Pricing,
Promoting and Distributing the product or service.
MARKETING SELLING
1. Emphasis is given on the 1. Emphasis is given on the needs of
customer’s wants. seller.
2. Producer first determines the 2. Producer first produces the
customer’s want and then product and then figures out
figures out to produce and how to sell it.
deliver the product to satisfy
3. Planning for selling is short-term
the wants.
in terms of today’s products
3. Planning for marketing is long- and markets.
term in terms of new products,
tomorrow’s markets and future
growth.
OBJECTIVES OF MARKETING MANAGEMENT:
1. CREATING NEW CUSTOMERS:
 The marketing manager should take all necessary steps such
as advertisement, sales promotion activities, etc. to attract
new customers for buying the firm’s product.
 This will help to increase sales.
2. SATISFYING THE NEEDS OF CUSTOMERS:
The marketing manager should study the customer’s demand
before offering them any product as the modern marketing
begins and ends with customers.
3. ENHANCING THE PROFITABILITY OF THE BUSINESSS:
 Marketing department is the only department which
generates revenue and the survival of the firm depends on
the efficiency of this department to generate profit.
 Thus, marketing management aims at enhancing the
profitability of the firm through the sale of products.
OBJECTIVES OF MARKETING MANAGEMENT…
4. RAISING THE STANDARD OF LIVING OF THE PEOPLE:
 Marketing facilitates the production of a variety of goods and
services for satisfying consumers’ needs.
 Therefore, it helps to raise the standard of living of people.
5. DETERMINING THE MARKETING MIX:
 Marketing mix refers to the combination of various elements
such as Product, Price, Promotion and Physical Distribution.
 Marketing management aims at proper planning of
marketing mix to meet the requirements of different kinds of
customers.
---
PROCESS OF MARKETING MANAGEMENT:
The process of marketing management is described under the
following heads:
1. SETTING OBJECTIVES:
 The process of marketing management starts with setting of
objectives.
 The organisational mission provides the priorities for
scanning the environment and finding out the
opportunities.
2. ANALYSIS OF MARKETING OPPORTUNITIES:
 Analysis of marketing opportunities means analysis of long-
term, medium-term and short-term opportunities.
 For this a reliable Market Information System is required.
 Market Information System helps the enterprise to know
Customers for the products, Location of Customers, Buying
Habits of Customers, Social Practices of Customers, and so
on.
PROCESS OF MARKETING MANAGEMENT…
3. SELECTING TARGET MARKETS:
 Now the enterprise is ready to select the target markets.
 The firm has to understand the techniques for measuring
market potential and forecasting future demand.
 Measuring market potential and forecasting future demand
become the key inputs in deciding which markets and new
products to focus on.
 Modern marketing concept cares for dividing the markets
into smaller segments, evaluating the different segments,
selecting and targeting certain segments and deciding on
enterprise’s position in each segment.
PROCESS OF MARKETING MANAGEMENT…
4. DESIGNING MARKETING STRATEGIES:
 Marketing strategy means the game plan by which the
enterprise expects to achieve its marketing objectives in
target market.
 It consists of basic decisions on marketing expenditure,
marketing mix and marketing allocation.
The four Ps of Marketing Management, Product, Price,
Promotion and Place, should be directed at consumers.
5. PLANNING MARKETING PROGRAMMES:
 Without marketing programmes the best marketing strategy
may fail.
 Decisions have to take regarding the Features, Packaging,
Branding, Servicing Policies, etc. of the product, the
Wholesale and Retail Prices, Discounts, Allowances and
Credit Terms, Identification, Recruitment and Linking of
various Marketing Facilitators, Advertising, Sales Promotion,
Publicity, etc., so that its products and services are efficiently
supplied to the market.
PROCESS OF MARKETING MANAGEMENT…
6. ORGANISING, IMPLEMENTING & CONTROLLING THE
MARKRTING EFFORTS:
 This is the final stage in the process of marketing
management.
 The firm should have a marketing organisation to implement
its marketing efforts.
 The head of this marketing organisation coordinates the
work of marketing personnel and works closely with the
Heads of Finance, Production, Research & Development,
Purchase and HR to coordinate efforts to satisfy customers.
 The marketing head has to ensure that all the departments
work together to fulfill the enterprise’s promise to customers.
---
PROBLEMS OF MARKETING MANAGEMENT:
 All types of business enterprises face marketing problems,
but these problems are more severe in case of small scale
business.
 Some of the marketing problems faced by the small-scale
entrepreneurs are described below:
1. COMPETITION FROM LARGE-SCALE SECTOR:
 Small and medium entrepreneurs face tough competition
from the products and marketing strategies of large-scale
entrepreneurs in terms of cost, quality, standard,
popularity, meeting ever changing demand of consumers.
2. LACK OF MARKETING KNOWLEDGE:
 Most of the small entrepreneurs are not highly educated or
professionally qualified to have knowledge of marketing.
 This inhibits them to understand the prevailing trends in the
market.
PROBLEMS OF MARKETING MANAGEMENT…
3. LACK OF SALES PROMOTION:
 Small units do not have required resources and knowledge
for effective sales promotion. Large-scale units mostly have
brand names.
 They also have huge amount of resources to spend on
advertisement and other sales promotion tools.
 Small-scale units, on the other hand, have to pay a heavy
commission to dealers for their selling efforts, which reduce
profit margins.
4. WEAK BARGAINING POWER:
 At the time of purchase of inputs, large-scale entrepreneurs
manage to get huge discounts and credit. Such facilities are
not available to small units.
5. PRODUCT QUALITY: It is costly and difficult for a small
unit to have quality testing and evaluating equipments.
PROBLEMS OF MARKETING MANAGEMENT…
6. CREDIT SALES:
 The small enterprises are to sell the products on credit. They are
denied liberal credit policies in purchasing inputs.
 As a result, they have to borrow excessive working capital than
actually needed. This increases the cost of production and prices,
making it non-competitive.
7. IDENTIFYING THE CUSTOMERS:
 It is not realistic that small entrepreneurs can meet the needs of
every customer.
 But if the target market is selected carefully, entrepreneurs may be
happy with the performance of the business.
8. LIMITED RESOURCES:
 Small entrepreneurs have limited financial and managerial
resources. They do not have enough money to support marketing
activities and to hire experienced marketing managers.
 Small entrepreneurs also can not conduct Market Research and
designing Marketing Campaigns. ---
MARKETING STRATEGIES:
 Success of small business enterprises is dependent on
identifying a particular group of customers who need the
product.
 Successful entrepreneurs define their target markets more
precisely.
 Marketing strategy helps to identify the target market which
a small enterprise can serve better than its competitors.
 It includes Product offerings, Prices, Distribution,
Promotional efforts and Services towards the target market.
 Marketing strategy tries to address customer needs which are
currently not being met.
 This represents adequate market potentiality and
profitability.
 Through a good marketing strategy a small business
enterprise can satisfy all customers of the target market by its
product. ---
TARGET MARKETING/ STP STRATEGY:
 The marketing strategy, which can satisfy a particular
consumer group, is known as target marketing or STP
strategy.
The process of target marketing is as follows:
i. SEGMENTATION OF MARKET:
 Market segmentation is dividing a market into subgroups of
customers.
 From all such sub groups, any one can be selected as a target
market.
 The main aim of market segmentation is to prepare separate
marketing strategy for different market segments, so that
maximum satisfaction can be provided to consumers.
TARGET MARKETING…
ii. TARGETING:
 Targeting means the process of identifying group of
consumers who are likely to purchase a specific product.
 There are different approaches to this process.
iii. POSITIONING:
 It is the act of fixing the place of the product in the minds of
the target consumers.
 In positioning, the business enterprises decides how and
around what parameters, the product offered has to be
placed before the target consumers.
---
MARKETING MIX:
 Marketing mix is developed by Jerome Mc. Carthy. It is a
combination of Product, Price, Place and Promotion(Four ‘P’)
which helps to achieve marketing goals. Marketing mix is
discussed below in detail.
1. PRODUCT: Entrepreneurs give emphasis on certain aspects such
as Requirement of customers, Features of the product, Uses of
product, Looks of product, Customers’ experience with the
product(Size, Shape, Colour, Name, Symbol, Brand), How the
product is different from that of competitor and Cost of the
product.
 Keeping in mind all such aspects, the entrepreneur will try to sell
the product sufficiently and profitably. The entrepreneur also
considers the stage of the product life cycle that the product has
already reached by that time. Marketing strategy will vary
according to the type of product and its stage in the product life
cycle.
MARKETING MIX…
2. PLACE:
 The place means where buyers look for this product, the kind of
store(a Super Market, Online Demand, Direct Demand, Demand
via Catalogue), Right Distribution Channels and Analysis of
competitors distribution channels.
 Business enterprises need to make many decisions related to
‘place’ – Access, Parking, Competition, Physical Location, etc.
3. PRICE:
 Entrepreneurs analyse Value of the product to buyers, Established
price points for products in that area, Price sensitivity of
customers and Comparison of price with competitors at the time
of determining price.
 Most of the entrepreneurs use a ‘Cost Plus method’ which involves
cost of production and profit margin.
 However, many other factors are also involved in determining the
price like Perceived price, Elasticity of Demand for the product,
Pricing objectives, etc.
MARKETING MIX…
4. PROMOTION:
 It refers to the promotion of the product to the target market.
 Target consumers are persuaded through promotional
activities to buy the product.
 The tools which are used for promotion of the product are
as follows:
i. Advertising:
 For advertisement of the product, entrepreneurs may use
electronic or print media.
 The ‘Reach’(How many people will watch the
advertisement),
 ‘Frequency’(How many times the entrepreneurs will
advertise the product) and
 Impact of the advertisement must also be evaluated.
MARKETING MIX…
ii. Personal Selling:
 It implies what happens between sales man and consumers
in the shop. In personal selling, entrepreneurs may use tricks
to persuade consumers to buy the product.
iii. Sponsorship & Promotional Licensing:
 Certain specific products are sold under license which
promotes business.

Thus, marketing mix means assembling the four Ps in right

combination. The entrepreneur may plan different marketing
mix with different expenditure on each element.
Recently, some marketing experts have added three more Ps,
i.e., Packaging, Process and People to Marketing Mix. Thus,
there are now 7 Ps in Marketing Mix instead of 4 Ps. ---
institutional support of
Entrepreneurs In Marketing
 The term institutional support refers to the part of economic environment of
industry and business. It consisting of authorities and institutions whose
decisions and active support in form of laws, regulation, financial and non-
financial help brings a lot of changes in the functioning of any business.
