Q & A from 2001 to 2014

Entrepreneurs and managers--similarities and

differences
Or compareManagers v/s Entrepreneurs
Or
Discuss the critical points of similarities and
differences
between
entrepreneurs
and Apr
2010,2002,200
professional managers.
9,2008
Or
Discuss the qualities of a successful entrepreneur
vis--vis a successful manager in the Indian
context.(2005)

Any enterprise needs entrepreneurs to start the enterprise and run it. It also
needs managers for the managerial role required for running day to day
operations of the enterprise. Generally the Chief Executive and his team at
top level play the role of entrepreneurs whereas the group of officers in the
organisation in middle level as well as lower level plays the role of managers.
A professional manager takes care of the general functions of running an
organisation such as strategic planning, operation planning, organising the
resources, staffingcoordination, motivation and controlling work in the
organisation. The professional manager is driven by a plan to achieve the
predetermined targets to build the organisation and develop it. A manager
uses managerial tools to achieve the targets like the volume of production,
the profit or growth of an organisation. He contributes on day to day
operations in achieving the quality of goods produced, makes efficient use of
the resources and enhancement of the standards. A manager is appointed by
the organisation and paid as per the employment contract. An entrepreneur
is not a paid manager. He is great motivator to start his new business and
also manage it successfully. He is the investor and takes risks in the
enterprise. He is an innovator and a manager and works for his satisfaction
and he is happy to get positive results. An entrepreneur appoints a manager
for carrying out some of his functions, whereas the reverse is not true. An
entrepreneur may also perform duties of a manager in getting done his
creative activities and satisfying need of achievement. An entrepreneur takes
a venture for his personal satisfaction, whereas a professional manager has
functions like setting targets, following rules, procedures, attainment of set
targets. Any failure of an enterprise may be a huge loss in the career of an
entrepreneur. In case of professional managers the failures may mean little.
1

The distinction between an entrepreneur and with professional / traditional

manager is detailed in to separate table 5.2:
Table 5.2 Distinctive Features of Entrepreneur and Professional
Manager
Entrepreneur
Risk-taking
Committed
Visionary
Motivator
Perception of an opportunity
Interpersonal communication
Planner
Negotiating
Trouble-shooting
Tactical Planning
Innovator
Determined
Making it a growing concern

Professional Manager
Policy formulation
Loyal
Planner
Skilled, Knowledgeable
Setting of objectives
Formal Communication
Implementer
Organising
Motivating
Strategic Planning
Administrator
Confident
Controlling

An entrepreneur differs from manager with respect to the following:

Table 5.3 Managers vs. Entrepreneurs
Basis
Running of
business

Manager
He runs an already
existing business

Type of
skills

He possesses the
managerial skills and
business know-how to
operate a
business enterprise.

Working
Pattern

e works in the set up

created by the
entrepreneur. He
performs day-to-day
functions of the
business.
He maintains the
efficiency of the

Vision

Entrepreneur
He sets up a new
business
enterprisE
He possesses the
managerial,
creative and innovative
skills to
launch a business
venture.
He acts as an innovator
and creates
a set up for managers
to work in.

He launches a new
business and works for

organisation.
Remuneration

Functions.

Accountability.

Basic Motive

Work Style

Training and
Development

He is paid for his

services by the
company. He does not
assume any
risk for business
activities.
He performs managerial
functions
on a continuous basis.

He is accountable to his
superiors
and also the owners of
the
company.
Want promotion and
traditional
corporate rewards.
Power
motivated
Delegate action,
supervising and
reporting take most of
energy.
Professional training.
Often
business-school trained.

its
growth and success
He assumes the risk of
success or failure of an
enterprise

He performs
entrepreneurial
functions only when
there is the need to
launch a new enterprise
or reenergise
(change) the existing
enterprise.
Entrepreneurial
functions are not
performed on a
continuous basis
He is accountable to his
own self. He does not
have any boss

Wants Freedom, goaloriented, self-reliant,

and
self-motivated
Gets hands dirty. May
upset employees by
suddenly doing their
work
Knows business
intimately. More
business
acumen than
managerial or political
skill. Often

Degree of Courage
& Destiny

Focus

Background

Sees others in charge of

his or her
destiny. Can be forceful
and
ambitious, but may be
fearful of
others ability in case of
optimism.
Primarily on events
inside
corporation.
Family members worked
for large
organisations.

Level of Education

Highly educated

Relationship with
Others

Hierarchy as basic
relationship

Orientation
towards time
management

Respond to quotas and

budgets,
weekly, monthly,
quarterly, annual
planning horizons, the
next
promotion or transfe
Cares about status
symbols (decent
office, etc.)

Status Que

Degree of Risk

Careful

Decision Making

Agrees with those in

power.
4

technically trained if in
technical business
Self-confident,
optimistic, courageous

Primarily on technology
and market place
Entrepreneurial smallbusiness, professional
or
agricultural background
Less well educated in
earlier studies, some
graduates work but not
Ph.D
Transactions and deal
making as basic
Relationship
goals of 5-10 year
growth of business in
view and
objectives. Takes action
now to move the next
step along way.
Happy sitting on an
orange crate if job is
getting
Done
Like moderate risk.
Invests, heavily, but
expects
to succeed.
Follows private vision.
Decisive and

Mistakes and Un
success

View towards
The system

Problem Solving
Methodology

Delays decision until he

gets a feel
of what bosses want
Strives to avoid
mistakes and
surprises. Postpones
recognising
failure.
Sees system as
nurturing and
protective, seeks
position within
it.
Works out problems
within the
System

actionoriented.

Deals with mistakes and

failures as learning
experiences. Please
others. Pleases self and
customers
May rapidly advance in
a system, when
frustrated,
reject the system and
form his or her own
Pushing up and dawn
problems get diluted or
loosed around

Similarities between Managers and Entrepreneurs

Both managers and entrepreneurs are answerable for producing
results. The results are, of course, different. In their respective result areas,
the buck stops with them. While they can delegate, they are finally
accountable.
Both have to produce results through people working with them
though they deal with different sets of people. They are not effective in the
long run, if they are loners.
Both are decision-makers but the decisions are different as their tasks
vary. Both have to operate under constraints, which are understandably
different.
To be effective in their respective roles, both have to follow sound
principles of management like planning, staffing, delegation and control. The
focus of these management tools may vary depending upon the ultimate
purpose.
Similarities between Managers and Entrepreneurs
. To produce results
. To produce results through people
. To take decisions
. To cooperate under constraints
. To follow sound principles of management
Write
Comparative
features
of
entrepreneur May2014,20
,manager and corporate entrepreneur.
13
5

Managerial

Intrapreneurial

Entrepreneurial

Primary
motives

promotional and
other traditional
corporate
rewards like
office, staff,
power

Independence
and ability to
advance in the
corp. rewards

Independence,
opportunity and
money

Time
orientation

Short term meeting quotas

and budgets,
W/M/Q and
annual planning
horizon

Between
Manager and
Entrepreneur,
depending on
urgency to meet
self imposed and
corp. timetable

Survival and
achieving 5-10
yrs growth of
business

Activity

Delegates and
supervises rather
than direct
involvement

Direct
involvement,
more than
delegation

Direct
involvement

Risk

Careful

Moderate risk
taker

Moderate risk
taker

Status

Concerned about
status symbols

Not concerned
about traditional
status symbols,
desires
independence

Not concerned
about status
symbols

Failures and
mistakes

Tries to avoid
mistakes and
surprises

Attempts to hide
risky projects
from view until
ready

Decisions

Usually agrees
with those in
upper
management
positions

Able to get others Follow dreams

to agree to help
with decisions
achieve dreams

Relationship
with others

Hiararchy as
basic relationship

Transactions
within hiararchy

Compare year 2002

Male Entrepreneurs v/s Female Entrepreneurs

Deals with
failures and
mistakes

Transactions and
deal making as
basic relationship

Apr2001

Factor

Male Entrepreneur

Female Entrepreneur

Motivation

Self image as it relates

to status desire to grow
faster achievementstrive to make things

Flexibility in working
hours to be independent
achievement
-accomplishment of a

happen

goal

Job frustration side

activity of present job
.grabbing an
opportunity

Earning extra money for

the family .keeping
oneself
gainfullyoccupied
.inability to seek wage
employment .lack of
growth in the present
job

Personal savings bank

finance investors

Family and personal

loans

Experience in line of
work comperence in
managing business

House wife ,service

related

Personality

Goal oriented high level

of self confidence
enthusiasthic and
energetic innovative
and idealistic

Flexibilty and tolerant

goal oriented adequate
self confidence
enthusiastic and
energetic creative and
realistic

Support Group

Professionals family
,business associations

Close friends ,family

and husbands women
organisations

Reasons for
becoming an
entrepreneur

Sources of
funds
Occupational
Background

Short Notes
Export Finance

May 2004

Failure is the beginning of entrepreneurship

May 2004

usually feel bad because nobody likes been associated with failure. Failure
makes you look like a dumb; while success puts you in the hero position.
Failure makes you feel alone.
; I have successful entrepreneurs and role models that have failed woefully in
the past.
9

Success is a poor teacher. We learn the most about ourselves when we fail,
so dont be afraid of failing. Failing is part of the process of success. You
cannot have success without failure. Rich Dad
In below line, I will be sharing with you some of the spectacular business
failures faced by these successful entrepreneurs. I am not sharing these
business failures with you to get you excited; I am doing it to let you know
that every successful entrepreneur in this world has gone through a stint of
failure in business. Take a closer observation at the entrepreneurial path of
the drop out billionaires and you will see that their successes were built on
past failures.
The business empires built by successful entrepreneurs were erected on the
foundation of past failures. Ajaero Tony Martins
Do you think you are a failure in business? Do you think you are alone? Then
read this:
Famous Business Failures of Successful Entrepreneurs
1. Henry Ford
Henry Ford failed twice in business before he finally went on to build the Ford
Motor Company; and became one of the richest men in the world. He has this
to say about his business failures:
Failure is just a resting place. It is an opportunity to begin again more
intelligently. Henry Ford
If I lose a billion dollars, I will have it back in less than five years. Henry
Ford
2. Thomas Edison
Thomas Edison went through a lot in life as an entrepreneur but his most
spectacular business failure was his famous light bulb invention. He failed
10,000 times trying to invent the light bulb and after the 10,000th time; he
succeed. Today, his company General Electric is one of the most powerful
companies in the world. Thomas Edison has this to say about his business
failures:

10

I have not failed. I have just found 10,000 ways that wont work. Thomas
Edison
Many of lifes failures are people who did not realize how close they were to
success when they gave up. Thomas Edison
3. Robert Kiyosaki
Robert Kiyosaki in his best selling book Rich Dads Before You Quit Your Job
explained how he built a successful business (Nylon and Velcro Wallet
Company) from scratch and lost this business due to incompetence. With
experience from the failure of the Nylon and Velcro wallet company; he went
on to build The Rich Dad Company. This is what he has to say about his
business failure.
There are no mistakes in life, just learning opportunities. Robert Kiyosaki
4. Colonel Harland Sanders
Colonel Sanders started out as an entrepreneur at the age of 66; when he
developed a Chicken recipe business idea. He took this business idea to
different restaurants and he was turned down over a 1,000 times. These
rejections formed the foundation on which Kentucky Fried Chicken was built
and this is what Colonel Harland Sanders has to say about his initial failures.
I made a resolve then that I was going to amount to something if I could.
And no hours, nor amount of labour, nor amount of money would deter me
from giving the best that there was in me. And I have done that ever since,
and I win by it. I know. Colonel Harland Sanders
5. J. K. Rowling
Harry Potter series is one of the best selling books in the world but what
most people will never know is that the author J. K. Rowling was turned
down several times by publishers. Instead of being deterred; she went on to
become a billionaire author and this is what she has to say about her initial
failures.
Whats the worst that could happen? Everyone turned me down; big deal.
J. K. Rowling

11

Never be ashamed! Theres some who will hold it against you, but they are
not worth bothering with. J. K. Rowling
6. Martha Stewart
Martha Stewart successfully built her company Martha Stewart Living
OmniMedia from scratch and became a billionaire. But she made a mistake
(insider trading) that negatively affected her reputation and landed her in
jail. Being an entrepreneur with guts; she refused to be cowed by her
mistakes and she bounced back to fortune and fame. This is what she has to
say about her mistake and resulting failure.
I know I have a very tough five months ahead of me, but I understand, too,
that I will get through those months knowing that I have the ability to return
to my productive and normal life, my interesting work and future business
opportunities. Martha Stewart
My new motto is: When youre through changing, youre through. Martha
Stewart
7. Larry Ellison
Larry Ellison dropped out of college twice; and bounced from job to job
without a direction. His adopted father told him that he would not amount to
anything in life. But Larry Ellison started Oracle from scratch and went on to
become one of the richest drop out billionaires in the world and this is what
he has to say about it.
The most important aspect of my personality as far as determining my
success goes; has been my questioning conventional wisdom, doubting
experts and questioning authority. While that can be painful in your
relationships with your parents and teachers, its enormously useful in life.
Larry Ellison
I have had all the disadvantages required for success. Larry Ellison
8. Sir Philip Green
Sir Philip Green is a British billionaire and owner of one of the worlds largest
retailing chain but what most people will never know is that Sir Philip Green

12

went through four business failures before making his first million at the age
of 33.
9. Donald Trump
Donald Trump is a savvy real estate billionaire that has gone through
bankruptcy; not one but twice. He once had a personal debt of $1billion and
corporate debt of $9billion but he courageously pulled himself out of the
mess and this is what he has to say about his business failures.
Anyone who thinks my story is anywhere near over is sadly mistaken.
Donald Trump
Sometimes by losing a battle, you will find a new way to win the war.
Donald Trump
I was relentless even in the face of total lack of encouragement because
much more often than you think; sheer persistence is the difference between
success and failure. Donald Trump
10. Richard Branson
Richard Branson is one of the few entrepreneurs that inspire me the most. He
has gone through thick and thin; and has been on the verge of business
failure on countless occasions. His first business (student magazine) failed
despite showing strong potentials. Richard Branson has also painfully shut
down or sold some businesses just to survive; but despite all, he still
emerged stronger and more successful. You can read about his business
experience, failures and successes in his best selling book Losing My
Virginity: How Ive Survived, Had Fun, and Made a Fortune Doing Business
My Way.
We have always had a pretty competitive ferocious battle with British
Airways. It lasted about 14 years and we are very pleased to have survived
it. Richard Branson
To be successful, you have to be out there, you have to hit the ground
running, and if you have a good team around you and more than a fair share
of luck, you might make something happen. But you certainly cant
guarantee it just by following someone else formula. Richard Branson

13

As a final note, these are the top ten entrepreneurs I chose to share their
failure stories with you. The reason i shared these failure stories is to make
you see that there is no shortcut to success and theres nothing like
overnight success. Every successful entrepreneur paid a price. I still want
you to know that you are not alone. Every entrepreneur had my own share
of business challenges and I am still fighting it out. Just be strong, stay
focused and stick to the entrepreneurial process. I will see you at the top.
Short notes :Need for Achievement Theory

Apr 2003

MCCLELLANDS NEED THEORY OF MOTIVATION

Three basic types of motivating needs

1]

Need for achievement

2]

3]

Have an intense desire for success and an equally intense fear of

failure
Want to be challenged
Set moderately difficult goals for themselves
Take realistic approach to life
Would analyse and assess problems and take personal
responsibility of completing a job
Like specific and prompt feedback on how they are doing
need for power
People with high need for power have a great concern for
exercising influence and control
They seek positions of leadership
Good conversationalists
Can be argumentative
Forceful, outspoken, hardheaded and demanding
Enjoy mentoring
need for affiliation
Derive pleasure from being loved and tend to avoid the pain of
being rejected by a social group
Concerned with maintaining pleasant social relationships
Enjoy sense of intimacy and understanding
Ready to console and help others in trouble

How it applies to managers

14

Entrepreneurs : showed very high need for achievement ; fairly high

need for power ; low in their need for affiliation

In small companies/ Ventures : president/ entrepreneur has a

very high achievement motivation
In large companies :
CEO/ Entrepreneur tend to be average in achievement but
stronger in power and affiliation
Entrepreneurs: rated higher in achievement motivation

Short notes :National Small Industries Corporation

Limited
Apr 2003

National Small Industries Corporation (NSIC)

The NSIC was constituted in the year 1955 with a view to promoting, aiding
and fostering the growth of small scale industries in the country with focus
on commercial aspects of the these functions. NSIC continues to implement
its various programmes and projects throughout the country to assist the SSI
units. The Corporation has been assisting the sector through the following
schemes and activities :
Composite Term Loan Scheme: To promote small-scale sector, NSIC
has launched a Composite Term Loan Scheme for the benefit of existing and
prospective entrepreneurs to acquire land and building, machinery and
equipment and working capital under one roof to the tiny units.
Hire Purchase Scheme: Supply of indigenous and imported machinery
and equipment on each financial terms with special focus on women
entrepreneurs, weaker sections, handicapped and exservicemen and SC/ST
entrepreneurs.
Equipment Leasing: It is done mainly to facilitate SMEs to expand their
capacities or diversify and/or upgrade their technology according to the
needs of the market.
Working Capital Finance: This Scheme aims at augmenting working
capital of viable and well managed units, on selective basis in case of
emergent requirements in enable them to pay-off theirpurchase of
consumable stores, spares and production related overheads particularly
electricity bills, statutory dues.
Raw Material Assistance: It facilitates availability of scarce raw material
either through the domestic market or by importing.
Marketing Support Programme: NSIC has been trying to act as a major
agency to bring SMEs closer to various Governmental purchasing agencies
with the intending of creating confidence in the purchasing agencies about
15

SMEs, and their capabilities to supply goods and services of requisitequality

economic prices and adherence to agreed delivery scheduling
Tender Marketing: To participate in bulk global tender on behalf of Small
Scale Industrial Enterprises. It is a immediate assisting SSIs with the ability
to manufacture quality products but which lack brand equity & credibility or
have limited financial capabilities.
Integrated Marketing Support: NSIC has been operating an Integrated
Marketing Support Programme in which bills pertaining to supplies made by
small scale units to eligible purchasers are discounted by NSIC up to a
certain specified limited.
Government Stores Purchase Programme: The units registered with
the Corporation for participation in government purchase programme are
considered at or with individual purchase organisations and derive all the
benefits like free supply of tender forms, exemption form payment of earnest
money, security deposits, etc.
Technology Up gradation: Excellent technical support is provided to
SSIs/SMEs through five NSIC-Technical Service Centres. These centres have
been recognised by Council of Scientific and Industrial Research for in-house
R&D. NSIC has set up a Technology Transfer Centre. The latest information is
provided to on-line connections and networks of computers on matching
technology seekers and technology providers are arranged through the
Technology Transfer Centre.
Software Technology Parks: NSIC has set up a NSIC-STP Complex under
Software Technology Parks of India (STPI). Software Technology Parks
facilitates small scale units to establish their units for the 100% export of
software and also act as the major point activate software exports directly
through NSIC.
NSIC-STP Complex at Okhla, New Delhi is one of such Parks set up by the
National Small Industries Corporation under the Software Technology Parks of
India to promote small entrepreneurs in softwaredevelopment. NSIC-STP
provides high speed better communication facilities through
VSNI/SATCOMnetworks, built-up office space and uninterrupted power supply
break-up and other administrative support.
Exports: NSIC is providing a complete package of export assistance,
testing facilities, preshipmentcredit facility, export incentives etc. apart from
exposure to the products of SSFC in tradefairs, buyer and seller meets etc.
the corporation has been endeavouring to increase share of India.Industries
in purchases to United Nations Organisation, it being the largest single buyer
in the world
Short notes Technology Bureau of Small Enterprises

Apr 2003

1. Promoted by United Nations Asian and Pacific Center for Transfer of

Technology
(APCTT) and SIDBI. One roof, synergy of technology and finance
16

2. Provides a gateway technology market through Internet and other

channels
3. Range of Services (a) Technology Information Computerized database on technology
option
available from different countries.
(b) Match Making Between business partners willing to collaborate
(c) Finance Syndication Through SIDBI covering term loans, foreign
currency, venture capital, letter of credit, equity assistance
(d) Support Services: Consultancy, visits of overseas experts, buyer-seller
meets for specific product / process technologies.
Small Industries Development Organization

Apr 2003

The Development Commissioner (Small Scale Industries) office is also known

as the Small Industry Development Organization (SIDO). It is an apex body,
established in 1954, for assisting the Ministry in formulating, coordinating,
implementing and monitoring policies and programmes for the promotion
and development of small scale industries. It has over 60 offices and 21
autonomous bodies under its management,
including Tool Rooms, Training Institutions and Project-cum-Process
Development Centres etc. Functions of such main bodies are as follows:
Small Industries Service Institutes (SISIs) are operational one in each
state. They provide technical support and consultancy services, conduct
entrepreneurship development programmes, an export promotion and liaison
activities Emphasizes is also placed on implementation of programmes on
modernization, energy conservation, quality control / up gradation and
pollution control for the benefit of entrepreneurs.
Regional Testing Center (RTC) provides Testing facilities for product quality
up gradation.
Tool Rooms/Tool Design Institutes (TRs/TDI) assist SSIs in technical up
gradation and provide good quality tooling by designing and producing tool,
moulds, jigs & fixtures, components, etc.
Product-cum-Process Development Centres (PPDCs) took into their specific
problems and render technical service.
Central Footwear Training Institutes (CFTIs) develop footwear designing to
promote exports.
Sub-Contract Exchange for Ancillary Development (SCXs) register and
create database of the spare manufacturing/service capacity of SSI; create
database of requirements of large/medium units and match the requirements
with the spare capacity available with small units; and arrange Buyer-Seller
Meets, organise vendor exhibitions, seminar, workshops for large-small units
coordination, quality up gradation, export promotion, etc and facilitate flow
of data on vendor development.

17

Maharashtra State Finance Corporation

Apr 2003

The Maharashtra State Financial Corporation (MSFC)

has been set up under the 'State Financial Corporations
Act, 1951. The Corporation operates in State of
Maharashtra from 1962 and in State of Goa and Union
Territory of Daman & Diu since 1964.
Functions and Objectives
The main function of MSFC is to meet the term loan requirements of small
and medium scale industries for acquisition of fixed assets like land, building,
machinery and equipments. The loans are given for setting up new industrial
units as well as for expansion and modernisation of the existing units.
The objective of the Corporation is to promote more industries in backward
and developing areas of Maharashtra, Goa and Union Territory of Daman &
Diu.
Organisational set up
MSFC is a highly decentralised organisation and has network of offices in all
the districts of Maharashtra and Goa except Gadchiroli. MSFC has nine
regional offices and twenty branch offices.
Services Rendered

MSFC grants term loans upto Rs. 90 lakhs to limited companies and
registered co-operative societies and Rs. 60 lakhs to proprietary and
partnership firms.

The Corporation also finances projects with large capital outlay (total
project cost upto Rs. 5 crores) in participation with SICOM/ALL India
Financial institutions/Commercial Banks etc. However, in such cases
assistance from MSFC is limited to Rs. 90 lakhs.

The Corporation provides seed capital assistance mainly to the

new/first generation entrepreneurs who possess necessary skill or
practical experience but lack requisite funds to meet gap in the DER
and/or promoter's contribution. The seed capital assistance is given to
bridge the gap in expected promoter's contribution. If the requirement
of seed capital exceeds Rs. 4 lakhs, the same is covered by IDBI seed
capital scheme. The assistance may be in the form of soft loan or
18

equity. The seed capital assistance is also given for expansion,

modernisation/diversification.
In the case of private limited companies, it maybe by way of equity/soft loan
or redeemable cumulative preference shares. Wherever Government seed
capital is available through Regional Development Corporations, MSFC does
not grant seed capital.
Write short note
(c) National association of young entrepreneurs
Apr 2005
(NAYE).
ANJE was set up on 29 July 1986 and centres its activity in the fight for
respect and safeguard of the specificities of the role of young entrepreneurs.
It considers that the high death rate of the companies set up by young
people is the result of a series of penalizing circumstances in the initial
stages of the investment. For this reason it is necessary that an
entrepreneurial environment be developed that takes into account the
constraints, and also the advantages, deriving from the age of the
entrepreneurs and their degree of maturity. This premise is, in ANJEs
opinion, essential for a society of entrepreneurs to be de facto created in
Portugal.
ANJE advocates an economic paradigm based on human capital and on
scientific and technological knowledge.
In this sense it is necessary to act preferentially with the new generation,
involving three great vectors: universities, companies and institutions
promoting entrepreneurial activity.
A new generation of highly qualified entrepreneurs may emerge from the
joint work of these three vectors which, for that reason, would be capable of
acting in sectors of high added value, generating qualified employment and
increasing productivity.

