ENTREPRENEURSHIP BMS SEM VI

MODULE- I
The Concept of Entrepreneurship
v Definition of Entrepreneurship v Need for Entrepreneurship v Factors Influencing Entrepreneurship

Emergence of Entrepreneurial Class

v Introduction v Communities that promoted entrepreneurship in India v Causes of slow growth of Entrepreneurship in India Family Business in India v Stages of Evolution of Entrepreneurship

Characteristics of Entrepreneurship
v Qualities of Entrepreneurship v Entrepreneurial functions v Classification of Entrepreneurs

Difference between
v v v v v Entrepreneur & Manager Entrepreneur and Entrepreneurship Entrepreneur and Enterprises Entrepreneur and Administrator Entrepreneur & Intrapreneurship

RAMB
-1-

ENTREPRENEURSHIP BMS SEM VI

INTRODUCTION
The ultimate measure of a man Is not where he stands In moments of comfort and convenience But where he stands At times of challenge and controversy. Martin Luther King.

The words entrepreneur, intrapreneur and entrepreneurship have acquired special significance in the context of economic growth in a rapidly changing socio-economic and socio-cultural climates, particularly in industry, both in developed and developing countries. Entrepreneurial development is a complex phenomenon. Productive activity undertaken by him and constant endeavor to sustain and improve it are the outward expression of this process of development of his personality.

WHO IS AN ENTREPRENEUR?
An entrepreneur is a person with a dream, originality and daring, who acts as the boss, who decides as to how the commercial organization shall run, who co-ordinates all activities or other factors of production, who anticipates the future trend of demand and prices of products. An entrepreneur is one of the important segments of economic growth. Basically he is a person responsible for setting up a business or an enterprise. Infact, he is one who has the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent of change and works for the good of people. He puts up new green-field projects that create wealth, open up many employment opportunities and leads to the growth of other sectors. The entrepreneur displays courage to take risk of putting his money into an idea, courage to face the competition and courage to take a leap into unknown future and create new enterprises/ business. This creative process is the life blood of the strong enterprise that leads to the growth and contributes to the national development. The entrepreneur will always work towards the creation and enhancement of entrepreneurial society.

RAMB
-2-

ENTREPRENEURSHIP BMS SEM VI The best entrepreneur in any developing country is not the one who uses much capital but an individual who knows how to organize the employment and training of his employees. A classic example is that of Mr. Dhirubhai Ambani because he had all the dynamic qualities of a successful entrepreneur, as a result of which today, he was the owner of the largest private company in India. All decisions which he had taken to grow were instinct and no one had taught him to take decisions.

BASICS OF AN ENTREPRENEUR
Organization
Urge

Innovation Risk Enterprise

Skill Vision Growth Management

We can define entrepreneur as one who innovates, raises money, assembles inputs, choose managers and sets the organization going with his ability to identify them. As per Peter Drucker- An entrepreneur is one who always searches for change, responds to it as an opportunity. Entrepreneurs innovate. Innovation is a specific instrument of entrepreneurship. As per Joseph A. Schumpeter- Entrepreneur is one who innovates, raises money, and assembles inputs, chooses managers and sets the commercial organization going with his ability to identify them and opportunities which others are not able to identify and is able to fulfill such economic opportunities.

RAMB
-3-

ENTREPRENEURSHIP BMS SEM VI As per Walker- An entrepreneur is one who is endowed with more than average capacities in the task of organizing and co-coordinating the various factors of production. He should be a pioneer, a captain of industry. The process undertaken by an entrepreneur to augment his business interests gave birth to ENTREPRENEURSHIP.

THE CONCEPT OF ENTREPRENEURSHIP

Entrepreneur

Entrepreneurship Process of action

Enterprise

Person

Object

Fig 1. Concept of Entrepreneurship

ENTREPRENEURSHIP DEFINED: Entrepreneurship is an elusive concept. Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions. Schumpeter In the above definition, entrepreneurship refers to the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as what managers do, entrepreneurship may be regarded as what entrepreneurs do. In other words, entrepreneurship is the act of being an entrepreneur. Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise. It is thus, process of giving birth to a new enterprise. Entrepreneurship is composite skill, the resultant of a mix of many qualities and traits- these include tangible factors as imagination, readiness to take risks, ability to bring together and put to use other factors of production, capital, labour, land, as also tangible factors such as the ability to mobilize scientific and technological advances. A practical approach is necessary to implement and mange a project by securing the required

RAMB
-4-

ENTREPRENEURSHIP BMS SEM VI licenses, approvals and finance from governmental and financial agencies. The personal incentive is to make profits from the successful management of the project. A sense of cost consciousness is even more necessary for the longterm success of the enterprise. However, both are different sides of the same coin. Entrepreneurship lies more in the ability to minimize the use of resources and put them to maximum advantage. Without any awareness of quality and desire for excellence, consumer acceptance cannot be achieved and sustained. Above all, entrepreneurship today is the product of teamwork and the ability to create, build and work as a team. The entrepreneur is the maestro of the business orchestra, wielding his baton to which the band is played. The basic two elements involved in entrepreneurship are as follows;-

Entrepreneurship

Innovation
INNOVATION

Risk- bearing

Innovation, i.e. doing something new or something different is a necessary condition to be called a person as an entrepreneur. The entrepreneurs are constantly on the look out to do something different and unique to meet the requirements of the customers. They may or may not be inventors of new products or new methods f production but they possess the ability to foresee the possibility of making use of the inventions for their enterprises. In order to satisfy the changing preference of customers nowadays many enterprises have adopted the technique of innovation. For instance, pidilite industries innovated the new 5.rs pack of fevi quick which was accepted by the customers as it was easy to use when it was needed. Other example would be of the mobile enterprise which came up with the scheme for the customers of refill pack of 999.rs which says Zindagi bhar mobile raho which was accepted bye the customers. Since customers taste and preferences always keep on changing, hence the entrepreneur needs to apply invention on a continuous basis to meet the customers changing demand for products. RISK- BEARING Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a predetermined business or Industrial objective. The capacity to take risk independently and individually with a view to making profits and seizing the opportunity to make more earnings in the market-

RAMB
-5-

ENTREPRENEURSHIP BMS SEM VI oriented economy is the dominant characteristic of modern entrepreneurship. In fact he needs to be a risk taker, not risk avoider. His risk bearing ability enables him even if he fails in one succeed. The Japanese proverb says Fall seven times, stand up eight. Though the term entrepreneur is often used interchangeably with entrepreneurship, yet they are conceptually different. The relationship between the two is just like the two sides of the same coin. Thus, entrepreneurship is concerned with the performance and co-ordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship.

NEED FOR ENTREPRENEURSHIP

Entrepreneurship promotes small business in the society. Government has accepted the fact that small firms have a crucial role to play in the economic development of the country. Small businesses are an essential part of our future economic prosperity because of the following reasonsv EMPLOYMENT GENERATION:

Entrepreneurial development is looked at as a vehicle for employment generation through promotion of small business. India, being far more developed and forward looking country than some of the third world countries, can provide lead to entrepreneurial development activities. However, India can benefit from the well- documented success experiences of developed countries like USA, Japan and UK in the field of employment generation and small business promotion. Steady growth in consumer spending, expanding retail sales, a strong housing market, continued expansion of the service sector, low rates of inflation and of labour cost increases and failing interest rates contributed to a healthy environment for small business. In India, the government policies, political and economic environment greatly encourage the establishment of new and small enterprises. Self- employment and small scale industry schemes have been further liberalized during the last decade. The employment in the small-sector increased from 9.00 million people in 1984-85 to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in employment in this sector. v SMALL BUSINESS DYNAMISM:

Great dynamism is one of the qualities of the small and medium enterprises. This quality of dynamism originates in the inherent nature of the small business. The structure of small and medium enterprises is less complex than

RAMB
-6-

ENTREPRENEURSHIP BMS SEM VI that of large enterprises and therefore facilitates quicker and smoother communication and decision- making. This allows for the greater flexibility and mobility of small business management. Also, small enterprises, more often make it possible for owners, who have a stronger entrepreneurial spirit than employed mangers, to undertake risk and challenges. v BALANCED ECONOMIC DEVELOPMENT:

Small business promotion needs relatively low investment and therefore can be easily undertaken in rural and semi-urban areas. This in turn creates additional employment in these areas and prevents migration of people from rural to urban areas. Since majority of the people are living in the rural areas, therefore, more of our development efforts should be directed towards this sector. Small enterprises use local resources and are best suited to rural and underdeveloped sector. This in turn will also lead to dispersal of industries, reduction in concentration of economic power and balanced regional development. v INNOVATIONS IN ENTERPRISES:

Business enterprises need to be innovative for survival and better performance. It is believed that smaller firms have a relatively higher necessity and capability to innovate. The smaller firms do not face the constraints imposed by large investment in existing technology. Thus they are both free and compelled to innovate. Entrepreneurship development is accelerating the pace of small firms growth in India. An increased number of small firms are expected to result in more innovations and make the Indian industry compete in the international market.

FACTORS INFLUENCING ENTERPRENURESHIP

The emergence of entrepreneurs in a society depends upon closely interlinked social, religious, cultural, psychological, and political and economic factors. v FAMILY TRADITION:

Individuals who for some reason, initiate, establish maintain and expand new enterprises generate entrepreneurship in society. It is observed that entrepreneurs grow in the tradition of their families and society and accept certain values and norms from these sources.

RAMB
-7-

ENTREPRENEURSHIP BMS SEM VI v RELIGIOUS, SOCIAL AND CULTURAL FACTORS:

Religious, social and cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that high profit is unethical. This type of belief inhibits growth of entrepreneurship. v PSYCHOLOGICAL FACTORS:

The psychological factors like high need for achievement, determination of unique accomplishment, self confidence, creativity, vision, leadership etc, promote entrepreneurship among individuals. On the other hand psychological factors like security, conformity and compliance, need for affiliation etc restrict promotion of entrepreneurship. v POLITICAL FACTORS:

The political and also the political stability of country influence the growth of entrepreneurship. The political system, which promotes free market, individual freedom and private enterprise, will promote entrepreneurship. v ECONOMIC POLICIES:

The economic policies of the government and other financial institutions and the opportunities available in a society as a result of such policies play a crucial role in exerting direct influence on entrepreneurship. In view of the haphazard development of economic zones, Government is encouraging the entrepreneurs to establish their business in backward and tribal areas. This is primarily to arrest the migration of people from the villages to cities and to create employment opportunities locally. Government is promoting such development by giving incentives like tax holidays (both sales and income), subsidized power tariff, raw materials, transportation cost etc.

EMERGENCE OF ENTREPRENEURIAL CLASS

From times immemorial, the Indian society has been characterized by a kind of stratification of religious and regional sections. The Hindu society projected a type of hierarchy in which the caste groups were separated from each other on the basis of function. Every member of the society followed the family occupation. This caused immobility between occupations.

RAMB
-8-

ENTREPRENEURSHIP BMS SEM VI The Bania was a caste that carried on the trading and money lending business. They specialized in trade and commerce and came from urban areas. In fact, because of their good financial, standing, their position was an enviable one in the urban centers. However they ranked third in the castehierarchy. The Brahmins ranked first and kshatriyas second. The caste system was so rigid, that people were afraid of ostracisation .But in places where the caste system was relatively loose and the trading caste were missing, people from other castes, undertook commercial activities and were also regarded as the members of the business community. The mid nineteenth century witnessed a fairly developed business community in India. Saurasthra (now known as Gujarat) was the most developed and urbanized region in the whole of India. It had a continuous record of foreign trade, which had lasted for centuries. This tract had a developed Bania (both Hindu and Jain) community and also large trading communities, popularly known as the Bohras, Khojas and Kacchi, Memone. They were converts from Hinduism. Trading was their occupation. They mainly dealt in cotton. They also carried out overseas trade. They had business dealing with Persian Gulf, Arabia and Africa to the west and with Malaya (now known as Malaysia), Indonesia to the south and south east coast India. The above trading communities are responsible for the supply of entrepreneurs in India. Following important communities can take the credit for the supply of entrepreneurs in India.