 The institutions could be government owned, statutory, semi autonomous or
autonomous. It is the government or government supported institutions
authorized to take up certain activities – financing, marketing, project
preparation, training the to promote industrial activities in the state.
 There are three stages of promotion – inception stage, operational stage and
expansion or diversification stage. The Government through its plans and
policies assisted the business houses in facilitating in the above stages through
various specialised institutions set up as per the law. An entrepreneur who
needs to set up a business unit of his own or with his friends and relatives is
supposed to know the various institutions or organizations working as per the
law for the purpose. Dissemination of information in this regard can only help
them in achieving the very dream of becoming a successful entrepreneur.
 ORGANISATIONAL
SUPPORT SERVICES
‘or’
INSTITUTIONAL SUPPORT
FOR
SMALL & MEDIUM
ENTERPRISES(SMEs)
CENTRAL/NATIONAL LEVEL INSTITUTIONS:
 The following national level institutions provide financial,
technical and other requirements to entrepreneurs.
1. KHADI & VILLAGE INDUSTRIES COMMISSION:
 As per the Special Parliamentary Act. 1956, the Government
of India has established Khadi & Village Industries
Commission (KVIC).
OBJECTIVES OF KVIC:
 To preserve the traditional arts and crafts.
 To equip the artisans and craftsman to take up the challenges
of the modern market.
 To promote the handicrafts, khadi, village and cottage
industries by facilitating them with the necessary inputs like
raw materials, equipments, capital, etc.
 To develop a market for these products.
 To introduce the products even in the international market.
KVIC…
SCHEMES OF KVIC: To achieve these objectives, the
following schemes are provided by KVIC:
 Financial assistance for purchase of land, building,
workshop, shed, machineries and equipments at 4% rate of
interest.
 Working capital provision
 Equity capital
 Loan provision for purchase of raw material
 Marketing Avenues and Selling Centres for the products of
artisans and craftsmen.
 Subsidies for the registered societies of artisans and
craftsmen belonging to Scheduled Castes, Scheduled Tribes,
Ex-Service men and women, etc.
KVIC…
 KVIC provides facilities for cottage industry covered in the
following schemes:
o Integrated Village Development Programme
o Special Beneficiary Scheme
o Silk Industry Development Scheme
o Interest Subsidy Scheme
o Artisans Employment Guarantee, etc.
 In order to popularise all the schemes and to promote the
products of the khadi and village industries, KVIC organises
exhibitions.
 KVIC also arranges special programmes on television and
radio.
KVIC…
 KVIC publishes a magazine called “GRAMODYOG” and
organises conferences and get together of artisans and
craftsmen.
 Government of India has defined “Gramodyog” or village
industry as:
o Population of the village should not be more than ten
thousand.
o Investment in products, machines and equipment should not
exceed Rs. 15,000/-.
o Manufacturing can be done either with power or without
power.
 Thus, KVIC plays a significant role in the promotion and
development of the khadi and village industries. ---
NATIONAL LEVEL INSTITUTIONS…
2. NATIONAL SMALL INDUSTRIES CORPORATION:
 National Small Industries Corporation(NSIC) was set up in
the year 1955 as a Central Government undertaking.
 The main aim is to fulfill the requirement of machineries and
equipments for the development of small entrepreneurs.
 It is observed that the main constraint faced by the
entrepreneurs is the dearth of funds to purchase machineries
and equipments.
 NSIC is established to provide plants, machineries and
equipments on a hire-purchase basis.
 Under its special scheme, entrepreneurs can procure
indigenous as well as imported machineries. But the scheme
does not include second hand machineries and machinery
costing less than 1,000/-.
NSIC…
 NSIC also assists the entrepreneurs in procuring government
orders.
 The prescribed application forms are available in all offices of
NSIC, SISI(Small Industries Service Institute) and
DICs(District Industries Centres).
 The processing fee is 2% to 5% of the cost of machinery
 Service fee depends upon the location of the unit.
 Discrimination is made between the units located in
industrially developed regions and the units of Scheduled
Castes, Scheduled Tribes, persons with disabilities, ex-service
men and women.
 The cost of the machineries is to be repaid in 9 or 13 equal
installments.
NSIC…
 Depending upon the cost of machinery, an entrepreneur has
to pay an application fee of Rs.50/- to Rs. 1,000/-. New
entrepreneurs are given special incentives.
 They can pay the first installment after 18 months from the
date of contract with NSIC.
 The rate of interest charged by NSIC is usually 16% to 21%.
 For imported machineries, entrepreneurs have to abide by
the import policy of the Government. Entrepreneurs have to
secure a license for such import. ---
3. NATIONAL INSTITUTE FOR SMALL INDUSTRY
EXTENSION AND TRAINING(NISIET):
 NISIET was set up in the early 1950s in Hyderabad. It has
been imparting training to entrepreneurs, managers and
various development functionaries of State Governments,
financial institutions and other agencies.
NATIONAL LEVEL INSTITUTIONS…
 It organises about 45 national level and 15 international level
programmes every year.
 NISIET also acts as an important resource and information
centre for small industrial units and undertakes research and
consultancy for their development.
 Since its inception NISIET has taken enormous steps to
become the premier institution for the promotion,
development and modernisation of Small and Medium
Enterprises(SMEs).
 Being an autonomous arm of Ministry of Small Scale
Industries, NISIET tries hard to fulfill its objectives through a
variety of operations ranging from training, consultancy,
research and education to extension and information service.
---
NATIONAL LEVEL INSTITUTIONS…
4. SMALL INDUSTRIES DEVELOPMENT
ORGANISATION(SIDO):
 This organisation is mainly created for development of
various small-scale units.
 It is a nodal agency for identifying the needs of Small-Scale
Industries(SSI) units, coordinating and monitoring the
policies and programmes for promotion of the small
industries.
 SIDO undertakes various programmes of training,
consultancy, evaluation for needs of SSI and development of
industrial estates.
 All these functions are taken care with 27 offices, 31 Small
Industries Service Institutes.
SIDO…
OBJECTIVES OF SIDO:
The major objectives of SIDO are:
 To improve the chance of growth of small and medium
enterprises(SMEs).
 To improve the rate of survival of SMEs.
STRATEGIES USED TO ACHIEVE OBJECTIVES:
i. To support innovative entrepreneurs, start-ups and existing
entrepreneurs at the early stage and assist them in
implementing their innovative ideas.
ii. To optimise the capacity utilisation of available
infrastructure facilities like buildings, professional skills
available for the growth of entrepreneurs.
SIDO…
FUNCTIONS OF SIDO:
The following functions are performed by the SIDO:
i. FUNCTIONS RELATING TO CO-ORDINATION:
 To provide a national policy for the development of small
scale industries
 To co-ordinate the policies and programmes of various State
Governments.
 To maintain a proper liaison with the related Central
Ministries, Planning Commission, State Governments,
Financial Institutions, etc.
 To co-ordinate the programmes for the development of
industrial estates.
SIDO…
ii. FUNCTIONS RELATING TO INDUSTRIAL
DEVELOPMENT:
 To reserve items for production by small-scale industries.
 To collect data on consumer items imported and then,
encourage industrial units to produce these items by
providing assistance.
 To render required support for the development of ancillary
units.
 To encourage small-scale industries to actively participate in
Government Stores Purchase Programme by giving them
necessary guidance and assistance.
SIDO…
iii. FUNCTIONS RELATING TO EXTENSION:
 To make provision of technical services for improving
technical process, production planning, selecting appropriate
machinery, preparing factory lay out and design.
 To provide consultancy and training services to strengthen
the competitive ability of small-scale industries.
 To render marketing assistance to small-scale industries to
sell their products.
 To provide assistance in economic investigation and
information to small-scale industries.
---
NATIONAL LEVEL INSTITUTIONS…
5. SMALL SCALE INDUSTRIES BOARD:
 Small Scale Industries Board(SSI Board) was established in
1954 to provide effective co-ordination and inter institutional
linkages for the benefits of small scale sector.
 The board plays advisory role in solving the problems of
small scale sectors.
 The SSI Board operates in the following areas:
o Policies and Programmes
o Development of industries in a specific region such as the
North east
o Quality improvement and marketing assistance
o Credit facilities, taxation and modernisation
o Industrial sickness
SSI BOARD…

 The SSI Board is constituted with the following members:

o Union Industry Minister: Chairman
o State Industry Ministers: Members
o Selected Members of Parliament: Members
o Secretaries of Department concerned: Members
o Selected Public Enterprises: Members
o Industry Associations: Members
o Eminent experts in the field: members
---
NATIONAL LEVEL INSTITUTIONS…
6. NATIONAL INSTITUTE FOR ENTREPRENEURSHIP
AND SMALL BUSINESS DEVELOPMENT(NIESBUD):
 NIESBUD was established in the year 1983 by the Ministry of
Small-Scale Industry.
 It is an apex body for coordinating and overseeing the
activities of various institutions/agencies engaged in
entrepreneurship development particularly in the area of
small industry and small business.
 The main functions of NIESBUD are to coordinate, research
and training in entrepreneurship development and to impart
specialised training to various categories of entrepreneurs.
 It serves as a forum for interaction and exchange of views
between various agencies engaged in entrepreneurial
development.
NIESBUD…
 The policy and guidance to the NIESBUD is provided by its
Governing Council whose Chairman is the Minister of Small
Scale Industries.
 It conducts about 28 National and 5 International Training
Programmes every year.
 Besides, NIESBUD undertakes research studies, consultancy
assignments and development of training aids.
---
7. SMALL INDUSTRIES SERVICE INSTITUTE:
 Small Industries Service Institute(SISI) is a national level
organisation established by the Central Government.
 At the state level, SISI functions under the Director assisted
by Deputy Directors.
 There are 28 SISIs and 30 branches of SISI set up in state
capitals and other industrial cities all over the country.
SISI…
FUNCTIONS OF SISI: The functions of SISI are :
i. TECHNICAL INFORMATION:
 SISI provides information about the supply and the
availability of raw materials. It also provides technical
information about the machines and equipments.
 Technical know-how about the process of production, quality
testing, standardisation of products, modernisation, product
design and other services are provided by SISI.
ii. WORKSHOP:
 SISI has well-equipped workshops which provide services to
entrepreneurs at reasonable rates.