ANJE Headquarters

19

ANJE hosts in its headquarters, in Porto, a technologically based business

incubator for young entrepreneurs. Its facilities will be officially opened
during this route.
Write short note
(a) Entrepreneurship training programmes.
Apr
Or
2005,2007
Ingredients of a training module for entrepreneurs
There are several organisations engaged in conducting entrepreneurship
development program in India. The lead in the matter was taken by the
Small
Industrial Development Organisation (SIDO) through its service centres.
Other
organisations that have been actively conducting Entrepreneurship
Development
Programmes are
(a) State Bank of India;
(b) Financial institutes such as IDBI Entrepreneurial Motivation Training
centre
in northern eastern region,
(c) Xavier Institute of Social Services, Ranchi
(d) Industrial Consultancy Organizations in various states,
(e) Centre for Entrepreneurship Development, Ahmedabad
(f) State Financial Corporations,
(g) Centre of Entrepreneurship development, Hubli
(h) Small Industries Extension Training Institute, Hyderabad,
(i) National Science & Technology Entrepreneurship Development Board etc.
A need was felt to evolve an integrated national approach towards training
program for
various centres and states entrepreneurship development programme. In
order to train the
entrepreneurs, proper syllabi needed to drawn. Moreover, it was felt that
there are not
enough trainers and motivators to run the Entrepreneurship Development
Programmes.
The training program is designed to serve the following objectives
1. To impart basic knowledge about the industry, product & production
methods
2. To build the necessary skill for new entrepreneurs.
3. To assist the entrepreneur to function more effectively in his present
position by
exposing him to various relevant concepts, techniques & information.
4. To expose the entrepreneur to latest developments which directly or
indirectly
20

affect him.
5. To broaden the vision of entrepreneurs by providing them suitable
opportunity for
an interchange of experiences within and outside an industry.
6. To impart customer education
7. To impart knowledge of the marketing of goods
Methods of Training
1. Individual Instructions Under this method, a single individual is
selected for
training. This mode of training is undertaken where a complicated skill is to
be
imparted to an individual
2. Group Instructions This mode of training is suitable for a group of
individuals
for tasks which are not very complicated and entire group needs same set of
skills.
3. Lecture Method Here the instructor teaches the theoretical aspects.
Any
practicals are followed by the learners subsequently. Under this method,
whenever
there are any doubts they may be clarified on the spot.
4. Demonstration Method Where the performance of work to be shown
practically
by the instructor for better understanding, this method can be followed. This
is more
concerned with the practical then theoretical aspects.
5. Written Instruction Method The medium of training is followed where
a feature
reference is to be made by the learners. This method is mostly followed
where a
standardisation production is followed.
6. Conference Conferences are organised wherein experts in the field
share their
ideas & bring to the notice of learners new ideas & techniques to increase
the
production
7. Meeting Meetings are a mode of training involving a group of people
who
discuss the various problems confronting them; they exchange ideas & views
and
learn from each other.
Write short note on any two of the following:( (d) Incentives to small/tiny Sector.

21

Apr 2005

Government schemes and incentives for promotion of

entrepreneurship
World over, micro and small enterprises (MSEs) are recognized as an
important
constituent of the national economies, contributing significantly to
employment
expansion and poverty alleviation. Recognizing the importance of micro and
small
enterprises, which constitute an important segment of Indian economy in
terms of their
contribution to countrys industrial production, exports, employment and
creation of
entrepreneurial base, the Central and State Governments have been
implementing
several schemes and programmes for promotion and development of these
enterprises.
1. PRIME MINISTERS EMPLOYMENT GENERATION PROGRAMME
(PMEGP)
Government of India has approved the introduction of a new credit linked
subsidy
programme called Prime Ministers Employment Generation Programme
(PMEGP) by
merging the two schemes that were in operation till 31.03.2008 namely
Prime Ministers
Rojgar Yojana (PMRY) and Rural Employment Generation Programme (REGP)
for
generation of employment opportunities through establishment of micro
enterprises in
rural as well as urban areas. PMEGP will be a central sector scheme to be
administered
85 by the Ministry of Micro, Small and Medium Enterprises (MoMSME). The
Scheme will
be implemented by Khadi and Village Industries Commission (KVIC), a
statutory
organization under the administrative control of the Ministry of MSME as the
single
nodal agency at the National level. At the State level, the Scheme will be
implemented
through State KVIC Directorates, State Khadi and Village Industries Boards
(KVIBs) and
District Industries Centres (DICs) and banks. The Government subsidy under
the
Scheme will be routed by KVIC through the identified Banks for eventual
distribution to
22

the beneficiaries / entrepreneurs in their Bank accounts.

Objectives
I. To generate employment opportunities in rural as well as urban areas of
the
country through setting up of new self-employment ventures/projects/micro
enterprises.
II. To bring together widely dispersed traditional artisans/ rural and urban
unemployed youth and give them self-employment opportunities to the
extent
possible, at their place.
III. To provide continuous and sustainable employment to a large segment of
traditional and prospective artisans and rural and urban unemployed youth
in the
country, so as to help arrest migration of rural youth to urban areas.
IV. To increase the wage earning capacity of artisans and contribute to
increase in
the growth rate of rural and urban employment.
2. MARKET DEVELOPMENT ASSISTANCE SCHEME FOR MICRO/ SMALL
MANUFACTURING ENTERPRISES/ SMALL & MICRO EXPORTERS
The scheme offers funding for:
1. Participation by manufacturing Small & Micro Enterprises in International
Trade
Fairs/ Exhibitions under MSME India stall.
2. Sector specific market studies by Industry Associations/ Export Promotion
Councils/ Federation of Indian Export Organisation.
3. Initiating/ contesting anti-dumping cases by SSI Associations and
4. Reimbursement of 75% of one time registration fee (w.e.f. Ist January
2002) and
75% of annual fees (recurring) (w.e.f. Ist June 2007) paid to GSI (Formerly
EAN
India) by Small & Micro units for the first three years for bar code.
Objectives:
(i) To encourage Small & Micro exporters in their efforts at tapping and
Developing overseas markets.
(ii) To increase participation of representatives of small/ micro manufacturing
Enterprises under MSME India stall at International Trade Fairs/ Exhibitions.
(iii) To enhance export from the small/ micro manufacturing enterprises
(iv) To popularize the adoption of Bar Coding on a large scale.
3. SCHEME FOR ASSISTANCE TO TRAINING INSTITUTIONS
The Scheme envisages financial assistance for establishment of new
institutions
(EDIs), strengthening the infrastructure of the existing EDIs and for
supporting
entrepreneurship and skill development activities. The main objectives of the
scheme
23

are development of indigenous entrepreneurship from all walks of life for

developing
new micro and small enterprises, enlarging the entrepreneurial base and
encouraging
self-employment in rural as well as urban areas, by providing training to first
generation
entrepreneurs and assisting them in setting up of enterprises. The assistance
shall be
provided to these training institutes in the form of capital grant for
creation/strengthening
of infrastructure.
4. RAJIV GANDHI UDYAMI MITRA YOJANA
A Scheme of Promotion and Handholding of Micro and Small
Enterprises
There are still wide spread variations in the success rate, in terms of actual
setting up
and successful running of enterprises, by the EDP/SDP/ESDP trained
entrepreneurs. It
has been observed that new entrepreneurs generally face difficulties in
availing full
benefits under available schemes of the Governments / financial institutions,
completing
and complying with various formalities and legal requirements under various
laws/regulations, in selection of appropriate technology, tie-up with buyers
and sellers
etc. In order to bridge the gap between the aspirations of the potential
entrepreneurs
and the ground realties, there is a need to support and nurture the potential
first
generation entrepreneurs by giving them handholding support during the
initial stages of
setting up and managing their enterprises.
Objective
The objective of Rajiv Gandhi Udyami Mitra Yojana (RGUMY) is to
provide
handholding support and assistance to the potential first generation
entrepreneurs, who
have already successfully completed EDP/SDP/ESDP or vocational training
from ITIs,
through the selected lead agencies i.e. 'Udyami Mitras', in the
establishment and
management of the new enterprise, in dealing with various procedural and
legal hurdles
and in completion of various formalities required for setting up and running
of the
24

enterprise. Under RGUMY, financial assistance would be provided to the

selected lead
agencies i.e. Udyami Mitras for rendering assistance and handholding
support to the
potential first generation entrepreneurs.
7. CREDIT LINK CAPITAL SUBSIDY SCHEME FOR TECHNOLOGY
UPGRADATION
The Scheme was launched in October, 2000 and revised w.e.f. 29.09.2005.
The
revised scheme aims at facilitating Technology Upgradation of Micro and
Small
Enterprises by providing 15% capital subsidy (12% prior to 2005) on
institutional finance
availed by them for induction of well established and improved technology in
approved
sub-sectors/products. The admissible capital subsidy under the revised
scheme is
calculated with reference to purchase price of Plant and Machinery. Maximum
limit of
eligible loan for calculation of subsidy under the revised scheme is also been
raised Rs.
40 lakhs to Rs. 100 lakh w.e.f. 29-09.2005. The scheme has been continues
10th five
year plan to 11th five year plan. Under the scheme approximately 7396 units
have
availed subsidy of Rs. 315.21 crore upto August, 2009.
8. MICRO&SMALL ENTERPRISES-CLUSTER DEVELOPMENT
PROGRAMME
(MSE-CDP)
Office of the Development Commissioner(MSME) launched Micro and Small
Enterprises Cluster Development Programme (MSE-CDP) for holistic
development for
selected MSEs Clusters through value chain and supply chain management
on cooperative
basis. Designed on need assessment, the major component of the scheme
are Technology Upgradation, Quality Upgradation and Certification, Credit
Facilitation,
Marketing Support, including exposure to the global markets and Collective
Capacity
Building of the cluster units with a view to enabling them to ultimately
operate as
collectives of their own. Establishment and operation of Common Facility
Centres
(CFCs), organized procurement and marketing continuous skill and
technology
25

upgradation are the deliverables of any intervention under MSE-CDP.

Recently, support
for infrastructural upgradation for resurgence of the clusters has also been
included in
the MSE-CDP.
89
Objectives of MSE-CDP:
Key Strategy for enhancing productivity/Competitiveness of small
enterprises.
To Facilitate economies of scale
For integrated and focused development of MSEs.
Interventions for large number of units with higher gains at lower cost
9. CREDIT GUARANTEE FUND SCHEME FOR MICRO AND SMALL
ENTERPRISES
The Credit Guarantee Fund Scheme for Micro and Small Enterprises
(CGMSE) was launched by the Government of India to make available
collateral-free
credit to the micro and small enterprise sector. Both the existing and the new
enterprises are eligible to be covered under the scheme. The Ministry of
Micro, Small
and Medium Enterprises and Small Industries Development Bank of India
(SIDBI),
established a Trust named Credit Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for
Micro and
Small Enterprises. The scheme was formally launched on August 30, 2000
and is
operational with effect from 1st January 2000. The corpus of CGTMSE is being
contributed by the Government and SIDBI in the ratio of 4:1 respectively and
has
contributed Rs.1754.05 crore to the corpus of the Trust up to March 31, 2009.
As
announced in the Package for MSEs, the corpus is to be raised to Rs.2500
crore by the
end of 11th Plan. As on March 31, 2009, 1,50,034 proposals from micro and
small
enterprises have been approved for guarantee cover for aggregate credit of
Rs.4824.34
crore.
10. NATIONAL AWARD SCHEME
The Micro, Small &Medium Enterprises (MSMEs) in India have seen a vast
development in the last five decades. The MSMEs have registered
tremendous growth
as also progress in terms of quality production, exports, innovation, product
development and import substitution, very much beyond the expected
objectives of
26

setting up MSMEs by the planners of industrial production base in the

country.
Entrepreneurial efforts have made it possible to produce number of items,
which
hitherto were imported. In quite a few cases new variants so produced are
having
additional attributes than their original versions and are capable of solving a
multitude of
user problems. This all has become possible owing to the ambitions and
visionary spirit
of entrepreneurs of MSMEs
Objective
The ministry of Micro, Small and Medium Enterprises with a view to
recognizing
the efforts and contribution of MSMEs gives National Award annually to
selected
entrepreneurs and enterprises under the scheme of National Award.
11. SCHEME TO SUPPORT 5 SELECTED UNIVERSITIES / COLLEGES TO
RUN
1200 ENTREPRENEURSHIP CLUBS.
The scheme is to support 5 universities to run Entrepreneurship Clubs ( one
each
from Northern, Western, Eastern, Southern and North East region ). Each
university will
have to run 240 clubs per year and each club may have a membership of 50
entrepreneurs. In a period of 5 years, 3 lakh entrepreneurs are to be
benefited in all.
Objectives:
The scheme has been devised to encourage entrepreneurs to run selfemployment
ventures of Micro or Small Enterprises.
Moreover, this will be a very important scheme bringing the entrepreneurs,
universities
and MSME-Development Institutes (MSME-DI) together.
In addition, this will create a base to entrepreneurs for coming together to
solve their
common problems a shift from Lobbying Mode to Facilitation Mode, giving
hard
intervention in the form of technology and soft intervention like arranging
workshops,
seminars, guidelines to obtain ISO certification, ISI Marks, participation in
Trade Fairs,implementation of Quality Management Tools.

27

Short notes :Entrepreneurship Development

Programme (EDP)

Apr
2003,2001

Entrepreneurs play a predominant role in accelerating the socio-economic

development of a country. They are regarded as the nation builders and
wealth
creators. They are the change agents who initiate economic activities to
create wealth.
They undertake the business initiative, employ themselves in that business
and open up
employment avenues for others. Therefore, the role of entrepreneur is of
fundamental
importance to a country like India where the twin problems of poverty and
unemployment coexist.During early sixties, the small scale sector was
considered as exclusively an employment-generating sector, but gradually
this sector began to be recognized as the crucial tool for tapping latent
entrepreneurial talent and now in the post-liberalization period, there seems
to be ample opportunities for entrepreneurship and entrepreneurial growth.
Considering the importance of small scale industries in employment creation
and
economic development, the Government of India envisaged promotional
packages to
facilitate setting up of new enterprises. In order to bring about
entrepreneurial growth,
the policy mailers and financial institutions started thinking in terms of
imbibing
entrepreneurship culture through training interventions. Thus,
Entrepreneurship
Development Programmes (EDPs) Corporation (GIIC) and other agencies who
have
organized a three-month entrepreneurship development programme in late
sixties. The
programme was conducted for a selective group of energetic and potential
entrepreneurs who had the willingness and desire to achieve the goal set by
them. The
objectives laid down for the above programmes were as follows:
(i) To set up small scale ventures
(ii) To manage them effectively
(iii) To earn adequate profit from these ventures
(iv) To undertake personal responsibility of the business
It has been found out that n Ach factor developed by David McClelland,
the

28

renewed behavioural scientist, is the most important quality for

entrepreneurial
development. In order to prove that the need for achievement could be
induced, he
conducted an experiment in collaboration with the erstwhile Small Industries
Extension
and Training Institute (SIET) of Hyderabad at Kakinada, Andhra Pradesh.
Young
persons were selected and put through rigorous training for a period of three
months to
guide them to set new goals. The achievement motivation has a positive
impact upon
their task performance. The Kakinada experiment could be treated as an
important
basis for the present-day EDP inputs on behavioral aspects.
In later stage, Achievement Motivation Training (AMT) has become an
integral
part of EDP course curriculum. Institutes like SISI, NISIET, SIDO and TCOs
came
forward conduct EDPs and national level organizations like Entrepreneurship
Development Institute (EDI) of India, Ahmedabad and National Institute for
Entrepreneurship and Small Business programmes. According to a study
conducted by
NIESBUD, at present, as many as 686 odd organizations, including the state
level
organizations like IEDs/CEDs, are organizing EDPs in the country.
Objectives of EDPs:
The important objectives of Entrepreneurship Development Programmes
(EDPs) can be
stated as follows:
a) Accelerating industrial development by enlarging the supply of
entrepreneurs
b) Developing entrepreneurial qualities and motivating the prospective
entrepreneurs to achieve the goal
c) Enhancing the growth of small-and medium-scale enterprise sectors which
offer
better potential for employment generation and dispersal of industrial unit
d) Providing productive self-employment avenues to a large number of
educated
and low educated young men and women coming out of schools and colleges
e) Improving performance of small-and medium-scale industries by the
supply of
carefully-selected and trained entrepreneurs and diversifying sources of
entrepreneurship
f) Enterprise development in rural and no-industry areas where local
29

entrepreneurship is not really available and entrepreneurs from nearby

towns are
not easily lured
THE INDIAN EDP MODEL
There is a saying that entrepreneurs are the products of nature, nature and
culture. Of
course, this is very much true in Indian context. Apart from the nature and
the culture,
the role of nurture is very much significant for human resource development.
The myth
that entrepreneurs are born and not made has no longer been accepted.
Ordinary
persons can be turned into successful entrepreneurs though well-designed
training
programmes conducted by the Entrepreneurship Development institutes. The
term
nurture here implies the training intervention which is a real endeavor
towards human
resource development, especially entrepreneurial development. The
Entrepreneurial
Development Programmes, therefore, are based upon well-designed and
integrated
modular packages to but to the needs of the budding entrepreneurs. The
training level
follow more or less the same principle in organizing Entrepreneurial
Development
Programmes. In the present context, EDPs are usually conducted for four to
six weeks
and the curriculum adopted by the above institutes for imparting training is
also
apparently uniform.
PHASES OF EDPs
The EDPs normally pass through following three important phases:
Pre-training phase
Training phase
Post-training or follow-up phase
Pre-training phase:
This phase is the preparatory phase for launching the programmes. It
includes a
number of activities, which are as follows:
i) Identification of operationally-promising area, normally a district
ii) Selection of a project leader/course coordinator to coordinate the
programme
iii) Arrangement of infrastructural facilities for the programme
iv) Undertaking potential industrial survey/environmental scanning for
identification of
30

good business opportunities

v) Planning the programmes on various fronts such as:
a) Promotional campaigns through either with the help of print or electric
media,
leaflets, posters, etc.
b) Establishing contacts with business personalities, NGOs and related
agencies
which can contribute to the programme both directly and indirectly
c) Getting the application forms printed and making them available at
different
centers along with instructions.
d) Forming selection committee for selecting the trainees
e) Preparing the budget, obtaining administrative sanctions and organizing
other
activities which from a part of EDP
f) Preparing and finalizing the need-based inputs in training syllabus and to
tie u
with guest faculties to impart training
vi) Contacting the support agencies like DICs, SFCs, SISI, banks, NSIC, District
Magistrate, etc. to receive support in implementing the programme
vii) Organizing industrial motivational campaigns to mobilize as many
number of
applications as possible.
Training phase: Training potential entrepreneurs are providing them proper
guidance
for setting up enterprise constitutes the cornerstone of EDP. Most of the
Entrepreneurship Development institutes generally conduct training
programmes of 4-6
weeks duration on full time basis. The programmes design in terms of
objectives,
training inputs and their focus is described.
Training Phase: Programme Design
Objectives
Focus
Inputs
Motivation and
Entrepreneur
Behavioural inputs
reinforcement
of entrepreneurial traits,
confidence building
Facilitating decisionEnterprise
Business opportunity
making
establishment
guidance, information
process to set up a new
and
venture
project planning inputs,
technical inputs
Successful and
Enterprise
Management inputs,
profitable
management,
plant
31

operation of enterprise.
Industrial exposure

first-hand knowledge of
factory layout, business
sites, etc

visit/in-plant training

Post-training phase: Post-training phase is otherwise known as the phase

of follow-up
support. During this phase, post-training support services are rendered to the
participants who have successfully completed the Entrepreneurship
Development
Programme (EDP). This is because of the fact that, very often, the potential
entrepreneur after undergoing the training confronts a number of problems
while
implementing the action plan for grounding the project. So during this phase,
the
training organization helps the entrepreneur in sorting out the problems
through
counseling support. A committee is formed consisting of members generally
drafted
from the leading bank of the district, State Financial Corporation, training
organization
and above all, the District Industries Centre to help the entrepreneurs with
the following
objectives during the follow-up:
i) To provide a meaningful direction to the trainees in grounding their
enterprise
ii) To review the progress made by the trainees in implementation of the
project
iii) To review the post-training approach
iv) To provide escort services to the trainees by involving financial
institutions and
promotional agencies.
Usually, follow-up action meetings are organized thrice a year after the
completion of training and the following methods are generally used for
follow-up:
a) Postal questionnaire
b) Telephonic follow-up
c) Personal contact by the trainer
d) Group meetings
Problems of EDPs: The low level of performance is usually attributed to the
following
problems involved in organizing and conducting EDP trainings:
a) Shortage of adequate number of specialized and committed organizations
b) Insufficient trainer motivators to motivate people for undergoing EDPs and
to
impart training
32

c) Identification and selection of wrong projects

d) Lack of entrepreneurial and culture
e) Apathetic attitude of the support agencies like banks and financial
institutions to
support entrepreneurs
f) Lack of forward and backward linkages
g) Selection of wrong person for training
h) Improper identification of projects
i) Inadequate counseling support after training
j) Lack of continuous follow-up action or post-training support services for
grounding the project
Criteria for assessment or evaluation of EDPs: Following criteria are
being used by
the behavioral scientists to assess the effectiveness of EDPs in the country.
i) New enterprise creation
ii) Employment generation in quantifiable terms
iii) Creation of job opportunities both directly and indirectly
iv) Increase in sales and profit
v) Enterprise expansion
vi) Enterprise transformation
vii) Improvement in quality of product or services
viii) Repayment of loans
Write short notes covering past, present and future trends on : 20
01
Reservation Policy of Small Scale Industries

The government provides protection to the small scale sector, through the
policy of
reserving items for exclusive manufacture in the small scale sector. The
reservation policy is anattempt to protect SMEs from competition from big
corporations and 44 goods were specified to be exclusively manufactured by
SMEs (large corporations were allowed to enter this sector on condition that
50% of their produce would be exported). As a result, SMEs dominated
readymade garments, leather goods, auto components, electrical appliances
and the hand tool industries. Over the years, the number of items reserved
for SMEs increased and it stood at over 800 in 1989.However, the Abid
Hussain Committee set up by the Government of India which submitted its
report in
January 1997 observed that the reservation policy was inconsistent with the
current trade reforms which allow free import of a large majority of the goods
and most of the remaining can be imported under the special Import License.
The number of reserved items has, therefore, been coming down. At present
only 20 items are in the reserved list. A list of items reserved for exclusive
manufacture in micro and small enterprises sector is as follows

33

List of Items Reserved For Exclusive Manufacture by Micro and

Small Enterprise
Sector (Last revised on 30 July, 2010)

You friend want to be a successful entrepreneur May2013,20

,what tips would you give him?what are the 11
different types of entrepreneurs?
Entrepreneur is a key figure in economic progress. He is the person who
introduces new things in the economy. He is considered as the business
leader and not
as simple owner of capital. He is a person with telescopic faculty, drive and
talent who
perceives business opportunities and promptly seizes them for exploitation.
M.M.P.
Akhouri, formerly Executive Director, National Institute for Entrepreneurship
and Small
Business Development (NIESBUD), New Delhi, describes entrepreneur as a
character
who combines innovativeness, readiness to take risk, sensing opportunities,
identifying
and mobilizing potential resources, concerns for excellence and who is
persistent in
achieving the goal. To be successful, an entrepreneur should have the
following
characteristic features.
1. Need to achieve: Entrepreneurs have got strong desire to achieve
higher goals.
Their inner self motivates their behaviour towards high achievement: most of
the people
dream of success but do not take any action towards achieving these
dreams.
34

Entrepreneurs with high n-Ach factor act continuously to achieve the goal
and make
their dreams come true. For them, winning is achievement.
2. Independence: Most of the entrepreneurs start on their own because
they dislike to
work for others. They prefer to be their own boss and want to be responsible
for their
own decisions.
3. Risk-bearing: Entrepreneurs are the persons who take decisions under
uncertainty
and thus they are willing to take risk, but they never gamble with the results.
They
choose moderate risk rather than play wild gamble. They, therefore,
undertake calculated
risk which is high enough to be exciting, but with a fairly reasonable chance
to win.
4. Locus of control: According to Rotters locus of control theory, an
individual
perceives the outcome of an event as being either within or beyond his
personal control.
Entrepreneurs believe in their own ability to control the consequences of
their
endeavour by influencing their socio-economic environment rather than
leave
everything to luck.
5. Perseverance: Entrepreneur has got the quality of sticking to job he
decides to
undertake. Once committed to a specific goal and course of action,
entrepreneurs
become absorbed to it. They personally solve the problems that come across
their way
while setting up the project. They also work sincerely until the whole project
is
successfully implemented.
6. Positive self-concept: Entrepreneurs are always positive in their action.
Being an
achiever, he directs his fantasies and dreams towards achievement of
worthwhile goals
and sets extraordinary standard of excellence in what he is doing. This is
based upon
his awareness of SWOT analysis, i.e. his strengths, weaknesses,
opportunities and
threats. He utilizes his positive knowledge to support his thinking. He never
exhibits
any negative attitude.
35