COMMUNITIES THAT PROMOTED ENTREPRENEURSHIP IN INDIA

1. THE PARSIS: Parsis migrated from Persia in the century. They performed artisans, carpenters, weavers etc, in the 17th century. By 18th century, they became wellknown shipbuilders; they had set merchant houses in Bombay, Burma, China and London. Their chief overseas trade comprised of yarn and opium. They acted as brokers for the European traders at Bombay and Surat. They were regarded as merchants and traders of repute. They emerged as the most prominent trading and financing community or Bombay and Gujarat. Parsees and Gujarat trading castes that controlled even foreign trade become the wealthiest Indian communities by the 19th century. 2. TRADERS FROM SOUTH INDIA: The trading castes of South India were the chettis. They were dividing into various groups such as the Telugu komatia, the Tamil, Nattukottai Chettis, and Beri- Chettis etc. The Komatia were the chief traders not only in the

RAMB
-9-

ENTREPRENEURSHIP BMS SEM VI Telugu districts but also in Mysore, Coimbatore, Canara and other places. The chief financiers are bankers of South India were the Nattukottai Chettis. Trading in drugs grain and cloth was done by the Beri-Chettis. In the early 19th century they were known to be respectable peddlers who traveled in caravans. The communities that traded had trade relations with South- East Asian countries like Burma, Ceylon, and Malaya, Singapore etc. The chettiars established connections with reputed Indian business firms and also made good investments in and property. They became important suppliers of rural credit. The Nattukottai Chettiars were a well- known business community in Burma. Their working funds invested abroad were mainly employed in Burma. Trading was done by Syrian Christians called Nazrani Mappilas and Mohammedan merchants known as Moplahs on the West coast in South India. The Nazrani Mappilas financed internal trading activities of Travancore and Cochin. Moplahs traded in Malabar and Canara. They shared the functions of trade with the koknies who conducted banking business in the country. When the monopoly of the East India Company ended in 1857, a period of boom began for the Christians who prospered as merchants. They played the role of private bankers. The Syrian and Chaldean Christians were active in promoting Joint Stock Banks at the end of the 19th century. 3. THE MARWARI COMMUNITY: This important and fairly developed business community came from Marwari in Rajasthan. The trading and money lending cases got tremendous development in Gujarat and Rajputana on account of the famous route from Gujarat ports to the historical center of the Great Mughal state. Rajputana was torn by feudal strife during the first half of the 19th century. It was not the place for large scale trading and money lending operations. Though the local trade was good, it provided a limited scope for development. Trade remained fairly constant and it was because of this that investment crossed the borders of Rajputana. Trade spread in towns throughout the north, east and west of India, especially to the commercial centers of Bombay and Calcutta. With the rise of British commerce, these traders gradually replaced the Bengalis who served as British agents in Calcutta. The Brahmins and the Kayasthas of Bengal who operated as the British agents started tuning their attention to investments in land. They even got into 9 professions and administrative services. But the Subarna Banika, a Bengal trading community filled the void created by such an occurrence. But Bengal soon became the center for political revolution. The Britishers both rulers and traders did not

RAMB
- 10 -

ENTREPRENEURSHIP BMS SEM VI approve of this. Wherever possible, they tried to replace a Bengali by someone who proved to be more dependable. The Rajasthani traders tried to be more co-operative than the Bengali Commercial castes. It is because of this that the Bengali names in business are relatively un important and where they occur; they mostly represent the professional agent class and not the indigenous trading class. Besides the above trading, money- lending communities that could be regarded as the source of entrepreneurs in India. There were the Bhatias and Lohanas. These communities carried out local trade and were spread all over the country. The Khatris a community that trade not only in Punjab but also in Afghanistan, Central Asia etc. has also been a source of entrepreneurs. In Maharashtra the contribution of Yajurvedi Brahmins and the Chitapavan Brahmans who took active part in trading, money lending ad indigenous banking cannot be forgotten. The above was on account of the origin of entrepreneurs in India.

CAUSES OF SLOW GROWTH OF ENTREPRENEURSHIP IN INDIA

Entrepreneurship developed only in the beginning of the 19th century and though the base for industrialization had been laid a century ago. The following be the main reasons, which could be responsible for lack of initiative and entrepreneurial spirit among the Indians. 1. Caste System: - This decided occupation for members from each caste. The altitudes were restrictive and therefore there were no changes of accumulating wealth and promoting production. 2. Agriculture: - Agriculture was the main occupation. Farmers and cultivators were always in the clutches of the money lenders. The zamindars, nawabs and rajahs exploited the laborers. They spent money on enjoyment and luxury and never risked money in industry. Banking and commercial system was also absent so even if there were savings, they could not be utilized for productive use. 3. Educational System: - Talented young men were prepared to take white collared jobs or join government or professional services. Many were attracted towards politics. The result was that very few young men got attracted towards becoming efficient, industrialists, technicians, managers etc.

RAMB
- 11 -

ENTREPRENEURSHIP BMS SEM VI 4. Colonial Rules: - The British rulers adopted discriminatory policy Rich Indian businessman had special connections with foreign rulers and both satisfied their self interests. Even the few insurance and banking services catered to the needs of some rich Indian businessman, Britishers in India did also not encourage Industrialization. 5. Managing Agents: - There were just a handful of people who were known to be having managerial skills. On common basis, these agents would lend their skills to some top industries. Industrialists could not manage their own units. They were always at the mercy of the managing agents who filled their pockets with big chunks of the companies profits and took full advantage of Indian industrialists till the managing agency system was abolished in 1970. 6. Joint Family System: - Younger members of the family always depended on the Head who never gave any kind of independence or encouraged units other than family business ones. A number of young men were discouraged from diversifying from family business and doing something new and different. 7. Religious attitude: - Indians were very religious mi9nded. They gave more time to religion than to earning material wealth. Religion got priority over business. Some religions even condemned excess earnings and indulgence I in comforts. Industrial activity was, therefore, given secondary consideration by the religious Indians. 8. Mindset: - The mindset of the average Indian was never entrepreneurial. Our religious literature and epics told us to have patience and to keep on working without expecting the fruits of labor. This also killed the drive and desire to get into entrepreneurial activities. 9. Recognition by the society: - In earlier days, the heroes India were the social reformers and the politicians. Now it is the era of sportsmen, models and film stars. It is sad that successful or the struggling entrepreneurs have never been recognized as heroes. Entrepreneurial activity did not get due importance in the India society. 10. Family Background: - Empirical studies have shown that a good number of entrepreneurs come from families with industrial backgrounds. Unfortunately, only a few entrepreneurial communities in India made entrepreneurial contribution. These communities could also not make headway in the entrepreneurial field on account of the colonial rule, lack of infrastructure and other facilities. Entrepreneurship development could only take place after independence in India.

RAMB

- 12 -

ENTREPRENEURSHIP BMS SEM VI

FAMILY BUSINESS IN INDIA

In India, family business accounts for about 70prcent of the total sales and net profits of the biggest 250 private sector companies. Big families have carved up the big industries. In vehicles, for example, the Tatas make Lorries, the Birlas make ambassador cars, the Bajaj family makes two wheelers and the Mahindras make jeeps. They diversified into any business where they could get a permit to operate. Borrowing, mainly from public sector institutions, was easy, and company law makes it simple to control subsidiaries through very small shareholdings. The Tata Empire, for example, embraces some 70 companies, making everything from tea to watches in which the parent companys average stake is rarely above 15 percent. Entrepreneurship is not just a way to- increase the level of innovation and productivity of organizations, although it will do it. More importantly, it is a way of initiating vast business so that work becomes a joyful expression of ones contribution to society. The Indian entrepreneur, intrapreneur and/or manger of the 90s have to be molded in psycho- philosophy rooted in the Indian context and values. The crisis in business is spiritual says Prof. Sitangshu Kumar Chakraborty, All management ideas till now have been external directed paradigms, developing behavior, skills, not character, and values. But meaning and richness must flow from mind to work, not the other way. We need a fundamental shift from the current reductionism, fragmentize and materialistic paradigm to one which recognizes consciousness and spirit as the right approach. The concept of entrepreneur and entrepreneurship incorporates basic qualities of leadership, innovation, enterprise, hard work, vision and maximization of profits. All his socio-economic, organizational and society and the community. He is committed to progress. He is a catalytic agent of development and change. Personal satisfaction and monetary rewards are blended with social betterment and welfare of mankind. In August 1992, with their combined savings of Rs. 25,000, Alka and Anupam Joshi launched premier clothing as an export- oriented unit. The premier clothing has been licensed to market, for the first time, The Disney babies range of products in India. Having several information mail- order companies, not to mention store chains, in the bag isnt enough for Joshi. Now, hes planning a move into the booming readymade shirts business. As always, Joshi plans to hedge his bets: hes talking to some foreign companies about starting off by producing shirts

RAMB

- 13 -

ENTREPRENEURSHIP BMS SEM VI for them. Thats clearly part of his philosophy of manufacturing for a readymade market. And, as in the case of the Disney babies line, to a ready- made mindset, either ways, its a premier strategy. Chandan Sumaya look plunge in 1985 armed with only a passion for cars borrowing Rs 30,000 from his mother to float Kent. This name he chose because it rhymed with rent and had an international ring- car. Apparently, he fell in love with the business while helping his uncle run one. Working out of his home in Bombays Nepean Sea Road, Sumaya installed a desk and a telephone in the front half of his garage; the car took up the rest. Only by the end of the second year could he afford to invest in two more Ambassadors cars. He has invested in a fleet of 136 cars and concentrates on the corporate sector, where they are market leaders. Kent Cars is now poised to drive into the national market place through the franchising route. Whether or not he does as well in these cities as he is in Mumbai, Chandan Sumaya has driven a long way from the home garage he started from. And thats the spirit of Kent.

STAGES OF EVOLUTION OF ENTREPRENEURSHIP

The evolutionary process of entrepreneurship activities may be divided into the following broad stages: 1. Hunting Stage: - The primary stage of the evolution of the economic life of man was hunting stage. Wants were limited and very few in numbers. The family members themselves satisfied problems of food, clothing and shelter. Producers were the consumers also. Robinson Crusoe, living in the deserted island, satisfying his own requirements had no knowledge of business. People in some parts of Africa and India still lead this type of life. In this stage problems of production and distribution were not complexed since wants were simple and limited. 2. Pastoral Stage: - With the progress of mankind gradually mental understanding developed and people started realizing that instead of killing animals, they should breed and rear them. Thus cattle breeding encouraged the use of milk, and they had to think in terms of grazing areas for their cattle. The surplus milk, meat and other related products were spared of exchange. This stage can be termed as the first stage of economic development and the beginning of commerce. 3. Agricultural Stage: - In search of grazing areas, they further realized that they should grow plants as food for animals. They started testing some grain products and slowly developed a taste in plants and the land was used for cultivation. Groups of persons started living together on their

RAMB

- 14 -

ENTREPRENEURSHIP BMS SEM VI agricultural fields, which were subsequently converted into small villages with their farms. Free exchange of goods was started and the activities were also divided to the extent of division of labor at the village level to complement the needs of each other. Initially each village was selfsufficient, but later they began small trading activities on barter basis. 4. Handicraft Stage: - In the agricultural stage, people started learning the use of cloth made of cotton products, and they developed the segments of the workers for different activities. Cottage scale setup was developed at the village level to nearby villages, and in exchange they brought requirements either to consume themselves or for their village friends. Since the demand for gold coins, silver coins, skin and hide etc increased the activities of cobblers, gold smiths, and blacksmiths, laborers also rapidly increased, and caste system was also formed on the basis of activities they did. Everybody selected their job according to their own choice and taste. 5. Present Industrial Stage: - The use of mechanical devices and the commonly acceptable form of monetary system accelerated the growth of entrepreneurship activities. The progress of science and the increase in the means of transportation and communication enabled to travel widely and the markets were developed in the country and abroad.