 Jobs related with machine shops, heat treatment, hardness
testing are in these workshop is to improve the quality of the
products.
SISI…
iii. TECHNICAL TRAINING:
 SISI provides technical training to the workers employed in
the various industrial units as well as the entrepreneurs in
order to improve standards of quality and labour.
 In the extension centres of SISI, training is provided for
machine shop, milling, heat treatment, blueprint reading,
etc.
iv. ECONOMIC INVESTIGATION DIVISION:
 SISI collects and compiles statistical information regarding
various aspects concerned with the establishment and
development of small scale industries.
 Important aspects are demand, and supply scenarios for
different products, investment, raw material, etc.
SISI…
 This division prepares review reports on the items reserved
for the SSI units.
 The study of sick units is also undertaken by this division. In
such studies, SISI tries to identify the causes of the sickness
for the smooth working of SSI units.
v. EXPORT PROMOTION:
 SISI plays a significant role in the efforts regarding export
promotion.
 A special arrangement is made to provide information about
export promotion.
 On behalf of the small entrepreneurs, SISI participates in
international exhibitions and promotes the products in the
foreign market.
SISI…
vi. MODERNISATION:
 Small Industries Service Institute guides the entrepreneurs
in the quality upgradation, modernisation and
improvement of productivity.
vii. DEVELOPMENT OF THE MARKET:
 SISI acts as a link between the tiny and small industries and
the medium and large scale industries.
 SISI provides information about the products and the
services of the small entrepreneurs to the requirements of
the large industries.
 Thus, SISI bridges the small industries with large industries
and tries to develop the market.
 Many of the products manufactured by the small industries
are purchased by the large industries.
SISI…
viii. LIBRARY:
 SISI has a huge collection of books, journals, magazines,
news papers in its library.
 It has a collection of hundreds of project reports.
Entrepreneurs can use these ready-made project reports at
reasonable rates.
ix. EXHIBITION:
 A permanent exhibition is arranged by SISI in its office
premises.
 SISI exhibits products manufactured by small entrepreneurs.
 The exhibition is free of cost.
Thus SISI provides multifarious services to the small
entrepreneurs. ---
NATIONAL LEVEL INSTITUTIONS…
8. SIDBI:
 Small Industries Development Bank of India(SIDBI) was
established in the year 1990 as a development bank
exclusively for the small-scale industries.
 SIDBI is a Central Government undertaking.
 The prime aim of SIDBI is to promote and develop small
industries by providing them the valuable factor of
production and finance.
 It coordinates the work of all institutions and commercial
banks which supply finance to small entrepreneurs.
SIDBI…
FINANCIAL ASSISTANCE SCHEME OF SIDBI:
 The main obstacles and problems in the growth of industrial
units are:
o Paucity of Primary Infrastructure
o Unavailability of suitable Market for selling the products
o Working capital Requirement
o Difficulties arising out of the Delay in Receiving the Bills
 Considering these problems, the following provisions are
included in the various schemes of SIDBI:
o Loan Assistance to the Institutions providing Market or
Marketing Avenues to the Small Entrepreneurs
o Loan Assistance to Ancillary Units and also for
Modernisation and Upgrading Technology
SIDBI…
o Loan Assistance to Institutions providing Primary Services
and Infrastructure and Developing the Growth Centres.
o Loan Assistance to National Small Industries
Corporation(NSIC)
o Loan Assistance to Private Companies which function on
rental basis or contractual basis
NATURE OF LOAN ASSISTANCE SCHEME:
The nature of Loan Assistance Scheme is as follows:
 Refinance to Small Scale Industries development
Corporation(SSIDC) which supply raw materials to small
enterprises and provide them marketing avenues.
 Refinance for loan given by State level Institutions and banks
under the single window system for Fixed Capital, Working
Capital and Bill Discounting.
SIDBI…
 Refinance of Loan given to Professionals and Self-Employed
People for business like Small Clinics and Hospitals, Nursing
Homes, Development of Tourism, etc.
 Refinance of Loan given by Banks and concerned Institutions
for New Projects, Expansion and Modernisation of existing
units, quality improvement and rehabilitation of the units.
 Similarly, SIDBI provides Assistance to Women
Entrepreneurs and Ex-Servicemen under its various schemes.
---
9. NABARD:
 The Government of India set up the National Bank for
Agriculture and Rural Development(NABARD) in 1982.
 It acts as an agency for promoting integrated rural
development and to provide all sorts of production and
investment credit for agriculture and rural development.
NATIONAL LEVEL INSTITUTIONS…
OBJECTIVES OF NABARD: The objectives are:
o To give attention and direction to integrated rural
development.
o To act as a centre piece for the entire rural credit system at
the national level.
o To act as a provider of supplemental funding to rural credit
institutions.
o To arrange for investment credit to small industries, village &
cottage industries, handicrafts and other rural crafts, artisans
and farmers.
o To improve the credit distribution system by institution
building, rehabilitation of credit institutions and training of
bank employees.
NABARD…

o To provide refinance facilities to State Land Development

Banks(SLDBs), Regional Rural Banks(RRBs) and Commercial
Banks for development purposes in rural areas.
o To coordinate the working of different agencies engaged in
development work in rural areas at the regional level, and to
have liaison with Government of India, Reserve Bank of
India(RBI), State Governments and other policy making
institutions at the national level.
o To inspect, monitor and evaluate projects getting refinance
from the NABARD.
NABARD…
ORGANISATION OF NABARD:
 The NABARD is managed by a Board of Directors which
consists of :
o Chairman
o Managing Director
o Two Directors from the experts in Rural Economics, Rural
Development, etc.
o Three Directors from the working Cooperative banks
o Three Directors from the Directors of RBI
o Directors from the officials of the Government of India.
o Two Directors from the officials of State Governments
All the Directors are appointed by the Central Government.
NABARD…
STRUCTURE OF NABARD:
 The NABARD started with a capital of Rs. 100 crores which is
in equal proportion held by the Government of India and the
Reserve Bank of India.
 The NABARD has replaced the Agriculture Refinance
Development Corporation(ARDC) by taking over the entire
assets and liabilities of the latter.
 NABARD is also authorised to accept deposits for over a year
from the Central, State and local Governments, scheduled
Commercial banks, etc.
 With the approval of the central Government, NABARD can
also borrow foreign currency from any bank or institutions in
India or abroad.
NABARD…
FUNCTIONS OF NABARD:
 The functions of NABARD have been divided into following
three categories:
1. CREDIT DISTRIBUTION:
The NABARD provides refinance of various types to the
following institutions:
i) SHORT-TERM CREDIT:
The NABARD provides short term credit to State Cooperative
Banks(SCBs), Regional Rural Banks(RRBs) and other
financial institutions approved by the Reserve Bank of
India(RBI) for the following purposes:
 Seasonal Agricultural Operations
 Marketing Agricultural products
NABARD…
 Marketing and Distribution of inputs like pesticides,
fertilisers, etc.
 Other activities related to rural/agricultural sectors.
 Production and marketing of certain activities like,
Handicrafts, Small Industries, Village Industries, cottage
industries, artisans, silk industry, etc.
ii) MEDIUM TERM CREDIT:
 The NABARD provides medium term credit to SCBs, LDBs,
RRBs and other approved institutions for a period ranging
from 18 months to 7 years.
 The medium term loans are given for investment schemes
relating to agriculture and rural sector.
NABARD…
iii) LONG TERM CREDIT:
 The NABARD provides long term credit to SLDBs, RRBs,
SCBs, Commercial Banks and any approved financial
institutions.
iv) FACILITIES FOR CHANGES & REARRANGEMENT:
 The NABARD provides refinance facilities to SCBs and RRBs
in the event of changes and rearrangement of credits when
there is drought, famine or other natural calamities, army
operations, enemy operations, etc.
 Refinance facilities are also provided to the artisans, small
industries, etc.
 The duration of such refinance facilities is not more than 7
years.
NABARD…

v) REFINANACING OF INDUSTRIES IN RURAL AREAS:

 The NABARD provides refinancing facilities to all small,
village and cottage industries in rural areas.
2. DEVELOPMENTAL FUNCTION:
The NABARD performs the following developmental
functions:
 The NABARD coordinates the rural credit institutions.
 It takes measures towards institution building to improve the
capacity of credit delivery system.
 NABARD develops specialisation to solve problems relating
to agriculture and villages.
NABARD…
 NABARD helps the Government, RBI and other institutions
in their rural development efforts.
 It acts as an agent of the Government and RBI for monitoring
work in agriculture and related areas.
 NABARD provides facilities for research and training to the
staff of RRBs, SCBs, LDBs, etc. and promotes research in
agriculture and rural development activities out of its
Research and Development Fund.
 To provide training facilities in the field of rural banking,
agriculture and rural development, NABARD has the ‘Banker
Rural Development Institute’ and ‘National Bank Staff
Colleges’ at Lucknow, Bolpur and Mangalore, and ‘College of
Agriculture Banking’ at Pune.
NABARD…
 NABARD spreads information regarding rural banking and
development.
 It helps the State Governments so that they may subscribe to
the share capital of State Cooperative Banks.
 NABARD provides direct credit in cases approved by the
Central Government connected with agriculture and rural
development.
 It maintains an ‘Easy Credit Aid Fund’ out of its profits so
that entrepreneurs getting refinance facilities for village,
cottage and very small industries may be provided margin
money.
 This help is given interest-free and is recovered in yearly
installments after the loan is repaid.
NABARD…
3. REGULATORY FUNCTIONS: NABARD performs the
following regulatory functions:
 It inspects the working of Regional Rural Banks(RRBs) and
Cooperative Banks of all types except the Primary
Cooperative Banks.
 NABARD inspects the apex cooperative marketing
federations, state handloom weaving societies, etc.
 All applications for opening of a branch by the RRB or a
Cooperative bank, other than a primary cooperative society,
are required to be submitted to the RBI through the
NABARD.
 All RRBs and Cooperative Banks submitting returns to the
RBI are required to furnish a copy of returns to the NABARD.
 NABARD is empowered to obtain any information or
statement from the RRBs and Cooperative Banks.
---
THANK
‘U’
THANK
‘U’
Intellectual Property
Right(IPR)
Intellectual Property Right(IPR)

• Intellectual Property Right(IPR) is the right to creation of

one’s mind.
• This creation may be artistic or literary works , scientific
inventions, designs, etc.
• IPR enables the individual to claim exclusive right to exploit
his creation commercially.