7. Ability to find and explore opportunities: Entrepreneurs are always

alert to
opportunities. They are very much quick to see and grab opportunities. They
exhibit
an innovative turn of mind and convert the problems into viable
opportunities. They
plan intellectually and anticipate carefully how to achieve their goals in
realizing an
opportunity.
8. Hope of success: Hope of success is a significant quality of
entrepreneurial
personality. Entrepreneurs set their goals with a hope of success rather than
fear of
failure. This is because they set their goals on the basis of facts and their
ability to
maneuver them to their advantage.
9. Flexibility: Most of the successful entrepreneurs measure the pros and
cons of a
decision and tend to change if the situation demands. They never feel
reluctant to
revise their decisions. They are the persons with open mind without rigidity.
10. Analytical ability of mind: Entrepreneurs are unaffected by personal
likes and
dislikes. They stand beyond these types of prejudices as they are realistic in
their
approach. At the time of their need they select experts rather than friends
and relatives
to assist them. They usually avoid emotional and sensitive attitude towards
their
business or problem.
11. Sense of efficacy: Entrepreneurs are always oriented towards action
for
accomplishment of their goals. Being confident of their abilities, they find
themselves as
problem solvers rather than problem avoiders. They chalk out their goals for
future and
make planning to achieve them.
12. Openness to feedback and learning from experience: Successful
entrepreneurs
like to have immediate feedback of their performance. They modify their
plans on the
basis of the feedback they receive from the environment around them. They
learn from
their experience and never get discouraged having received unfavorable
information.
36

On the contrary, they are stimulated by unfavorable information to involve

themselves
sincerely in their own tasks to reach their desired goals.
13. Confronting uncertainty: Successful entrepreneurs are always
optimistic and
take every odd as the opportunity. They maneuver their environment in such
a way that
the works get accomplished rationally. Thus, they win by the application of
their
extraordinary insight and skill.
14. Interpersonal skills: Entrepreneurs are always comfortable while
dealing with
people at all levels. They interact with raw material suppliers, customers,
bankers, etc..
for different activities. As successful entrepreneurs, they should be persons
who like
working with others possessing the much needed quality of interpersonal
skill to deal
with people.
15. Need to influence others: Once the entrepreneurs set their goals,
they have to
play the roles of manager too. For influencing others (n Power), a low need to
establish
emotional relationship (low n Affiliation), and a high need to discipline ones
own self (to
inhibit over expression of their personality) are essential.
16. Stress takers: Entrepreneurs are capable of working for long hours and
solving
different complexities at the same time. As the captain of an industry or an
enterprise,
an entrepreneur faces a number of problems and in right moment he takes
right
decisions which may involve physical as well as mental stress. He can face
these
challenges if he has the capability to work for long hours and keep himself
cool under
monotony.
17. Time orientation: Entrepreneurs anticipate future trends basing upon
their past
experience and exposure. They stick to the time pragmatically while doing
their jobs.
18. Innovators: Successful entrepreneurs are innovators. They constantly
put their
efforts in introducing new products, new method of production, opening new
markets
and recognizing the enterprise.
37

19. Business communication skill: In order to motivate others in the

business
entrepreneurs must possess good communication skill. Both written and oral
communication skills are necessary for the entrepreneurs for running
enterprise
efficiently.
20. Telescopic faculty: Successful entrepreneurs always tend to think
ahead. They
have got telescopic faculties which make them think for the future. Future
orientation
makes them quite alert to the changing conditions of the time and they tend
to produce
goods and commodities as per the changing demands.
21. Leadership: Entrepreneurs should possess the quality of leadership.
Leadership
is the ability to exert interpersonal influence by means of communication
towards the
achievement of goals. Entrepreneurs as the leaders should provide the
necessary
spark to motivation by guiding, inspiring, assisting and directing the
members of the
group for achievement of unity of action, efforts and purpose. Hence,
entrepreneurs by
their own leadership styles and behaviour reduce the problems by proper
handling of
situations. Good administrative work depends upon effective leadership of
the
entrepreneur.
22. Business planning: Planning implies deciding in advance what, when
and how to
do a thing. Entrepreneurs should be equipped with skill and knowledge to
prepare their
business plan. A successful entrepreneur always follows the principles of
management
while planning for his business. The planning can act as a bridge between
the present
position and expected future shape of the enterprise. It provides a sense of
vision to
the entrepreneurs to cope with risky and uncertain situation.
23. Decision making: Decision-making skill is a fundamental characteristic
of an
entrepreneur. This implies the function of choosing a particular course of
action at
every stage of creation of an enterprise out of several alternative courses for
the
38

purpose of achieving specified goals. Hence, decision making is necessary at

all times
and mostly at conditions of uncertainty and risk.
24. Ability to mobilize resources: Entrepreneurs must have the ability to
marshal all
the inputs to obtain the end product. They have to mobilize 6Ms, i.e. Man,
Money,
Material, Machinery, Market and Method effectively to realize the final
product as
entrepreneurship is a function of gap filling and input completing.
25. Self-confidence: Entrepreneurs must have self-confidence to
accomplish the task
effectively and efficiently. They must take decisions on their own in uncertain
and risky
situation and should stick to it confidently even if there occurs initial
setbacks.
Types of Entrepreneur
Researchers who have studied entrepreneurial behaviour suggest that there
are different types ofentrepreneurs. Classifying entrepreneurs into various
categories is a tricky issue. The taxonomy ofentrepreneurs can be carried out
in various ways. Entrepreneurs can be classified on various basis.
ClarenceDenhof Classifies entrepreneurs on the basis of stage of economic
development: some others have classified on the basis of their functions and
characteristics. In the initial stages of economic development, entrepreneurs
tend to have less initiative and drive. As development proceeds, they
become more innovating and enthusiastic. The various types of
entrepreneurs are classified on certain parameters.
Some important classifications are described below:

39

1. On the Basis of Economic Development: Clarence Danhof classified

entrepreneurs into four groups on the basis of economic development.
A. Innovating Entrepreneurs: This type of entrepreneurship is
characterized by aggressive assemblage of information and the analysis of
results deriving from novel combination of factors of production.
Entrepreneurs falling in this class are generally aggressive in
experimentation and exhibited shrewdness in putting attractive possibilities
into practice. They are the entrepreneurs who have creative and innovative
ideas of starting a new business. An innovating entrepreneur sees the
opportunity for introducing a new technique or a new product or a new
market. He may raise money to launch an enterprise, assemble the various
factors, and choose top executives and the set the organization going.
Schumpeters entrepreneur was of this type.Innovative entrepreneurs thus,
results in the creation of something new. They are the contributors tothe
economic development of a country.Innovating entrepreneurs are very
commonly frond in undeveloped countries. There is dearth of such
entrepreneurs in developed countries. Innovating entrepreneurs played the
key role in the rise of modern capitalism, through their enterprising sprit,
hope of moneymaking, ability to recognize and exploit opportunities, etc.
B. Adoptive or Imitative Entrepreneur: There is a second group of
entrepreneurs generally

40

referred as imitative entrepreneurs. The imitative entrepreneurs copy or

adopt suitable innovations made by the innovative entrepreneurs. They does
not innovate the changes himself. They only imitates technology innovated
by others. Such entrepreneurs are particularly important in developing
courtiers because they contribute significantly to the development of such
economies. Imitative entrepreneurs are most suitable for the developing
regions because in such countries people prefer to imitate the technology,
knowledge and skill already available in more advanced countries. In highly
backward countries there is shortage of imitative entrepreneurs also. People
who can imitate the technologies and products to the particular
conditions prevailing in these countries are needed. Sometimes, there is a
need to adjust and adopt the new technologies to their special
conditions.Imitative entrepreneurs help to transform the system with the
limited resources available. However; these entrepreneurs face lesser risks
and uncertainty then innovative entrepreneurs. While innovative
entrepreneurs are creative, imitative entrepreneurs are adoptive.
C. Fabian Entrepreneur: The third type is Fabian entrepreneur. By nature
these entrepreneurs
are shy and lazy. This type of entrepreneurs have neither will to introduce
new changes nor desire to adopt new methods of production innovated by
the most entrepreneurs. They follow the set procedures, customs, traditions
and religions. They are not much interested in taking risk and they try to
follow the footsteps of their predecessors. Usually they are second
generation entrepreneur in a business family enterprise.
D. Drone Entrepreneur: The fourth type is Drone entrepreneurs who
refuse to copy or use
opportunities that come on their way. They are conventional in their
approach and stick to their set practices products, production methods and
ideas. They struggle to survive not to grow. They may be termed as
Laggards. In such cases the organization looses market, their operations
become uneconomical and they may be pushed out of the market.
2. On the Basis of Type of Business: Under this category we can classify
entrepreneurs as described below:
A. Business Entrepreneurs: They are the entrepreneurs who conceive an
idea for a new product or service and then create a business to materialize
their idea into reality. They tap the entire factor of production to develop a
new business opportunity. They may set up a big enterprise or a small scale
business. When they establish small business units they are called small
business entrepreneurs. In a majority of cases, entrepreneurs are found in
small trading and manufacturing business.
B. Trading Entrepreneur: There entrepreneurs undertake trading activities
and are not concerned with the manufacturing work. They identifies
potentiality of their product in markets, stimulates demand for their product
line among buyers. They may go for both domestic and overseas trade.
These entrepreneurs demonstrated their ability in pushing many ideas ahead
which promoted their business.
41

C. Industrial Entrepreneur: Industrial entrepreneur is essentially a

manufacturer who identifies
the needs of customers and creates products or services to serve them. He is
product-oriented who starts through an industrial unit to create a product like
electronic industry, textile unit, machine tools.
D. Corporate Entrepreneur: These entrepreneurs used his innovative skill
in organizing and
managing a corporate undertaking. A corporate undertaking is a form of
business organisation
which is registered under some statute or Act like a trust registered under
the Trust Act, or a
company registered under the Companies Act. These corporate work as
separate legal entity. He is thus an individual who plans, develops and
manages a corporate body.
E. Agricultural Entrepreneur: Agricultural entrepreneurs are those who
undertake agricultural
activities as through mechanization, irrigation and application of
technologies to produce the crop. They cover a broad spectrum of the
agricultural sector and include agriculture and allied occupations.
3. According to the Use of Technology: The application of new
technology in various sectors of the national economy is essential for the
future growth of business. We may broadly classify these entrepreneurs on
the basis of the use of technology as follows:
A. Technical Entrepreneurs: With the decline of joint family business and
the rise of scientific and technical institutions, technically qualified persons
have entered the field of business. These entrepreneurs may enter business
to commercially exploit their inventions and discoveries. Their main asset is
technical expertise. They raise the necessary capital and employ experts in
financial, legal- marketing and other areas of business. Their success
depends upon how they start production and on the acceptance of their
products in the market.
B. Non-technical Entrepreneur: Non-technical entrepreneurs are those
who are not concerned
with the technical aspects of the product or service in which they deal. They
are concerned only
with developing alternative marketing and promotional strategies for their
product or service.
C. Professional Entrepreneur: Professional entrepreneur is an
entrepreneur who is interested in establishing a business but does not have
interest in managing it after establishment. A professional entrepreneur sells
out the existing business on good returns and starts another business with a
new idea. Such an entrepreneur is dynamic and conceives new ideas to
develop alternative projects.
4. According to Motivation: Motivation is the main force that promotes
the efforts of the entrepreneur to achieve his goals. An entrepreneur is
42

motivated to achieve or prove his excellence in their performance.According

to motivation we can classify entrepreneur as:.
A. Pure Entrepreneur: A pure entrepreneur is the one who is motivated by
psychological
economical, ethical considerations. He undertakes an entrepreneurial activity
for his personal
satisfaction in work, ego or status.
B. Induced Entrepreneur: This type of entrepreneur is one who induced to
take up an
entrepreneurial task due to the policy reforms of the government that
provides assistance, incentives, concessions and other facilities to start a
venture. Most of the small scale entrepreneurs belong to this category and
enter business due to financial, technical and several other facilities provided
to them by the various agency of Govt. to promote entrepreneurship. Today,
import restrictions and allocation of production quotas to small units have
induced many people to start a small scale unit.
C. Motivated Entrepreneur: New entrepreneurs are motivated by the
desire for self-fulfillment.
They come into being because of the possibility of making and marketing
some new products for the use of consumers. They are motivated through
reward like profit.
5. According to Growth: The industrial units are identified as high growth,
medium growth and low growth industries and as such we have Growth
Entrepreneur and Super Growth Entrepreneur.
A. Growth Entrepreneur: He necessarily takes up a high growth industry
and chooses an industry which has sustained growth prospects. Growth
entrepreneurs have both the desire and ability to grow as fast as large as
possible.
B. Super-Growth Entrepreneur: This category of entrepreneurs is those
who have shown
enormous growth of performance in their venture. The growth performance is
identified by the high turnover of sales, liquidity of funds, and profitability.
6. According to Entrepreneurial Activity: Based on entrepreneurial
activity, entrepreneurs are classified as novice, serial, and portfolio
entrepreneur.
A. Novice Entrepreneur: A novice is someone who has started his/her first
entrepreneurial venture. A novice entrepreneur is an individual who has no
prior business ownership experience as a business founder, inheritor of a
business, or a purchaser of a business. It is not similar to early starter; a
novice can also be a 50 year old with over 25 years of experience in the
industry.
B. A Serial Entrepreneur: A Serial Entrepreneur is someone who is
devoted to one venture at a
time but ultimately starts many. It is the process of starting that excites the
starter. Once the business is established, the serial entrepreneur may lose
interest and think of selling and moving on.
43

C. Portfolio Entrepreneur: A portfolio entrepreneur is an individual who

retains an original business and builds a portfolio of additional businesses
through inheriting, establishing, or purchasing them. A portfolio entrepreneur
starts and runs a number of businesses. It may be a strategy of spreading
risk or it may be that the entrepreneur is simultaneously excited by a variety
of opportunities. Also, the entrepreneur may see some synergies between
the ventures.
7. Other Entrepreneurs:
A. First-Generation Entrepreneurs: This category consists of those
entrepreneurs whose parents or family had not been into business and was
into salaried service. The booming economy of India has led to a multitude of
business opportunities, and with deregulation, it has become easier to set up
businesses. Also, with a change in the mindset of the middle class, it is now
more acceptable to become an entrepreneur. A first-generation entrepreneur
is one who starts an industrial unit by means of an innovative skill. He is
essentially an innovator, combining different technologies to produce a
marketable product or service.
B. Modern Entrepreneur: A modern entrepreneur is one who undertakes
those businesses which go well along with the changing scenario in the
market and suits the current marketing needs.
C. Women Entrepreneurs: Women as entrepreneurs have been a recent
phenomenon in India.
The social norms in India had made it difficult for women to have a
professional life. Now this has changed. Progressive laws and other
incentives have also boosted the presence of women in entrepreneurial
activity in diverse fields. In 1988, for the first time, the definition of Women
Entrepreneurs enterprise was evolved that termed an SSI unit/industryrelated service or business enterprise, managed by one or more women
entrepreneurs in proprietary concerns, or in which she/they individually or
jointly have a share capital of not less than 51 per cent as partners /
shareholders / directors of a private limited company / members of a
cooperative society, as a Woman Enterprise.
D. Nascent Entrepreneur: A nascent entrepreneur is an individual who is
in the process of starting a new business.
E. Habitual Entrepreneur: A habitual entrepreneur is an individual who
has prior business ownership experience. The nascent entrepreneur can
either be a novice or a habitual entrepreneur.
F. Lifestyle Entrepreneurs: Lifestyle entrepreneurs have developed an
enterprise that fits their
individual circumstances and style of life. Their basic intention is to ear an
income for themselves and their families.
G. Copreneurs: It is related to the married couples working together in a
business. When a married couple share ownership, commitment and
responsibility for a business, they are called copreneurs. As copreneurs,
couples struggle in ventures to establish equality in. their relationships. Such
couples represent the dynamic interaction of the systems of love and work.
44

H. IT Entrepreneurs: IT entrepreneurs are creating a new business platform

that takes them
straight to the top. They are confident, ambitious innovative and acquired
creativity in the competitive global environment and created a niche of their
self. They are the brave new bunch of entrepreneurs who are raring to take
on the world of information technology.
I. Social Entrepreneur: Social entrepreneur is one who recognizes the part
of society which is
stuck and provides new ways to get it unstuck. Be it dedicated efforts for
child upliftment, fighting for the conservation of Assams rainforests, working
for the betterment of the blind or initiatives to empower women, the
entrepreneurs passion is very strong. Freedom, wealth, exposure, social
mobility and greater individual confidence are driving this huge wave of
social innovation and entrepreneurship. After all are tired with the
Inefficiency of governments and the indifference of corporate, and want to
make a change and this is the case everywhere.
J. Forced Entrepreneurs: The money-lenders of yesterday, who are thrown
out of their family
business because of government legislation, the neorich Indians returning
from abroad and the
educated unemployed seeking self-employment form this class of
entrepreneurs.
K. Individual and Institutional Entrepreneurs: In the small scale sector
individual entrepreneurs
are dominant. Small enterprises outnumber the large ones in every country.
Such entrepreneurs have the advantage of flexibility, quick decision making.
But a single individual can establish, operate and control an organization up
to a limit. Thereafter, it becomes necessary to institutionalize
entrepreneurship. The business will have to acquire a number of new
entrepreneurial skills through a corporate body. A group of entrepreneurs has
to be developed to handle the increasingly complex network of decision
making. The central function of the entrepreneur remains the same but the
basic decisions like the line of business, the amount of capital employed, etc.
are taken collectively by the promoters at the helm of affairs. Thus,
individual entrepreneur and institutional entrepreneur coexist and support
each other. Corporate sector the symbol of institutionalized
entrepreneurship.
L. Entrepreneurs by Inheritance: At times, people become entrepreneurs
when they inherit the
family business. In India, there are a large number of family controlled
business houses. Firms in
these houses are passed from one generation to another.

45

SIDBIor
May 2014 Apr
Explain the role of SIDBI in development of 2009, 2008,
small scale industries
2007,2002

Small Industries Development Bank of India (SIDBI):

The Bank (SIDBI) was established in the year 1990 as the apex refinance
bank. The SIDBI is operatingdifferent programmes and schemes through 5
Regional Offices and 33 Branch Offices. The financial assistance of SIDBI to
the small scale sector is channelized through the two routes direct and
indirect.
(a) Indirect Assistance:
SIDBIs financial assistance to small sector is primarily channelised
through the existing credit delivery system, which consists of state level
institutions, rural and commercial banks.
SIDBI provides refinance to and discounts bills of Primarily Lending
Institutions (PLI).
The Assistance is available for
Marketing of SSI product
Setting up of new ventures
Availability of working capital
Expansion
Modernisation
Human resource development
Diversification of existing units for all activities
(b) Direct Assistance:
The loans are available for new ventures, diversification technology up
gradation, modernization and expansion of well run small scale enterprises.
Assistance is also available for private sector.
Small scale sector is eligible for maximum debt equity ratio of 3:1
Foreign currency loan for import of equipment are also available to export
oriented small scale enterprises.
SIDBI also provide venture capital assistance to the entrepreneurs for their
innovative ventures if they have a sound management team, long term
competitive advantage and a potential for above average profitability
leading to attractive return on investment.
(c) New Initiatives of SIDBI:
Two Subsidiaries viz. SIDBI Venture Capital Limited and SIDBI Trustee
Company United formed
to oversee venture capital.
Technology Bureau for Small Enterprise formed to oversee Technology
Transfer, Match Making,
Services, Finance Syndication and Facilitating Joint Ventures.

46

 SIDBI Foundation for Micro Credit has been launched to provide financial
assistance to the poor and to meet emerging needs of the micro finance
sector especially in rural areas
What are various quick-start routes to
entrepreneurship?
Discuss
their
relative
merits and de-merits(2009,2013,2012)
or
Compare and contrast the relative merits and
de-merits
of
(a)
franchising
and
(b)
ancillarising as a quick-start route to
entrepreneurship.
Or
What is meant by franchising? Why is it said
to be a gift of the 20th Century to the world
of business? Also discuss the merits and
demerits of franchising as a quick start route
to business.(2010)
Franchising(2014,2008,2003)
or
Ancillarization
Apr
Or
2007,2003,2003,20
Ancillarization and Entrepreneurs
02,2001
Or
What are the different options for the growth
of a newly established business ? Mention
which entrapreneurial competences one must
possess for each of the option
Or
Compare
Franchising,
Ancillarising
&
Acquisitioning as Strat Up Routes for an
Entrepreneur
Or short notes (b)
Acquisitions as a quickroute to entrepreneurship.
(2005)

Franchising A management whereby the manufacturer or sole distributor

of trade marked product or services gives the exclusive
rights of local distribution to independent retailers for their
payment and conformance to standardised operating
47

procedures.
The toughest part of business is to gain customer acceptance and trust for
your product.
Franchising is an start-up strategy that minimises this uncertainty from
business venture.
Franchising strategy is adopted by well established and visible brands.
Franchising is a special form of licensing which allows the franchisee to sell a
highly
publicised product or service using the franchisers brand name or
trademark, carefully
developed procedures and marketing strategies. The franchise is operated by
the franchisee,
who must adhere to the strict policies of the franchising company. Like in
case of
licensing, in this case too, the franchisee pays a fee to the franchiser,
normally as
percentage of sales.
McDonald outlets are all franchisee outlets. Actually most of the food chain
companies
outlets are franchisee outlets.
The entrepreneur is trained in conduct of business and supported in
marketing by the
franchiser besides using a name that has some established image and some
ready
customers.
Four Characteristics of Franchising
(a) A contractual relationship in which franchise licenses the franchisee to
carry
out business under the name owned by or associated with franchiser
(b) Controlled by the franchiser over the way in which franchisee carries out
the
business
(c) Assistance to the franchisee by the franchiser in running the business
prior
to commitment and through out the contract period
(d) Franchisees business is a separate entity from that of the franchiser. The
franchisee provides and seeks capital in the venture
There are three types of franchising available
1. Product Franchising Sales outlets are franchised. Most of the apparels
and shoes
companies follow this format. It facilitates easy accessibility to the product
for
customer and achieves sale transaction without any value addition.

48

2. Process Franchising outlets are granted to use the brand name and
process of the
franchiser. The process and recipe are generally patented by the parent
company.
Like soft drinks companies who franchise bottling plants (but draw the
money by
sale of soft drink concentrate)
3. Business format franchising Name, sale and method of doing
business are
transferred for a yearly fee/percentage of yearly sales. McDonalds outlets fall
in
this category. This is the most common type of franchising.
Advantages to the Entrepreneur
1. Product Acceptance The franchisee usually enters into a business that
has an
accepted brand name and therefore ready customer base. The franchisee,
therefore,
does not have to spend resources trying to establish the credibility of the
business.
2. Management Expertise Management assistance is provided by the
franchiser.
Each new franchise is often required to take a training program on all aspects
of
operating the franchise. This training could include classes in accounting,
personnel
management, marketing and production.
3. Capital Requirement A new venture can be costly both in terms of
time and
money. The franchise offers an opportunity to start a new venture with
upfront
support that could save the entrepreneur significant time and possibly less
capital.
In some cases the franchiser will also finance the initial investment to start
the
franchise operation. The initial capital required to purchase the franchise
generally
reflects a fees for the franchise, construction cost and purchase of
equipment. The
pre-structured layout of the facility, control of stock, inventory and the
potential
buying power of the entire franchise operation can save the entrepreneurs
significant funds.
4. Knowledge of the Market Most franchiser will be constantly
evaluating market
conditions and determining the most effective strategies to be
communicated to the
49

franchisees.
5. Operating and Structural Control Two problems that many
entrepreneurs have
in starting a new venture are maintaining quality controls of the product and
services and establishing effective managerial controls. Administrative
controls
usually involve financial decisions revolving to cost, inventory, cash flow and
personal issues such as criteria for hiring/firing, scheduling and training to
ensure
consistent service to the customer. These controls will usually be outlined in
a
manual supplied to the franchisee by the franchiser.
Advantages to Franchiser (As expansion strategy used by
Entrepreneur)
The most obvious advantage of franchising as a expansion strategy for the
entrepreneur is
that business can be expanded quickly with little capital. A franchiser can
expand a
business nationally and even internationally by authorising and selling
franchise in selected
locations. The capital necessary for this expansion is much less than it
should be without
franchising. Operating a franchised business requires fewer employees than
a non
franchised one. Head quarters and regional offices can be slightly modified
to primarily
support the needs of the franchises.
Cost Advantages
The franchiser can purchase supplies in large quantities and get economies
of scale that
would not have been possible otherwise. Many franchised businesses
purchase parts,
accessories, packaging and raw material in large quantities and then in turn
sell them to
franchisees.
Problems in Franchising
1. The problem in franchising usually centre on the inability of the franchiser
to
provide service and advertising. When promises made in the franchise
agreement
are not kept, the franchisee may be left without any support in important
areas.
2. The franchisee may also face a problem when a franchiser fails or is
brought out by
another company. In some case, the franchiser finds it difficult to find quality
50

franchisee. Poor management can cause individual franchise failure.