QUALITIES OF ENTREPRENEURSHIP
The qualities that contribute to the success of an entrepreneur are as follows: 1. Risk Taking: - Entrepreneurs are moderate risk takers. They enjoy he excitement of a challenge, but they do not gamble. Entrepreneurs avoid low- risk situations because there is a lack of challenge. They avoid high risk situations because they want to succeed. They like achievable challenges. They do not tend to like situations where the outcome of a quest depends upon a chance and not on their efforts. They like to influence the outcome of their quest by putting in more efforts and then experiencing a sense of accomplishment. A risk situation occurs when an entrepreneur is required to make a choice between two or more alternatives whose potential outcomes are not known and must be evaluated in advance, with limited information. A risk situation involves potential gain and potential loss. As the size of the business expands the problems and opportunities become more numerous and complex. Business growth and development require an entrepreneur not to be afraid of taking decisions and certain risks. Most people are afraid to take risks because they want to be safe and avoid failure. An entrepreneur always takes a calculated risk and is not afraid of failure.

RAMB
- 15 -

ENTREPRENEURSHIP BMS SEM VI

2. Self- Confidence: - A man with self confidence has clear thoughts and well- defined goals to achieve in his life. An entrepreneur gets into business or industry with a high level of self- confidence. He is able to evaluate his competencies and capabilities in a realistic manner. He can set realistic and challenging goals. He is confident of achieving these goals. He possesses a sense of effectiveness, which ultimately contributes to success of his venture. He puts forward his case confidently and gets needed help from concerned agencies/ authorities. 3. Optimist: - An entrepreneur is able to visualize the hidden opportunities in the environment and translate them into business realities. An entrepreneur exhibits a positive and optimistic attitude towards such opportunities. The entrepreneur approaches his task with the hope of success and not with a fear of failure. In the process of accomplishing his task he may also fail but the failure experience does not change his thinking. He is always an optimist in his outlook. The positive outlook develops a drive in the entrepreneur to attempt new things and innovate. 4. Need for achievement: - The need to excel known as achievement is a critical factor in the personality of an entrepreneur. People with high need for achievement have desire for success in competition with others or with a self- imposed standard of excellence. They try to accomplish something new and try to innovate themselves in longterm goals. They try to accomplish challenging tasks. They know their own strengths and weaknesses, the facilitating factors and constraints in the environment and the resources needed to accomplish their tasks. If the objectives are accomplished they feel elated. 5. Need for independence: - The need for independence is the prime characteristic that has driven the entrepreneurs to start their own business. These entrepreneurs do not like to be controlled by others. They do not wait for direction from others and choose their own course of action. They set their own challenging goals and put efforts to achieve this goal. The independence provides opportunity for trying out new ideas and helps them achieve their goals. 6. Creativity: - Entrepreneurs are highly creative people. They always try to develop new products, processes or markets. They are innovative, flexible and are willing to adopt changes. They are not satisfied with conventional and routine way of doing things. They involve themselves in finding new ways of doing the things for the better.

RAMB
- 16 -

ENTREPRENEURSHIP BMS SEM VI 7. Imaginative: - Successful entrepreneurs possess a high degree of imagination and foresightedness. Entrepreneurs have a great vision. Knowing the present and the past the entrepreneur is able to predict the future events the business more accurately than others. It is because of their visionary nature and power of imagination that helps them in anticipating problems and evolving actions strategies for such problems. 8. Administrative ability: - A successful entrepreneur is always a good administrator. He knows the art of getting things done by other people without hurting their feelings of self- respect. He has strong motivation towards the achievement of a task and puts in necessary efforts in getting things done by others. 9. Communication ability: - Communication ability is the ability to communicate effectively. Good communications also means that both the sender and the receiver understand each other and are being understood. An entrepreneur who can effectively communicate with customers, employees, suppliers and bankers will always succeed in their business. 10. Clear objectives: - An entrepreneur has clear objectives as to the exact nature of the business, the nature of the goods to be produced and the subsidiary activities to be undertaken. A successful entrepreneur has the objective to establish the product to make profit or to render social service. 11. Business Secrecy: - An entrepreneur who is successful always guards his business secrets. Leakage of business secrets to trade competitors is a serious matter; therefore an entrepreneur should carefully guard it. An entrepreneur must be able to make a proper selection of his assistant since most of the time it is the assistant who leaks the trade secret. 12. Emotional stability: - The most important personality factors contributing to the success of an entrepreneur are emotional stability, personal relations, consideration and tactfulness. An entrepreneur must maintain good relations with the customers if he wishes to enjoy their continued patronage. He must also maintain good relation with his employees, whom he shall motivate to perform their jobs at a high level of efficiency. An entrepreneur who maintains good human relations with customers, employees, suppliers and the community has a better chance to succeed in his/ her business. 13. Open-mindedness: - Open- mindedness means a free and frank approach in accepting ones own errors and change for the better. An

RAMB

- 17 -

ENTREPRENEURSHIP BMS SEM VI entrepreneur must be willing to learn from his past experience, mistakes and moulds himself for better. 14. Technical knowledge: - Technical knowledge implies knowledge about the product, process or technology used in manufacturing. An entrepreneur who has reasonable level of technical knowledge will always be successful. Technical knowledge is easy to acquire if the entrepreneur tries hard to acquire it. 15. Patience: - Patience means ability to wait. Patience also means doing the work and waiting for the result. A certain amount of patience is necessary in any type of vocation. An entrepreneur should not wait for actions but can certainly wait for result for his efforts. 16. Hard working and energetic: - Ability and willingness to work hard is an important quality of an entrepreneur. A person having physical and mental stamina to cope with the hard work and human relation is fit to become a successful entrepreneur. By carrying out well- planned and systematic work, success is always the end result. 17. Good organizer: - Entrepreneurs are good organizers of resources like men, machines, materials and money needed to start and run the business smoothly. They can convince the employees, investors, customers and co- ordinate the activities of individuals and groups in the accomplishment of business objectives. An entrepreneur works like a coordinating force among the resources, mould and manages them effectively.

ENTREPRENEURIAL FUNCTIONS
An entrepreneur is said to perform the following functions: 1. Assumption of risk: - Risk bearing or uncertainty bearing is the most important function of an entrepreneur which he tries to reduce by his initiative, skill and good judgment. 2. Business decisions: - The entrepreneur has to decide a. To enter the industry this offers him the best prospects b. To produce goods that he thinks will pay him the most c. To employ those methods of production which seem to him the most profitable. d. To effect suitable changes in the size of the business, its location that are needed for the development of his business.

RAMB
- 18 -

ENTREPRENEURSHIP BMS SEM VI

3. Managerial Functions: - The entrepreneur performs the managerial functions such as a. b. c. d. e. Formulating production plans Overseeing finances Dealing with the purchases of raw materials Providing production facilities Organizing sales

In large establishments these management functions are delegated to professional managers an entrepreneur performs many useful functions such as v Undertakes a venture v Assumes risk and v Earns profits v Identifies opportunities to start business either as a manufacturer or a distributor. The entrepreneurship exists in every field of economic endeavor. Entrepreneurship has also been developed in the trading sector. A manufacturing entrepreneur demonstrates his entrepreneurial talents by bringing out new products while a trading entrepreneur performs his entrepreneurial functions in creating demand for the business he deals.

Deciding the Project. Risk Taking Innovation

Raising Finance

Planning Production Managing Enterprise Earning Profits

Entrepreneur
Fig.2 Entrepreneurial function

RAMB
- 19 -

ENTREPRENEURSHIP BMS SEM VI

CLASSIFICATION OF ENTREPRENEURS
The entrepreneurs have been broadly classified according to v v v v v Types of business Use of professional skill Motivation Growth Stages of development

ENTREPRENEURS ACCORDING TO TYPES OF BUSINESS v Business entrepreneurs are those individuals for a new product or service and then translate the same into business reality. Tap both production and marketing resources to develop a new business opportunity. Setup big establishment or small unit such as printing press, textile processing house, advertising agency, readymade garments or confectionery. In majority of cases, entrepreneurs are found in small trading and manufacturing business. Entrepreneurship flourishes when the size of business is small. Industrial entrepreneurs are essentially a manufacturer who identifies potential needs of customers and products or service to meet the marketing needs. He should have the ability to convert economic resources and technology into a profitable venture. Corporate entrepreneur is an individual who demonstrates his innovative skill in organizing and managing corporate undertaking. He plans, develop and manage a corporate body. Agricultural entrepreneur are the ones who undertake agricultural activities such as raising and marketing of crops, fertilizers and other inputs of agriculture. They are motivated to improve agriculture through mechanization, irrigation, and application of technologies for dry land agricultural products.

ENTREPRENEURS IN TECHNOLOGY v Technical entrepreneur is the one who is essentially a craftsman. He develops improved quality of goods because of his craftsmanship. He concentrates more on production than on marketing. He demonstrates his innovative capabilities in matter of production of goods and rendering of services.

RAMB
- 20 -

ENTREPRENEURSHIP BMS SEM VI v Non- technical entrepreneur are those who are not concerned with the technical aspects of the product in which they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their business. Professional entrepreneur is interested in establishing a business but does not have interest in managing or operating it once it is established. He sells out the running business and starts another venture with the sales proceeds.

ENTREPRENEUR AND MOTIVATION An entrepreneur is motivated to achieve or prove his excellence in job performance. He influences others by demonstrating his business acumen. v Pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes entrepreneurial activity for his personal satisfaction in work, ego and status. Induced entrepreneur is one who is induced to take up an entrepreneurial task due to policy measures of the government that provides assistance, incentives, and concessions and other facilities to start a venture. Enter business due to financial, technical and other facilities provided to them by the state agencies to promote entrepreneurship. Motivated entrepreneur: they come into being because of the challenge involved in developing and marketing a new product for the satisfaction of consumers. If the product succeeds, the entrepreneur is further motivated for launching of newer products. Growth and entrepreneur are those who take up a high growth industry which has substantial growth prospects. Super growth entrepreneurs are those who show enormous growth or performance in their venture.

ENTREPRENEUR AND STAGES OF DEVELOPMENT v First generation entrepreneur is the one who starts an industrial unit by his innovative skill. He is the one who combines different technologies to produce a marketable product or services. Modern entrepreneur is one who undertakes those ventures which go well with the changing demand in the market. He undertakes those ventures that suit the current market needs.

RAMB
- 21 -

ENTREPRENEURSHIP BMS SEM VI

Classic entrepreneur is one who is concerned with maximizing the economic returns at consistent level. He is concerned more about the survival of the firm with or without an element of growth. Apart from the above, there are entrepreneurs who can be classified into innovative and imitative categories. Innovating entrepreneurs are generally aggressive in collecting information, analyzing and experimenting attractive possibilities into practice. They are quick to convert old established products or services by changing their utility, their value, their economic characteristics into something new, attractive and utilitarian. They can see the opportunity for introducing a new technique of production process or a new commodity or a new service or even the reorganization of an existing enterprise. They are very commonly found in developed countries while there is dearth of such entrepreneurs in underdeveloped countries. They are always creative and bringing in innovation in their work. Imitative entrepreneurs are ready to adopt and are more flexible in imitating techniques developed by others. They exploit opportunities as they come and are mostly on a small scale. He is more of an organizer of factors of production than a creator. In the context of a poor country, he is definitely a change agent and hence he is important in underdeveloped countries.