• IPR ensures that others can not exploit somebody’s
creation without his consent.
• Most common forms of IPR are patents, trademarks, copy
rights, industrial design and geographical indications.
DIFFERENT ETHICAL ISSUES IN IPR…

ADVANTAGES OF IPR:
• IPR is an incentive for the innovator. It promotes
innovation and provides opportunities to the innovator to
exploit his innovation commercially. Generally it is for 20
years.
• IPR helps many companies for investment in research and
innovation. Once IPR is granted, the company is able to
recover the investment and make profits.
• IPR protects the tradition and rich heritage associated
with famous products and places such Kancheepuram silk
or Darjeeling Tea.
DIFFERENT ETHICAL ISSUES IN IPR…
DISADVANTAGES OF IPR:
• IPR provides scope to exploit consumers by granting
exclusive right for production and marketing of a product,
e.g., pharmaceutical companies spend a lot of money on
research and clinical trials.
• Then by having IPR, they acquire exclusive right to
manufacture and market the product.
• During this period, generic products can not be made and
marketed.
• Pharmaceutical companies exploit this situation by pricing
the product so high that it is beyond the reach of an average
consumer. Such high price for life-saving drug is not correct.
DIFFERENT ETHICAL ISSUES IN IPR…
DOMAINS OF IPR:
Some of the major domains of IPR are:
i) PATENTS:
• Patents are granted for invention or improvement of existing
products, i.e., innovation.
• Patents grant the owner a right such that others are not
allowed to exploit the invention or innovation without
permission from the owner.
• The Controller General of Patents grants patents.
• The headquarter of the patent office is in Kolkata with
branches in Chennai, Mumbai, and Delhi.
• The office of the Patent Information System is in Nagpur.
DIFFERENT ETHICAL ISSUES IN IPR…
ii) TRADEMARKS:
• A trademark is a verbal, visual, or combination symbol
which distinctly identifies products or services provided by a
person or a company.
• The purpose of a trademark is to distinguish products
produced by a company from similar products produced by
others.
• For example, the symbol of windows software, consisting of
four rectangles, is a registered trademark of the Microsoft
Corporation for the product windows.
• It helps consumers to identify the source of a product or
service, e.g., the trademark ‘Sony’ instantly brings to mind a
product from Sony Corporation.
DIFFERENT ETHICAL ISSUES IN IPR…
• Trademarks help the company to advertise the product
using the trademark.
• It acts as a guarantee for quality and creates confidence
among consumers.
• Trademarks can be registered with the Registrar of
Trademarks in a country.
• In India, the registration of trademarks is governed by
Trademarks Act. 1999.
• The registration of trademarks goes through different stages
like Examination, Enquiry, Advertisement and Opposition.
Trademarks must be unique.
• It is advantageous to register a trademark for its protection
and to create consumer confidence.
DIFFERENT ETHICAL ISSUES IN IPR…
iii) COPYRIGHT:
• Copy-right is for the protection of artistic and literary works.
• It covers books, maps, dramatic works, paintings, sound
recordings, movies, photographs, computer programmes,
etc.
• The sign of copyright (©) indicates the presence of
copyright protection.
iv) INDUSTRIAL DESIGN:
• Industrial design is something which makes the product
attractive, e.g., a conventional chair and a modern chair.
• Both the chairs serve the same purpose but they have
different aesthetic appeal. One can patent the design.
DIFFERENT ETHICAL ISSUES IN IPR…
• In India, designs can be registered with the Registrar of
Industrial Design Patent under the Designs Act 2000.
• Design registration gives exclusive right to the owner to
make a class of products.
• Designs, if registered, can be sold to others for production.
The design is protected for a specified period only, unless
renewed.
V) GEOGRAPHICAL INDICATION:
• This has been done to protect the quality and territorial
identity of products which are famous.
• This covers natural, agricultural or manufactured goods
which are known by their geographical territory of
production.
DIFFERENT ETHICAL ISSUES IN IPR…
• The rich heritage of India has been preserved by
geographical indications.
• In agriculture, Basmati rice, Nagpur orange, Darjeeling tea,
etc. are famous all over the world.
• In textiles, Kanjeepuram silk, Chanderi, Pochampali, Kota
and Sambalpuri saree are famous names.
• There are many other products which go with their
geographical names, such as Kolhapuri chappals, Mysore
Sandal soaps, Sholapur bed sheets, etc.
• In India, such goods are covered under the Geographical
Indication of Goods (Registration and Protection) Act. 1999.
• There is a Geographical Indication Register maintained at
the Patent Office, Chennai.
DIFFERENT ETHICAL ISSUES IN IPR…
• The geographical indication registration is given for a period
of 10 years and is extended by similar spans on re-
registration.
INFRINGEMENT OF IPR:
• The most common form of IPR infringement is in the case of
copyright of movies.
• Producers spend a large amount of money to make films
which has to be recovered by selling tickets to people to
watch the film in theatres.
• However, making unauthorised copies of the film and selling
them at a low price is a big business racket.
• Other forms of infringement is to copy the work of someone
else and publish papers as original research, which is known
as plagiarism.
• Such infringements go to the appropriate judiciary for legal
action. ---X---
 SICKNESS
IN
SMALL SCALE
INDUSTRIES
INTRODUCTION:
 Sickness is a major problem of Small and Medium
Enterprises(SMEs) in all countries. It is a matter of serious
concern because it affects the owners, employees, creditors,
suppliers and it causes wastage of national resources and social
unrest.
 Substantial amount of fund is blocked-up in sick industrial units
and affects the healthy growth of Indian economy.
 Due to globalisation and opening up of Indian economy, the
domestic enterprises have to compete with MNCs as a result of
which sickness of Indian enterprises is growing at a faster rate.
 In India, about 90% of sick units are non-viable and can not be
revived, rest 10% can be revived. Therefore, it is essential to detect
industrial sickness at early stage and taking measures to prevent
sickness.
 An enterprise is made of many inputs. When such inputs are
mismanaged, inappropriate, insufficient and inefficient it leads to
sickness.
DEFINITION OF A SICK UNIT:
 Industrial sickness refers to a situation where the revenues of
an enterprise are insufficient to meet its costs.
 RBI defines, a sick unit is one which has incurred a cash loss
for the years together and is likely to continue incurring cash
losses for the current as well as in the following year and the
unit has an imbalance in its financial structure.
 According to SBI, ‘A sick unit is that unit which fails to
generate an internal surplus on a continuous basis and
depends for its survival upon frequent infusion of external
funds’.
 Sickness is a relative concept. To a layman, a sick unit is one
which is not healthy. To an investor, it is one which skips
dividends. To an industrialist, it is a unit which is making
losses. To a banker, it is a unit which is not repaying its
installments on due dates.
DEFINITION OF A SICK UNIT…
 An enterprise is said to be sick, when it is not able to protect the
interest of all the concerned parties and fails to live up to their
expectations.
 When a business enterprise runs on continuous losses for a
long period and there is no chance of making profit in future is
said to be sick unit.
SYMPTOMS OF SICKNESS: Delay in payment of taxes, excise
duty, provident fund contribution, ESI contribution, electricity
bills, telephone bills, etc.
 Inability to pay installment of loans and creditors timely
 Increased litigation with the customers and decrease in number
of customers
 Higher rate of labour turnover, Decrease in the market price of
share and debentures, Poor maintenance of plant and
machineries, Frequent application to banks for additional
credit, Increase in push sales, Constant decrease in profitability.
CAUSES OF SICKNESS:
 A unit may become sick at any time due to any reason. Many
units become sick before the completion of the project and
some units become sick after a longtime of successful
operation. The major causes of industrial sickness are:
A. INTERNAL CAUSES OF SICKNESS:
These causes usually take birth inside the enterprise and
become the reasons of sickness.
i. OBSOLETE TECHNOLOGY:
 Due to old and out-dated technology, production may not be
qualitative and cost effective which leads to inefficiency and
higher cost of production.
 Old and out-dated plant and machineries require frequent
repair and maintenance as a result there may be decrease in
the overall efficiency which leads to sickness of the
enterprise.
CAUSES OF SICKNESS…
ii. FINANCIAL MISMANAGEMENT:
 The finance of the enterprise may be mismanaged and there
may be diversion of funds to unprofitable activities. This may
lead to financial sickness.
 In India diversion of fund for non-business activities such as
marriage, construction of residential houses, purchase of
personal vehicles, higher education of children, political
donations, etc. is very common which leads to sickness of an
enterprise.
iii. POOR INDUSTRIAL RELATION:
 If the relation between the management and workers is not
cordial, the workers often resort to strike, agitation, go-slow,
etc. which hampers the growth of an enterprise.
 Such labour unrest due to poor industrial relation is a major
cause of industrial sickness.
CAUSES OF SICKNESS…
iv. INEFFICIENT MANAGEMENT:
 An efficient management can not only increase profits but
also convert the losses into profit where as an inefficient
management can easily convert the profit into heavy loss.
This is only due to mismanagement of resources.
 So, an inefficient management plays a major role in making
the enterprise sick.
v. INEFFICIENT SALES AND MARKETING ACTIVITIES:
 Even if there is qualitative production at reasonable cost, due
to inefficient sales and marketing organisation, other
competitors will get the chance to win the hearts of the
consumers.
 So, the unit may not be in a position to achieve good sales
target which will affect the long run existence of the unit and
gradually the unit becomes sick.
CAUSES OF SICKNESS…
vi. HIGHER COST OF PRODUCTION:
 If the cost of production is high, the margin of profit can not
be high and it will be difficult to manage the enterprise and
finally it will be sick.
 The cost may be high due to many reasons, such as,
inefficiency, higher cost of inputs, excessive dependence on
labour, higher interest burden, more spoilage, breakage, etc.
vii. WRONG SELECTION AND PLACEMENT OF
WORKERS:
 If the recruitment, selection and placement of manpower is
wrong , an inefficient team may be in charge of the
organisation which leads to sickness.
CAUSES OF SICKNESS…
viii. UNWANTED EXPANSION, MODERNISATION AND
DIVERSIFICATION:
 It is seen that some enterprises go for expansion, mordernisation
and diversification of its activities without making proper study of
market conditions.
 The additional financial burden due to such activities may be too
heavy and may block a huge amount of money. This may not
result in adequate return on the investment.
 This may be the reason for the sickness of an enterprise.