Entrapreneurial competences one must possess for Franchising as
below :
Information Seeking :Research on how to provide a product or
service,Consults experts for business or technical advice
Commitment to work contract :Expresses a concern for satisfying the
customer
Acquisition
An acquisition is the purchase of a company or a part of it so that the
acquired company is
completely absorbed and no longer exists as business entity. Entrepreneur
can start &
expand the venture by acquiring an existing business.
Advantages of Acquisition
1. Acquired firm has an established management and operating practices.
2. Entrepreneur gets a well established customer base from the acquired firm
3. Entrepreneur acquires well established channels and sales structure,
suppliers,
retailers, wholesalers, manufacturers by acquiring the firm.
4. Actual cost of acquiring can be lower than other methods of expansion.
5. The employees of the existing business can be an important asset & can
help the
business to continue its successful mode.
6. Since entrepreneur does not have to find suppliers, channel members,
employees or
customers more time can be spent assessing opportunities to expand the
business.
Disadvantages of Acquisition
1. Most firms offered for acquisition have an erratic, marginally successful or
even
unprofitable track record. It is important to review the records to assess
future
potentials.
2. Entrepreneur may assume he can succeed where others have failed. Self
evaluation
is important before agreement. Even though the entrepreneur brings new
ideas &
management qualities, the venture may never be successful for reasons that
are not
possible to correct.

51

3. When business changes hands, often, key employees also leave. Loss can
be
devastating since value of business is often a reflection of efforts of
employees.
4. It is possible that purchase price is too high
FOUR STEPS OF ACQUISITIONING
1. Planning your approach and targeting the type of business you wish to
acquire
2. Finding available business to purchase
3. Using an appropriate methodology to evaluate the deal
4. Negotiating the terms and purchase price for the business.
Entrapreneurial competences one must possess for Acquistion as
below :
Sees and acts on opportunities :Looks and acts on opportunities
(business ,education and personal growth)
Problem Solving:Switches to an alternative statetegy to reach a
goal.Generates new ideas or innovative solutions
Assertiveness :tells others what they have to do,disciplines those failing to
perform as expected
Monitoring:Personally supervises all aspects of a work
Concern for employee welfare:Take positive action in response to
employees personal concerns,express concern about the welfare of
employees
Joint Ventures
Joint Ventures are partnership projects. Two or more companies join hands to
launch a
third company. While the capital is often shared between the JV companies,
there is a
complementary relationship between the strengths and weaknesses of the
two companies.
While one firm may have cutting edge technology but no knowledge of
marketing
dynamics of other country, second firm may have obsolete technology but a
strong
presence in that product segment of targeted market. Thus, coordination of
superior
technology and equally strong marketing and managerial strength creates a
formidable
company which has all strengths and few weaknesses.
52

Airbus Industries of Europe is a joint venture among many companies in

Britain, France,
Spain and Germany
Entrapreneurial competences one must possess for Joint venture as
below :
Systematic planning:develops and uses logical ,step by step plans to
reach goals ,plans breaking a large task down into sub tasks ,develop plans
that anticipate obstacles .evaluates alternatives ,takes a logical and
systematic approach to activities
Ancillarisation
An ancillary unit is defined as an industrial undertaking engaged in
1. Manufacturer of parts & components, sub assemblies, tooling or
intermediates &
2. Supply not less than 50 % of its production to one or more other industrial
undertaking for use in their production.
Major part of production of an ancillary unit is used by another company in
its production.
Thus, a company engaged in supplying headlights or rear view mirror to
Maruti is an
ancillary unit if 50% or more of its sales come from supply to Maruti and
other car
manufacturers. However, a tyre company supplying tyres to Maruti can not
be called an
ancillary unit because its major part of production is not consumed by a few
industrial
units. Thus, an SSI can be an ancillary but every SSI is not an ancillary.
Advantages of Ancillarisation
1. Investment can be minimised by sourcing part of requirements by
subcontracting to
an ancillary unit
2. JIT concept followed by many Ancillary units helps the large companies to
bring
down the inventory level and saves a lot of money.
3. Sourcing is economical from ancillary units that are normally located near
the
company.
4. Ancillary units work with the parent companies in the process & product
development.
Major benefits of Ancillarisation Drive to a Country
1. It is the first step towards full fledged industrialisation of the country. India
is now
embarking on this path through ancillarisation of automobile spares.
53

2. Helps in generating employment

3. Helps in growth of GDP
4. Promotes entrepreneurship
Problems with Ancillarisation
1. Delay in payments puts ancillary company in big trouble. If the parent
company is
big (which is most often the case), then the ancillary company finds it
difficult to
take even any legal action for non payment.
2. When parent company revises the specifications, ancillary units are some
times not
given the expected support for adopting the higher technology, nor given
sufficient
time to bring changes in the technology to match that of parent co.
3. Reckless multiplication of suppliers by the parent company makes the
ancillary
units operate below BEP (Break even point). As a result these units incur
losses
because of capacity under utilisation.
4. Any problems in production or marketing of parent units product reflect on
sales of
ancillary unit due to its overdependence.
Government Initiatives to promote Ancillarisation
Sharing successful company experiences
Training on ISO / QS 9000
Collaboration on Benchmarking Services
Joint Projects for Productivity Improvements
Technology Development Projects
Trade Delegations Worldwide / Trade Fairs / Exhibitions
Global Dissemination of Information
Linkages Building / Networking
Science & Technology Parks
Vendor Development Programmes
Sub-contract Exchanges
54

Cluster-development Programme
Purchase & Price Preference Scheme
Entrapreneurial competences one must possess for Ancillarisation
as below :
Concern for quality of works :acts to do things that meet or beat existing
standards of excellence
Efficiency Orientation:Finds ways to do things faster or with fewer
resources or at a lower cost ,looks for or finds ways to do things faster or at
less cost,uses information or business tools to improve efficieny

55

Who is an Intrapreneur? What role does an

Intrapreneur play in an organization? How best can
one sustain and nurture intrepreneurs? (OR)
Or intraprenuer
Or
A director of a company wishes to introduce
intrapreneurship in his organization;what are the
strategic action plans that he could introduce(2011)
Or
Who is an Intrapreneur? What benefits are
conferred
by
Intrapreneuring
within
an
organization? Illustrate y our answer with suitable
examples.
Or
Why and how organizations are encouraging
Intrapreneurs in recent years ? What are the
advantages
of
Intrapreneurship
over
Entrapreneurship ? Support your answer with a
case.

Apr 2007,
Apr
2006,2004,2
001

Or
Why is Intrapreneurship given so much importance
now a days? How it can be developed deliberately
within the organization? What are it main
challenges?(2014)
Or
What is Intrapreneurship ? Explain the role of an
individual and an organization to promote the
culture of Intrapreneurship(2002)
Or
Intrapreneuring lies at the heart of a learning
organization do you agree? Furnish a road map for
nurturing greater entrepreneurial initiatives in a
modern business organization.
Or
Intrapreneuring lies at the heart of a learning
organization ?Comment upon this statement and
enumerate the steps involved for developing
intrapreneurial skills in the organization.
What is Intrapreneurship?
56

,2009,2012

Intrapreneurship is defined as entrepreneurship within an existing business

set up. That is
to say Intrapreneurship is corporate entrepreneurship. When a corporation
indulges in
entrepreneurial activities, like diversification into new businesses, it is called
intrapreneurship.Intrapreneur is a manager who focuses on innovation and
creativity; who brainstorms,dreams and puts ideas into profitable venture by
operating within the organisational
environment.It is a tool for capitalizing the entrepreneurial spirit of
employees in the organisation. It
gives managers the freedom to try new ideas by employing firms resources
in a unique
way.
It is a corporate entrepreneurship
It is entrepreneurship in existing business
They bridge a gap between a manager and an innovator.
Their contribution is in taking new ideas and even working prototype
and turning them into profitable products and businesses.
When the ideas have become solid and functioning businesses,
intrapreneurs tend to grow bored. At this point, they often need proven
managers to maintain and develop business while they go back to
building new ventures for others to manage.
An Entrepreneur operates in an open world whereas an intrapreneur
operates within the organisation.

For Entrepreneur, the liability is total whereas for Intrapreneur the

liability is limited to his contract with his employers.

Role of Intrapreneur
An intrapreneur is not far removed from an entrepreneur. The major
difference being that
an entrepreneur risks his own money where as an intrapreneur works with
his employers
money. Thus, the risk level of an intrapreneur is considerably reduced.
Secondly, the desire
for independence and material success is not as strong in case of
intrapreneurs. For most
other characteristics, the two match perfectly.
1. Vision It is the basis for successful venture. An Intrapreneur has ability
to
visualise from idea to implementation.
2. Motivation Intrapreneur is generally self motivated, but expect
corporation
reward and recognition.
3. Orientation Intrapreneur is achievement oriented.

57

4. Risk Appetite Intrapreneurs are moderate risk takers since risk

acceptance
depends on their skills. Wild risk takers are not affordable to corporates.
5. Locus of status Intrapreneurs want to do the work on their own rather
than
delegate like managers
6. Failure and Mistakes Intrapreneur hide risky projects and ideas to
ensure
learning without political cost and public failure. They develop multi
disciplinary
team in the organisation and may go beyond organisation boundaries for
results.
7. Goal set up Intrapreneur are determined to do things not even asked
for. They
set goals and quality standards.
Intrapreneurial Environment
Organization operates on frontiers of technology
New ideas encouraged
Trial and error encouraged
Failures are allowed
Resources available and accessible
Multidiscipline teamwork approach
Long time horizon
Appropriate reward system
Support of top management
Steps for setting Intrapreneurship in organisation
Following are the steps required to be taken to establish Intrapreneurship in
an organisation
1. Secure Commitment to Intrapreneurship from Top, Upper and
Middle
Management
(a) Cultural Changes The cultural changes needed to development the
spirit
of intrapreneurship in an organisation is not possible without whole hearted
commitment of its full line of higher management. It requires prolonged
commitment and investment in arranging to expose the spirit of
intrapreneurship among the employees. Talk shows are organised and
bulletins published to expose people to this concept. Seminars and strategy
sessions are held to transform the organisation into an intrapreneurial
organisation.
(b) Resource Requirement Intrapreneurship demands commitment of lot
of
resources; material as well as human. Without commitment of higher
58

management, such resources will not be available for any intrapreneurial

venture.
(c) Confidence Building While intrapreneurship leads to rich rewards for
the
company, there is very little direct benefit to the employees. Most tend to
work as intrapreneur to give expression to their creative zeal. On top of that,
there is always a fair amount of risk of failure in such ventures. Therefore,
unless the employees have full support of the higher management, they will
not stick their neck out in such a venture.
2. Create Framework for Intrapreneurship Once cultural changes have
been
launched, which is a long slow process lasting approximately 23 years,
parallely, a
framework needs to be developed as to how the ideas will be processed and
executed, how they will be funded, how they will be monitored and how will
the
losses, whenever they occur will be accounted.
3. Identification of Intrapreneurial Leaders Not every one has
entrepreneurial
spirit. Therefore, people with entrepreneurial characteristic need to be
identified,
selected and trained. Along with training, a mentor/sponsor system is also
needed to
be developed. These mentors from the top management will give the needed
guidance and support to the intrapreneurial leaders
4. Identify the general areas of Intrapreneurial Thrust Every
company has a
priority area where it would like to move forward. Such areas need to be
identified
and notified to employees. An IT company would rarely want to foray into
hardcore
manufacturing sector even if the prospects are quite promising.
5. Improve Responsiveness and Flexibility Intrapreneurial spirit can
not sustain the
usual snail paced and ultra cautious bureaucratic decision making process in
case of
capital investments that is typical of ordinary organisations. Use of
technology to
speed up decision making process and induce flexibility in the process is
required.
6. Modifying Organisational Structure A fat hierarchical organisational
structure is
inherently sluggish in decision making (Many cooks spoil the broth). A flat
organisational structure is more suited to the Intrapreneurship. Therefore,
certain
59

modifications to the organisational structure may be needed. However, It is

easier
said than done.
7. Publicity of Ideas New ideas should be well publicised. While such
publicity is a
morale booster for the author of the idea and therefore encourages more
people to
come forward with ideas, published ideas get scrutinised and value added by
other
people.
8. Tapping Customers Base for New Ideas Customers are the richest
source of new
ideas. 3M Corporation, holding over 6 lakh patents, claims that almost 70%
of new
ideas have been contributed by the customers themselves.
9. Create Strong Support Structure for Intrapreneurship This is
particularly
important since most people have short term focus on quarterly, half yearly
and
yearly numbers. Intrapreneurial ventures are long term projects and
therefore may
get overlooked for funding and other support. Similarly, appraisal of the
intrapreneurs may get adversely affected since there is nothing concrete to
show
quarter by quarter. Such a mishap is to be strongly guarded against because
if such
a thing does happen, it would kill the initiative among the employees.
10. Create a Strong Reward System Linked to Performance of the
Intrapreneurial
Venture Notwithstanding all the OB theories to the contrary, nothing works
as
fast and as effectively as tangible/material rewards system to motivate most
people
to put their best feet forward.
11. Create an Evaluation System Some Intrapreneurial venture are
bound to fail for
various reasons including change in external environment. Also, some
ventures are
likely to astonish with their success even the most optimistic supporters.
Therefore,
regular evaluation of the ventures in hand is necessary. Promising ventures
might
need further thrust or scaling up in size while unsuccessful need to be wound
up.
Benefits of Intrapreneurship
60

Intrapreneurial ideas offer a way to build onto or improve the corp.

business
Capital for the idea is easy to come from internal sources within a
corp. identity
The established corporate image helps to boost the chances of
success of an intrapreneur idea.
Corporates offer economies of scale in marketing, distribution and
service.
Corporates offer the unique advantage of multidisciplinary teamwork.
The intrapreneur retains the job security but as well enjoys the
freedom and prosperity.

Case /example of intrapreneur

an intrapreneur is an employee who creates new products, services and
systems and doesnt have to abide the companys protocols. Although
eminent companies have significantly contributed in encouraging the
rewards of these efficient employees. But the point to be pondered upon is
the emphasis of this concept by the Indian enterprises, which form a
formidable part of the innovative India!
Although the market has witnessed a staggering growth in business by
allowing the free flow of ideas of their employees and thus, nurturing
intrapreneurship. There are innumerable examples where companies have
encouraged this concept to a great extent. A glaring instance of this, is that
of the Virgin Airlines whose founder Sir Robert Branson hired a young,
budding designer Joe Ferry to bring a solution for the problems posed by
specification for upper class cabin in their airlines. Flying colours of success
could be seen with the idea of herring bone configuration of the private
sleeper suites a paradigm of creative and unique thinking. Apart from this,
3M Corporation allows employees to spend 15 percent of their working hours
to devote for developing their business or product ideas. Moreover, as a
result of this policy, Post-It-Notes and other renowned products were
fabricated.
There is a dire need of innovation within the organizations in todays
scenario. If these exemplary business standards and different yet unique
strategies can be opted by the entrepreneurial firms then why cant these
existing organizations utilize their opulence in fostering innovation more
readily? The epicenter lies in the fact that the leaders within a company say
CEO, manager, executives are not treated as people who enable others and

61

thats the reason why renowned IT companies like Wipro and Infosys have
intrapreneurial structures which are not yet fully result oriented.
The much talked about Google news is an outcome of an intrpraneurship
opportunity given to an Indian employee Krishna Bharat. Moreover, here the
20 percent of the time can be allotted to the desired project which has a far
reaching impact in elevating the innovative ideas of intrapreneurs. The
service called Shopping Trip 360 introduced by Infosys Technologies to
help retailers and consumer packaged goods (CPG) companies to acquire
visibility in in-store activity is an intrapreneurial effort . This should prove to
be the trend setter for the other Indian companies as well. Various MBA
institutes and B -schools have also shown their contribution by including
global entrepreneurship programmes which include 20 entrepreneurs and
intrapreneurs in the campus.
Thus this is the scenario where companies provide freedom and
encouragement to their employees to establish new, contemporary ideas.
Richard Branson puts it Perhaps the greatest thing about an enable
intrapreneurship form is that often everyone becomes enabled in
what they are doing and they would feel like they own the
companies. So are the Indian companies geared up to embrace this
situation when employees are working for themselves and not for someone
else?

Role of small scale

corporations (SSIDCs)

industries

development

May 2004

State Small Industries Development Corporations (SSIDC)

The State Small Industries Development Corporations were sets up in various
states under the companies act 1956, as state government undertakings to
cater to the primary developmental needs of the small tiny and village
industries in the state/ union territories under their jurisdiction. Incorporation
under the companies act has provided SSIDCs with greater operational
flexibility and wider scope for undertaking a variety of activities for the
benefit of the small sector. The important functions performed by the SSIDCs
include:
(i) To procure and distribute scarce raw materials.
62

(ii) To supply machinery on hire purchase system.

(iii) To provide assistance for marketing of the products of small-scale
industries.
(iv) To construct industrial estates/sheds, providing allied infrastructure
facilities
and their maintenance.
(v) To extend seed capital assistance on behalf of the State government and
provide management assistance to production units.
Imagine that you a professor of entrepreneurship
management and that you have to address MBA
Apr 2010
students on 'The importance of entrepreneurship'.
How will you go about this task?
Entrepreneurship is, and continues to be, important to every sector in India
and in other global economies.Entrepreneurship contributes to economic and
social development of a country. Operating an enterprise,wealth creation,
making innovative decisions or managing an organization, all have the thrill
of risk, challenges and profitable opportunities.Entrepreneurial firms are not
just money-making ventures for their promot-ers. The positive impact of
entrepreneurial firms is seen throughout the economy and society. A vast
majority of this high-impact .firms are fast growing companies. David Birch
has differentiated these firms by calling them gazelles. He defines a gazelle
as a business establishment with at least 20 per cent growth every year.
Entrepreneurship has many functions to perform and roles to play in every
type of economy. Entrepreneurship is the life blood of any economy and it
applies more to a developing economy like India. It influences a number of
areas such as innovation, job creation, career alternatives etc. The
contribution of entrepreneurship lies in the following areas:

1. Innovation: Innovating is a process of creating, changing, experimenting,

transforming and
revolutionizing. Innovation is one of the key distinguishing characteristics of
entrepreneurial activity. The passionate drive and intense hunger of
entrepreneurs to forge new directions
products and processes and to take risks set in motion a series of decisions
that lead to the innovations that are important for economic vitality. Without
these new ideas, economic, technological, and social progress would be slow
indeed. The creative destruction process of innovating leads to
technological changes and employment growth. Entrepreneurial firms act as
these agents of change by providing an essential source of new and unique
ideas that might otherwise go.
2. Job Creation: We know that job creation is vital to the overall long-term
economic health of
63

communities, regions, ad nations. Entrepreneurial ventures play very

important role in it. Small
business create more jobs than large business do. During economic
recession, when large companies are on their way to retrenchment of their
work force, individuals whose jobs are eliminated find employment with small
business. The creation of jobs by small businesses is expected to continue
into the future as new firms start small and grow.
3. Number of New Start-ups: All businesses whether they fit the definition
of entrepreneurial or not at one point in time were start-ups, the most
convenient measure we have of the role that entrepreneurship plays in this
economic statistic is to look at the number of new firms over a period of
time. The assumption that we have to make, then, is that some of these new
firms engage in activities that are entrepreneurial in nature. The next
important function of entrepreneurship is starting the venture. In fact,
entrepreneurs identify opportunities and possible competitive advantages.
They set goals and strategies. Pursuit of entrepreneurship contributed to the
overall creation of new firms. Why is the creation of new firms so important?
Its important because these new firms contribute to economic development
through benefits such as product-process innovations, increased tax
revenues, societal betterment, and
job creation.
4. Opportunity to Contribute to Society and Be Recognized for Your
Efforts: Often, small
business owners are among the most respected and most trusted members
of their communities. Business deals based on trust and mutual respect are
the hallmark of many established small companies. These owners enjoy the
trust and recognition they receive from the customers they have served
faithfully over the years. Entrepreneurship often deals with the difficult
issues of social responsibility and ethical problems. Entrepreneurship
produces such goods and services that protect consumer health and global
environment and helps in creating better living conditions in society. It
generates employment and conserves natural resources, balances growth in
the country and provides more amenities to people. Ethical considerations
also play a role in decisions and actions of entrepreneurs.
5. Path of Creating Tomorrow: Peter Drucker Says, Entrepreneur has to
seek off yesterday and to render obsolete what already exists and is already
known. He has to create tomorrow. Making thebusiness of tomorrow cannot
be a flash of genius. It requires systematic analysis and hard, rigorous work
today. The specific job of entrepreneurship is to make todays business
capable of makingthe future, of making itself into a different business.
6. Entrepreneurship Provides an Opportunity to Make a Difference
and Create Your Own
Destiny: Increasingly, entrepreneurs are starting businesses because they
see an opportunity to
make a difference in a cause that is important to them. Entrepreneurs are
finding ways to combine their concerns for social issues ad their desire to
64

earn a good living. Owning a business provides entrepreneurs the

independence and the opportunity to achieve what is important to them.
7. Entrepreneurship Serve Small Markets With New Technology:
Large firms, with their crippling overheads, do not find it profitable to serve
small populations. This is where small entrepreneurial firms serve an
invaluable role by providing specialized products to niche customers.
Entrepreneurial firms are usually faster to come to the market with radical
new technologies. Ultimately, this will lead to a better standard of living for
the whole society.
8. Entrepreneurship Provides Opportunity to Reach Your Full
Potential and Reap Impressive
Profit: Too many people find .their work boring, unchallenging, and
unexciting, but not entrepreneurs. To them, there is little difference between
work and play; the two are synonymous. Entrepreneurs businesses become
their instruments for self-expression and self-actualization. They know that
the only boundaries on their success are those imposed by their own
creativity, enthusiasm, and vision. Although money is not the primary force
driving most entrepreneurs, the profits their businesses can earn are an
important motivating factor in their decisions to launch companies. Most
entrepreneurs never become super-rich: but many of them do become quite
wealthy.
9. Other Contribution:
Entrepreneurship in small businesses helps in distribution of products of
large business. They, thus, support the large business houses.
It offers business avenues to women and minorities. Women and
minorities are allowed the benefit
of financial independence and a chance to exhibit the ability to manage
business enterprises.
Dispersal of economic activities to different sectors of economy and
identifying new avenues ofgrowth.
Improvement of the standard of living of different weaker sections in the
society.
Bring socio political change in the society.
Develop technological know-how.
Improve culture of business and expand commercial activities.
Entrepreneurship acts as a change agent to meet the requirements of the
changing markets and customer preferences.
Develop a culture of achievement orientation.
It helps in bringing about change and development of the civilization
through change in trade, comment be and industrialization.
It arouses the need for achievement in individuals which brings about a
change in the economic scenario through economic development and
growth.
It results in exploitation of economys resources, such as labour, capital
and technology to the fullest extent.
65