DIFFERENCE BETWEEN
A. ENTREPRENEUR & MANAGER

No. 1.

ENTERPRENEUR

MANAGER

The main motive of an The main motive of a manager is to entrepreneur is to start a venture render his services in an enterprise by setting up an enterprise. He already set up by someone else. understands the venture for his personal gratification. An entrepreneur is the owner of A manger is the servant in the the enterprise. enterprise owned by the entrepreneur.

2.

RAMB
- 22 -

ENTREPRENEURSHIP BMS SEM VI 3. An entrepreneur being the owner A manger is a servant does not bear of the enterprise assumes all risk any risk involved in the enterprise. and uncertainty involved in running the enterprise. The reward an entrepreneur gets A manger gets salary for the services for baring risks involved in the rendered by him in the enterprise. enterprise is profit which is highly uncertain. Entrepreneur himself thinks over what and how to produce goods to meet the changing demands of the customers. Hence, he acts as an innovator also called as a change agent. An entrepreneur needs to possess qualities and qualification like high achievement motive, originality in thinking, foresight, riskbearing, ability and soon. A manager simply executes the plan prepared by the entrepreneur. Thus, a manger simply translates the entrepreneurs ideas into practice.

4.

5.

6.

On the contrary a manger needs to possess distinct qualifications in terms of sound knowledge in management, theory and practice.

B. ENTREPRENEUR AND ENTREPRENEURSHIP

NO 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

ENTREPRENEUR Refers to a person Is a visualiser Is a creator Is an organizer Is an innovator Is a technician Is an initiator Is a decision- maker Is a planner Is a leader

ENTREPRENEURSHIP Refers to a process Is a vision Is a creation Is an organization Is an innovation Is a technology Is an initiative Involves decision making Involves planning Involves leadership

RAMB
- 23 -

ENTREPRENEURSHIP BMS SEM VI

C. ENTREPRENEUR AND ENTERPRISES

Entrepreneur is the fourth factor of enterprise

ENTREPRENEUR

LABOUR

ENTERPRISE

CAPITAL

LAND
The entrepreneur and enterprise are Inter- linked. Enterprise is an offshoot of an entrepreneur. Its success is dependent on the entrepreneur.

D. ENTREPRENEUR AND ADMINISTRATOR

No. 1.

ENTREPRENEUR

ADMINSTRATOR

Entrepreneurship are associated Administrations are associated with connotations of enterprise, with notions of organization, opportunism, individuality planning, professionalism, rationality and predictive management processes. The entrepreneur of a small business organization needs primarily to perform activities relevant to adaptive management process, activities that enable him to exploit the advantages he has in being a small enterprise. An entrepreneur puts emphasis on the entrepreneurial activities of management process, so his hold attitudes related to entrepreneurial orientation. The administrator in a large firm is primarily concerned with those activities relevant top predictive management processes that are with activities related to prediction and control.

2.

3.

An administrator of a large organization would hold attitudes related to the administrative orientation of the management process.

RAMB
- 24 -

ENTREPRENEURSHIP BMS SEM VI

E. ENTREPRENEUR & INTRAPRENEURSHIP

No. 1. 2.

ENTREPRENEUR

INTRAPRENEURSHIP

An entrepreneur is independent An intrapreneur is dependent on in his operations the entrepreneur i.e. the owner An entrepreneur himself raises The intrapreneur does not raise funds required for the funds. enterprise. Entrepreneur bears the involved in the business. risk An intrapreneur does not fully bear the risk involved in the enterprise.

3.

4.

An entrepreneur operates from An intrapreneur operates from outside. within the organization itself.

END OF MODULE I
RAMB
- 25 -

ENTREPRENEURSHIP BMS SEM VI

MODULE II

THEORIES OF ENTREPRENEURSHIP
Knight on the Role of Uncertainty Schumpeter on Innovation Mc Clellands Achievement and Motivation theory Peter Druckers views on Entrepreneurship

RAMB
- 26 -

ENTREPRENEURSHIP BMS SEM VI

KNIGHT ON THE ROLE OF UNCERTAINTY

Knight identifies the entrepreneur as a recipient of pure profit. Profit is the residual income available after all contractual payments have been deducted from the revenues of the enterprise. It is the reward to the entrepreneur for bearing the costs of uncertainty. Knight identifies uncertainty with a situation where the probabilities of alternative outcomes cannot be determined either by a priori reasoning or by statistical interference. A priori reasoning is simply irrelevant to economic situations. Statistical interference is impossible because the situation involves a unique event. It does not belong to a larger population of identical events. In particular there is no precedent for it, so that no assessment of probability can be made on the basis of relative frequency. This is the foundation for Knights distinction between uncertainty and risk. Uncertainty is a ubiquitous aspect of business decisions because production takes time. Decisions on inputs must be made now in order to create output for the future. Households as factor owners demand spot payment for their services. At the same time they are unwilling to commit themselves on future demand for the product because they anticipate that unforeseeable changes will occur. But the consumer does not even contract for his goods in advance, generally speaking. A part of the reason might be the consumers uncertainty as to his ability to pay the end of the period, but this does not seem to be important in fact. The main reason is that he does not know what he will want, and how much, and how badly. Consequently, he leaves it to producers to create goods and hold them ready for his decision when the time comes. The clue to the apparent paradox is of course in the law of large numbers. The consolidation of risks (or uncertainties). The consumer is to himself only one to the producer he is a mere multitude in which individuality is lost. It turns out that an outsider can foresee the wants of am multitude with more ease and accuracy than an individual can attain with respect to his own. This phenomenon gives us the most fundamental feature of the economic system, production for a market. Knight is mainly concerned to show how markets, together with institutions such as the large corporation, contribute to specializing uncertainty-bearing in the hands of those best equipped to make decisions under uncertainty. The main quality required for making production decisions is foresight they have, and competition ensures that individuals

RAMB
- 27 -

ENTREPRENEURSHIP BMS SEM VI with the greatest degree of foresight (relative to other abilities) specialize in making production decisions. However, it does not follow that individuals with foresight will become selfemployed and make decisions on their own behalf. They may instead become managers of a large firm. Knight argues that business uncertainty can be reduced through consolidation. Consolidation is to uncertainty what insurance is to risk: It is a method of reducing total uncertainty by pooling individual instances and allowing each individual to hold a share of the pool. It is widely recognized today that an individuals exposure to uncertainty can be reduced through portfolio diversification in the equity market. Knight recognizes this possibility which he calls diffusion but he does not accord it much prominence as a vehicle for the reduction of uncertainty. He believes that uncertainty is reduced mainly through the pooling of uncertainties by the large firm. The gains in uncertainty- reduction from large scale organization are, in Knights view, quite considerable. So much so, that the most important uncertainties relate not to producing for a market itself, but to the selection of suitable mangers to take production decisions. Once the firm has recruited a person with foresight much of the uncertainty in producing of a market is eliminated. The crucial decisions made within the large firm are decisions about personal recruitment. The pure profit generated by a firm is compensation to people for bearing uncertainty that they have delegated decisions to the wrong sort of person. Knight does not seem to anticipate that there will be much difficulty in ensuring that managers with foresight exercise it properly on the stockholders behalf. The moral hazard problem is negligible. Presumably, because close supervision of the manager is possible. Much greater moral hazard arises with the directors of the firm who recruit the managers and supervise them on the stock holders behalf. The unavoidable moral hazard involved in delegating direction means that directors cannot possibly be fully insured against the consequences of their decisions. They must operate under profit related incentives and so effectively they must become stock holders in the firm. Thus, directors who make decisions under uncertainty also bear the consequences of those decisions and are ipso facto recipients of pure profit. Some people have good judgment of other peoples abilities and others do not. But no one can be certain of his or her own judgment of other peoples abilities. As a result, confidence in his own judgment is perhaps the most important characteristic of the entrepreneur. This has to be coupled with a low version to risk, as reflected in a disposition to back up his judgment with his own capital. The elasticity of supply of self- confident people is, in Knights view, the single- most important determinant of the level of profit and of the number of entrepreneurs.

RAMB
- 28 -

ENTREPRENEURSHIP BMS SEM VI

The income of nay particular entrepreneur will, in general, tend to be larger (i) as he himself as ability and good luck but (ii) perhaps more important , as there is in the society a scarcity itself- confidence combined with the power to make effective guarantees to employees. The abundance or scarcity of mere ability to mange business successfully exerts relatively little influence on profit. The main thing is the rashness or timidity of entrepreneurs (actual and potential) as a class in bidding up the prices of productive services. Entrepreneurs income, being residual, is determined by the demand for these other services, where demand is a matter of the self- confidence of entrepreneurs as a class, rather than upon a demand for entrepreneur services in a direct sense. We must see at once that it is perfectly possible for entrepreneurs as a class to sustain a net loss, which would merely have to be made up out of their earnings in some other capacity. This would be the natural result in a population combining low ability with high courage. On the other hand, if men generally judge their own abilities well, the general rate of profit will probably be low, whether ability itself is low or high, but much more variable and fluctuating for a low level of real capacity. The condition for large profit is a narrowly limited supply of high- grade ability with a low level of initiative as well as ability. Knights analysis exhibits very clearly the difficulties in theorizing about entrepreneurship, and in particular the problems of structuring the analysis in a coherent way. As a result, Knights views have been widely misinterpreted in the past. Many parts of the present work are simply a reformulation of ideas first presented by Knight. The concepts of probability and judgment are slightly different but the basic view of the way that market system allocates judgmental decision- making to entrepreneurs is the same both in cases.

SCHUMPETER ON INNOVATION
Schumpeter, perhaps more than any other writer, is very explicit about the economic function of the entrepreneur. The entrepreneur is the prime mover in economic development and his function is to innovate or to carry out new combinations. Five types of innovation are distinguished the introduction of new good (or an improvement in the quality of an existing good); the introduction of anew method of production; the opening of an new market, in particular, a export a market in a new territory the conquest of a new source of supply of raw materials or half- manufactured goods and the creation of a new type of industrial organization, in particular, the formation of a trust or some other type of monopoly.