B.EXTERNAL CAUSES:
The entrepreneur has no control on external causes for sickness
which are:
i. NON-ACCEPTANCE OF PRODUCT BY CONSUMERS:
 If the products by the enterprise are not accepted by the
consumers due to changes in taste, fashion, requirement, custom
and attitude which adversely affect the demand of the product.
This will cause sickness of the enterprise.
CAUSES OF SICKNESS…
ii. SHORTAGE OF RAWMATERIALS:
 There may be shortage of raw materials due to many reasons
which are beyond the control of the entrepreneur. Due to this
the plant, people and physical facilities remain idle without
any job. This also leads to sickness of an enterprise.
iii. SHORTAGE OF POWER:
 Small and medium enterprises may not have their
independent source of power.
 If there is a shortage of power, industrial activities can not go
on smoothly which may cause sickness.
 Frequent interruption of power also causes many problems
for the enterprise due to which they perform under their
capacity.
CAUSES OF SICKNESS…
iv. STIFF COMPETITION:
 There is cut-throat competition among the entrepreneurs to
sell their products.
 So due to stiff competition, entrepreneurs are usually
compelled to sell their products even at loss to eliminate
competitors.
 In such cases, enterprises with poor financial strength fail to
perform as per expectation and hence become sick.
v. REDUCTION IN DEMAND:
 If the demand for the product goes down due to invention of
new products, prices and quality of substitutes, change in
technology, etc. the enterprise is bound to be sick.
CAUSES OF SICKNESS…
vi. CHANGE IN GOVERNMENT POLICIES:
 Due to the change in government policies on some products,
some business becomes unprofitable and hence it becomes
sick.
 For example, if the government decides to import paper at a
low price, the domestic paper manufacturing enterprises may
become sick.
vii. GLOBAL COMPETITION AND TRADING PATTERN:
 When demand for product falls in a country, or there is an
excess supply, such products are usually exported to other
countries at throw away prices which causes lot of damage to
the industries of the countries to which it is exported.
 As a result of such dumping, domestic enterprises will
become sick.
 This happens in case of underdeveloped and developing
countries.
CAUSES OF SICKNESS…
C. ENTREPRENEURIAL CAUSES: The major entrepreneurial
causes are:
i. IMPROPER PLANNING:
 Many enterprises become sick due to improper planning of
entrepreneurs. They lack proper planning skill for which many
things do not move as per expectations.
 Planning is the foundation of a business and if it is wrong, the
enterprise may become sick.
ii. LACK OF DETERMINATION:
 Most of the people go to start enterprises when they fail to secure
any other suitable source of income. So starting an enterprise was
not a long standing desire.
 If the entrepreneur has selected a project half-heartedly, the
enterprise and the entrepreneur will not have adequate strength.
 So, lack of strong determination and lack of adequate interest may
be the reason of sickness of an enterprise.
CAUSES OF SICKNESS…
iii. LACK OF INNOVATION AND SKILL:
 Starting an enterprise and running it successfully requires a
lot of innovation and talent.
 Always the entrepreneur has to think of newness and
innovative ideas to succeed in business.
 Many people do not possess such talent and depend on
others. Hence, they make the enterprise sick.
iv. ATTITUDE OF THE ENTREPRENEUR:
 If the attitude of the entrepreneur is for the betterment of
the enterprise, then his struggle will make him successful.
 But if the entrepreneur is lazy, dull and non-achievement
oriented, it is difficult for him to run a business enterprise
successfully. Such enterprise usually becomes sick very soon.
CAUSES OF SICKNESS…
v. INTENTIONAL SICKNESS:
 If the entrepreneur intentionally makes the enterprise sick
by any means and divert its resources to other projects, then
nothing will be helpful to avoid sickness.
 Sometimes, entrepreneurs start enterprises to take advantage
of subsidies, concessions, facilities, etc. from the
government. Their aim is not to make a long standing
business but to abstract benefits. In such cases, sickness is
invited by entrepreneurs.
vi. LACK OF ENTREPRENEURIAL CHARACTERISTICS:
 Entrepreneur is the major element in the success of an
enterprise, but if he does not possess adequate
characteristics, abilities, skill and talent of an entrepreneur
then there is every chance that his unit will become sick very
soon.
CAUSES OF SICKNESS…
vii. EXCESS DEPENDENCE OF ENTREPRENEURS:
 During the initial period the entrepreneurs do everything
and get involved in all the activities to ensure success.
 But when they achieve success and become rich, gradually
they start depending on others. They do not remain in touch
with all the activities.
 Many times, the entrepreneurs remain busy in other social,
cultural, personal and allied activities for their status and
positions.
 Due to this sort of dependence, an entrepreneur may lose
grip over his enterprise and employees.
 Others will try to take advantage of this dependence and
cheat him and hide information.
 Excessive dependence may be the cause of sickness of his
enterprise.
CAUSES OF SICKNESS…
D. OTHER CAUSES SICKNESS:
i. NATURAL CAUSES:
 Natural calamities such as flood, cyclone, draught,
earthquake, etc. cause heavy damage to the enterprises and
make them sick for ever.
 Just after the natural calamities, a temporary sickness is
found but if proper care is not taken, this temporary sickness
may become permanent sickness.
ii. SOCIAL CAUSES: Awareness among the people not to use a
particular product on the ground that it is harmful to health
or environment create mass opinion and movement against
such product and hence such industries become sick.
 Sometimes excessive pollution, heat, foul smell, etc. from the
unit cause social awareness among the people and they resist
the continuance of such unit in that area.
CAUSES OF SICKNESS…
iii. STRATEGICAL CAUSE:
 Sometimes there may be conflicts between countries which
may cause war.
 Due to that, trade and business between such countries come
to a halt causing many industries sick.
 Further, there may be treaty between nations due to which
there may be imports and exports. This inflow of foreign
goods may cause sickness to the domestic industries.
EFFECTS OF INDUSTRIAL SICKNESS: Major effects of
industrial sickness are described below:
i. SET BACK TO EMPLOYMENT PROSPECTS:
 Closure of industrial unit is likely to render workers
unemployment.
 The implications are serious if the sick industrial unit is a
large one, employing large number of people.
EFFECTS OF INDUSTRIAL SICKNESS…
ii. WASTAGE OF RESOURCES: In a capital scarce economy
like India, if an industrial unit turns sick and is closed down,
resources invested in that unit are wasted.
 This problem is particularly serious for large scale sick units
where substantial investments have been made in plant and
machinery.
iii. ADVERSE EFFECT ON RELATED UNITS: An industrial
unit is linked with a number of other industrial units through
backward and forward linkages. Hence, sickness in one unit
adversely affects related units.
 For example, a textile unit is connected to other units for
procuring raw materials and other inputs. Similarly, it is
linked to other units to whom it supplies its finished
products. So sickness in such textile unit is likely to have
adverse effects on related units.
EFFECTS OF INDUSTRIAL SICKNESS…
iv. INDUSTRIAL UNREST:
 Closure of a large sick industrial unit causes widespread
labour unrest and strikes.
 The peace of industrial environment will be threatened
resulting in loss of production in number of units.
v. ADVERSE EFFECTS ON INVESTORS &
ENTREPRENEURS:
 Closure of a large sick unit creates dissatisfaction among the
investors as money invested by these investors is lost.
 It will demoralise the present and potential investors.
 Failure of a unit acts as disincentive to other entrepreneurs
who are planning to set-up new industrial units.
EFFECTS OF INDUSTRIAL SICKNESS…
vi. LOSS OF REVENUE TO GOVERNMENT: The central,
state and local governments raise substantial revenue from
industrial units by way of various duties and taxes.
 Sickness in industrial units results in decreased revenue
collection in the from of lesser taxes and duties.
vii. LOSSES TO BANKS AND FINANCIAL INSTITUTIONS:
 Closure of industrial unit causes substantial financial losses
to banks and financial institutions which have given loans to
these units.
 Some of the financial institutions like IFCI, IDBI and ICICI
are incurring huge losses on account of non-recovery of
advances from sick industrial units.
 It will also adversely affect the future lending programme of
banks and financial institutions, as shortage of resources
emerges on account of locking-up of funds in the sick units.
---
PREVENTIVE MEASURES FOR SICK ENTERPRISES:
Following preventive measures may be taken to avoid
sickness.
 All the activities should be planned carefully and the
implications of such activities be apprehended before hand.
 Financial discipline should be ensured at each and every
level.
 A good industrial relation should be created and maintained.
 Entrepreneurs, managers and workers should keep them
update with new techniques and developments taking place
around them. Excessive dependence on others should be
avoided.
 Efficiency of the management should be taken care of.
 Keep a watch on the competitors and prepare actions
accordingly.
PREVENTIVE MEASURES FOR SICK ENTERPRISES…
 Behaviour and attitudes of consumers may be studied
carefully.
 Instead of doing the work himself, the entrepreneur gets the
work done by others and keep a watch over them.
 Entrepreneur should remain in touch with the change in
technology by visiting exhibitions, trade fairs, markets and
similar units and attend seminars, conferences, etc.
 Entrepreneur should know his own faults, weaknesses,
ignorance and he should remain alert that all such qualities
do not bring problems to his enterprise.
 Entrepreneur should be aware of symptoms and reasons of
sickness. He should take appropriate steps to kill the causes
of sickness at the initial stage and ensure sound health of the
enterprise. ---
REMEDIAL MEASURES FOR SICK ENTERPRISES:
Certain remedial measures for SSI units are described below:
i. EFFECTIVE PLANNING: A detailed feasibility study of the
project is highly essential for small entrepreneurs to start their
units.
 Without proper planning they may be affected by improper
location, inexperienced consultancy services, improper
technology, under-estimation of costs, etc. So, small scale
enterprises are required to have effective planning for their
survival.
ii. IMPROVEMENT IN TECHNOLOGY: Small business enterprises
should try to adopt modern technology.
 Government consultancy organisations and laboratories have to
arrange viable modern techniques of production to them.
 Small entrepreneurs should be aware about the development in
technology. If possible they should spend money in research and
development. They should believe in continuous innovation by
REMEDIAL MEASURES FOR SICK ENTERPRISES…
iii. TRAINING AND DEVELOPMENT:
 Small entrepreneurs should make efforts to impart training and
proper education to their workers.
 Expenditure on training and development activities should be
treated as an investment.
 Workers should be encouraged to innovate as it would enable the
small enterprises to compete with their counterparts.
 For this purpose, effective motivation and reward system are
highly desirable.
iv. PROVISION OF INFRASTRUCTURAL FACILITIES:
 Finance, power, water supply and other infrastructural facilities
are necessary for the smooth functioning of small enterprises.