What is creativity? How can one nurse and promote

it effectively in entrepreneurial organizations so as
to optimize results?
Apr 2010
Or
Creativity and its role in developing business
ideas(2001)
Creativity is showing imagination & originality. It is basically an innovation
generated by
entrepreneur in business to solve or generate ideas to serve the market
better. Creativity can
decline due to age, education, idleness, perceptual, cultural, emotional &
organisational
factors. Creative thinking is basically a process of searching, screening &
connecting
thoughts. Creativity can be used for development of better business ideas in
terms of
product, process, market development aspects.
The various creativity oriented problem solving & idea generating techniques
are as
follows
Brainstorming
The first technique, brainstorming, is probably the most well known and
widely used for both creative problem solving and idea generation. In
creative problem solving, brainstorming can generate ideas about a problem
within a limited time frame through the spontaneous contributions of
participants. A good brainstorming session starts with a problem statement
that is neither too broad (which would diversify ideas too greatly so that
nothing spe-cific would emerge) nor too narrow (which would tend to confine
responses).' Once the problem statement is prepared, 6 to 12 individuals are
selected to participate. To avoid inhibiting responses, no group member
should be a recognized expert in the field of the problem. All ideas, no matter
how illogical, must be recorded, with participants prohibited from criticizing
or evaluating during the brainstorming session.
Reverse Brainstorming
Reverse brainstorming is similar to brainstorming, except that criticism is
allowed. In fact, the technique is based on finding fault by asking the
question "In how many ways can this idea fail?" Since the focus is on the
negative aspects of a product, service, or idea, care must be taken to
maintain the group's morale. Reverse_ brainstorming can be effectively used
before other creative techniques to stimulate innovative thinking. The
process usually involves the identification of everything wrong with an idea,
followed by a discussion of ways to overcome
66

these problems.
Brainwriting
Brainwriting is a form of written brainstorming. It was created by Bernd
Rolirbaa at the end of the 1960s under the name Method 635 and differs
from classical brainstorming by giving participants more time to think than in
brainstorming sessions, where the ideas are expressed spontaneously.
Brainwriting is silent, written generation of ideas by group of people. The
participants write their ideas 311 special forms or cards that circulate within
the group, which usually consists of six members. Each group member
generates and writes down three ideas during a five-minute period. The form
is passed on the adjacent person, who writes down. three new ideas, and so
on, until each form has passed all participants. A leader monitors the time
intervals and can reduce or lengthen the, time given to participants
according to the needs of the group. In a variation of this idea-generation
method, the participants are located at their own workplaces and the sheets
are rotated by e-mail, in which case the time interval can be longer.
Gordon Method
The Gordon method, unlike many other creative
problem-solving techniques, begins with group
thinkers not knowing the exact nature of the
problem. This ensures that the solution is not
clouded by preconceived ideas and behavioral
patterns. The
entrepreneur starts by mentioning a general
concept associated with the problem. The group
responds by ex-pressing a number of ideas. Then a
concept is developed, followed by related concepts,
through guidance by the entrepreneur. The actual
problem is then revealed, enabling the group to
make suggestions for implementation or refinement
of the final solution
Checklist Method
In the checklist method, a new idea is developed
through a list of related issues or suggestions The
entrepreneur can use the list of questions or
statements to guide the direction of developing
entirely new ideas or concentrating un specific
"idea" areas. The
Checklist may take any form and be of the
length.one general checklist is as follows
67

Free Association
One of the simplest yet most effective methods that entrepreneurs can use
to generate
new ideas is free association. This technique is helpful in developing an
entirely new slant to a problem. First, a word or phrase related to the
problem is written down, then another and another, with each new word
attempting to add something new to the ongoing thought processes, thereby
creating a chain of ideas ending with a new product idea emerging
Forced Relationships
Faired relationships, as the name implies, is the process of forcing
relationships among some product combinations. It is a technique that asks
questions about objects or ideas in an effort to develop a new idea. The new
combination and eventual con-cept is developed through a five-step process:
1. Isolate the elements of the problem.
2. Find the relationships between these elements.
3. Record the relationships in an orderly form.
4. Analyze the resulting relationships to find ideas or patterns.
5. Develop new ideas from these patterns

Collective Notebook Method

In the collective notebook method, a small notebook that easily fits in a
pocketcon taining a statement of the problem, blank pages, and any
pertinent background datais distributed. Participants consider the problem
and its possible solutions, recording as at least once, but preferably three
times, a day. At the end of a month, a list of the best ideas is developed,
along with any suggestions.9 This technique can also be used with a group of
in-dividuals who record their ideas, giving their notebooks to a central
coordinator who summarizes all the ma-terial. The summary becomes the
topic of a final creative focus group discussion by the group participants

Attribute Listing
Attribute listing is an idea-finding technique that requires the entrepreneur to
list the attributes of an item or problem and then look at each from a variety
of viewpoints. Through this process, originally unrelated objects can be.
brought together to form a new combination and possible new uses that
better satisfy a need.
68

Big-Dream Approach
The big-dream approach to coming up with a new idea requires that the
entrepreneur dream about the problem and its solution, in other words,
thinking big. Every possi-bility should be recorded and investigated without
regard to all the negatives involved or the resources required. Ideas should
be conceptualized without any constraints un-til an idea is developed into a
workable form.'
Parameter Analysis
A final method for developing a new ideaparameter analysisinvolves two
as-pects: parameter identification and creative synthesis.' As indicated in
Figure 5.1 step one (parameter identification) involves analyzing variables in
the situation to de-termine their relative importance. These variables
become the focus of the investiga-tion, with other variables being set- aside..
. after the primary issues have beenidentified, the relationships between
parameters that describe the underlying issues are examined. Through an
evaluation of the parameters and relationships, one or more solutions are
developed; this solution devel-opment is called creative syuthesis

69

Visualize that you have already prepared a

business plan for a start up in the services sector.
One of your immediate tasks is to present it
bankers so as to obtain financial assistance.
Which aspects of your business plan would you
like to stress and convince your bankers? How will
you do it?orQ.a)what is a Business Plan?Narrate
the contents thereof in detail. b)what are the
reasons attributable to business failures inspite
of a Good Business Plan?
Or
An entrepreneurs business plan is ready.he is
going to present it to his bankers ,majors
suppliers and potential :franchisees ,what will be
his approach to each of them?

May 2014
Apr2013,2011,
2002,2001,201
0

Or
What is a Business Plan ? What is its purpose ?
Give the outline of a good Business Plan, clearly indicating what it
should cover.
Present an "Executive Summary" of a hypothetical business plan.
Business Plan
Or
What is a Business Plan ?
Give the format of a Business Plan
What care an Entrepreneur needs to take to develop a good Business
Plan ?
A business plan is a written document giving in detail all relevant internal
and external elements that affect business and strategy for starting a new
venture. It is an important document that deals with all aspects of proposed
new business. It integrates the functional areas of the organisation like
marketing, production, finance and human resource. It also takes into
account the time horizon for a new venture. In preparing a business plan an
entrepreneur can take help of experts in different fields like finance, legal,
marketing, technical consultants etc. Various governmental agencies at the
state and central level also extend help in preparation of business plan to
entrepreneurs starting a small business.A business plan can be used by an
entrepreneur for a variety of objectives
Some of the objectives/purposes are asfollows:
Getting debt from banks or getting equity funding from various investors.
70

 Attracting business partners or key alliances

To clarify exact nature of the business
A business plan must describe the company, its product, and its
management team. It should also state from where money will come and
how it will be spent. A well developed business plan is an asset to an
entrepreneur and helps in understanding the objectives of the business and
achieving them.
While writing a business plan following things should be taken care of:
Defining Purpose: deciding the purpose of business plan in advance i.e.
using the business plan- for securing loan or attracting business partners,
etc; helps in customising it according to the need of the audience.
Information Collection: It is important to list out all the information that
is already available with you regarding business and the industry. The gap in
information should be identified and required information should be
collected. Government has created specialised institutions and bodies that
are entrusted with collection, dissemination and updating of correct and
current information aboutdifferent aspects of business and industry.
Financial Analysis: All costs and revenues estimates have to be
calculated, financial statements have to be drafted. This exercise will finally
lead to sensitivity analysis, calculation of ROI (Return on Investment), break
even analysis and various financial ratios. It should be taken care that
financial analysis is realistic and practical.
A business plan consists of the following sections:
1. Executive summary
2. Business Description
3. Market Plan
4. Competitive analysis
5. Operations and Management Plan
6. Financial Plan
7. Appendices
1. Executive Summary: The statement should be short, may be of one or
two pages. It should explain the fundamentals of the proposed business:
What will be the product? Who will be the customers? Who are the owners?
What future holds for the business and the industry?
It should be professional, complete, concise and above all should sound
enthusiastic. If purpose of making the business plan is to get a loan, it should
be clearly stated that how much loan is required, how it is going to be used,
and how the money will make the business more profitable, thereby ensuring
repayment.
2.Business Description: It is important to describe what business will you
be in and what will you do. To
describe ones business, following key elements may be included:
Mission Statement: Many companies have a brief mission statement,
usually in 30 words or
71

fewer, explaining their reason for being and their guiding principles. Although
it is not compulsory to have a mission statement, but it is a good to have one
as it serves as a guiding point.
Company Goals and Objectives: Goals are destinationswhere you
want your business to be.
Objectives are progress markers along the way to goal achievement. For
example, a goal might be to have a successful company that is a leader in
providing quality products. Objectives might be annual sales targets and
some specific measures of quality achievement.
Industry Description: Describe your industry. Is it a growth industry?
What changes do you
foresee in the industry, short term and long term? How will your company be
poised to take advantage of them?
Target Market: Target market tells about the customers to whom the
product will be marketed. It should be briefly stated here as detailed
explanation will be covered under marketing plan section.
Competitive Edge: Describe your most important company strengths
and core competencies that will make the company succeed? It could be a
better service, a wider range of products, better after sales services etc.
What background experience, skills, and strengths do you personally bring to
this new venture?
Structure: describe the type of operation, i.e. wholesale, retail,
manufacturing or service-oriented. Also state whether the business is new or
already established.
Legal form of Ownership: State the form of ownership adopted like Sole proprietor, Partnership, Corporation, Limited liability corporation (LLC)?
Why have you selected this form?
3.Market Plan: A good entrepreneur with poor marketing plan will face an
early disaster. Any product or service has to be marketed competently. A
market plan describes the strategies to be adopted for marketing of the
product. It is a result of market analysis. A market analysis helps in knowing
about various aspects of the market so that the target market can be defined
and the company can be positioned in order to capture desired market share.
Market analysis enables the entrepreneur to establish the strategies
regarding the marketing mix i.e. the four Ps- product, price, place
(distribution) and promotion. These strategies:
Will allow the company to become profitable within a competitive
environment.
Provides an indication of the growth potential within the industry.
Helps in developing estimates for the future of proposed business.
As discussed in earlier section, market analysis has enabled the entrepreneur
in:
Defining the Market in terms of size, structure, growth prospects, trends
and sales potential.
Defining the Target Market: The segmentation factors can be
geographic, customer attributes or product oriented. If the distribution of the
72

product of the proposed business is confined to a specific geographic area

being a small business, the target market can be defined as number of users
of that product within that geographic area.
Defining Total Feasible Market: The total feasible market is the market
that can be captured
provided every condition within the environment is perfect and there is very
little competition. Although this situation is not true in most industries. The
factors that affect the share of the feasible market a business can are obtain
are - structure of the industry, the impact of competition, strategies for
market penetration and continued growth, and the amount of capital the
business is willing to spend in order to increase its market share.
Estimating Market Share for the Time Period the Plan will Cover: It
is calculated after
considering the projected growth of the market and the expected
conversions from the competitors. After the above mentioned details have
been estimated through market analysis, the strategies regarding the
marketing mix i.e. the four Ps- product, price, place (distribution) and
promotion should be developed and included in the business plan. The key
strategies should be regarding:
Describing Product: Describe in depth the products or services
(technical specifications, drawings, photos, sales brochures, and other bulky
items are to be included in Appendices). Describe the most important
features including the after-sale services provided like warranty, service
contracts, support, follow-up, and refund policy.
Pricing of Product: Pricing strategy should fit with what was revealed in
competitive analysis.
Prices should be compared with those of the competitor.
Most small businesses go for low pricing. This is not a good strategy as it
decreases profit margin; customers may not care as much about price if they
have a good quality product. The better strategy will be to have average
prices and competing on quality and service.
Distribution: includes the entire process of moving the product to the
customer. The type of
distribution set up chosen will depend on the structure of the industry and
the size of the business.The business plan should clearly indicate how
products or services will be sold (Retail, Direct mail order, Web catalog,
Wholesale, Sales force, Agents, Independent representatives, etc.)
Promotional Plans: promotional plans will have to be initiated over a
period of time. Promotion strategy regarding advertising campaigns,
seasonal discounts or improved packaging have to de described in detail like:
What media, why, and how often? Cost effectiveness of various methods to
get the most out of the promotional budget? Will you use methods other than
paid advertising, such as trade shows, catalogs, dealer incentives, word of
mouth (how will you stimulate it?), and network of friends or professionals?
What image do you want to project? What will be the promotionalBudget?
73

How much will be spend on what all items listed above, before startup and
after startup?
4. Competitive Analysis: The purpose of the competitor analysis is to
determine the strengths andweaknesses of the competitors within the
market, strategies that will provide business with a distinct advantage,the
barriers that can be developed in order to prevent competition from entering
the market, and weaknesses that can be exploited within the product
development cycle. The questions to be answered are: What products and
companies will compete with you? List your major competitors and state
whether competitionis full or just for certain products, certain customers, or
in certain locations? Will you have important indirect competitors from
businesses? (For example, mobile phones manufacturing companies
compete with cameras
making companies, although they are different types of businesses).
Strategies should be so designed thatthey are primarily based on
competitive advantage and that they set the product or service apart from
the competitors.
5. Operations and Management Plan: This section will describe:
Operational procedures, manufacturing equipment, level of production
required, locations, licensing
and other aspects related to providing the product or service.
The organizational structure has to be well defined and based within a
realistic framework given theparameters of the business. Organize tasks into
departments that produce an efficient line ofcommunications between staff
and management. Establish the function of each task and how it will relate to
the generation of revenue within the company.
Human resource requirement: Determine the number and type of
personnel required to perform each task, where the right employees will be
found, what will be the pay structure, what type of labor (skilled, unskilled,
and professional) will be required? Determine who does which tasks and
prepare schedules and written procedures. If the business seems to have
more than 10 employees,it is good to create an organizational chart showing
the management hierarchy and who is responsible for key functions. Include
position descriptions for key employees.
If purpose of business plan is to secure loans from investors, resumes of
owners and key employees should be included. List of following should also
be included: Board of directors, Management advisory board, Attorney,
Accountant, Insurance agent, Banker, Consultant or consultants, Mentors and
key advisors.
6. Financial plan: The enterprise should have sound financial regulations.
An exact assessment of the revenue, costs, profits and losses, cash-flow
dynamics, stock of raw materials and finished products, loans etc. has to be
reflected in the financial profile. Critical assessment of the finances and its
dynamics help in the holistic assessment of the enterprise. More important,
the process of thinking through the financial plan will improves insight into
the inner financial workings of the company. The three common financial
74

statements need to be prepared are - cash flow statement, profit and loss
account and the balance sheet. Together they constitute a reasonable
estimate of the companys financial future.
The profit and loss statement tells how much money the business earns
over a given period of time. A twelve month profit and loss projection and a
four-year profit and loss projection (optional) are to be prepared.
The cash flow statement is an information tool telling how much cash is
needed to meet obligations, when will it be needed and where is it coming
from. If the profit projection is the heart of a business plan, cash flow is the
blood. Every part of the business plan is important, but none of it means a
thing if the business run out of cash. Businesses fail because they cannot
pay their bills. It is important to plan how much cash is needed before
startup, for preliminary expenses, operating expenses, and reserves. It will
enables to foresee shortages in time to do something about themperhaps
cut expenses, or perhaps negotiate a loan.
The cash flow projection is just a forward look at the checking account. For
each item, determine when actual receipt of cash (for sales) will happen or
when actually the cash will be needed. Essential operating data, should be
kept track of, which may not be the part of cash flow as it allows controlling
items that have a heavy impact on cash flow, such as sales and inventory
purchases. Cash outlays should also, be kept track of, prior to opening in a
pre-startup stage. Cash flow shows whether the working capital is adequate.
Balance sheet is a summary of all the financial data giving a macro view of
the company at a given point of time. It is one of the fundamental financial
reports that any business needs for reporting and financial management. It
shows what items of value are held by the company (assets), and what its
debts are (liabilities). When liabilities are subtracted from assets, the
remainder is owners equity.
Break-Even Analysis can be prepared. It predicts the sales volume, at a
given price, required to recover total costs. In other words, its the sales level
that is the dividing line between operating at a loss and operating at a profit.
7. Appendices: It includes details and studies used in the business plan; for
example:
Brochures and advertising materials
Industry studies
Blueprints and plans
Maps and photos of location
Magazine or other articles
Detailed lists of equipment owned or to be purchased
Copies of leases and contracts
Letters of support from future customers
Any other materials needed to support the assumptions in this plan
Market research studies
List of assets available as collateral for a loan

75

Top Reasons Why Businesses Fall?

The Marketing Aspect
Marketing keeps your products selling and money flowing into your business,
which makes your business run. It is crucial that you do it effectively. Some
of major mistakes made while
marketing are as follows:
1. ignoring competition: Today custoiners go where they can find the best
products and services, and the best value-even if that means breaking off
long-term relationships. Monitor your competitors, and don't be ashamed to
copy their best ideao (without violating the law, of ccurse). Better yet,
devote some time to formulating a new business model, products, or
services that can give you an edge.
2. ineffective customer service: Once you attract customers, you will have to
work hard to keep them. Customer service is the key aspect of your
business. If you don't follow through with your customers, they will find
someone who will, Marketing Myopia is one of the common mistakes
committed ts:y Thic, the inability to look at the need of the customers.
3, Failing to validate your customers: This may sound obvious, but too many
entrepreneurs assume they know exactly what their customers need without
bothering to ask. Take the time to learn about your customers, and build your
Business Plan around their needs and desires.
4. Lack of Internal marketing: Above all, it Is necessary to market yourself to
your employees itself. This is called internal marketing. This helps in
integrated marketing and an overall commitment of the organization
(including employees) to the customers. The Financial Aspect
Finance is the life-blood of a business and its management effectively is one
of the important factors for the success of the business. Poor financial can
lead to disasters ultimately leading to the closure of business.
Some of the important factors to be considered here are as follows:
1. Lack of foresight: This may also be referred to as overlooking the risks or
not expecting the unexpected. Due
to lack of foresight:
a) unfavorable gearing and --forages
b) inappropriate diversion of capital
c) overtrading
d) imprnper tax planning
The above are some of the common mistakes committed.
2. Cash flow problem: This is probably the most common problem In
businesses. and could turn serious enough to shut you down. You need to
know how to track the money coming into and out of your business; even a
profitable venture will flounder if it runs Short of cash. In addition, you must
learn to make cash flow projections that will help you Decide how much
money you can affordto spend and warn you of imminent trouble.
The Inappropriate Team
76

The top management lear-4,; the business through its whole life

77

Why
"Entrepreneurship
Management"
is
compulsory subject for Management Studies ?

Apr 2002

Entrepreneurship and Management Students

1. A Management Graduate is a person trained in necessary skills and
knowledge to
manage an enterprise.
2. A Management Graduate is best placed to be an entrepreneur. With his
knowledge
78

of business domain, his chances of launching a successful entrepreneurial

venture
are much higher than any one else. It will benefit the Management Graduate
as well
as the country.
3. Experience even from Harvard Business School confirms that more
Management
Graduates take Entrepreneurial Role (after gaining some experience) and the
average income of entrepreneurs is higher by almost 2.5 times compared to
their
friends who are in job.
4. A Management Graduate should therefore not be just a Job Seeker. He can
and
should take the role of Job Provider.
5. Enterprises in protected economy can sustain mismanagement because
the markets
are assured under quota and license raj. In the ensuing monopoly or
monopolistic
market, there is a demand supply mismatch and therefore profit margins are
high.
Therefore, there is enough resilience to sustain errors and consequential
losses in an
entrepreneurial venture once the license was obtained.
6. Enterprises in competitive environment are essentially to be well
managed. In the
resulting perfect or near perfect market, profits are thin and any losses due
to errors
can not be passed on to the consumer. Therefore, entrepreneurial ventures
have to
be well managed.
7. Even in his employment in a company, he needs to become an
INTRAPRENEUR
in order to deliver maximum to his employer and increase his own stock in
return.
8. Therefore, either way, Entrepreneurship Management becomes an
essential part of
curriculum of management studies.
Name various theories of entrepreneurship and
Apr 2005
explain any three of them.
Following list of various theories of entrepreneurship are
1.
2.

1600 : French verb Go between or To undertake

1700 : Person bearing Risks of Profit in a fixed price contract
79

3.
1725 : Richard Cantillon Person bearing risks is different from capital
supplier (Risk)
4.
1803 : J B Say Shifts economic resources out of an area of
lower into an area of higher productivity & greater yields (Value
Addition)
5.
1934 : Joseph Schumpeter Innovation is the sole cause of profit.
6.
1961 : David McClelland Need for Achievement N Ach factor - highly
motivated, energetic, moderate risk taker. Need for Power Need for
Affiliation.
7.
1964 : Peter Drucker Searches for change, responds to it and exploits
as opportunity. (Opportunity focused)
8.
1980 : Karl Vesper Behaviour perceptions Economists,
Psychologists, Businessmen, Politicians, (Environment)
9.
1983 : Gifford Pinchot Intrapreneur
10. 1985 : Robert Hisrich Creating something different with value,
devoting time and effort, assuming risks financial, psychic and social,
results rewards, satisfaction (Leadership & Vision)
Following are three theories explained in details
1. Innovation Theory of Schumpeter:
A dynamic theory of entrepreneurship was first advocated by Schumpeter
(1949) who considered entrepreneurship as the catalyst that disrupts the
stationary circular flow of the economy and thereby initiates and sustains the
process of development. Embarking upon new combinations of the factors
of production - which he succinctly terms, innovation - the entrepreneur
activates the economy to a new level of development.Schumpeter
introduced a concept of innovation as key factor in entrepreneurship in
addition to assuming risks and organising factor of production. Schumpeter
defines entrepreneurship as a creative activity. An innovator who brings
new products or services into economy is given the status of an
entrepreneur. He regards innovation as a tool of entrepreneur, The
entrepreneur is viewed as the engine of growth, He sees the opportunity for
introducing new products, new markets, new sources of supply, new forms of
industrial organization or for the development of newly discovered resources.
The concept of innovation and its corollary development embraces five
functions:
The introduction of a new product with which consumers are not yet
familiar or introduction of a new quality of an existing product,
The introduction of new method of production that is not yet tested by
experience in the branch of manufacture concerned, which need by no
means be founded upon a discovery scientifically new and can also exist in a
new way of handling a commodity commercially,

80

 The opening of new market that is a market on to which the particular

branch of manufacturer of the country in question has not previously
entered, whether or not this market has existed before,
Conquest of a new source of supply of raw material and
The carrying out of the new organisation of any industry.
Schumpeter is the first major theorist to put the human agent at the centre
of the process of economic development. He is very explicit about the
economic function of the entrepreneur. The entrepreneur is the prime mover
in economic development; his function, to innovate or carry out new
combinations. Schumpeter makes a distinction between an innovator and an
inventor. An inventor discovers new methods and new materials. On the
contrary, an innovator is one who utilises or applies inventions and
discoveries in order to make new combinations. An inventor is concerned
with his technical work of invention whereas an entrepreneur converts the
technical work into economic performance. An innovator is more than an
inventor
because he does not only originate as the inventor does but goes much
farther in exploiting the invention commercially.
2. Need for Achievement Theory of McClelland:
According to McClelland the characteristics of entrepreneur has two features
- first doing things in a new and better way and second decision making
under uncertainty. McClelland emphasises achievement orientation as most
important factor for entrepreneurs. Individuals with high. achievement
orientation are not influenced by considerations of money or any other
external incentives. Profit and incentives are merely yardsticks of
measurement of success of entrepreneurs with high achievement
orientation. People with high achievement (N-Ach) are not influenced by
money rewards as compared to people with low achievement.
The latter types are prepared to work harder for money or such other
external incentives. On the contrary, profit is merely a measure of success
and competency for people with high achievement need. Professor David
McClelland, in his book The Achieving Society, has propounded a theory
based on his research that entrepreneurship ultimately depends on
motivation. It is the need for achievement (N-Ach), the sense of doing and
getting things done, that promote entrepreneurship. According to him, N-Ach
is a relatively stable personality characteristic rooted in experiences in
middle childhood through family socialisation
and child-learning practices which stress standards of excellence, material
warmth, self-reliance training and low father dominance. According to him a
person acquires three types of needs as a result of ones life experience.
These three needs are:
Need for Achievement. A drive to excel, advance and grow.
Need for Power. A drive to dominate or influence others and situations.
Need for Affiliation. A drive for friendly and close inter-personal
relationships.
81