RAMB
- 29 -

ENTREPRENEURSHIP BMS SEM VI

Anyone who performs this function is an entrepreneur whether he is at independent businessman or a dependent employee of a company such as a manager or a director. Not all businessmen are entrepreneurs; the typical entrepreneur is the founder of a new firm rather than the manager of an established one. Schumpeter is adamant that the entrepreneur is not a risk- bearer. Risk bearing is the function of the capitalist who lends his funds to the entrepreneur. The entrepreneur bears risk only in so far as he acts as his own capitalist. Unlike Knight, Schumpeter does not perceive much problem of moral hazard for a capitalist lending to an entrepreneur. Entrepreneurs spend a lot of heir time doing non-entrepreneurial things: The entrepreneur of earlier times was not only as a rule a capitalist too; also he was also often- as he is still today in the case of small concerns- his own technical expert, in so far as a professional specialist was not called in for special cases. Likewise he was (and is) often his own buying and selling agent, the head of his office, his own personal manager, and sometimes, even though as a rule he, of course employed solicitors, his own legal advisor in current affairs. And it was performing some or all of these functions that regularly filled his days. The carrying out of new combinations can no more be a vocation than the making and execution of strategically decisions, although it is this function and not his routine work that characterizes the military leader. Therefore, the entrepreneurs essential function must always appear mixed with other kinds of activity which as a rule must be much more conspicuous than the essential one. Hence, the Marshallian definition of the entrepreneur, which simply treats the entrepreneurial function as management in the widest meaning, will naturally appeal to most of us. We do not accept it, simply because it does not bring out what we consider to be the salient point and the only one which specifically distinguishes entrepreneurial from other activities. The climate most favorable to innovation is when the economy is approaching in equilibrium for then the future seems relatively easy to foresee. The first innovations made by the most talented entrepreneurs prove successful and this encourages less talented entrepreneurs to follow suit in a swarm. Because they are adapting ideas which are pioneers have already tried out the risks that the capitalists perceive in backing the less talented entrepreneurs are relatively low. A wave of innovation follows which then, for a variety of reasons quickly recedes. Schumpeter believed that talented entrepreneurs were very scarce breed. Their scarcity lays not so much in their alertness or their professionalism as in

RAMB

- 30 -

ENTREPRENEURSHIP BMS SEM VI their psychology. While entrepreneurs are rational economic men, their objective is not to the pursuit of consumption in the usual sense of that word. The motivating factors are three fold: First of all there is the dream and the will to found a private kingdom usually though not necessarily also a dynasty. The modern world really does not know any such positions but what may be maintained by industrial or commercial success is still the nearest approach to medieval lordship possible to modern man. Its fascination is especially strong for people we have no other chance of achieving social distinction. Then there is the will to conquer- the impulse to fight, to prove one superior to others, to succeed for the sake, not of the fruits of success itself. From this aspect economic action becomes akin to sport- there are financial races, or other boxing- matches. Finally, there is the joy of creating of getting things done or simply of exercising ones energy and ingenuity. Our type seeks out difficulties, changes in order, delight in ventures. This group of motives is the distinctly anti-hedonist among the three. The precursor to innovation is invention, which is a field of imaginative activity outside the province of the entrepreneur. The process of invention forms no part of Schumpeters theory, but one of the attractive features of the theory is how easily the dynamics of invention can be grafted on it. Schumpeter recognized that invention could be an endogenous process stimulated by the desire to alleviate pressing scarcities, but his attitude is basically to regard it as autonomous. The possibility of grafting on a theory of invention may be illustrated as follows. It is often suggested that modern economic growth related to the innovation of the mass market. Multipurpose goods, such was the typical consumer durable. The innovation of these goods often depends critically upon the invention of components from which they can be made up. Innovation of a new multi-purpose good is possible when the design of each of the constituent components has involved sufficiently providing the requisite standards of compactness, reliability and performance. If an autonomous random process of invention generates improvements in component design then there will come a critical point at which mass production of themulti- purpose good becomes viable. This is the point at which each of the components has jus evolved to the requisite standard. This may trigger of a major innovation, such as the railway or the motorcar, whose repercussions are sufficiently widespread to stimulate a wave of subsidiary innovations. This wave of innovations uses up the outstanding stock of

RAMB
- 31 -

ENTREPRENEURSHIP BMS SEM VI inventions, which were pending adoption and lead to a subsequent fall in invention until the stock of inventions builds up again to a threshold level. Schumpeter himself was very cautious about relying upon major innovation and their consequent economies and spins off as an explanation for the clustering of innovation observed during the business cycle. Basically, he regarded wave of innovation and their creative destruction as a basic phenomenon of capitalist economic development so much that he dated the origin of capitalist from the first appearance of these waves. He recognized that the waves could take different forms in different times and places. He was concerned to offer analytical frame work for the interpretation of varied historical experience rather than to formulate a narrow theory to which all historical experience was alleged to conform.

MC CLELLANDS THEORY OF ACHIEVEMENT AND MOTIVATION

David McClelland has developed an achievement motivation theory. According to this theory, an individuals need for achievement refers to the need for personal accomplishment. It is the drive excel, to strive for success and to achieve in relation to a set standards. People with high achievement motive like take calculated risks and want to win; they like to take on personal responsibility for solving problems and want to know how well they are doing. High achievers are not motivated by money; but instead employ money as a method of keeping sure of the achievements. Such people strive for personal achievement rather than the rewards of success. They want to do something better and more efficiently than has been done before. Need for achievement is simply the desire to do well not so much for the sake of social recognition or prestige but for the sake of an inner feeling of personal accomplishment. It is the need for achievement that motivates people to take risk. People with high need for achievement behave in an entrepreneurial way. Need for achievement stimulates the behavior of a person to be an entrepreneur. The following psychological factors contribute to an entrepreneurial motivation: 1. Need for achievement through self- study, goal setting and interpersonal support. 2. Keen interest in situations involving moderate risk. 3. Desire for taking responsibility.

RAMB

- 32 -

ENTREPRENEURSHIP BMS SEM VI 4. 5. 6. 7. Concrete measures of task performance. Anticipation of future responsibilities. Energetic or novel instrumental activity Organizational skills, etc.

Some societies produce a large percentage of people with high need for achievement. Entrepreneurship becomes the link between need achievement and economic growth. Mc Clelland considers the need for achievement to be most critical to a nations economic development. He held that a strong inner spirit in individuals to attain is a measurable variable arising from a need, which the individual develops mainly in childhood and seeks to satisfy throughout his life. This inner spirit which he called need for achievement, if higher, would produce more energetic entrepreneurs capable of generating rapid economic development. High need for achievement or ambition motivates an entrepreneur to take risks, work hard, find new things, save more, and reinvest the savings in industry and so on. The limited empirical evidence supports the hypothesis that need for achievement contributes to entrepreneurial success. Mc Clelland rated the achievement motivation of different countries on the basis of ideas related to need for achievement contained in the childrens stories. This has come to be known as n-factor rating. He established a correlation between n- factor rating and the prosperity of the countries a generation ahead. The criterion on n- factor rating was the inherent concern for achievement or non- induced achievement motivation. Mc Clelland found that achievement motivation was lower among people under developed countries than among these of developed nations. Even in USA only about ten percent of the people were actually high achievers. It is the level of aspirations or ambitions that explains the lack of enterprise underdeveloped countries. Ambition is the level of all motives and aimless life a goal- less game. Ambitions motivate men, activate them, broaden their vision and make life meaningful. Ambition builds up achievement pressure in the individual and provides the base for Mc Clellands n- factor. Ambition is the lever of all motives. The initiative intentions of an individual are directed by his ambitions. It is the ambition electrifies mans actions. Therefore, what matters are not merely the people are their aspirations and the means to achieve the goals? Therefore, it is the duty leaders and teachers to build up ambitions into the minds of the young people however ambitions differ greed and windfall. Greed results in disaster a windfall makes one speculator .Sometimes personal ambitions may come in way of family aspirations or

RAMB
- 33 -

ENTREPRENEURSHIP BMS SEM VI national aspirations. Unfulfilled ambitions passed to the next generation who may chase the goal with redoubled effort and vigor Thus, ambition nourishes achievement motivation and brings economic growth. The biggest obstacle to economic progress in countries like India is perhaps the limited ambition of people. The initiative of an individual is directed by his ambitions, which nourish the entrepreneurial spirit and bring about economic development. Hence, what matters are not merely the people and then talents but their aspirations? However, ambitions differ among individuals on the basis of environment in which they are born and brought up. Galbraith has also attributed the backwardness of many Asian and African countries to lack ambition.

PETER DRUCKERS VIEW ON ENTREPRENEURSHIP

Peter Drucker has aptly 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 practiced. 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 apply the principles of successful innovation. Systematic innovation, according to him, consists in the purposeful and organized search for 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 makes great demands on diligence, persistence and commitment. 2. To succeed, innovation must build on their strengths 3. Innovation always has to be closed to the market focused on the market, indeed market- driven. Specially, systematic innovation means monitoring sources for innovative opportunity. The first three sources lie within the enterprise, whether it be a business or a public service institution or within an industry or service sector. They

RAMB

- 34 -

ENTREPRENEURSHIP BMS SEM VI 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 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 in 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, scientific and non- scientific.

END OF MODULE II
RAMB
- 35 -

ENTREPRENEURSHIP BMS SEM VI

MODULE III

BUSINESS PLAN

PROJECT MANAGEMENT Search of a Business Idea. Selection of a Product. Adoption Process. Concept of Project and its Classification. Basic Components Project. of a

Introduction Writing a Business Plan Contents of a Business Plan Failure of a Business Plan

RAMB
- 36 -

ENTREPRENEURSHIP BMS SEM VI

INTRODUCTION TO BUSINESS PLAN

The business plan is written document prepared by the entrepreneur that describes all the relevant external and internal involved in starting a venture. Entrepreneur should consult with many other sources in its preparation like lawyers, accountants, marketing consultants and engineers. Business plan could take more than 200 hrs to prepare but varies from person to person according to their knowledge and experience, with purpose about a new venture to a potential investor.

CONTENTS OF A BUSINESS PLAN

I. INTRODUCTORY PAGE
A. B. C. D. E. Name and address of business. Name(s) and address (es) of principals. Nature of business. Statement of financing method. Statement of confidentiality of report.

II. EXECUTIVE SUMMARY

Three to four pages summarizing the complete business Plan.

III. INDUSTRY ANALYSIS

A. B. C. D. Future outlook and trends. Analysis of competitors. Market Segmentation. Industry forecasts.

IV. DESCRIPTION OF VENTURE

A. B. C. D. E. Product(s) Service(s) Size of business. Office equipment and personnel. Background of entrepreneurs.

RAMB
- 37 -

ENTREPRENEURSHIP BMS SEM VI V. PRODUCTION PLAN A. B. C. D. Manufacturing process (amount subcontracted) Physical Plant. Machinery and Equipment. Names of Suppliers of raw materials.

VI. MARKETING PLAN

A. B. C. D. E. Pricing. Distribution. Promotion. Product forecasts. Controls.

VII. ORGANIZATIONAL PLAN

A. B. C. D. E. Form of ownership. Identification of partners or principal shareholders. Authority of principals. Management- team background. Roles and responsibilities of members of organization.

VIII. ASSESSMENT OF RISK

A. Evaluate weakness of business. B. New technologies. C. Contingency Plans.

IX. FINANCIAL PLAN

A. B. C. D. E. Proforma income statement. Cash Flow Projections. Proforma balance sheet Break-Even analysis. Sources and application of funds.

X. APPENDIX (contains backup material)

A. B. C. D. Letters. Market Research Data. Leases or contracts. Price lists from suppliers.

RAMB
- 38 -

ENTREPRENEURSHIP BMS SEM VI

HOW TO WRITE A BUSINESS PLAN

The business plan can take more than 200 hours to prepare, depending on the experience and knowledge of the entrepreneur as well as the purpose it is intended to serve. It should be comprehensive enough to give any potential investor a complete picture and understanding of the new venture and will help the entrepreneur clarify his or her thinking about the business. Many entrepreneurs incorrectly estimate the length of time that an effective plan will take to prepare. Once the process has begun, however, the entrepreneur will realize that it is invaluable in sorting out the business functions of a new venture. Each of the items in the contents of the business plan is explained in detail as follows. INTRODUCTORY PAGE: This is the title page or cover that provides a brief summary of the venture and should include the following things: Name and address of the company. Name of the entrepreneur(s) and telephone number. Description about the company and also stating nature of business. Stating their financial requirements. A statement of the confidentiality of the report.

EXECUTIVE SUMMARY: This is prepared after total plan is written. This about 3 to 4pages in length, this summary should stimulate the interest of the potential investor. This highlight concise and convincing manner the key point in the business plan stating the nature of the venture, financing needed, market potential, and supports to why it will succeed. INDUSTRIAL ANALYSIS: This reviews industry trends and competitive strategies. The industry outlook, including future trends and historical achievements, insight of new product developments in this industry. Competitor should be identified, with appropriate strengths and weakness described and how will it affect the new ventures potential success in the market.