 SIDC, SSIDC and TCO are engaged in provision of infrastructural
facilities. But their support system needs further improvement.
 Development of industrial estates has solved this problem to some
extent but efforts are still required to develop more industrial
estates to accommodate more small enterprises.
REMEDIAL MEASURES FOR SICK ENTERPRISES…
V. REGULAR SUPPLY OF RAW MATERIALS: Small
Industries Development Corporation (SIDC) and other
agencies should take necessary action to maintain a
continuous and proper supply of raw materials. They should
exclude the bogus firm from this type of support.
 Government should also intervene from time-to-time in
arranging cheaper imports of raw materials for them.
vi. ADEQUATE CREDIT ARRANGEMENTS: With the
traditional sources of finance, alternative means like venture
capital are to be developed for the small enterprises to
expand.
 Security and Exchange Board of India (SEBI) has formulated
guidelines for venture capital. Besides this, Priority Sector
Lending Scheme should be available to this sector. Credit
limit to small business enterprises is to be enhanced.
REMEDIAL MEASURES FOR SICK ENTERPRISES…
 The small entrepreneurs are not able to get proper support from
banks and other funding agencies.
 The Small Industries Development Bank of India (SIDBI) is trying
to provide these facilities but intermediaries involved in the
system are creating problems for small entrepreneurs.
 So, SIDBI should try to bring transparency and effectiveness in its
functioning.
vii. EFFECTIVE MARKETING ARRANGEMENTS:
 Small enterprises should focus on brand, product and market
development. They should thrust on quality improvement
programme.
 Products at low cost and more benefits to consumers would
improve their marketing performance. Due to their brand names,
the large entrepreneurs earn handsome profits from marketing
the products of small units by charging higher price.
 So small entrepreneurs should try to popularise their products in
the market which will provide them identity. ---
GOVERNMENT POLICIES ON REVIVAL OF SICKNESS:
Considering the evil consequences of industrial sickness, the
Government has made following efforts to deal with the
industrial sickness.
1. BOARD FOR INDUSTRIAL & FINANCIAL
RECONSTRUCTION (BIFR):
 BIFR has been established in the year 1987 to deal with the
sickness of small scale industries. It has been set up as per
Sick Industrial Companies Act (SICA).
 The objective of BIFR is to revive potentially viable sick
industrial unit or recommend the closure of non-viable sick
unit.
 Earlier, only sick units in private sector could be referred to
BIFR but after amendment in the SICA, public enterprises
have also been brought under its purview.
GOVERNMENT POLICIES ON REVIVAL OF SICKNESS…
OBJECTIVES OF BIFR:
i. To evaluate the techno-economic viability of sick industrial
units with a view to either rehabilitating them or to closing
them down.
ii. To stop continued drain of public and private resources.
iii. To protect employment, as far as it is practicable.
OPERATIONAL PROCEDURE OF BIFR:
 When a sick industrial unit is registered with the BIFR, it is
dealt with by the BIFR in the following manner:
i. In the first stage, an enquiry is to be made to determine
whether the company is sick.
ii. If so determined, the BIFR has to examine whether the
industrial unit can make its net worth positive through its
own efforts.
GOVERNMENT POLICIES ON REVIVAL OF SICKNESS…
iii. If that is not possible, in the public interest, BIFR makes an
attempt to rehabilitate the unit.
iv. The rehabilitation effort commences by commissioning an
operating agency to prepare techno-economic viability report.
v. Based on the viability report and measures (such as merger,
change of management which may be appropriate), BIFR prepares
a draft scheme of rehabilitation.
vi. After that the rehabilitation scheme is to be advertised for
comments and objections.
2. INDUSTRIAL RECONSTRUCTION BANK OF INDIA(IRBI):
 IRBI was set up in 1985 to initiate steps to check the growth of
industrial sickness and to help in industrial revival.
 In 1986, IRBI set up Small Industries Development Fund (SIDF) in
the IDBI to provide financial assistance to the small scale sector.
 The fund would be used not only for development, expansion and
modernisation but also for rehabilitation of sick small-scale
industrial units.
GOVERNMENT POLICIES ON REVIVAL OF SICKNESS..
3. GOSWAMI COMMITTEE REPORT:
 In 1993, Dr. Onkar Goswami, Chairman of this committee
submitted following recommendations for sick companies:
i. Early detection of sickness: The definition of sickness should
be changed to: (a) Default of 180 days or more on
repayment to term lending institutions, and (b)
Irregularities in cash credits or working capital for 180 days
or more.
ii. Amendment of Urban Land (Ceiling & Regulation)Act,
1976, to improve generation of internal resources of sick
companies.
iii. Empower the BIFR for speedier restructuring, winding-up,
and sale of assets of companies.
iv. A sick company’s own reference to BIFR should be
voluntary, not mandatory.
GOVERNMENT POLICIES ON REVIVAL OF SICKNESS..
4. SICK INDUSTRIAL COMPANIES ACT (SICA):
 This Act was made in the year 1985. Further amendment was
made in the year 1994.
 It applies to industrial undertakings both in public and
private sectors. The basic objective was to determine sickness
in the industrial units.
 It also aims at reviving viable units to make the investment
profitable. Closure of unviable units so as to release the
investments in such units for productive use elsewhere.
Objectives of SICA:
i. Timely detection of sick and potentially sick companies.
ii. Speedy determination by body of experts for the preventive,
remedial, and other measures which need to be taken with
respect to such companies.
iii. Quick enforcement of the measures ---
THANK
‘U’
 STARTUPS
&
BUSINESS
INCUBATION
MEANING OF STARTUPS:
 A startup is like a new born baby, which is learning
new moves everyday.
 It is just in the development phase.
 Initially, few individuals or founders invest in this
startup.
 The sole motive of startaps is to offer a new idea in the
market, be it a new product/ service or a simple
modification of the existing product/ service.
DEFINITION OF STARTUPS:
 According to Steve Blank, “A startup is a temporary
organisation designed to search for a repeatable and scalable
business model.”
 Startups are also called entrepreneurial ventures.
 They convert the business idea into a successful business.
 Different advanced methods, procedures as well as
technologies are utilised by the entrepreneurs in such
ventures.
 Startups are extensively involved in research and
development activities so as to develop the unique products
and services.
STARTUP COSTS:
 Startup costs are the expenses incurred during the process of
creating a new business.
 There is more to a business than furnishing and office space.
 Especially, in the early stages, startup costs require careful
planning and meticulous accounting. Startup costs include the
following:
i. Startup Expenses:
 These expenses are made before the enterprise is launched and
earning any revenue.
 Examples of startup expenses are expenses for legal work, logo
design, brochures, site selection and improvement, rent and so
on.
ii. Startup Assets:
 Typical startup assets are cash (in the form of the money in the
bank when the enterprise starts) and inventory. Other startup
assets are equipments, office furniture, vehicles and so on.
TYPES OF STARTUP COSTS:

 All businesses are different, so they require different types of

startup costs.
 Online businesses have different needs than that of coffee
shops and coffee shops have different requirements than that
of bookstores.
 However, the following expenses are common to all business
types:
i) Advertising and Promotion:
 A startup will never succeed without promoting itself. It
includes marketing everything a startup does in order to
attract clients to the business.
TYPES OF STARTUP COSTS...
ii)Borrowing costs:
 Starting up any kind of business requires an infusion of
capital.
 There are two ways to acquire capital for a business: equity
financing and debt financing.
 Equity financing is related to issue of shares but it is not
applicable to small businesses which are proprietorships.
 For small business owners, the source of finance is debt
financing means they get loans from banks, savings
institutions, central or state government institutions, etc.
 Loans are accompanied by interest payments.
 These payments must be planned because during the start of
business, the default possibility is very high.
TYPES OF STARTUP COSTS...
iii. Employee Expenses:
 Startups planning to hire employees must plan for wages,
salaries, also known as cost of labour.
 Failure to compensate employees adequately can end in low
morale, mutiny and bad publicity, all of which can be
disastrous to a startup/new venture/new company/new
entrepreneur.
iv. Equipment and Supplies:
 Every startup/new business requires some form of
equipments and basic supplies.
 Before adding equipment expenses to the list of startup costs,
a decision has to be made to lease or buy.
 It adds to the startup cost of the entrepreneur.
TYPES OF STARTUP COSTS...
v. Insurance, License and Permit Fees:
 Many startups have to obtain business licenses and basic
supplies.
 Before adding equipment expenses to the list of startup costs,
a decision has to be made to lease or buy.
 It adds to the startup cost of the entrepreneur.
vi. Research Expenses:
 Careful research of the industry and consumers must be
conducted before starting a business.
 Some startups choose to hire market research firms to aid
them in the assessment process.
 Startups who choose to follow this route, the expenses of
hiring these experts must be included in the business plan.
TYPES OF STARTUP COSTS...
vii. Technological Expenses:
 These expenses include the cost of a website, information
systems and software (including accounting and payroll
software) for a business.
 Some small startups choose to outsource these functions to
other enterprises to save on payroll and benefits.
CHALLANGES BEFORE STARTUPS/ENTREPRENEURIAL
VENTURES ‘or’ DISADVANTAGES ASSOCIATED WITH
STARTUPS/ ENTREPRENEURIAL VENTURES:
i. Fluctuation in Sales:
 In case of startups there are high fluctuations in the sales and
no definite pattern.
 In some months, sales are very low, while in other months,
sales become very high.
CHALLANGES/DISADVANTAGES BEFORE STARTUPS...
 Therefore, startup/new business owner has to balance his
cash outflows with his cash inflows on a regular basis so that
there is no liquidity trap.
 At times he has to deal with temporary liquidity problems.
 The problematic situation is common across most startups/
ventures.
ii. Competition:
 The increased risk of competition is another problem
associated with the startup’s business venture.
 A startup may face intense competition after starting the
business and running it successfully.
 Also, a startup is prone to various changes in the business
environment like changes in the demand patterns. For
example, various small restaurants often lose their customers
to Mc. Donalds and other popular eating places.
CHALLANGES/DISADVANTAGES BEFORE STARTUPS...
iii. Financial Losses:
 It is not always essential that all the decisions made by the
startup are likely to be successful. Some of them may not be
successful.
 Wrong decisions may create undesirable situations such as
excess inventory, stock out situations, lower revenues due to
low prices of products, ineffecive advertising campaign, etc.