McClelland found that certain societies tended to produce a large percentage

of people with high achievement.He pointed out that individuals, indeed
whole societies that possess N-ach will have higher levels of economic wellbeing than those that do not. McClellands work indicated that there are five
major components to theN-ach trait: (a) responsibility for problem solving,
(b) setting goals, (c) reaching goals through ones own effort, (d) the need for
and use of feedback, and (e) a preference for moderate levels of risktaking.The individual with high levels of need achievement is a potential
entrepreneur. The specific characteristics
of a high achiever (entrepreneur) can be summarized as follows:
(i) They set moderate realistic and attainable goals for them.
(ii) They take calculated risks.
(iii) They prefer situations wherein they can take personal responsibility for
solving
problems.
(iv) They need concrete feedback on how well they are doing.
(v) Their need for achievement exist not merely for the sake of economic
rewards or
social recognition rather personal accomplishment is intrinsically more
satisfying to
them.
According to McClelland, motivation, abilities and congenial environment, all
combine to promote entrepreneurship. Since entrepreneurial motivation and
abilities are long run sociological issues; he opined it is better to make
political, Social and economic environments congenial for the growth of
entrepreneurship in underdeveloped and developing countries.
Peter Drunker's view on Entrepreneur
Peter Drunker has aptly observed that, "An entrepreneur as one who always
searches for change, respond to it and exploits it as an opportunity.
Innovation is the specific tool of entrepreneurs, the means by which they
exploit changes as an opportunity for a different service. It is capable of
being presented as a discipline, capable of being learned and practiced.
Entrepreneurs need to search purposefully for the sources of innovation, the
changes and their symptoms that indicate opportunities for successful
innovation. They need to know and to apply the principals of successful
innovations."
`',,-term innovations, according to him, consists in the purposeful and
organized search changes and in the systematic analysis of the opportunities
such changes might offer scope for economic and social Innovation.
According to Drucker, three conditions have to be fulfilled.
1, Innovation at work. it requires knowledge and ingenuity, It works great
demands on diligence, persistence and commitment.
2. To succeed, innovation must build on their strength.
3. Innovations always has to be close to the market focused on the market,
indeed market-driven. Specially, systematic innovation means monitoring six
82

sources for innovative opportunity.the first three source lie within the
enterprise, whether it be a business or a public service institution or within
an industry or service sector. They are therefore, visible primarily to people
within that industry or service sector. They are basically symptoms. But they
are highly reliable indicators of changes that have already occurred or can be
made to occur with little effort. These four source areas are:
1. The unexpected the unexpected success, the unexpected failure, the
unexpected outside event
2. The Incongruity between "reality as it actually is" and "reality as it is
assumed to be" or as it "ought to be"
3. Innovation is industry structure or market structure that catches everyone
unawares.
4. The second set of sources for innovative opportunity, a set of three,
involves changes outside the enterprise or industry:
Demographics ( population changes)
Changes in perception, mood and meaning
New knowledge, both scientific and non-scientific
Furnish at least five definitions of an entrepreneur,
as given by well known authorities on the subject. Apr 2010
Which one of these do you prefer and why?
Who is an entrepreneur? What is entrepreneurship? What is an
entrepreneurial career path? These frequently asked questions reflect the
increased national and international interest in entrepreneurs. On the other
hand, increased academic interest in the entrepreneurship is bringing a
sharper focus on the subject. In spite of all this interest, a concise,
universally accepted definition has not yet emerged. The word entrepreneur
is French and, literally translated, means between-taker or go-between.
The Webster Dictionary explains that the term entrepreneur is applicable
to one who organizes, manages and assumes the risks of a business or
enterprise. The general perception of the entrepreneurs as a starter of
businesses is reflected by the definition in the BBC English Dictionary,
which refers to an entrepreneur as a person who sets up a business.
English Dictionary defines an entrepreneur as a person who attempts to
profit by risk and initiative. This definition emphasises that entrepreneurs
exercise a high degree of initiative and are willing to take a high degree of
risk.
Michael Palner writes, The word entrepreneur carries a deluge of
definitional and operational ambiguity. The entrepreneurial function has been
identified with uncertainty bearing, co-ordination of production
resources, introduction of innovations and the provision of capital. All
definitions are ex-post facto: a person is defined as an entrepreneur because
of something he has done, in terms of a function. The New Encyclopaedia
Britannica considers an entrepreneur as an individual who bears the risk of
operating a business in the face of uncertainty about the future conditions.
83

Leading economists of all schools, including Karl Marx have emphasised the
contribution of the entrepreneurs to the development of economies,
but Joseph Schumpeter who argues that the rate of growth in an economy
depends to a great extent on the activities of entrepreneurs, has probably
put greater emphasis on the entrepreneurial function than any other
economist.
By the 17th century, the term entrepreneur was meant to refer to
individuals who entered into contractual agreements to sell goods and
services at fixed prices. In the 18th century, the term included individuals,
who brought in capital to carry out the business activities rather than using
the capital provided by others. Back in 1800, Jean-Baptist Say, the French
economist usually credited with inventing the word said; entrepreneurs shift
economic resources from an area of lower productivity into an area of higher
productivity and greater yield. In other words entrepreneurs create value by
exploiting some form of change, for example in technology, materials, prices
or demographics. We call this process innovation and this is an essential tool
for entrepreneurs. Entrepreneurs, therefore, create new demand or find new
ways of exploiting existing markets. They identify a commercial opportunity
and then exploit it.
According to Joseph Schumpeter Entrepreneur is one who innovates,
raises money, assembles inputs, chooses managers and sets the commercial
organisation going with his ability to identify them and opportunities which
others are not able to identify and is able to fulfil such economic
opportunities. Joseph A. Schumpeter also writes : The entrepreneur in an
advanced economy and an individual who introduces something new in the
economy - a method of production not yet tested by experience in the
branch of manufacturer concerned, a product with which consumers are not
yet familiar, a new source of raw material or of new markets and
the like. He further states the entrepreneurs function is to reform or
revolutionise the pattern of production by exploiting an invention or more
generally, an untried technological possibility for producing a new
commodity
Frank W. Young conducted a series of tests and found that entrepreneurs
show a tendency to describe any problematic situation as a problem to be
tackled with pragmatic efforts. The entrepreneur will have confidence in their
own ability of analysing and solving.
F. H. Knight, in his article on Risk, Uncertainty and Profit propounded that
entrepreneurs are a specialized group of persons who bear risks and deal
with uncertainty, He also identified social, psychological and economic
factors which govern the supply of entrepreneurship.
According to Francis A. Walker An entrepreneur is one who is endowed
with more than average capacities in the task of organising and coordinating
the various factors of production. He should be pioneer, a captain of
industry.
David C. McClelland wrote that an entrepreneur is an individual who
takes moderate risks and brings innovation. McClelland also suggests that an
84

entrepreneur is not characterised by routine tasks which are managed by

usual managers and situations of high risks such as gambling or betting. The
entrepreneur exhibits a desire to take personal responsibilities for decisions
preference for moderate risks and interest in concrete knowledge of business
and the possible outcomes.
Peter Drucker observed that, Innovation is the specific tool of
entrepreneurs, the means by which they exploit changes as an opportunity
for a different business or a different service. It is capable of being presented
as a discipline, capable of being learned and practised. entrepreneurs need
to search purposefully for the sources of innovation, the changes and their
symptoms that indicate opportunities for successful innovation. And they
need to know and to apply the principles of successful innovation.
Henry Ford said that, Entrepreneur can do anything with passion and
enthusiasm. Enthusiasm is the yeast that makes his hopes rise to the stars.
Enthusiasm is the spark in his eye, the swing in his gait, the grip of his hand,
the irresistible surge of his will and his energy to execute his ideas.
Everett E. Hagen describes an entrepreneur as a creative problem
solver interested in things in the practical and technological area. He is a
person who has high need achievement and feels a sense of increased
pleasure when he faces a problem. He does not rebel against the
conventional view for sake of rebelling; also he does not accept it because it
is generally accepted.
Robert D. Hisrich says, The person who is going to establish a successful
new business venture must also be a visionary leader - a person who dreams
great dreams. Although there are many definitions of leadership, the one
that best describes the needed entrepreneurial leadership is: A leader is like
a gardener. When you want a tomato, you take a seed, put it in fertile soil,
and
carefully water under tender care. You dont manufacture tomatoes, you
grow them.
As per my points of view, The best entrepreneur in any developing
country is not necessarily
the man who uses much capital, out rather the man who knows how to
organise the employment and training of his employees. Whoever
concentrates on this is rendering a much more important service to his
country than the man who uses huge capital.
Entrepreneur is someone who initiates and actively operates an
entrepreneurial venture. Inherent in this definition is the idea that the
entrepreneur is not just the person who identifies the opportunities that are
the basis for pursuing and initiating the entrepreneurial venture, but is also
that person who operates the entrepreneurial venture. The entrepreneur
does the venture as well as dreams it up.
Entrepreneurship may be defined in various ways, but the four key elements
involved in it are:
(i) Innovation
(ii) Risk-taking,
85

(iii) Vision and

(iv) Organising skill. All the four elements are inter-related and form a
continuous process in business.
The term entrepreneur has been defined as one who detects and evaluates
a new situation in his environment and directs the making of such
adjustments in the economic systems as he deems necessary. He conceives
of an industrial enterprise for the purpose, displays considerable initiative,
grit and determination in bringing his project to fruition, and in this process,
performs one or more of the following:
explores the prospects of starting enterprise;
perceives opportunities for profitable investments;
arranges initial capital;
supplies technical know-how;
obtains necessary industrial licenses;
provides personal guarantees to the financial institutions;
Combining these definitions and elements of character gives us a good
definition for this elusive term:
Entrepreneurs use innovation to exploit or create change and opportunity
for the purpose of making profit. They do this by shifting economic resources
from an area of lower productivity into an area of higher productivity and
greater yield, accepting a high degree of risk and uncertainty in doing so.
Although each of these definitions views entrepreneurs from a slightly
different perspective, they all contain similar notions, such as newness,
organizing, creating, wealth, and risk taking. Yet each definition is somewhat
restrictive, since entrepreneurs are found in all professionseducation,
medicine, research, law, architecture, engineering, social work, and
distribution.
Social entrepreneurship (OR)
What is meant by 'social Entrepreneurship'? What
measures can strengthen the drive towards it? (OR)
Social entrepreneurship is the need of the hour.
Bring out the significance of this statement and also
put forward an integrated action plan for stepping
up social entrepreneurship in the country.
Or
a)Explain the concept of a social entrepreneurship .
b)Prepare your action plan for setting up the
scheme of social entrepreneur in india
Or
Distinguish
between
social
&
conventional
entrepreneurs? What is the role of social
entrepreneurs in a developing country like India?
(2014)
86

Apr 2010,
2009, 2008,
2007,
2006,2012

What is Social Entrepreneurship?

Social entrepreneurs are individuals with innovative solutions to societys
most pressing social problems. A social entrepreneur recognizes a social
problem and uses entrepreneurial principles to organize, create and manage
a venture to achieve social change.
While a business entrepreneur typically measures performance in profit and
return, a social entrepreneur focuses on creating social capital.
Thus, the main aim of social entrepreneurship is to further social and
environmental goals.
However, social entrepreneurs are most commonly associated with the
voluntary and not-for-profit sectors, but this need not preclude making a
profit.
Social entrepreneurship practiced with a world view or international context
is called international social entrepreneurship.
We believe that social entrepreneurs are those exceptional
individuals who dream up and take responsibility for an innovative and
untested idea for positive social change, and usher that idea from dream to
reality.
What enables social entrepreneurs to make lasting impact on the most
difficult problems is a special combination of groundbreaking creativity and
steadfast execution.
Although the terms are relatively new, social entrepreneurs and
social entrepreneurship can be found throughout history.
Social Entrepreneurship
Social entrepreneurs are not content just to give fish or teach
how to fish. They will not rest untill they have revolutionize the
fishing industry.
They help communities to build up social capital which gives them a
better chance of standing on their own two feet.
They help bringing about social change on a major scale.
They are agents of social change. Questioning the status quo, grabbing
new yet overlooked opportunities, not for personal gain but for social
gain.
They, in a way, change the world for better.
Making up for shortcomings of Govt. and bureaucracy.
Identify under utilised resources/ Social problems.
Social Entrepreneurship
They generally create flat and flexible organisations, with a core of
full-time paid staff, who work with few resources but a culture of
creativity.
Their organisations have an open and porous approach to their
environment. They do not see themselves as providing their clients
with a specific service; their aim is to form long-term relationships with
their users that develop over time.
While business entrepreneurs aim to generate profits, social
entrepreneurs aim to improve social values. They aim to make broad87

based, long term changes, instead of few immediate small-time

results.
They recognize when a section of the society is stuck and offer
innovative ways to break out of its stagnant state.
They propagate the solution and persuade the whole society to adopt
it.
Characteristics of Social Entrepreneur
Burning Desire / Passion
Selfless approach
Goal orientation
Commitment
Achievement motivation (N-Ach factor)
Creativity & Innovation
Dynamism
Leadership
Team building
Problem solving
Risk taking & Decision making
With an objective to bring together exemplary social entrepreneurs and the
companies that look forward to support such entrepreneurs at a common
platform, Confederation of Indian Industry (CII) had organized the 2nd edition
of Seminar on Social Entrepreneurship Development at India Habitat Centre
on Thursday, 12 December 2013, New Delhi. The seminar explored various
aspects related to social entrepreneurship in India.
Social entrepreneurship, a field which has gained solid traction as a
component for socio-economic development in recent years will play a
critical role in creating a positive future for the nation. The term Corporate
Social Responsibility (CSR) has now become the need of the hour and Private
sector needs to work together with Public Sector, so as to contribute towards
holistic development of society to reap the benefits in the long run, said Ms
Rashmi Singh, Executive Director, National Mission for Empowerment of
Women (NMEW), Ministry of Women & Child Development, Government of
India.
The Public and Private sector need to work hand in hand to train more and
more people under sustainable development projects which can create longterm social impact on society, provide required number of skilled workforce
and also help in promoting development in the areas of women
empowerment. At the same time, the government processes to clear social
development projects also need to be streamlined, she added.
Dr Sudhir Kapur, Chairman, CII NR Committee on CSR emphasised that, CIIs
Social Entrepreneurs (SEs) drive social innovation and transformation in
various fields including education, health, environment and enterprise
development. They address social issues with entrepreneurial zeal, business
88

methods and possess courage to innovate and overcome traditional

practices. A social entrepreneur, similar to a business entrepreneur, builds
strong and sustainable organizations, which are either set up as not-forprofits or for-profit companies.
In the present scenario, the CII under its mandate of CSR identifies,
promotes and supports social entrepreneurs with specific business solutions,
Self Help Groups, User groups or individuals to attract investments he
added.
Social Entrepreneurship has come up as an opportunity for those who can
act as the change-makers to the society. India is a hub of innovative social
enterprises and is making its way ahead by coming up with innovative social
business models that are breaking the barriers of development and
addressing the critical needs of the society sources, said by Mr Vivek
Prakash, Co-Chairman, CII NR Regional Committee on CSR.
Various social entrepreneurs from Coca Cola India , Sri Aurobindo Foundation
for Integral Management, Saath, Nidan, Udyoginim IL&FS Education, Godfrey
Philips and Jubilant Bhartia Foundation participated in the seminar and
presented their innovative business models
IMPORTANCE:
Social entrepreneurship sector is increasingly important for economic and
social development because it creates social and economic values:
1. Employment Development
The first major economic value that social entrepreneurship creates is
the most obvious one because it is shared with entrepreneurs and
businesses alike: job and employment creation. Estimates ranges from
one to seven percent of people employed in the social
entrepreneurship sector. Secondly, social enterprises provide
employment opportunities and job training to segments of society at
an employment disadvantage (long-term unemployed, disabled,
homeless, at-risk youth and gender-discriminated women). In the case
of Grameen, the economic situation of six million disadvantaged
women micro-entrepreneurs were improved. A similar SHG movement
is helping disadvantaged women in rural in India.
2.
Innovation/ New Goods and Services
Social enterprises develop and apply innovation important to social
and economic development and develop new goods and services.
Issues addressed include some of the biggest societal problems such
as HIV, mental ill-health, illiteracy, crime and drug abuse which,
importantly, is confronted in innovative ways. An example showing
that these new approaches in some cases are transferable to the
public sector is the Brazilian social entrepreneur Veronica Khosa, who
89

developed a home-based care model for AIDS patients which later

changed government health policy.
3.
Social Capital
Next to economic capital one of the most important values created by
social entrepreneurship is social capital (usually understood as the
resources which are linked to possession of a durable network of ...
relationships of mutual acquaintance and recognition"). Examples are
the success of the German and Japanese economies, which have their
roots in long-term relationships and the ethics of cooperation, in both
essential innovation and industrial development. The World Bank also
sees social capital as critical for poverty alleviation and sustainable
human and economic development. Investments in social capital can
start a virtuous cycle shown below:
4.Equity Promotion : Social entrepreneurship fosters a more
equitable society by addressing social issues and try into achieve
ongoing sustainable impact through their social mission rather than
purely profit-maximization. In Yunuss example, the Grameen Bank
supports disadvantaged women. Another case is the American social
entrepreneur J.B. Schramm who has helped thousands of low-income
high-school students to get into tertiary education resulting in income
generation.

To sum up, social enterprises should be seen as a positive force, as

change agents providing leading-edge innovation to unmet social
needs. Social entrepreneurship is not a panacea because it works
within the overall social and economic framework, but as it starts
at the grassroots level it is often overlooked and deserves much
more attention from academic theorists as well as policy makers.
This is especially important in developing countries and welfare
states facing increasing financial stress.
Action 1: Support the creation of social economy and social
entrepreneurship fora at
national and regional levels (public-private partnerships in four pilot regions),
and to
further the advancement of these fora to specific Social Economy Pacts
between social
and economic partners at regional and/or local level;
90

Action 2: Establish a nation-wide resource and support centre

(taking the form of a
National Competence Centre) for supporting and promoting the social
economy and
social entrepreneurship at national and regional levels;
Action 3: Create Support Centres at regional and local level that
enable regional and
local actors to deliver a broad range of advisory, training and business
development
services to support the start-up, development and growth of social
enterprises;
Action 4: Establish a Social Economy and Entrepreneurship
Observatory;
Action 5: Establish a comprehensive regulatory and
administrative framework to facilitate
access of social enterprises to public markets, and make best use of
it.

Entrepreneurs influence economic development

and productivity. Offer your comments with
Apr
examples.
2005,2004,2
Or
002
Explain the role played by the entreprenuers in
economic development of a country
Entrepreneurs play a significant role in economic development of a country.
He promotes the prosperity of a nation by his innovation and dynamic
leadership Skills. He creates wealth, opens up employment opportunities and
fosters the other segments. According to Harbison, entrepreneurs are prime
91

movers of innovation, growth and as such, entrepreneurship is a dynamic

force.
The role and significance of an entrepreneur are explained below :
1. Bringing Economic Growth and Prosperity: Entrepreneur bring
economic growth and prosperity in the country through generation of
employment opportunities, capital and wealth creation, increasing per capita
income and GDP, improvement in quality of life by raising the standard of
living, growth of infrastructural facilities, forward and backward linkages in
society, development of backward regions, economic independence. George
gilder observes, The heroic creativity of entrepreneur came to seem
essential to our economic well-being in a global economy. Baumback and
Mancuso write, In underdeveloped nations, entrepreneurs often hold the key
to economic growth for a whole society. So entrepreneur is not a dirty word
or a fast buck opportunist, but, rather the backbone of the capitalist system.
2. Brining Social Stability and Balanced Regional Development:
Entrepreneurs play a crucial
and unique role in bringing about social stability and balanced regional
development through absorption of workforce in industries, removal of
poverty, improving health and education facilities, creating fair competition,
equitable distribution of income, creation of social infrastructures,
empowering women and weaker sections of the society and supply of
qualitative goods and services Although entrepreneurs are criticized as self
interested exploiters, Adam Smith, while recognizing that they do some good
for society, partly reflected this view when he wrote in The Wealth of Nations:
In spite of their natural selfishness and rapacity, though they mean only
their convenience, though the sole end which they propose from the labours
of all the thousands they employ be the gratification of their own vain and
insatiable desires they are led by a hidden hand, and without intending it,
without knowing it, advance the interest of society.
3. Innovator in Economic Growth: by bringing new ideas, combinations,
products techniques,
organizations, new markets, making full use of technical knowledge,
balanced growth, systematic innovation, technological advancement,
implementation of mechanical skills, an entrepreneur play very crucial role in
encouraging entrepreneurship and economic development. Peter Drucker
writes,Just as management has become the specific organ of all
contemporary institutions and the integrating organ of our society of
organizations, so innovation and entrepreneurship have to become an
integral life-sustaining activity in our organizations, our economy, and our
society. He further says that the emergence of a truly entrepreneurial
economy is the most significant and hopeful event that have occurred in
recent economic and social history.
4. Creation of Employment Opportunities: Entrepreneurs play a
significant role in generation of employment opportunities by establishing
new units in manufacturing, trading and service sectors, laying emphasis on
small scale industries, utilizing the surplus labour force in varied industrial
92

and/or service activities, upholding self-employment as a core objective.

Entrepreneur integrates resources and technologies into profitable business
ventures and creates job opportunities.
5. Increase Productivity with Modern Production System: Play an
important role in raising
productivity. John Keudrick writes, Higher productivity is chiefly a matter of
improving production techniques, and this task is the entrepreneurial
function par excellence. Two keys to higher productivity are research and
development and investment in new plant and machinery. But there is a
close link between R & D and investment programmes, with a higher
entrepreneurial input into both. George Gilder in The Spirit of Enterprise
said that: Entrepreneurs are innovators who evoke demand. They are
makers of markets, creators of capital, and developers of opportunity and
producers of new technology. They seek the unique product, the marketing
breakthrough, the startling new, feature or the novel design. They change
technical frontiers and reshape public desires. They create wealth and
employment. They take exception to the received view that companies
should be market led. They lead the market.
6. Export Promotion and Import Substitution: Liberalization,
privatization and globalization [LPG]
has opened the arena of export promotion and import substitution to
entrepreneurs by establishing industries producing import substitution
goods, establish new industries, especially for export, products, exploration
of new global markets, earning foreign exchange reserves, utilizing the
available productive resources, achieving self-reliance in production of as
many goods as possible, entrepreneur, are playing a pivot role in export
promotion and import substitution.
7. Entrepreneur Plays a Role of Catalytic Agent: As Joseph Schumpeter
says, entrepreneurs
task is creative destruction. He destroys to create new things. He changes
and transmutes values. He searches change and responds to it. He is a
change creator. Ralph Harwitz writes in his book Realities of Profitability,
The entrepreneur makes a happening, wants piece of action, is the growth
man. Without him there is no happening, no action, and no growth.
8. Augmenting and Meeting Local Demands: Entrepreneurs also play a
significant role in augmenting local demands and meeting them
satisfactorily. Towards this entrepreneurs focus their attention to
manufacture service through indigenous technology, skill, resources and
experiences
9. Reinventing Entrepreneurial Venture: An entrepreneur work to
reinvent his entrepreneurial
venture. He knows that change and innovation is good for his organization.
Paul Wilken observes, Entrepreneurship is a discontinuous phenomenon,
appearing to initiate changes in the production process and then
disappearing until it reappears to initiate another change. Zoltan Acs writes,
93

Entrepreneurs stir up the waters of competition in the market place. They

are agents of change in a market economy

Examples :Dr. Verghese Kurlen (November 26, 1921)

Father of the Unlikely Entrepreneur: Dr. Kurien created Operation Flood, the
largest dairy development programunme in the world. He made India the
world's largest milk prOducer. But most importantly, he put economic power
in the hands of the producers, all 10 milliOn families at last count. The Kaira
District Cooperative Milk Producers' Union, or Amul, as India knows the giant,
is modern and fleet enough to lord it over an array of multinational
competitors. Humble farmers, and cowherds they all have a stake in one
of the world's best dairy operations.
He created India's White Revolution. His Operation Flood, launched in
1970, followed a simple structure (called the Anand Pattern): at the
core were farmers and the co-operatives, on top was a district-level
milk producers' union, and finally there was a state federation that did
the marketing. The National Dairy Development Board, which Kurien
founded in 1963 (he won the Ramon Magsaysay Award for Community
Ledership in the same year), today runs a co-operative network
composing 170 milk unions and 10.7 million farmer members. The 80year-old Kurien retired in 2000 as NDDB's chairman.