RAMB
- 39 -

ENTREPRENEURSHIP BMS SEM VI DESCRIPTION OF VENTURE: It states the product produced by venture which includes patent, copyright, or trademark status. It also gives a brief idea where the business will be located including the construction of building, leased or owned. In description of venture the type of office equipment will be required whether it will be purchased or leased. He (entrepreneur) should also look at the management experience, stating their education, age, special abilities and interest. PRODUCTION PLAN: This includes details of manufacturing process a product, which is very necessary. If the manufacturing is to be carried out in whole or in part by the entrepreneur, he or she will need to describe to physical plan layout: the machinery and equipment needed to perform the manufacturing operations: raw material and suppliers names, addresses, and the terms; costs of manufacturing and any future capital equipment needs. It should also include state subcontractors name and addresses; costs of subcontracted manufacturing; raw material required for manufacturing. MARKETING PLAN: The marketing plan represents a significant element in the business plan for a new venture. Marketing planning should be an annual activity that focuses on implementing decisions related to the marketing mix variables (product, price, distribution, and promotion). Like the annual budgeting cycle, market planning has also become an annual activity and should be incorporated by all the entrepreneurs, regardless of the size or type of the business. These marketing plans must be monitored frequently, especially in the early stages of start up. ORGANIZATIONAL PLAN: The organizational plan describes the venture form of ownership i.e. whether it is proprietorship, partnership or a corporation. If the venture is a partnership, the term of partnership should be included, name of partners, term of agreement, specimen signatures of the partners etc. If it is a corporation venture than it is important to detail the shares of the stock authorized, share options, names and address, resumes of the directors and officers of the corporation. If it is an incorporation venture than it should state the principal shareholders and shares owned by them; type and number of shares stating voting or non-voting stocks have been issued, members of board of directors, check signing authority or control. The plan also states how many members are there in management team and their background, their roles and responsibilities stating their salaries, bonuses or other forms of

RAMB
- 40 -

ENTREPRENEURSHIP BMS SEM VI payment for each members of the management team. This is also helpful to provide an organization chart indicating the line of authority and responsibilities of the members of the organization. This information provides the potential investor with a clear understanding of who controls the organization and how other members will interact in performing their management functions. ASSESSMENT OF RISK: All ventures face some potential hazards, given the particular industry and competitive environment. An entrepreneur should make assessment of risk and prepare an effective strategy to deal with them. Even if these factors present no risks to the new venture, the business plan should discuss why that is the case. Contingency plans and strategies illustrate to the potential investor that the entrepreneur is sensitive to important risks and is prepared should any occur. FINANCIAL PLAN: The financial plan should include proforma income statements, break -even analysis, proforma cash flow, proforma balance sheet, and proforma sources and uses of funds. APPENDIX: It generally contains business plan generally back up material that is not necessary in the text of the document. Reference to any of the documents in the appendix should be made in the plan itself. Letters from customers, distributors or sub- contractors are examples of information that should be included in the appendix. Any documentation of information that is secondary data or primary research data used to support plan decisions should also be included. Leases, contracts or any others types of agreement that have been initiated may also are included in the appendix. It should also include price lists from suppliers and competitors may be added. CONCLUSION A business plan is a crucial component for an entrepreneur. A business plan is presented to a bank to obtain funds in the initial stage of a project. It is a monetary rule that a business plan has to be presented to a bank before the release of funds by the financial institutions. Hence, business plan is a stepping- stone for an entrepreneur in the commencement of a project.

RAMB
- 41 -

ENTREPRENEURSHIP BMS SEM VI

WHY BUSINESS PLANS FAIL?

Generally a poorly prepared business plan can be blamed on one or more of the following factors: v v v v v v Goals set by the entrepreneur are unreasonable. Goals are not measurable. The entrepreneur has not made a total commitment to the business or to the family. The entrepreneur has no experience in the planned business. The entrepreneur has no sense of potential threats or weaknesses to the business. No customer need was established for the proposed product or service.

Setting goals requires the entrepreneur to be well informed about the type of business and the competitive environment. Goals should be specific and not so mundane as to lack any basis of control. For example, the entrepreneur may target a specific market share, units sold, or revenue. These goals are measurable and be monitored overtime. In addition, the entrepreneur and his or her family must make a total commitment to the business in order to be able to meet the demands of a new venture. For example, it is difficult to operate a new venture on a part- time basis while still holding on to a full- time position. And it is difficult to operate a business without an understanding from family members as to the time and resources that will be needed. Lenders or investors will not be favorably inclined toward a venture that does not have full- time commitment. Moreover, lenders or investors will expect the entrepreneur to make a significant financial commitment to the business even if it means a second mortgage or a depletion of savings. Generally, a lack of experience will result in failure unless the entrepreneur can either attain the necessary knowledge or team up with someone who already has it. For example, an entrepreneur trying to start a new restaurant without any experience or knowledge of the restaurant business would be disastrous. The entrepreneur should also document customer needs before preparing the plan. Customer needs can be identified from direct experience, letters from customers, or from marketing research. A clear understanding of these needs and how the entrepreneurs business will effectively meet them is vital to the success of the new venture.

RAMB
- 42 -

ENTREPRENEURSHIP BMS SEM VI

PROJECT MANAGEMENT
WHAT IS A PROJECT MANAGEMENT ?
It is a specialized branch of management that includes variety of factors such as organization structure, the process of planning and control, human relations etc. It is executed as under: a) Decide the scheme of operations. b) Break down work into series of operations. c) Evolve an orderly sequence or programme. Every project has three basic attributes, namely v v v The input characteristics Output characteristics, and Social cost benefit characteristics

The input characteristics define what the project requires such as raw materials, energy, manpower, financial resources and organizational structure. The output characteristics define what the project will generate viz. production of additional goods, provision of additional services etc. The social cost benefit aspect affects the equilibrium of availabilities and nonavailabilities in an economy. Thus the benefits which will be accrued to the society have to be carefully evaluated. The project idea needs to be evaluated for its feasibility and the setting up of an enterprise should be based on careful and sound evaluation. Project appraisal brings credibility to a project and projects from in built weaknesses and consequently a healthy and viable industry comes up.

SEARCH FOR A BUSINESS IDEA

CHOOSING AN IDEA To get established as a successful entrepreneur depends to a large extent on a good idea. Idea must not only be good for the market, but good for the project and good for the entrepreneurs.

RAMB
- 43 -

ENTREPRENEURSHIP BMS SEM VI

Further, it should be manageable without much dependence on others and should provide satisfactory results to the entrepreneur. In the idea stage, suggestions for new products are obtained from all possible sources viz. customers, competitors, R&D, distributors and company employees. Essentially the entrepreneur needs to scan the environment. THE VARIOUS SOURCES ARE Personal Informal Sources a. b. c. d. e. f. g. Family Customers Friends Colleagues Salesman Social Contacts Employees

Personal Formal Sources a. Bankers b. Business Consultants

Impersonal Written Sources a. b. c. d. e. f. Magazines Journals Books Newsletter Newspapers Catalogues

Impersonal Oral Sources a. b. c. d. e. Trade Shows Seminars/ Workshops Professional Organizations Small Business Organizations Suppliers/ Dealers

One should use as many resources as possible for the purpose of scanning the environment.

RAMB
- 44 -

ENTREPRENEURSHIP BMS SEM VI

OBSERVATIONS With constant observation, entrepreneurs target potential market, consumers, products and availability raw materials and widening of market demand. Entrepreneurs get tempted to step into the field that profit potential and is socially acceptable.

SELECTION OF A PRODUCT
Very essential for being success in business venture. The various factors that influence the entrepreneur in selecting the right product are: v The import restrictions or whether the import of the selected items is banned- In case of banned item, the domestic market will offer considerable scope for selling as the demand for such a product would not be met by import. Whether the entrepreneur or his partners have substantial experience in the manufacture and marketing of certain products. Most often, the items selected are of those lines of products in which entrepreneur or his colleagues have gathered enough experience. Degree of profitability that rules in the market. Such information can be obtained from the banks or the financial corporations or the market itself. Concessions available from the government for producing a product that may be import substitution. Entrepreneur will select a particular product that enjoys a substantial amount of incentives, concessions, liberal taxation policies etc. Products belonging to priority industries or small- scale sector- certain products are listed by the government for purchasing exclusively from the small- sector. Market for the product if the product also has an export market, it widens the scope of marketing and hence the success of the enterprise. Certain products are permitted for production only if the others belong to de- licensed category. Hence a product belonging to licensed

v v

RAMB
- 45 -

ENTREPRENEURSHIP BMS SEM VI category or de- licensed category is also considered before selecting the product. v v Products enjoying specific advantages such as locations viz, if produced in free trade zone in a backward area. Product belonging to an ancillary unit serves as a major component for the OEM- provides a ready demand and hence ensures easy marketability. Finally, whether the machinery and raw materials required to manufacture the product would be imported or indigenous, requirement of skilled/ unskilled labor, indigenous technical knowhow or foreign collaboration. The study of project idea is the starting point of the feasibility analysis.

THE ADOPTION PROCESS

A process to bring about a change in buyers attitudes and perception. A consumer invariably undergoes the following steps in determining the feasibility of buying the new products 1. 2. 3. 4. Awareness Interest Evaluation or mental trial Trial- physical

Awareness: A consumer learns about anew idea or a product and obtains limited information about its qualities, usefulness, performance through advertisements etc. Interest: Once the consumer develops an interest in the innovation, he demands detailed information about the new products, its utility, its performance, etc. He gets more information through jingles on radio or TV ads and teaches through sales- persons, opinion leaders, peers, friends etc. Evaluation: The consumer tries to weigh the value of the new product in relation to the benefits obtained from it i.e. conducts a mental trial of the new product.

RAMB
- 46 -

ENTREPRENEURSHIP BMS SEM VI Trial: The consumer is now ready to put the idea into practice. Competent assistance may become necessary to put the innovation to use. Adoption: 1. The consumer mow decides to adopt the new idea or a product for continued use. 2. Depending the post- purchase experience the consumer becomes a repeat buyer and consequently the advocate for the innovation. PRODUCT INNOVATION Product Innovation takes place through the process of product planning and development. Covers search for new products and innovations as well as the improvement of existing products.

PRODUCT INNOVATION

Internal Development

Licensing

Acquisition

INTERNAL DEVELOPMENT Discovering and developing new products by the firm itself a desirable means. LICENSING Securing right to produce the product from a patent holder i.e. contractual arrangement e.g. coca cola. ACQUISITION Buying the firm that developed or patented the product- a costly means.

RAMB
- 47 -

ENTREPRENEURSHIP BMS SEM VI

CONCEPT OF PROJECT AND ITS CLASSIFICATION

CONCEPT OF PROJECT The term project connotes programme of action. Project is always interwoven with all socio- economic and cultural activities the project involves a scheme and a speculative imagination. The kinds of projects 1. Agricultural projects- relating to a. b. c. d. e. Land development Irrigation Soil- conservation Fertilizers, and Seeds etc.

2. Research projects Definition of Project- According to World Bank, project can be defined as An approval for a capital investment to develop facilities to provide goods and services. Little and Mireless defines project as A scheme or a part of scheme for investing resources which can be reasonably analyzed and evaluated as an independent unit. It is an appraisal for investment with the definite aim of producing a flow of output over a specific period of time. Gittinger has defined it as the whole gamut of activities involved in using resources to gain benefits. According to Dr. Albert O. Hirchman The development project connotes purposefulness, some minimum size, a specific location, the introduction of something qualitative new, and the expectation that a sequence of further development will be set in motion. Project can be defined as a scientifically evolved work plan devised to achieve a specific objective with a specified period of time. The three basic attributes of a project are 1. A course of action 2. Specific objectives, and 3. Definite time perspective.