 In such cases, startup/entrepreneurial venture will suffer
from financial loss.
iv. Employee Relations:
 Unsatisfied employees hinder the growth of a
startup/entrepreneurial venture.
 The startup may suffer losses if there is not sufficient
investment in managing employee relations.
CHALLANGES/DISADVANTAGES BEFORE STARTUPS...
 Not allowing the employees to talk with each other during
working hours may create dissatisfaction which further
reduces productivity and performance of employees.
 Therefore, the startup has to find a balanced approach
towards resolving this problem.
v. Laws and Regulations:
 Every startup is subjected to numerous laws and regulations
which have to deduct TDS (Tax Deduction at Source) from its
employees and also satisfy other regulations like Income Tax,
Service Tax, GST (Goods & Service Tax), etc.
 Many startups are also to obtain a permit/license before
starting their business operations.
 The startups have to adhere with laws associated with
location, employee remuneration, safety norms, workingng
hours etc.
CHALLANGES/DISADVANTAGES BEFORE STARTUPS...
vi. Risk Failure:
 The biggest risk that a startup faces is the risk that his
business plan will not succeed and he will have to shut down
the business.
 Such a business failure causes huge loss to the startup. It ids
due to certain factors which are beyond the control of the
startup.
 For example, economic recession or draining out of
finzancial resources by some dishonest associates could
obstruct startup growth.
 The startup may also face unexpected troubles from natural
calamities like earth quakes or floods.
 Moreover, mismanagement of operations by managers can
also create risks leading to failure of startup.
CHALLANGES/DISADVANTAGES BEFORE STARTUPS...
vii. Responsibility:
 A new business venture puts a lot of responsibility on the
startup.
 The success or failure of the business entity rests upon the
startup.
 In case the startup faces any problem or the results are not as
expected, the startup has to solve the problem on his own.
 Thus, responsibility of running a business venture is very
hectic and is not suitable for every individual.
---
REMEDIES FOR STARTUP CHALLENGES:
 Some useful suggestions or tips to tackle problems of
startups/new ventures:
i. Acquiring Insights in the business:
 Successful startups develop special insights through
research, interactions with suppliers, customers, trade
associations, consultants and other sources of knowledge.
 ii. Developing Feedback System:
 A business plan provides a startup with milestones and
benchmarks against which performance can be monitored
regularly.
 Thus, incorrect assumptions can be rectified and corrective
actions undertaken on a continuous basis.
 A startup therefore should be seen as a series of experiments,
where learnings from each stage are compounded into the
success of the venture.
REMEDIES FOR STARTUP CHALLENGES...
ii. Developing Feedback System:
 A business plan provides a startup with milestones and
benchmarks against which performance can be monitored
regularly.
 Thus, incorrect assumptions can be rectified and corrective
actions undertaken on a continuous basis.
 A startup therefore should be seen as a series of experiments,
where learnings from each stage are compounded into the success
of the venture.
iii. Managing Financial Resources:
 This requires developing a proper information system so that
decision can be made on an informed basis.
 One of the thumb rules of a startup is that it requires thrice the
amount of time and twice the amount of cash (or vice-versa) as
entrepreneurs had originally estimated. hence, a startup must
have an adequate amount of capital and proper supply of cash.
REMEDIES FOR STARTUP CHALLENGES...
iv) Managing people:
 Ultimately, the success of startup/new venture depends upon
the team of employees since the entrepreneur can not do
everything alone.
 Adequate attention to development of capable and motivated
team is therefore a critical need for the startup.
V) Managing yourself:
 finally., the startup’s success depends to a large extent on the
entrepreneur’s capability, commitment, passion and
leadership.
---
STARTUP ECOSYSTEM:
INTRODUCTION:
 The startup ecosystem has emerged recently in India.
 In 1982, when the National Science and Technology
Entrepreneurship Development Board (NSTEDB) started,
there was no culture of promoting entrepreneurship and
ecosystem to speak of.
 This started to change in 1995-96 after the liberation of the
economy.
 More and more young people moving to U. S. A and Europe
as IT professionals, India gained a lot of experience and
expertise. India’s confidence in its capacity to deliver high
quality technology products and services grew.
 Since the millennium, there has been a conscious attempt to
commence startups/new ventures, especially in the
technology sector.
STARTUP ECOSYSTEM...
MEANING:
 A startup ecosystem is formed by people, startups in their
various stages and various types of organisations in a location
(physical and/or virtual), interacting as a system to create
new startups/new ventures/ new startup companies.
FACTORS AFFECTING STARTUP ECOSYSTEM:
 Startup ecosystems are controlled by both external factors
and internal factors.
i. External Factors affecting Startup Ecoystem:
 External factors are financial climate, big market disruptions
and big companies transitions.
 These factors control the overall the overall structure of an
ecosystem and the way things work in it.
STARTUP ECOSYSTEM...
ii. Internal Factors Affecting Startup Ecosystem:
 Internal factors are employees of the startup, startup’s ability
to contribute towards the ecosystem skills available with the
startup and startup’s success and failure. Internal factors
control ecosystem processes.
ELEMENTS OF STARTUP ECOSYSTEM: The different
elements of startup ecosystem are described below:
i. Support Organisations:
 A startup ecosystem comprises entrepreneurs, different kinds
of financial and non-financial support organisations,
incubators, accelerators, co-working spaces, mentoring and
technical experts.
 It also includes the government policies and programmes
relevant to startups, academia and other organisatons and
firms which interact with the startups and support the
startups.
STARTUP ECOSYSTEM...
ii. Big Companies:
 Indian startup ecosystem is buzzing with activity.
 Everyday startups are being founded and entrepreneurs are
racing to build the next big business.
 In India, Microsoft Ventures, TiE, GSF, The Startup Centre
and Kyron are the majpr startup accelerators.
 These organisations are becoming popular among the
startups
 They have demonstrated the need for the startup ecosystems.
iii. Universities:
 The talent pool is ideally created and augmented locally at
universities and other learning institutions will be able to
draw in talents to seed the ecosystem with the latest
knowledge.
STARTUP ECOSYSTEM...
iv. Funding Organisations:
 Startups/new ventures require funding to reach profitability.
 Though there are different sources of funding, the final
component of a thriving startup ecosystem is local funding.
 The local funding is generally made by the previous
generations of entrepreneurs as they truly understand the
complexity and difficulty of creating successful startups.
v. Service Providers:
 A service provider (SP) is a company which provides
consultancy, legal, financial real estate, education,
communications, storage, processing and many other
services to the enterprises. A service provider is a third party
or outsourced supplier like Telecommunication Service
Providers (TSPs), Application Service Providers (ASPs),
Storage Service Providers (SSPs) and Internet Service
Providers (ISPs).
STARTUP ECOSYSTEM...
vi. Research Organisations:
 With the help of research organisations in recent years, the Indian
startup ecosystem has really taken off and come into own – driven
by factors such as massive funding, evolving technology,
numerous support of research organisations and a developing
domestic market. ---
BENEFITS OF STARTUPS: Following are the major benefits of
startups:
i. Independence:
 One of the greatest advantages of startups/new business is the
freedom that comes with being own boss.
 If the entrepreneur will be an employee, then he has to obey the
company rules and regulations.
 When the entrepreneur owns a business, he will make rules and
regulations for his enterprise.
 Being his own boss, entrepreneur can enjoy greater job security
knowing that no one can lay him off.
BENEFITS OF STARTUPS…
ii. Financial Opportunity:
 Another major reason for going into business for oneself is
financial opportunity.
 Many new venture owners make more money running their
own startups than they would work for some one else.
iii. Community Service:
 Sometimes a person realises that a particular product is not
available. If the person believes that the customers will pay
for such a product, he/she will have a startup to provide it.
iv. Job Security:
 When one owns a business, job security is ensured.
 The individual can work as long as he or she wants; no
mandatory retirement exists.
BENEFITS OF STARTUPS…
v. Family Employment:
 Another advantage of startup is the opportunity to provide
employment opportunities to the family members.
vi. Challenge:
 Many new venture owners are attracted by the challenge that
companies with the business.
 Research reveals that most successful startup owners/venture
owners like to feel they have a chance to succeed and a
chance to fail.
 But one thing is certain – The final outcome depends heavily
on them.
 They want to win or lose on their own abilities.
 This challenge gives them psychological satisfaction.
BENEFITS OF STARTUPS…
vii. More Incomes:
 Owners of startups see self employment as the door to
financial freedom.
 As an employee, income is limited because salary is limited.
 Salary enhancement and promotions are at the discretion of
supervisor.
 Owning a successful business can give entrepreneurs the
opportunity to achieve financial security and live the life
entrepreneurs always dreamed of.
vii. Creates new jobs:
 A new venture/startup provides employment to people.
---
STARTUP CULTURE:
INTRODUCTION:
 The word “culture” means the belief and attitude of the
people than to what actually they do.
 In the business, society’s belief is more important than
individual’s belief.
 Culture refers to the way in which entrepreneurs give
expression to normative patterns of traditions and behaviour
in establishing industrial ventures/startups.
 Cultural identity supplies the primary mechanism for
entrepreneurial behaviour which includes decision making,
assessing market potential, developing commercial strategy,
calculating risk versus opportunities and implementing
methods for procuring resources.
 A startup culture is a work place environment that values
creative problem solving, open communication and a flat
heirarchy.
STARTUP CULTURE...
 In a corporate culture, core values are informed by the
identity of the company, including its mission statement,
products and customer service.
 In startup culture, these core values tend to reflect the
personalities and ethos of the people who worked for the
business in the early days.
 Because startups/new businesses must adopt quickly to
internal and external market pressures in order to survive.
 A startup culture also promotes business agility and
adaptibility.
 The company which embraces startup culture is known an
kaizen.
 Startup culture utilises a casual attitude in some respects to
promote efficiency in the work place.
STARTUP CULTURE...
 Douglas Mc Gregor stressed that punishments and rewards
for uniformity in the workplace are not necessary, because
some people are born with the motivation to work without
incentives.
 This removal of stressors allows the employees to focus less
on the work environment and more at the task at hand,
giving them potential to achieve something for their
company.
 Google has permitted its employees to bring their dogs to
work.
 The main goal behind all changes to the culture of the work
place to make the employees feel as comfortable as possible
so they can have the best performance in the office.