There are various types of organizations rendering May 2012

assistance to entrapreneurs in india.Narrate the 2014
names of such organizations and explain the
specific
role
they
play
in
assisting
entrepreneurs(2012)
Or
What are the various support systems available for
budding entrepreneurs in India? What role do they
play?(2014)
Indians have entrepreneurial capacity. However the society and government
are not very encouraging towards entrepreneurship. To a large extent, the
Indian society is risk average. People usually seek secure and longterm
employment, such as government jobs. The physical infrastructure needs to
94

be improved. Social Attitudes, lack of capital, inadequate physical

infrastructure and lack of government support are major factors of hindrance
India is the fifth largest economy in the world (ranking above France, Italy,
the United Kingdom, and Russia) and has the third largest GDP in the entire
continent of Asia. It is also the second largest among emerging nations. The
liberalization of the economy in the 1990s has paved the way for a
huge number of people to become entrepreneurs. Over the years India and
China have followed opposing strategies for development. While Chinas
growth has been fuelled by the heavy does of foreign direct investment,
India has followed a much more organic method and has concentrated more
on the development of the institutions that support private enterprise by
building a stronger infrastructure to support it.
Its corporate and legal systems operate with greater efficiency and
transparency than do Chinas. The Government has encouraged
entrepreneurship by providing training and also the facilities to succeed,
particularly in the rural areas. One style of innovation that really works in a
country as large and diverse as India, is grassroots innovation this includes
inventions for a milieu that is quiet essentially Indian. Moreover, in India, the
post-liberalization and globalization era has brought with it a growing middle
class roughly estimated to be 250 million and rising disposable incomes.
This presents a huge potential, which
if tapped can be a veritable gold mine. Entrepreneurs can make the best of
this by catering to various demands of this segment. India, with its abundant
supply of talent in IT, management, and R&D, has become the hot bed of
outsourcing of services from all parts of the globe where companies can
reduce their costs, but not their quality [if the foreign company chooses the
right Indian partner].Interms of improvement, there needs to be an increase
in the quality and quantity of VC / Angle Investors in India. Also, the
Governments need to still continue reducing the administrative burden on
entrepreneurs, and coordinate among their agencies to ensure that the
necessary resources are directed where they are needed. The physical
infrastructure needs to be improved. Socially, the Indian Society is adapting
to a more risk friendly environment and also looking for jobs in the private
sector. Usually bankers and Government agencies have a belief that the
borrower must be possessing requisite entrepreneurial competencies. Fact is
that this subject is never seriously included in any school / college
curricula. That is why we observe almost all the graduates (even engineering
graduates) running to search a job after completion of their education and
hesitate to set up an enterprise, in fact, not only new entrepreneurs but also
existing entrepreneurs need continuous education / training to enhance their
entrepreneurial competencies and skills. Recognizing this need, the Central
Government and several State Governmentshave setup various training
institutes which are engaged in providing entrepreneurship development
trainings.Given below is a list of such institutes. The bankers should make all
efforts to ensure that their borrowers are made ware of thesefacilities and
get training from time to time.
95

Some other organizations engaged in providing support to SME

Entrepreneurs are :
Indo-German Tool Room at Ahmedabad, Aurangabad and Indore IndoDanish Tool Room at Jamshedpur
Hand Tool Design, Development and Training Centre, Nagore, Rajasthan
Central Machine Tool Institute at Bangalore

96

 Central Institute of Plastics Engineering and Tools at Chennai &

Ahmedabad
National Institute of Foundry and Forge Technology at Ranchi
DICs at District level Small Industries Development Corporations set up by
various State
Governments.
A brief of important institutes engaged in entrepreneurial support is given
below :
The National Institute for Entrepreneurship and small Business
Development (NIESBUD):
NISEBUD was established in 1983 by the Ministry of industry (now Ministry of
Small Scale Industries), Govt. of India, as 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 Institute which is registered as a society under Govt. of
India Societies Act (XXI of 1860) started functioning from 6th July, 1983. Its
website can be accessed through www.niesbud.nic.in
Major Activities of the Institute are :
Evolving effective training strategies and methodology
Standardising model syllabi for training various target groups
Formulating scientific selection procedure
Developing training aids, manuals and tools
Facilitating and supporting Central / State / Other agencies in organising
entrepreneurship development
programmes Conducting training programmes for promoters, trainers and
entrepreneurs.
Undertaking research and exchange experiences globally in development
and growth of
entrepreneurship. The Institute is actively involved in creating a climate
conductive to emergence of
entrepreneurship.
The trainings Conducted by the Institute Include :
Training of Trainers / promoters
Accreditation Programme for Entrepreneurial Motivation Trainers.
Trainers Training Programme for Enterprise Launching & Management
Trainers / Promoters Programme for support organisations such as SISIs,
DICs, Development
Corporations etc.
Small Business Promotion Programme
Entrepreneurship Orientation Programme for HoDs and Senior Executives.
Evolves Standardized Material and Research Publications
National Institute of Small Industry Extension Training
(NISIET):
NISIET since its inception in 1960 by the Government of India, has taken
gigantic strides to become the premier institution for the promotion,
development and modernization of the SME sector. An autonomous arm of
97

the Ministry of Small Scale Industries (SSI), the Institute strives to achieve its
avowed objectives through a gamut of operations ranging from training,
consultancy, research and education, to extension and information services.
It has been renamed as National Institute of Micro Small and Medium
Enterprises (NIMSME) (www.nimsme.org) from April 2007. The Primary
objective of the institute was to be the
trainer of trainers. Today, with the technological development and everchanging market scenario, their involvement has undergone changes too.
From being merely trainers they have widened their scope of activities to
consultancy, research, extension and information services. Its website can be
accessed through www.nisiet.gov.in
Indian Institute of Entrepreneurship (IIE):
With an aim to undertake training, research and consultancy activities in the
small industry sector focusing on entrepreneurship development, the Indian
Institute of Entrepreneurship (IIE) was established in the year 1993 at
Guwahati by the Ministry of Industry (now Ministry of Small Scale Industry),
Government of India as an autonomous national Institute. The institute
started its operations from April 1994 with North East Council (NEC), Govt. of
Assam, Arunachal Pradesh and Nagaland and SIDBI as other stakeholders.
The activities of the Institute include identification of training needs,
designing and organizing programmers both for development functionaries
and entrepreneurs; evolving effective training strategies and methodologies
for different target groups and location; organize seminars, workshops and
conferences for providing foram for interaction and exchange of views by
various agencies and entrepreneurs; undertaking research on
entrepreneurship development, documenting and disseminating information
needed for policy formulation and implementation on self-employment and
entrepreneurship. The institute acts as a catalyst for entrepreneurship
development by creating an environment for entrepreneurship in the support
system, developing new entrepreneurship, helping in the growth of existing
entrepreneurs and propagation of entrepreneurial education. Its website can
be accessed through ww.iie.nic.in
Entrepreneurship Development Institute of India (EDII):
The Entrepreneurship Development Institute of India (EDI), an autonomous
body and not-for-profit institution, set up in 1983, is sponsored by apex
financial institutions, namely the industrial Development Bank of India (IDBI),
IFCI Ltd. ICICI and State Bank of India (SBI). The Institute is registered under
the Societies Registration Act 1860 and the Public Trust Act 1950.
An acknowledged national resource institution, EDI is committed to
entrepreneurship education, training and research. The institute strives to
provide innovative training techniques, competent faculty support,
consultancy and quality teaching & training material. EDI has been spreading
entrepreneurship movement throughout the nation with a belief that
entrepreneurs need not necessarily be born, but can be developed through
98

well-conceived and well-directed activities. Its website can be accessed

through www.ediindia.org.
The Institute of Small Enterprises and Development (ISED):
The Institute of Small Enterprises and Development (ISED) stands for
Sustainable development through enterprise. It is a multi-faceted Centre for
advanced learning and practice in the area of development. For the past
decade, the Institute for Small Enterprises and Development has focused on
research, education, innovative program design and entrepreneurship
development initiatives, advocacy and networking dedicated towards
sustainable development through enterprise certain. Among the similar
institutions ISEDs leadingedge is the identification of methodologies and
processes that empower one to break out of existing mental
models in order to identify new opportunities, while exploiting the emerging
niche. ISEDs interest in linking research, policy, and action is realized
through the programmes of its Activity Centers. The integration of the
outcomes takes place at the Centre for Policy integration. In realizing its
vision and fulfilling its mission, the institute also collaborates with likeminded institutions and individuals. Its website can be accessed through
www.isedonline.org.

Examine
the
contribution
made
by
Joseph
Schumpeter and its impact on the technical
Apr
literature on the subject.
2008,2007,2
Or
006
Critically examine the contribution of Joseph
Schumpeter in the theory of entrepreneurship.

Innovations and Profits: Joseph Schumpeter's Theory of Profits

Aseph A Schupeter (1883-1950) recognized that a person who introduces
innovation changes is an entrepreneur. He treated entrepreneur as an
integral part of economic growth. The fundamental source of equilibrium was
the entrepreneur.
He gave the term entrepreneur a wide acclaim. He defined the entrepreneur
us a innovator who carries out new combination to initiate the process of
economic development through introduction of new products, new markets,
conquests of new source of raw materials and establishment of a new
organization of industry. He said "The carrying out of new combinations we
call enterprise, the individuals who function is to carry them out we call
entrepreneurs". He has put emphasis on pre.- which is the product of
innovation and the prime mover of econornin development. According to
Schumpeter, "The process of development is a deliberate and continuous
99

phenomenon which is actively promoted by the escort services of a change

agent who provides economic leadership; this change agent is what is called
entrepreneur."
Schumpeter wrote: "The entrepreneur ;n an adval ice economy is an
individual who introduces something new in the economy a method of
production not yet tested by experience in the branch of manufacture
concerned, a product with which consumers ace not yet tamillar, a new
source of raw material or of new markets and the like." He further states the
entrepreneur's function is to reform or revolutionise the pattern of production
by exploiting an invention or more generally, an untried technological
possibilities for producieg the new commodity...."
7'lefly, an entrepreneur is one who innovates, raises money, assembles
inputs, chooses managers and sets the organization going with his ability to
identify them. Innovation occurs through (1) the-introduction of new quality
in a product: (2) a new oroduflf (3) a (.liscovery of a fresh demand and a
fresh source of supply and (4) by changes in the organization and
Management.
It has been held by Schumpeter that the main function of the entrepreneur is
to introduce innovations in the economy and profits are reward for his
performing this function. innovation as used by Schumpeter, has a very wide
connotation. Any new measure or policy adopted by an entrepreneur to
reduce the cost of production or to increase the demand for his product Is an
Innovation.
Hence, innovations can be dividod into two categories:
1. Those which reduce the cost of production i.e. which change the
production functions. In this first type of Innovation are included the
introduction of new machinery, new and cheaper technique or process of
production, exploitation of a new source of raw material, a new and better
method of organizing the firm etc.
2. _Those which Inc' ease the demand for tho product i.e. which change
the demand or utility function. In this category are included the introduction
of a new product, a new variety or design of the product, a new and superior
mottled of advertisement, discovery of new markets etc.
Rol of an Innovator
Schumpeter assigns the role of the Innovator to the Entrepreneur. The
Entrepreneur is not a man of ordinary managerial ability, but one who
introduces something entirely new. The Entrepreneur is motivated by the
deslrc to be the founder of a private commercial kingdom, the will to conquer
and prove his superiority and the joy of creating, of getting things done or
simply of exercising ono's energy and ingenuity.
To perform his economic function, the entrepreneur requires two things - the
existence of technical knowledge to produce new products and the power of
disposal over the factors of production in the form of finances.
Role of Profits
100

An entrepreneur innovates to earn profits. Profits arise due to dynamic

changes resulting from an Innovation. They continue to exist until the
Innovation becomes general.
Breaking of the circular flow
Schumpeter's model talks about the breaking of the circular flow with an
innovation in the form of a new product by an entrepreneur for earning
profits. Profit caused by a particular Innovation tends tc be competed away
as others imitate and adapt that. But if the entrepreneur comes out with
another Innovation at that time when the favorable effects of the former
Innovation are dying out, he will make profits again. Therefore as long as
Innovations exist, profits continue to arise out of them. So, according to
Joseph Schumpeter, Innovation is the sole cause of profit. In the case of
developing economy like India the concept is being understood differently.
An entrepreneur in the developing economy is one who starts an industry
(old or new), undertakes risk, bears uncertainties and also performs the
managerial functions of elecision-making and co-ordination. He also puts
new process based on technological ,o3earch into operation. Even if he
imitates any 'technique of production from developed ,),,onomy, he is called
entrepreneur. In point of fact, entrepreneurship in developing economies Is
one form or labour that tells the rest of the labour what to do and sees to it
that it gets things done. Unlike the developed industrial world, emphasis is
not put (nor is 'here any need for it) only on "Schumpeterian ability" in the
case of developing countries.
Schumpeter's entrepreneur only exist If the factors of production are
combines for the first time. To him maintenance of combination is not
entrepreneurial activity. As such, he .iffers from the theory of Rent
enunciated by Ricardo. Recardo Included the term "entrepreneurial ability" as
an Independent factor of production. To Recardo, profit Is the -,ward for
entrepreneurial ability.
In less developed economies, the role of the Schumpeterian entrepreneur is
somewhat limited. A large number of indigenous Schumpeter entrepreneurs
are trading entrepreneurs whose Innovations are the opening of new
markets. In the light of the )ossibilities technical transfers from advanced
economies no undue emphasis should be t on the development of entirely
new combinations. Hoselitz also remarks that in. as developed economy, not
to speak of Schumpeterian innovations even limitator -entrepreneUrs have a
distinct role to play. Such entrepreneurs provide a fillip to the process of
economic growth, sometimes having as strong or perhaps stronger impact on
economic growth as real or alleged innovations.

a)explain entrepreneurial decision process on the basis of

push factors and pull factors b)identity in the order of
priority ,six key factors which contribute for the success of May
an entrepreneur .give your justification
2003,
or
101
apr
What is the Entrepreneurship Decision Process ?
2001
How a person should evaluate his own personality as a procespective
entrepreneur.

Entre preneur ial Dec is ion Proce s s

A person decides to do something either because something in that activity
lures him or he
he takes it as option in lieu of something else, ie, he is forced to do it by
people or
circumstances. The factors which lure a person to become entrepreneur are
called Pull
factors and the factors that compel him are called Push factors.
Pull Factors
(a) Perception of Advantages If a person feels that he can earn better or
overall gains in terms of money. Status, security, future, etc as an
entrepreneur are better than working as an employee, he tends to turn an
entrepreneur.
(b) Spotting an Opportunity Many employees spot a business
opportunity in
the course of their work and decide to exploit that opportunity rather than
pass it on to their employer. Many employees buy unsuccessful businesses
at throw away prices from their former employers and turn them around.
(c) Government Policies Govts very often formulate policies to promote
certain business activity or backward areas which offer tax
concessions/holidays, cash subsidies, cheap land, etc, which improve
success and profit prospects.
(d) Motivation from biographies or success stories.
(e) Influenced by Culture, Community, Family Background, Teachers, Peers,
etc.
Push Factors
(a) Job Dissatisfaction Many people start their own venture because they
feel
dissatisfied with their existing jobs/boss/work environment.
(b) Relocation Repeated or especially unhappy relocation some times
prompts
some people to entrepreneurship.
(c) Joblessness This is the biggest source of micro level
entrepreneurships.
Many parents help their academically poor children, who fail to find a job,
to start their own micro ventures. But success rate in such ventures is poor.
The very traits responsible for their academic failure lead to business failure.
(d) Lay off Lay offs often lower the market value of an employee to half.
Thus, if a person is laid off and he is unable to find a suitable job for him, he
might think of starting his own business.
(e) Retirement Many retired, but physically and mentally fit, people start
their
own business either to supplement their pension/savings or just to keep
themselves gainfully occupied.
(f) Boredom This is applicable to many ladies from well to do families. With
their army of servants to take care of home, they find an avenue to keep the
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boredom away and start ventures like boutiques, fashion designing, etc.
Factors contribute to success of an Ent reprene ur
1. Developed Infrastructure Facilities Availability of infrastructure
reduces the cost
& efforts and improves viability of projects through higher profit margins.
2. Financial Assistance Easy availability of cheap funds is vital for
promoting
entrepreneurship.
3. Protective and Promotional Policies Most of the entrepreneurship
projects start
very small and have no resilience. They are extremely vulnerable to
competitors,
market, money markets, etc, for considerable time. Favourable Govt policies
shelter
them from such vagaries.
4. Growth of Education Science, Technology & Management Growth of
education is believed to be promoting entrepreneurship. However, there are
enough
examples to suggest otherwise. A very large proportion of first generation
entrepreneurs are low educated. Take the case of Microsoft Chairman Mr Bill
Gates
or Reliance Founder Mr Dhirubhai Ambani. (We also have Mr Narayan Murthy
and
Mr Ajim Premji to balance this scale). On a wider spectrum, Kerala, the most
literate state and West Bengal, another state high on literacy front, are least
entrepreneurial states where as Punjab, with 5 rank from bottom was top on
entrepreneurial charts.
5. Risk Taking Abilities Risk taking ability is one of the pillars of
entrepreneurial
spirits.
6. Hunger for Success (Capitalistic View) Fire in the belly and dreams
of riches is
what drives most entrepreneurs on this risky path. Any person content with
what he
has would take the easier route of salaries job.
7. Environment/Culture Impact Entrepreneurship is contagious.
Communities like
Punjabies and Marwaries are historically entrepreneurial. They are known for
seeking and exploiting business opportunities in most remote areas. It is a
culture
that propels them.
8. Social Security Social security acts as a safety net against failure of
enterprise.
Social security guarantees basic roti, kapada aur makan in case of
failure.
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Entrepreneurial spirit of United States is born partly out of this security.

9. Technical/Industrial Training Facilities Industrial Training facilities on
one
hand generate skilled manpower so vitally required for setting up enterprises
while
on the other hand they are also nursery for future entrepreneurs. Among the
educated entrepreneurs, a majority is product of technical institutes from IIT
to ITI
(Tier I to Tier III institutes).
10. Globalization Globalization has provided another avenue for business.
Many dare
devils have taken a head along plunge into this uncharted water and have
written
new success stories.
Outline and discuss the socio-cultural, legal,
economic, political and technological factors which
can make or mar the entrepreneurial climate in a
country. Discuss this with special reference to the
contemporary Indian environment. (OR)
Discuss
the
various
socio-cultural,
legal
or Apr 2009,
regulatory, economic, political and technological 2008,2012,2
factors which have the effect of shaping the climate 003
for entrepreneurship. Give appropriate examples
drawn from both the domestic as well as
international scenario.
Or
Business environment and entrepreneurship

Entrepreneurship environment refers to the various facets within which

enterprises big, medium, small and others have to operate. The enterprise
is, therefore, influenced by the environment. By and large, entrepreneurship
is influenced by an environment created by political, social, economic,
national, legal forces, etc.
Enfreprerial environment
broadly ,asifien into six important segments, namely, (1) Political
environment, (2) Economic environment, (3) Social environment, (4)
Technological environment, (5) Legal environment. and (6) Cultural
environment,
POLITICAL ENVIRONMENT
Political environment affects the entrepreneurial growth and accelerate the.
process of economic activity. Law and order is of high priority, followed by
104

Government policies in regard to the promotion of entrepreneurship, followed

by incentives, encouragement and right institutional structure will go a
longway in fostering entrepreneurship.
Economical Environment
The entrepreneurial growth and development is also governed by the
economic environment. It encompass a wide I spectrum of items, namely,
land, availability of raw material, skilled labour, infrastructure, machinery,
capital and so on. Shortage of raw materials can much adversely affect the
entrepreneurial environment and it has been affecting' many industries.
Shortage of raw materials, inferior quality, high price resultingin high cost of
production are bringing bad name to the small industry. Without rawmaterials, no industry can run and no entrepreneurship would come up. The
more favourable the conditions of raw materials. are, better would be its
influence on entrepreneurial emergence.The role and importance of market
and marketing should.never be under-estiniated for the uprise of
entrepreneurship, If the proof of pudding lies in eating, the proof of
production lies in marketing: If the entrepreneur does not possess knowledge
and various marketing techniques, he is unlikely to survive. The size and
composition of market both influence entrepreneurship in their own ways.
The benefits of an improved and healthy market conditions in the
environment of entrepreneurial growth are self-explanatory. Germany and
Japan are examples where rapid improvement in market was followed by
rapid entrepreneurial appearance.
SOCIAL ENVIRONMENT
Social environment strongly affect the entrepreneurial behaviour which
contribute to entrepreneurial growth. The social factors can be (i) family
background, (ii) kith and !tins (relatives, friends and teachers), (iii) religion,
(iv) social status, (v) social mobility and (vi) social marginality. Family
background greatly affects the entrepreneurial environment and
maintenance of social system. Joint family or nuclear families have their own
benefits and disadvantages. There is more sentimental attachment of family
members of joint family as compared to nuclear family. But even in nuclear
families, sentimental association or emotional bonds are stronger in India as
compared to those in the western countries where "out of sight out of mind"
is the type of attitude of people. In the words of Desai, "the joint family is
perhaps the most faithful in which he lays stress on generation depth and
sentimental belangingness among the members of the family." The joint
family according to him is a three and more generational group of lineal
descendants.The environment of the family also influences the
entrepreneurship. If the father is a professional or a businessman or the like,
the son is more likely to adopt the same occupation because of certain
inherent advantages by virtue of his father being in the similar line. The
reference also affects the environment. A person is likely to adopt the
guidelines or rules of the reference group to which he belongs. The reference
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group can be church groups, armed services and otherwise, informal circle of
friends and relatives. The prospective entrepreneur would discuss his ideas
with them and seek their advice while starting a new business. Similarly,
social status has its own role to play. Every human being aspires for a high
social status and once he achieves a reasonable level, his aspirations and
desires for it start getting multiplied. People, therefore, become quite
responsible in the wake of protecting and developing their status. Chester
Barnard said that the desire for improvement of status and especially the
desire to protect status appears to be the basis of a sense of general
responsibilities. People work hard to maintain their status as it also
contributes to their entrepreneurial growth. Caste and religion of
entrepreneur are the contributory factors of entrepreneurial growth. History
reveals that the entrepreneurial traits do not belong to a specific caste rather
the entrepreneurs emerge from varied communities. James Berna conducted
a study of 52 medium-scale manufacturing entrepreneurs and found that his
firms had mostly grown from small beginnings and his entrepreneurs had
come from a wide range of social and economic backgrounds. Many cf his
entrepreneurs had to face formidable obstacles but their enterprises did
-row. But sociologists still claim that caste and religions do have an impact on
the environment. For example, Parsis of Maharashtra, Jains of Rajasthan and
Gujarat have been the mainsprings of entrepreneurial activity.Social mobility
involves the degree of social and geographical mobility and the nature of
mobility channels within a system. There are varied opinions about the
influence of social mobility on the entrepreneurial environment. Hnselitz and
McClelland's need for openness of a system and flexibility in role relations
respectively reveal an imperative role of mobility within a system for
entrepreneurship development. Their viewpoint is that high degree of social
mobility would help in the emergence of entrepreneurship. But Hagen's
belief is that the lack of mobility possibilities promote entrepreneurship. E _
ozen's emphasis is that the system should neither be too flexible nor too
rigid because the former would pull the entrepreneur away from his role and
the latter would restrict the entrepreneur. However, social mobility doer not
work in the system in isolation but there are many other factors which
influence the entrepreneurial environment. Social marginality also nosttively
influences entrepreneurship. Stauworth and Curran stress that a person
belonging to a social group traditionally constrained to enter economic
activity and barred from many other activities by the society is expected to
choose the owner-manager role in a small industry.
TECHNOLOGICAL ENVIRONMENT
Technology represents the application of scientific knowledge for practical
purposes. While the 20th century and certainly the 1st half upto 1950 gave
us a massive industrial base, shift from agriculture and rural life to urban life,
utilisation of energy and power for our benefit, the ongoing progress of
technology through R&D efforts have led to more comfortable lifestyles. The
last three decades of the 20th century brought in what we call an Information
Revolution.
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Technological advancement has become a catalytic agent in the promotion of