RAMB
- 48 -

ENTREPRENEURSHIP BMS SEM VI CLASSIFICATION OF PROJECTS Establishment of a new business unit to manufacture some product or arrange for the distribution of products of another company poses a challenge to the entrepreneur. Helps in expressing and highlighting the essential features of the project. Project includes all activities aimed at: a. Increased production of goods and/ or services. b. Increasing the capability of existing projects and c. Increasing the productivity of these goods/ services. The projects can be classified as under: 1. Quantifiable and Non- quantifiable projects v Quantifiable projects- quantitative assessment of benefits can be made. Concerned with industrial development, power generation, and mineral development. Non- quantifiable projects- where quantitative assessment is not possible. Concerned with health, education, defense etc.

2. Sectoral Projects In India planning commission has accepted the Sectoral basis as the criterion for classification v v v v v v Agriculture & Allied sector Irrigation and power sector Industry and Mining sector Transport and communication Social service sector Miscellaneous

Useful in resource allocation at macro level 3. Techno- Economic Projects Based on their techno- economic characteristics

RAMB
- 49 -

ENTREPRENEURSHIP BMS SEM VI (a) Factor intensity- oriented classification v v Capital intensive Labour- intensive

(b) Causation-oriented classification v v Demand based or, Raw materials based

Dominant reasons for starting a project Non- availability of certain goods or services and consequent demand for such goods or services. Availability of certain raw materials, skills or other inputs.

(c) Magnitude- oriented classification- based on the size of the investment. v Large- scale. v Medium- scale. v Small- scale. Techno- economic classification facilitates the process of project feasibility appraisal. 4. Financial Institution Classification All India and state financial institutions classify projects according to their age, experience and the purpose. v v v v New projects Expansion projects Modernization projects Diversification projects

These projects are invariably are profit- oriented. 5. Services Projects v v v v Welfare projects Service projects Research and development projects Educational projects

RAMB
- 50 -

ENTREPRENEURSHIP BMS SEM VI

BASIC COMPONENTS OF A PROJECT

Objective Internal rate of return

Size

A Scheme

Organization

Social Benefits

Conceptual Framework of a Project

v v v v A productive activity, which can be analyzed appraised and monitored independently. A specific objective in terms of a geographic location, specific starting and end point Serve the target population by achieving good returns on investment. Has an organization to implement it.

PHASES OF PROJECT MANAGEMENT

Start Identification Formulation Appraisal

Selection

Implementation

Management

RAMB
- 51 -

ENTREPRENEURSHIP BMS SEM VI

v v v v v v

Identification: - Careful scanning of the environment for investment opportunity and the ROI. Formulation: - Translation of idea into a concrete project, scrutiny and preparation of feasibility report. Appraisal: - Analysis and evaluation of market, technical, financial and economic variables, return on investment and break- even point. Selection: - Rational choice considering objectives and limitations. Implementation: - Expeditious completion within allocated resources. Management: - Operation of an enterprise with maximum of net present value, maximization of return. Increase in rate of return at low risk.

To summarize, it can be said that v v v v v Project is a scheme for investing resources in an enterprise. It can be a massive scheme like a multipurpose river valley project or a venture with small investment. It provides complete details and analysis of technical, marketing and economic aspects. To an entrepreneur it opens up a programme for action, profitability and economic viability. A sound project will definitely contribute towards economic development.

END OF MODULE III

RAMB
- 52 -

ENTREPRENEURSHIP BMS SEM VI

MODULE- IV

WOMEN ENTREPRENEURSHIP
Concept of Women entrepreneurship Growth of women entrepreneurship Problems of women entrepreneurship Special schemes for women entrepreneurship

RAMB
- 53 -

ENTREPRENEURSHIP BMS SEM VI

CONCEPT OF WOMEN ENTREPRENEURSHIP

Based on the general concept of entrepreneurship women entrepreneurs may be defined as a woman or group of women who initiate, organize and run a business enterprise. In terms of Schumpeterian concept of innovative entrepreneurs, women who innovate, imitate or adopt a business activity are called women entrepreneurs. The government of India has defined women entrepreneurs based on women participation in equity and employment of a business enterprise. Accordingly, a women entrepreneur is defined as an enterprise owned and controlled by a women having a minimum financial interest of 51 percent of the capital and giving at least 51 percent of the employment generated in the enterprise to women. However, this definition is subject to criticism mainly on the condition of employing more than 50 percent women workers in the enterprises owned and run by the women. In nutshell, women entrepreneurs are those women who think of a business enterprise, initiate it, organize and combine the factors of production, operate the enterprise and undertake risks and handle economic uncertainty involved in running a business enterprise.

GROWTH OF WOMEN ENTREPRENEURS

Women entrepreneurs in India accounted for 9.01% of the total value 11.70 million entrepreneurs during 1988-89. A cross country comparison reveals that emergence and development of entrepreneurship is largely caused by the availability of supporting conditions in a country. To quote, with improving supporting conditions, the share of women owned enterprises in the United States has risen from 7.1% in 1977 to 32% in 1990. It is likely to reach to 50% by the turn of the 20th century. In India, women entry into business is a new phenomenon. Women entry into business, or say, entrepreneurship is traced out as an extension of their kitchen activities mainly to 3 Ps viz, pickles, powder and pappad. Women in India plugged into business for both pull and push factors. Pull factors imply the factors, which encourage women to start an occupation or venture with an urge to do something independently. Push factors refer to those factors, which compel to take up their own business to tide over their economic difficulties and responsibilities. With growing awareness about business and spread of education among women over the period, women have started shifting from 3 Ps to engross to 3 modern Es, viz. Engineering, Electronics and Energy. They have excelled in these activities. Women entrepreneurs manufacturing solar cookers in

RAMB
- 54 -

ENTREPRENEURSHIP BMS SEM VI Gujarat, small foundries in Maharashtra and T.V. capacitors in Orissa have proved beyond doubt that given the opportunities, they can excel their male counterparts. Smt. Sumati Morarji (Shipping Corporation), Smt. Yumutai Kirloskar (Mahila Udyog Limited), Smt. Neena Malhotra (Exports) and Smt. Shahnaz Hussain (Beauty Clinic) are some exemplary names of successful and accomplished women entrepreneurs in our country. In India, Kerela is a state with highest literacy (including women literacy) reflecting a congenial atmosphere for the emergence and development of women entrepreneurship in the state. According to a study, the number of womens industrial units in Kerela was 358 in 1981, which rose to 782 in March 1984. These 782 units included 592 proprietary concerns, 43 partnership firms, 42 charitable institutions, 3 joint stock companies and 102 co- operative societies covering a wide range of activities. On the whole, proper education of women in Kerela resulted in high motivation among them to enter into business. The financial, marketing and training assistance provided by the state government also helped motivate women to assume entrepreneurial career. Womens desire to work at the place of residence, difficulty of getting jobs in the public and private sectors and the desire for social recognition also motivated women in Kerela for self- employment. Like Kerela, an increasing number of women are entering the business in the state of Maharashtra also.

PROBLEMS OF WOMEN ENTREPRENEURSHIP

Women entrepreneurs encounter two sets of problems, viz, general problems of entrepreneurs and problems specific to women entrepreneurs. These are discussed as follows: 1. Problem of finance: Finance is regarded as life blood for any enterprise, be it big or small. However, women entrepreneurs suffer from shortage of finance on two counts. Firstly, women do not generally have property on their names to use them as collateral for obtaining funds from external sources. Thus, their access to the external sources of funds is limited. Secondly, the banks also consider women less credit- worthy and discourage women borrowers on the belief that they can at any time leave their business. Given such situation, women entrepreneurs are bound to rely on their own savings, if any and loans from friends and relatives who are expectedly meager and negligible. Thus, women enterprises fail due to the shortage of finance. 2. Scarcity of raw material: Most of the women enterprises are plagued by the scarcity of raw material and necessary inputs. Added to this are the high prices of raw material, on the other. The failure of

RAMB
- 55 -

ENTREPRENEURSHIP BMS SEM VI nay women co- operatives in 1971 engaged in basket making is an example how the scarcity of raw material sounds the dealth- knell of enterprises run by women. 3. Stiff Competition: Women entrepreneurs do not have organization set- up to pump in a lot of money for canvassing and advertisement. Thus, they have to face a stiff competition for marketing their products with both organized sector and their male counterparts. Such a competition ultimately results in the liquidation of women enterprises. 4. Limited Mobility: Unlike men, women mobility in India is highly limited due to various reasons. A single woman asking for room is still upon suspicion. Cumbersome exercise involved in starting an enterprise coupled with the officials humiliating attitude towards women compels them to give up an idea of starting an enterprise. 5. Family Ties: In India, it is mainly a womans duty to look after the children and other members of the family. Man plays a secondary role only. In case of married woman, she has to strike a fine balance between her business and family. Her total involvement in family leaves little or no energy and time to devote for business. Support and approval of husbands seem necessary condition or womens entry in to business. Accordingly, the educational level and family background of husbands positively influence womens entry into business activities.

6. Lack of Education: In India, around three- fifths (60%) of women

are still illiterate illiteracy is the root cause of socio- economic problems. Due to the lack of education and that too qualitative education, women are not aware of business, technology and market knowledge. Also, lack of education cases low achievement motivation among women. Thus, lack of education creates problems for women in the setting up and running of business enterprises.

7. Male dominated Society: Male chauvinism is till the order of the

day in India. The constitution of India speaks of equality between sexes. But, in practice women are looked upon as able i.e. Weak in all respects. Women suffer from male reservations about a womens role, ability and capacity and are treated accordingly. In nutshell, in the male-dominated Indian society, women are not treated equal to men. This in turn, serves as a barrier to women entry into business.

8. Low Risk- Bearing Ability: Women in India lead a protected life.

They are less educated and economically not self- dependent. All these reduce their ability to bear risk involved in running an enterprise. Risk bearing is an essential requisite of a successful entrepreneur. In

RAMB

- 56 -

ENTREPRENEURSHIP BMS SEM VI addition to above problems, inadequate infra structural facilities, shortage of power, high cost of production, social attitude, low need for achievement and socio- economic constraints also hold the women back from entering into business.

SPECIAL SCHEME FOR WOMEN ENTREPRENEURS

With a view that women entrepreneurs should come forward in industrial field and become self- sufficient, government and financial institutions have announced many schemes of providing financial assistance. 1. Seed Capital Scheme: In order to start ones own business this scheme is undertaken by the government. Government provides funds @ 10% to unemployed youths and women. The seed capital provided is 10% to 15% of the total cost of the project. The percentage of seed capitalist 22.5% for backward class candidates. The woman is treated unemployed even if their husbands are in business or service. The qualification is they should have passed at least the standard and should be between 18- 50 years of age. The maximum capital available is 5 lacs. For a partnership firm, the contribution of employed should be more than 75%. The seed capital granted is to be aid within the period of 7 years. More details in regard are provided by District Industries Centre. 2. National equity Fund: National Bank or State finance Corporation implements this scheme. There is no condition of age or education under this scheme. Loan granted for industrial or service oriented business purpose. It is expected that the candidate should contribute minimum 105 of the cost of the project. 15% of the project cost is granted by the bank towards capital @ 10% equity fund as loan.75% of project cost is granted by the bank in the form of loan. 3. Finance Corporation Scheme: All the schemes announced by the finance corporation scheme are applicable to women entrepreneurs. Prime ministers employment guarantee scheme, Central governments scheme for educated unemployment: This scheme is sponsored by central government. The age limit applicant is 35 years and minimum education is Std.Xth. Under this scheme 95% of loan is granted by the bank. 15% subsidy is available. Rs. 5,000 for business purpose. Rs. 25,000 for service industry and Rs. 35,000 for the purpose of individual loan is granted. The candidate is not expected to contribute his share. 15% of subsidy is directly remitted to bank by central government. This scheme has been revised from April 1999. The income limit of the partners of the women should not be more