---
KEY ELEMENTS OF STARTUP CULTURE:
 The key elements of startup culture are as follows:
i. Agility:
 It is about physical space (spaces to move between standing height
tables, traditional desks and lounge settings) and a flexible
environment that supports the fast exchange of ideas, strategy and
action items, directly impacting business results.
ii. Authenticity:
 The freedom to truly be yourself without compromise is the holy
grail of the entrepreneurial ecosystem.
 Authenticity celebrates each person and the diversity they bring to
team.
iii. Passion:
 It is at the core of an entrepreneur’s business. This passion,
whatever it may be – passion for community, revenue or
environment becomes the heart of the business/startup.
KEY ELEMENTS OF STARTUP CULTURE...
iv. Personality:
 It is the key for startups.
 For many entrepreneurs, this exhibits itself in the creation of
unique items for their space – reclaimed or repurposed wood,
rich materials and commissioned art work.
 Feeling comfortable in the work place is the first step to
being engaged and productive.
 These two things spur forward movement for the company.
---
INTELLECTUAL PROPERTY RIGHTS (IPRs):
 Intellectual Property Rights are a bundle of exclusive rights
over creations of the mind, both artistic and commercial.
Intellectual Property Rights include the following:
i. Patent: A patent is a legal monopoly which is granted for a
limited time by a country to the owner of an invention.
 A patent, in the eyes of the law, is a property right that can be
given away, inherited, sold, licensed and even abandoned.
 As it is conferred by the government, the government can
revoke the patent even after the grant of patent or even if it
has been sold or licensed to another in the mean time.
ii. Copy Right: Copy Right is a form of intellectual property
protection granted to the creators of original works of
authorship such as literary works (including computer
programmes, tables and compilations), dramatic, musical
and artistic works, cinematographic films and sound
recordings.
INTELLECTUAL PROPERTY RIGHTS (IPRs)...
 Copy right provides exclusive rights to creators to use or
authorise others to use their works.
 The creator of a work can prohibit or authorise its
reproduction in various forms, including printing, recording,
broadcasting, public performance, translation or adaption.
iii. Trademark: A trademark is any sign that individualises the
goods of a given enterprise and distinguishes them from
goods of its competitors.
 In other words, a trademark is a word or symbol or
combination there of used by manufacture or vendor in
combination with a product or service.
 Marketing of a particular good or service by the trademark
because recognition becomes easier and quality is assured.
 The owner of the trademark can prevent the use of similar or
identical signs by competitors if such marks lead to
confusion.
INTELLECTUAL PROPERTY RIGHTS (IPRs)...
Trade Secret:
 A trade secret refers to data or information relating to the
business which is not generally known to the public and
which the owner attempts to keep it secret and confidential.
 Trade secrets generally give the business a competitive edge
over their rivals.
 Almost any type of data, processes or information can be
referred to as trade secrets so long as it is intended to be kept
as secret and involves an economic interest of the owner.
Industrial Design:
 An industrial design right protects the form of appearance,
style or design of an industrial object from infringement.
---
ANGELS/BUSINESS ANGELS/ANGEL INVESORS:
 Business angels/angel investors are the investors who invest
their own money, along with their time and expertise, in
unquoted firms in the hope of any financial gain.
 Angel funding is generally considered the entry level of
funding for entrepreneurs and their ideas and/or startups.
 Historically, angel investors have been defined as high net
worth individuals who have interest in using their resorces to
fund and grow startups/startup companies.
VENTURE CAPITAL:
 The term venture capital consists of two words – ‘venture’
and ‘capital’.
 Venture implies a course of action with uncertain outcomes
including the risk of loss.
 Capital denotes resources to move and run the projects.
VENTURE CAPITAL...
 Thus, the capital which is used for financing a new business
project may be termed as venture capital.
 It deals with offering funds to startups/growing companies.
 It is assumed that the entrepreneur and the venture capitalist
work as partners.
 Venture capital may be equity or equity related investment.
 It is generally deployed in the growth oriented small or
medium scale business.
 This is done to enable developers to accomplish their vision.
 Venture capital is a complex type of private equity
investment.
---
BUSINESS INCUBATION:
 Innovation fosters economic growth is accepted among
economists worldwide.
 Therefore, one of the most important challenges for
economic systems is to encourage technological innovation
among research institutes, universities, agencies and above
all firms.
 With this respect, empirical, empirical evidence shows that
young and innovative enterprises should be supported.
 This need arises due to market failures and other
shortcomings, such as, the difficult relation between
academic research and business, the lack of motivation
services, the absence of real ‘market’ for technology transfer
and the difficulties connected to the passage from the seed
capital to the venture capital stage.
 The spread of business incubators represents one of the main
answers to the needs of emerging and innovative firms.
BUSINESS INCUBATION...
 In some place, it is possible for a new venture to use an
incubator approach in getting started.
 business incubator is a facility with adaptable space that
small businesses can lease on flexible terms and reduced
rents.
 Support services like financial, managerial, technical and
administrative services are available and shared, depending
on the size and nature of tenants needed.
 Most incubators limit the amount of time, ranging from two
or five years.
 A small business may occupy space in this facility.
 According to the American National Business Incubators
Association (NBIA), “Business incubation is a dynamic
process of business enterprise development. Incubators
nurture young firms helping them to survive and grow
during the startup period when they are most vulnerable.
BUSINESS INCUBATION...
 Incubators provide hands-on management assistance, access
to financing and orchestrated exposure to critical business or
technical support services.
 Most also offer entrepreneurial firms shared office services,
access to equipment, flexible leases and expandable space –
all under one roof.
 An incubation programme’s main goal is to produce
successful graduates – businesses that are financially viable
and freestanding when they leave the incubator, usually in
two to three years.
 Incubator clients/incubatees are at the forefront of
developing new and innovative technologies – creating
products and services that improve the quality of our lives on
a small scale today, and on a much greater scale tomorrow.”
PRINCIPLES OF BUSINESS INCUBATION:
The following principles/industry guidelines characterise
effective business incubation around the world:
i. The incubator aspires to have a positive impact on its
community’s economic health by maximising the success of
emerging companies.
ii. The incubator itself is a dynamic model of a sustainable and
efficient business operation.
PRINCIPLES OF ADMITTING NEW COMPANIES/
STARTUPS/INCUBATEES/CANDIDATES TOTHE
INCUBATOR:
1. The following companies/startups/incubatees will be
admitted into the incubator:
i. New companies/startups and
ii. The existing companies which want to develop.
PRINCIPLES OF ADMITTING NEW COMPANIES/ STARTUPS...
2. The following types of companies are the candidates for the
incubator:
i. Production companies,
ii. Service companies,
iii. Craft companies and
iv. Wholesale trade companies, especially of locally made
goods, sold outside the region.
3. The new companies/startups/incubatees/candidates should
have the opportunity for self development.
4. The candidates should have the potential that would favour
the strengthening and the diversification of the local
economy.
5. The candidates should be in operation for not more than two
years.
PRINCIPLES OF ADMITTING NEW COMPANIES/ STARTUPS...
6. The candidates require the space which can be delivered by
the incubator.
7. The candidates’ seat and management should be located in
the city or in the region.
8. The candidates should create new jobs, especially for the
citizens of the cities and/or of the region.
9. The candidates should offer ant-import products and
services.
10. The candidates should use new technologies which ensure
bigger competitiveness among the companies and the
enhancement of employee qualifications.
11. The candidates should sell goods and services outside the
city and the region, in order to improve their export
capabilities.
PRINCIPLES OF ADMITTING NEW COMPANIES/ STARTUPS...
12. The candidates should not damage the environment or
other residents/incubateers of the incubator.
13. The candidates should be ready to cooperate with other
residents/incubatees of the incubator.
14. The candidates/incubatees should have a business plan for
the future development.
15. The candidates should be able to generate income and to
deduct taxes and
16. The incubator should be able to meet the needs of the
candidates/incubatees.
---
THE PRINCIPLES OF EXITING COMPANIES FROM AN
INCUBATOR:
1. In an incubator, a lease agreement and a contract for
professional services can be terminated for any of the
following reasons:
i. The time of residence in the incubator has been exceeded
three to five years.
ii. A blatant infringement of the provisions contained in the
statute of the incubator.
iii. Cases defined in the lease agreement.
iv. Failure to perform (the company is not able to commence
activities within three months).
v. The company’s area requirements exceed the incubator’s
capabilities.
vi. The company runs the type of activity which can threaten
other residents/incubatees or which can be damaging to the
natural environment.
THE PRINCIPLES OF EXITING COMPANIES FROM AN INCUBATOR...
2. the company may resign from operating within the
incubator at anytime, in accordance with the provisions
contained in the lease agreement.
SERVICES OFFERED BY THE INCUBATORS:
Various services offered by incubators are as follows:
i. Flexible Space and Flexible Lease:
 Most incubators provide facilities for startup companies.
 Traditionally, incubators provide space at below market
price.
ii. Administrative Services:
 Most incubators provide shared copiers, fax machines,
telephone systems, computers and high speed internet
access.
 Many incubators also provide administrative staff assistance
such as telephone services and clerical support.
SERVICES OFFERED BY THE INCUBATORS...
iii. Management Help:
 This is the most important service incubatees/entrepreneurs
receive.
 It often begins with a consultation to help the
incubatees/entrepreneurs evaluate concept or growth
prospects for a going concern and continues with regular
reviews of the business.
 Incubators provide support on business plans, refining the
business concept and marketing assistance.
iv. Expert Advice:
 Expert advice from university business professors, other
business owners, lenders and accountants can help keep a
business on track.
SERVICES OFFERED BY THE INCUBATORS...
v. Specialisation: Some incubators are industry-specific social
goals. Accordingly the incubatees try to be with a incubator.
vi. Easy Networking:
 Incubators provide opportunities to chat with other
tenants/incubatees and make formal presentations to
potential investors.
 Phone calls are more often returned when an entrepreneur is
physically located at a known incubators in a normal
business building.
vii. Funding:
 It is usually not available directly from incubators. However,
many incubators will help arrange meetings with potential
investors. A few public incubators will provide funds to help
entrepreneurs/incubatees/startups/new companies get
started. ---X---
ROLES OF BUSINESS INCUBATION:
 Business incubation has been identified as a means of
meeting a variety of economic and socio-economic policy
needs, which may include:
i. Job creation,
ii. Fostering a community’s entrepreneurial climate,
iii. Technology commercialisation,
iv. Diversifying local economies,
v. Building or accelerating growth of local industry clusters,
vi. Business creation and retention,
vii. Encouraging women or minority entrepreneurship and
vii. Identifying potential business opportunities.
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