entrepreneurship growth of industrial and allied services. Thomas DeGregori
sets forth thirty operational principles demonstrating that technology creates
resources and that with intelligent policies in science our society can be
sustainable and will continue to invent new resource creating technologies.
Conversely, he argues, "living within limits: is a course that, if followed,
would lead to certain decline and destruction. The technological impact on
agriculture, industry are immence. Further, technology bring in cultural
changes as well as the quality of life. Technological development continues
to give fillip to entrepreneurship in multi-facet manner, affecting the life of
the entrepreneurs as well as the common man. The entrepreneur's
endeavour is to stay ahead technologically in products and services with a
penchant for quality. This will not only enhance profits, but also maintain
balance in the ecosystem. Next two decades will see a Knowledge
Revolution, leading to large-scale adoption of new technologies in. India.
Most of them will be based on information technology using tools such as
computer and mobile phones for processing, storage and transfer of data,
Internet communication and e-commerce. Many new industries, arising out of
application of new technologies, will flourish in countries of Asia, depending
on their stage of economic and technological development.
The Knowledge Revolution has made it possible to routinise processes a
shift from the traditional manual control of conventional machinery for using
the computer brain to operate the machinery. Computer Software is an
alternate way to,reorganise traditional work processes, through application of
overseeing knowledge aided by systematic, logical analysis.
LEGAL ENVIRONMENT
There are various rules and regulations applicable to different groups of
industries, for various purposes. Some of them relate to: Registration,
licensing, pollution, location, Acquisition, payment of wages and labour
related laws, pollution and environmental rules, laws relating to organisation,
product, patent, resource and taxes. According to a recent study, there are
over 150 legal requirements an entrepreneur has to take care of.Some legal
entitymay be a business, a government agency, or a large non-profit
organisation may well contain in its fold a network of diverse autonomous
organisations. The old model of corporations is fast becoming obsolete and is
being replaced by new ones. We are witnessing the operation of
Schumpeter's doctrine of "creative destruction" in practice. Traditional
geocentric way of industrial operations are being replaced by innovative,
multi-location industrial operations tapping the synergies of "outsiders" from
different countries. This is happening in China and India now; and in
countries like Korea, Singapore, Thailand and Malaysia this procesS began
almost a decade or two ago. Indeed Australia, being closely aligned to the
Western countries, had the advantage of a headstart
CULTURAL ENVIRONMENT
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Every organisation has an invisible quality a certain style, a character, a

way of doing things that may be more powerful than the dictates of any
one person or a formai system This quality "the corporate culture' decides
how effective the organisation is in the marketplace. Achieving cultural
change to maintain a prime market position is the key preoccupation of
every chief executive these days.
Max Weber emphasises that cultural
factors have a crippling effect on
entrepreneurial growth. Culture consists
of (1) tangible man-mads objects like
furniture, buildings etc. (ii) intangible
concepts like laws, morals, knowledge
etc. (iii) values and behaviour
acceptable within the society. America
is a capitalist country, Russia followed 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 government
had to intervene and chalk out plans to
take the country,towa.ds development.
Culture of Hindus is to worship
'Ganesha' before undertaking any
financial affair. Whether it is a
superstition or not is a debatable point,
While going on some long journey or on
some special days or while tying, up a
nuptial knot, it is in our culture to seek
the recommendations of priests,
pandits, or sufis.
What do you understand by the term
corporate Entrepreneurship? Explain
how business environment and Apr 2005
management
culture
influence
Corporate Entrepreneurship.
Corporate Entrepreneurship (CE): is the entrepreneurial behaviour inside
established mid-sized and large organisations (Morris, Kuratko and Covin
2008). Zahra and Garvis (2000) define Corporate Entrepreneurship as the
sum of a companys efforts aimed at innovation, pro-activeness and risk
taking. Lumpkin and Dess (1996) have noted that CE can be used to enhance
108

company performance by promoting product and process innovation. At any

rate, corporate entrepreneurship allows an incumbent company to make full
use of its resources to capture new opportunities (Yiu and Lau 2008).
Corporate Entrepreneurship (CE) has long been recognised as a potentially
viable means for promoting and sustaining corporate competitiveness (Covin
and Miles, 1999). Corporate Entrepreneurship is a term used to describe
entrepreneurial behaviour inside established mid-sized and large
organisations (Morris et al 2008). CE refers to a scenario where the entire
company, rather than individuals, acts entrepreneurially (Covin and Miles,
1999).
Zahra and Garvis (2000) define Corporate Entrepreneurship as the sum of a
companys efforts aimed at innovation, pro-activeness and risk taking. These
efforts offer an important means of revitalising and renewing established
companies and improving their performance. According to Sebora and
Theerapatvong (2009), companies need continuous innovation, risk taking,
and pro-activeness in order to stay competitive. The presence of Corporate
Entrepreneurship among company managers leads to positive outcomes
(Ireland et al 2009). Top managers need to have an entrepreneurial strategy
and be able to cascade this through different levels within the company.
Corporate Entrepreneurship may be viewed broadly as consisting of two
types of phenomena and processes: firstly, the birth of new business within
existing organisations - whether through internal innovation or joint
ventures/alliances; and, secondly, the transformation of organisations
through strategic renewal, for example the creation of new wealth through a
combination of resources (Dess, et al 1999).
Wiklund (1999) has studied the impact of corporate entrepreneurship on
company performance and the findings showed a positive relationship. In
Wiklund (1999), the survey results showed a strong relationship over time,
which meant that the corporate entrepreneurship is effective within the
organisation over a certain period.
I Business Environment
The business environment has two parts, external and internal. First, consider the influence of the external business environment, which includes
customers, competitors, and other industry and competitive forces, as well
as the legal, regulatory, technological, and economic environment. Customer
pressures spur new business creation. But pressures from existing customers
also make it difficult to pursue disruptive technologies that lead to new
markets. And pressures encountered in co-developing a product with the
customer, in competing with the customer, and in dealing with intimidation
by the customer dampen new business reation. The threat of substitute
products and services, and industry rivalry, spur new business creation.
Concerns about product liability dampen new business creation whereas
strong patents encourage it. Government regulations facilitate new business
creation by encouraging innovation or hinder it with bu- reaucratic
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procedures and delays. Sometimes they do both!The absence of industry

standards makes it difficult to introduce new products if customers hesitate
to make purchases in anticipation of such standards. Successful industry
players create industry standards or adapt quickly to emerging standards.
Those who anticipate technology trends find new business opportunities in
markets that others view as mature. Those who ignore these trends end up
as somebody elses lunch. Adverse economic conditions inhibit new business
creation by biasing the thinking and actions of top managers toward survival
and near-term results. External advisors such as management consultants
either facili- tate or hinder new business creation depending on their
assessments and agendas. Next, consider the influence of the internal
business environment, which refers to the condition of the divisions existing
business (whether it is growing, maturing, or declining), the relative amount
and stage of development of the divisions new initiatives, the availability of
resources, and other internal factors such as the fear that new products
might can- nibalize existing business, or the bias toward product innovation
versus process innovation. When the existing business is growing, there is a
tendency to neglect new business creation. However, when the existing
business matures, top managers want new business creation on demand in
order to rekindle growth. Unfortunately, new business cannot be created on
demand. This is one advantage of independent entrepreneurship there is
no existing business to worry about! Introduction of new products, despite
the fear of cannibalization of the existing business, helps in two ways. First, it
pre-empts or counter-acts similar moves by competitors. Second, it provides
access to new cus tomers, some of whom end up buying existing products
because of their availability! New business creation is hindered if sufficient
resources are not available for it, or if several new initiatives have been
introduced to the market recently because then the focus shifts to
improving their performance to ensure their success. Both product
innovation and process innovation spur new business creation
II The management culture
Management culture is defined as the beliefs that the corporate executives
and the division managers share in common. Contrary to popular opinion,
financial incentives are not needed to promote corporate entrepreneurship if
the right management culture pre-vails. Big financial incentives such as
those offered to Silicon Valley entrepreneurs generate perceptions of
inequity and resentment within the corporate setting, and are counterproductive except under a very restrictive set of conditions. People are
motivated to undertake new initiatives without the use of financial
incentives, and despite the high probability of failure, if they believe there is
no personal risk in doing so. What economists call the moral hazard in this
approach if people feel protected against personalrisk, what is to prevent
them from becoming sloppy? is avoided with the right management
culture. Cultural taboos concerning opportunities not to be pursued constrain
new business creation, whereas a shared belief in the right to pursue ones
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business convictions promotes it. New business creation is encouraged if the

management culture permits rule-bending and limits the definition of
irresponsible behavior to violations of personal integrity and business ethics.
It is inhibited if rule-bending is not allowed and irresponsiblebehavior is
defined more broadly to include violations of the prevailing business beliefs
and practices.The management cultures of companies with successful track
records of new business creation help to control this activity, without stifling
it, by emphasizing conviction-testing and by limiting aggregate
investment.The corporate executives test the business convictions of the
divisionmanagers, but do not make decisions for them. Corporate executives
contain the financial risk inherent in new business creation by limiting the
aggregate financial investment in the division, not by making decisions
about the divisions initiatives (thus controlling the financial exposure
without micromanaging the specific initiatives)
behavior is defined more broadly to include violations of the prevailing
business beliefs and practices. The management cultures of companies with
successful track records of new business creation help to control this activity,
without stifling it, by emphasizing conviction-testing and by limiting
aggregate investment. The corporate executives test the business
convictions of the division managers, but do not make decisions for them.
Corporate executives contain the financial risk inherent in new business
creation by limiting theaggregate financial investment in the division, not by
making decisions about the divisions initiatives (thus controlling the
financial exposure without micromanaging the specific initiatives). Quarterly
financial results that do not meet the expectations of financialanalysts
adversely affect the companys stock price, so corporate execu-tives in all
companies ask certain divisions for additional profit and cash contributions
each quarter to offset anticipated shortfalls in other divi- sions. Division
managers accept these calls for quarterly giving as a fact of corporate life
and cut their budgets and delay their programs to comply. However,
managers with less successful new business creation track records share the
belief that the required budget cuts and program delays will inevitably hurt
this activity. They invest little time and effort in deciding where to cut and
delay programs, and how to communicate these decisions to the affected
personnel. Experience leads managers with more successful new business
cre- ation track records to the shared belief that too much money can diffuse a new programs focus, and that a delayed initiative sometimes can
benefit from future technology or market developments. Accordingly, they
believe in investing the time and effort necessary to carefully review
all programs before deciding where to cut and delay. And they communicate the rationale for their actions to everyone involved. The management
cultures in these companies view failure in new business creation as normal, and focus on learning from failure rather than on finding fault or
apportioning blame. This helps to generate new kno wledge as well as
second-generation initiatives
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Write short notes covering past, present and future trends on :

Backward Area Incentives
2001
Some of the major incentives to small scale industries in India that
deserves special mention are as follows:
An incentive is a motivational factor which induces a person to work hard or
to do his work more efficiently.
Many incentives are provided both by the Central and State Governments to
promote the growth of small-scale industries and also to protect them from
the onslaught of the large-scale sector. Among the various incentives given
to small-scale industries the following deserve special mention:
1. Reservation:
To protect the small-scale industries from the competition posed by largescale industries, the Government has reserved the production of certain
items exclusively for the small-scale sector. The number of items exclusively
reserved for the small-scale sector has been considerably increased during
the Five Year Plan Periods and now stands at 822
However, prior to the 1997 98 Budget the number of items reserved for the
small-scale sector stood at 836. The Finance Minister de-reserved 14 items in
the 1997 98 Budget.
2. Preference in Government purchases:
The Government as well as Government organisations shows preference in
procuring their requirements from the small-scale sector. For instance, the
Director General of Supplies and Disposals purchases 400 items exclusively
from the small-scale sector. The National Small-Scale Industries Corporation
assists the SSI units in obtaining a greater share of Government and defence
Purchases
3. Price preference:
The SSI units are given price preference up to a maximum of 15 per cent in
respect of certain items purchased both from small-scale and large-scale
units.

112

4. Supply of raw materials:

In order to ensure regular supply of raw materials, imported components and
equipments, the Government gives priority allocation to the small-scale
sector as compared to the large-scale sector. Further, the Government has
liberalised the import policy and streamlined the distribution of scarce raw
materials.
5. Excise duty:
In respect of SSI units excise duty concessions are granted to both registered
and unregistered units on a graded scale depending upon their production
value. Full exemption is granted up to a production value of Rs.30 lakhs in a
year and 75 % of normal duty is levied for production value exceeding Rs.30
lakhs but not exceeding Rs.75 lakhs. If the production value exceeds Rs.75
lakhs, normal rate of duty will be levied
6. RBIs credit guarantee scheme:
In 1960, the RBI introduced a Credit Guarantee Scheme for small-scale
industries. As per the Scheme, the RBI takes upon itself the role of a
guarantee organisation for the advances which are left unpaid, including
interest overdue and recoverable charges. This scheme covers not only
working capital but also advances provided for the creation of fixed capital.
7. Financial assistance:
Small-scale industries are brought under the priority sector. As a result,
financial assistance is provided to SSI units at concessional terms by
commercial banks and other financial institutions. With a view to providing
more financial assistance to the small-scale sector, several schemes have
been introduced in the recent past the Small Industries Development Fund
(SIDF) in 1986, National Equity Fund (NEF) in 1987 and the Single Window
Scheme (SWS) in 1988
SIDF provides refinance assistance to small-scale and cottage and village
industries and the tiny sector in rural areas. NEF provides equity type
support to small entrepreneurs for setting up new projects in the tiny/smallscale sector. In 1996, the small-scale sector received 42.3 per cent of the
total priority sector advances from public sector banks.
8. Technical consultancy services:
The Small Industries Development Organisation, through its network of
service and branch institutes, provides technical consultancy services to SSI
113

units. In order to provide the necessary technical input to rural industries, a

Council for Advancement of Rural Technology was set up in October, 1982.
The Technical Consultancy Organisation renders consultancy services to SSI
units at a subsidised rate. Many financial institutions are also providing
subsidies to SSI units for availing of consultancy services. For instance, small
entrepreneurs proposing to set up rural, cottage, tiny or small-scale units,
can get consultancy services at a low cost from the Technical Consultancy
Organisations approved by the All-India and State-level financial institutions.
They have to pay only 20% of the fees charged by a technical consultancy
organisation. The entire balance of 80% or Rs.5, 000 whichever is lower is
subsidised by the Industrial Finance Corporation of India.
9. Machinery on hire purchase basis:
The National Small Industries Corporation (NSIC) arranges supply of
machinery on hire purchase basis to SSI units, including ancillaries located in
backward areas which qualify for investment subsidy. The rate of interest
charged in respect of technically qualified persons and entrepreneurs coming
from backward areas are less than the amount charged to others. The
earnest money payable by technically qualified persons and entrepreneurs
from backward areas is 10% as against 15% in other cases
10. Transport subsidy:
The Transport Subsidy Scheme, 1971 envisages grant of a transport subsidy
to small-scale units in selected areas to the extent of 75 % of the transport
cost of raw materials which are brought into and finished goods which are
taken out of the selected areas.
11. Training facilities:
The Entrepreneurship Development Institute of India, financial institutions,
commercial banks, technical consultancy organisations, and NSIC provide
training to existing and potential entrepreneurs.
12. Marketing assistance:
The National Small Industries Corporation (NSIC), the Small Industries
Development Organisation (SIDO) and the various Export Promotion Councils
help SSI units in marketing their products in the domestic as well as foreign
markets. The SIDO conducts training programmes on export marketing and
organises meetings and seminars on export promotion
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13. District Industries Centres (DICs):

The 1977 Industrial Policy Statement introduced the concept of DICs.
Accordingly a DIC is set up in each district. The DIC provides and arranges a
package of assistance and facilities for credit guidance, supply of raw
materials, marketing etc
Write short notes covering past, present and future trends on :
20
Marketing Assistance to Entrepreneurs
01

Government provides marketing assistance to small scale firms to enable

them to overcome the problem as small scale firms face several problems in
marketing their products. Some of the agencies which provide marketing
assistance and their schemes of assistance are described as follows:
Central Government Stores Purchase Programme
The Government is the single largest buyer of a variety of goods. With a view
to increase the share of purchases from the small-scale sector, the
Government Stores Purchase Programme was launched in 1955- 56. NSIC
(National Small Scale Industries Corporation) registers Micro & small
Enterprises (MSEs) under Single Point Registration scheme (SPRS) for
participation in Government Purchases.
Benefits of Registration
Issue of tender sets free of cost.
Advance intimation of tenders issued by DGS&D.
Exemption from payment of earnest money.
Waiver of security deposit up to the monetary limit for which the unit is
registered.
Issue of competency certificate in case the value of an order exceeds the
monetary limit, after dueverification
Small Enterprises registered with the Director of Industries (DI) / having
acknowledgement of Memorandum(EM) from the Office Of Commissioner of
Industries (Registration) and are in continuous production of stores for a
minimum period of ONE YEAR as manufacturing small enterprises as well as
Small Enterprises engaged in providing or rendering services who own
workshop of their own or on lease basis and have the commercial and
technical competence to produce stores/provide services for supply to the
Central/State Government Departments and Central/State Government
Public Sector Undertakings etc. conforming to BIS or such standards as
required by the Government buying agencies. Small Enterprises shall have to
apply on the prescribed application form in Duplicate and to be submitted to
the concerned Zonal/Branch Office of NSIC located nearest to the unit. In

115

case of any difficulty in filling the application form and completing the
documentation, they have to consult any of the Zonal / Branch office
of NSIC. The application form containing Terms & conditions are available
free of cost from all offices of the NSIC. The guidelines attached with the
Application Form provide a checklist for the documents that are required to
be submitted along with the application
Governments Purchase Preference Policy for SSI Products
Realizing that small scale units face the problem of marketing their products
at remunerative prices, government stores purchase programme was
initiated to assist small-scale industries in obtaining a fair share of the total
purchases made by the government and its departments. bulk and
departmental buyers such as the railways, defence and communication
ministries and companies are invited to participate in buyer-seller meets to
enrich ssi units knowledge regarding terms and conditions, quality
standards, etc required by the buyer.
Canteen Stores Department (India)
This is yet another Government undertaking to purchase small sector
products. Its Head office is located at Mumbai. Its canteens are established
at various cantonments and defence places. The CDS (I), Mumbai purchases
consumable articles in large quantities. The entrepreneurs who desire to
market their products through this organization need to contact the canteen
Stores Department in its head office at Mumbai.
Purchase by State Government
Small scale units also get help from DGSD (Director General of Supplies and
Disposals) in marketing their products. The State Government have given
price preference to small scale units ranging from 10to 15 percent in their
purchase programme. The price preference is generally given to small scale
units located in articular State. The highest price preference up to 17% is
given by Himachal Pradesh to its small scaleunits in India.
Reservation of Products
The Government of India recognizes the vital role of small scale industries in
industrial and economic development. Thus it has come forward to rescue of
small scale units in variety of aspects. The reservation of items for exclusive
purchase from small scale industries is also one such measure initiated by
Government. Small scale industries suffer from shortage of capital and
financial resources thus they lack in staying capacity and are often forced to
sell their products at unreasonable price. The number of reserved items for
exclusive purchase from small scale units has been continuously increasing.
Short notes :Entrepreneurial Cycle
Apr 2003

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Entrepreneurial Life Cycle repeats itself in businesses of all sizes, from startups in a garage to corporate entrepreneurship activities in global Fortune
500 companies. It starts with an entrepreneur who perceives an opportunity,
creates an organization to pursue it, assembles the required resources,
implements a practical plan, assumes the risks and the rewards, all in a
timely manner for all involved. In this Article, we present the seven stages in
the Entrepreneurial Life Cycle.
Entrepreneurs are directly involved in the dynamic, and very complex,
interrelationship between financial management and business strategy. This
is the significant difference that sets entrepreneurial management apart
from all business management practices. In almost all cases, the person
making the decisions has personal risk at stake. The worst-case scenario for
folks at work is getting fired. The worst case for entrepreneurs is losing
their home, personal credit, and lifestyle, as well as the destruction of family
relationships.
Peter Drucker remarked that for the existing large company, the controlling
word in the phrase entrepreneurial management is entrepreneurial. In
any new business venture, the controlling word is management. Therefore,
for the purposes of our work we lean toward management as a discipline
for entrepreneurs.
We define entrepreneurial management as the practice of taking
entrepreneurial knowledge and utilizing it for increasing the effectiveness of
new business venturing as well as small- and medium-sized businesses.
The heart of entrepreneurial management is continually juggling
these vital management issues:
- What is this venture about? (mission and values statement)
- Where should it go? (goals and objectives)
- How will it get there? (growth strategy)
- What does it need to get there? (people and resources)
- What structure is best? (organizational capabilities)
- How much money does it need and when? (financing strategy)
- How will it recognize the final destination? (vision of success)
These vital entrepreneurial management issues and activities play out in
what we call the entrepreneurial life cycle. The entrepreneurial life cycle
repeats itself in businesses of all sizes, from start-ups in a garage to
corporate entrepreneurship activities in global Fortune 500 companies.
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It starts with an entrepreneur who perceives an opportunity, creates an

organization to pursue it, assembles the required resources, implements a
practical plan, assumes the risks and the rewards, all in a timely manner for
all involved. It was once said that entrepreneurship is a lot like driving fast on
an icy road. We prefer to think of entrepreneurship as less reckless and more
methodical. Entrepreneurship is a continual problem-solving process. It is like
putting together a huge jigsaw puzzle; at first pieces will seem to be
missing, obscure, or not clearly recognizable.
Not all entrepreneurial life cycles follow a single process, but our research
suggests that the stages we present below are common in the most
successful emerging growth ventures. Size, profitability, commitment,
complexity, scale of organizational structure, decrease in risk, increase in
value, and decrease in founders involvement characterize each stage.
We believe that by knowing and understanding these stages entrepreneurs,
business managers, investors, and consultants will be able to make more
informed decisions, and most of all, be prepared themselves for challenges
that lie ahead.
The Seven Stages in the Entrepreneurial Life Cycle
Stage 1. Opportunity Recognition
This gestation period is quite literally the pre-start analysis. It often
occurs over a considerable period of time ranging from one month to ten
years. At this stage it is important to research and understand the
dimensions of the opportunity, the concept itself, and determine how to
decide whether it is attractive or unattractive. The individuals need to look
internally and see if they are truly ready for entrepreneurship. The vast
majority of people, including almost all inventors, never move off of this
stage and remain just considering entrepreneurship.
Stage 2. Opportunity Focusing
This is a sanity check, a go/no-go stage gate for part-time entrepreneurs
because it fleshes out shaky ideas and exposes gaping holes. Venture
capitalist Eugene Kleiner, of Kleiner Perkins Caufield & Byers, says, Focus is
essential; there can be the possibility of the business branching out later, but
the first phase of a company should be quite narrowly defined.It is
important to include objective, outside viewpoints because different people
can investigate the same opportunity and come to opposite conclusions.
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Stage 3. Commitment of Resources

Most entrepreneurs see commitment as incorporating their business or
quitting their day job. But this stage actually starts with developing the
business plan. There is a huge difference between screening an opportunity
and researching and writing a business plan. Writing an effective business
plan requires a new level of understanding and intense commitment. The
process will take between 200 to 300 hours, so squeezing that amount of
time into evenings and weekends can make this stage stretch over three to
twelve months. A common mistake entrepreneurs make is skipping the
business plan; commit other resources, start the venture, then follow up and
try to determine exactly what the focus will be for the venture.
Stage 4. Market Entry
Profitability and success define the market entry stage. The entrepreneur is
committed with a very simple organization, the resources were correctly
allocated according to the business plan, and the first sales were made. This
is what defines success in the very early stages. If the business model was
profitable, reasonable objectives were met, and the venture is on track for
attaining true economic health, then the entrepreneur can chose between a
capital infusion for growth or remaining small with self-financing
(bootstrapping).
Stage 5. Full Launch and Growth
At this stage, the entrepreneur needs to choose a particular high-growth
strategy. Upon considering such alternatives, quite often the entrepreneur
chooses to remain a small business and never passes this stage or perhaps
opts to remain operating as a sole proprietor. Or the venture could remain
small for the simple fact that not all small ventures can or will become big
companies. They are not fast growth potential because there is not enough
room in the market for growth, their production and management systems
are not scalable, or they will not scale because the rate is too great of a
challenge to the management.
Stage 6. Maturity and Expansion
Now the venture is a market leader at cruising altitude. The growth becomes
a natural extension of the venture through professional management
practices. This professional management team is implementing the ventures
growth strategy through global expansion, acquisitions, and mergers as cash
is plentiful and inefficiencies are completely flushed out.

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Stage 7. Liquidity Event

This harvesting stage is focused on capturing the value created in the
previous stages through a business exit. Typical exits are an initial public
offering (IPO) or being acquired by a larger publicly traded corporation.
Unfortunately, most of the literature in entrepreneurship has concentrated
on the earlier stages. Little attention has been given to exits. We know from
experience that the opportunity to exit successfully from a venture is a
significant factor in the entrepreneurial life cycle, both for the entrepreneur
and for any investors providing investment capital along the way.

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