RAMB
- 57 -

ENTREPRENEURSHIP BMS SEM VI than Rs. 24,000 p.a. for availing loan under this scheme, the candidate has to make an application to District Industries Center. 4. Women Industries Fund scheme: Under this scheme women entrepreneurs get 15% seed capital of total cost of the project for starting a new business. The seed capital money is restricted to Rs. 4 lacs. The cost of the project should not exceed 10 lacs. It is expected that women entrepreneurs should contribute 10% of total project cost. Incase of partnership firms/ private limited company the contribution of women entrepreneurs should be minimum 51% of the total project cost. For availing this facility application must be made to nationalized banks or State Finance Corporation. 5. Single Window Scheme: To facilitate women entrepreneurs in getting term loan and working capital from one and the same institution, the Small Industrial Development bank of India has started this scheme. It is applicable to both, male and female entrepreneurs. This scheme is applicable to project where total expenses are up to 20 lacs (excluding working capital and margin money). The loan is too repaid within the period of 1 year. Entrepreneurs share in the project should be 25%. This scheme is implemented through Finance Corporation. The corporation also provides term loan and working capital. Bank has to take the responsibility of providing working capital. 6. Joint Loan Scheme: Under this scheme, the artisans living in rural areas, where the populations is up to 5 lacs get the loans to purchase instruments and working capital needs. Financial assistance is available cent per up to Rs. 50,000 lacs with minimum rate of interest. Loan granted is to repaid within a period of 8 years. There is no restriction of age education qualification of the candidate. 7. District Industries Center Scheme: The main objective of this scheme is to start industries in rural areas where the population is less than 1 lacs. The industries with investment in machinery not exceeding Rs. 2 lacs are eligible for financial assistance under this scheme. 20% of 2 lacs for general category and 30%incase of backward people are granted as seed capital from the District Industries Center. The remaining amount of entrepreneur has to invest rest of the amount. The government sponsors this scheme. The rate of interest on seed capital is 4%. The District Industries Center implements the scheme and the applicant has to apply to them for financial assistance.

RAMB
- 58 -

ENTREPRENEURSHIP BMS SEM VI 8. Scheme of KVIC: Many schemes are implemented by KVIC for women entrepreneurs to start their own business (cottage industries) in rural and semi- urban areas. 9. Women Financial Corporation: For overall financial development of women, Government establishes Women Financial Corporation. 10. Training For Women Entrepreneurs: The Indian small development bank has undertaken training programme for women entrepreneurs with an object of getting more opportunities for starting self employment industries/ business for women. This scheme is implemented in the state of Maharashtra at Maharashtra District Center, Aurangabad and other centers. 11. Banks Scheme for women entrepreneurs: Bank implements various scheme for women entrepreneurs, one of which is streeshakti in State bank of India. 12. Subsidy on Interest Scheme: The Indian Finance Corporation ahs implemented this scheme. The subsidy is granted loans up to Rs. 10 lacs. The women entrepreneurs are encouraged to start their own business. They are encouraged to undergo training in industrial development. The industry should be run by the women entrepreneur with the contribution of 51% of total cost of project. The amount of subsidy available is interest for 1 year or Rs. 20,000 granted through financial institution to women entrepreneurs. Indian Financial Corporation reimburses this amount to the financial institutions.

END OF MODULE IV
RAMB
- 59 -

ENTREPRENEURSHIP BMS SEM VI

MODULE- V

ANCILLARIZATION
What is an ancillary unit? Development of ancillary industry in India Factors affecting ancillarization Role played by Financial Institutions and commercial banks Meaning of sub- contracting Advantages and disadvantages of sub- contracting Franchising

RAMB
- 60 -

ENTREPRENEURSHIP BMS SEM VI

WHAT IS AN ANCILLARY UNIT?

An industrial unit which is engaged or is proposed to be engaged in the manufacture or production of parts, components, sub- assemblies, tooling or intermediaries, or the rendering of services and the undertaking supplies or renders or proposes to supply or render not less than 5o percent of its production or services, as the case may be, to one or more other industrial takings and whose investment in fixed assets in plant and machinery whether held on ownership terms or on lease or on hire purchase, does not exceed Rs 75 lacs.

DEVELOPMENT OF ANCILLARY INDUSTRY IN INDIA

The programme of ancillarisation includes motivation of public and private sector units to offload production of components, parts, sub- assemblies, tools, intermediates, services etc to ancillary units. The programme of ancillary development has specific advantages for both for large as well as small industries and also for the total economy of the country. The large scale units have the advantages in the form of savings in investments, inventories, employment of labour, etc. and getting the items of the desired specifications, while the small scale units have the advantage of getting assured market for their products, availability of technical assistance and improved technology from the parent units. This programme also helps in overall economy of the country. The strategy for ancillary development was originally outlined with the objective of: 1. Development of employment opportunities coupled with growth of entrepreneurship in different fields and different parts of the country. 2. Increase in productivity of the small scale units. 3. Growth of a low cost economy through reduction in costs brought by appropriate technology followed by ancillary units. 4. Development of a single or multi discipline expertise in different fields to bring about economies of scale.

FACTORS AFFECTING ANCILLARISATION

Recently there has been a growing trend towards ancillarisation due to the series of rapid developments that have been taken place in the industrial structure in the country.

RAMB
- 61 -

ENTREPRENEURSHIP BMS SEM VI The size of operations of industrial units has increased enormously; with the result that they are compelled to sub- contract some of the items of production to ancillaries. It was more convenient for large scale manufactures to get the ancillary units to produce certain items for them. With the growing complexity of management, the large scale manufacturer can now concentrate on the problems of organization, marketing etc, rather than concentrating on availability of raw materials etc. Large scale manufacturers can economize on transport costs, storage space, etc, by contracting rather than by producing the same components themselves. It is economic to have some items manufactured by ancillary units because the cost of these items is higher when they are fabricated by large scale manufacturers. By outsourcing, large scale manufacturer is able to insulate him against fluctuations in the prices of raw materials over a period of time by entering into contracts for the supply of these items.

All these facts underscore the point that the development of ancillaries and their growing popularity have been well supported by economic and management considerations.

ROLE PLAYED BY FINANCIAL INSTITUTIONS AND COMMERCIAL BANKS.

Role played by financial institutions and commercial banks in providing financial assistance to small scale entrepreneurs. The small scale industrial sector raises term credit and working, capital required by it from commercial banks, co- operative banks, regional rural banks and state- financial corporations. The banking system provided mainly working capital and the State Financial Corporations mainly provides investment capital. Financial assistance in kind is available to the small- scale industrial sector from the National Small Industries Corporation (NSIC) at the national level, the State Small Industries Development Corporations (SSIDCs) at the state level which supply machinery on hire- purchase basis. The Industrial Development Bank of India (IDBI), the National Bank for Agriculture and

RAMB
- 62 -

ENTREPRENEURSHIP BMS SEM VI Rural Development (NABARD) and the Industrial Reconstruction Bank of India (IRBI) provides refinance facilities to banks and financial corporations for financing the small scale industrial sector. The credit provided by banks to the small scale industrial sector is treated as credit to the priority sector. The commercial banks are required to lend 40% of their total loans to the priority sector, of which 15% to 16% are required to be in the form of direct agricultural advances and the rest can be to small scale industry, small business, small transport, operators etc. State Financial Corporations provide financial assistance up to Rs. 60 Lakhs to private/ public limited companies and up to Rs. 30 Lakhs to proprietors and partnership firms. Rates of interest charged vary according to the size of the loan and category of entrepreneurs like SC/ ST, women entrepreneurs, exservicemen, physically handicapped persons etc. Composite loans up to Rs. 50,000 are provided form meeting both term- loan and working capital so that, the small scale entrepreneurs does not have to go to other institutions. Locus of control is an attribute indicating the sense of control that a person has over life. One of the concerns the people have when considering forming a new venture is, whether they will be able to sustain the drive and energy required not only to overcome the inertia in forming something new but also to manage the new enterprise and make it grow.

MEANING OF SUB- CONTRACTING

Sub- contracting system is a mutually beneficial commercial relationship between the two companies. This is known as ancillarisation in India and more generally as sub- contracting. Sub- contracting can be defined as follows: A sub- contracting relationship exists when a company (called the subcontractee) places on order with another company (called the sub- contractee0 for the production of parts, components, sub- assemblies or assemblies to be incorporated into a product sold by the contractor. Such orders may include the processing, transformation or finishing of materials or parts by the subcontractor at the request of the contractor. In practice, large scale industries do not produce all goods on their own instead they rely on small scale enterprises called sub- contractors for a great deal of production. When the work assigned to small enterprises involves manufacturing works, it is called Industrial Sub- contracting. In other cases, it is known as commercial sub- contracting. It is not unusual for sub- contractors to work for more than one contractor.

RAMB
- 63 -

ENTREPRENEURSHIP BMS SEM VI

ADVANTAGES AND DISADVANTAGES OF SUBCONTRACTING

ADVANTAGES 1. It increases production in the fastest way without making much effort. 2. The contractor can produce products without investing in plant and machinery. 3. Sub- contracting is particularly suitable to manufacture goods temporarily. 4. It enables the contractor to make use of technical and managerial abilities of the sub-contractors. 5. Despite leading to dependence, sub- contracting ensures existence of sub- contractors by providing them business. 6. Last but no means the least; sub- contracting makes the core firms more flexible in their production. DISADVANTAGES However, sub-contracting is not an unmixed blessing. It has some disadvantages also. These are: 1. It does not ensure the regular and uninterrupted supply of goods to the core firms, i.e. contractors that adversely affect the functioning of the core firms. 2. Goods produced under sub- contracting system are often qualitatively inferior. 3. Sub- contracting also delimits the expansion and the diversification of the core firms. 4. Delays in payments, a common feature by the contractor to the subcontractors endanger the very survival of the latter.

FRANCHISING
In a sense, franchising is very much similar to branching. Franchising is a system for selectively distributing goods or services through outlets owned by the retailer or dealer. Basically, a franchise is a patent or trademark license, entitling the holder to market particular products or services under a brand name or trademark according the different terms and conditions. According to David D. Settz A franchisee is a form of business ownership created by contract whereby a company grants a buyer the rights to engage in selling or distributing its product or services under a prescribed business

RAMB
- 64 -

ENTREPRENEURSHIP BMS SEM VI format in exchange for royalties or shares or profits. The buyer is called the franchisee and the company that sells rights to its business concept is called the franchiser. David H. Holt has defined franchising as a business system created by a contract between a parent company, called the franchiser and the acquiring business owner, called the franchisee, giving the acquiring owner the right to sell goods or services, to use certain products, names, or branded, or to manufacture certain brands. Now, franchising can simply be defined as a form of contractual arrangement in which a retailer (Franchisee) enters into an agreement with a producer (Franchiser) to sell the producers goods or services for a specified fee or commission. Franchising arrangements are broadly classified into three types: 1. Product Franchising 2. Manufacturing Franchising 3. Business- Format Franchising PRODUCT FRANCHISING: This is the earliest type of franchising. Under this dealers were given the right to distribute goods for a manufacturer. For this right, the dealer pays a fee for the right to sell the trademarked goods of the producer. The Singer Corporation used product franchising perhaps for the first time during the 1800s to distribute its sewing machines. This practice subsequently became popular in the petroleum and automobile machines also. MANUFACTURING FRANCHISING: Under this agreement, the franchiser (manufacturer) gives the dealer (bottler) the exclusive right to produce and distribute the product in a particular area. This type of franchising is commonly used in the soft- drink industry. BUSINESS- FORMAT FRANCHISING: This is recent type of franchising and is the most popular one at present. This is the type that most people today mean when they use the term franchising. In the United States, this form accounts for nearly three- fourth of all franchised outlets. Business- format wide range of services to the franchisee, including marketing, advertising, strategic planning, training, production of operations manuals and standards and quality control guidance. The International Franchise Association (IFA) of America has defined format franchising as follows: A franchise operation is a contractual relationship between the franchiser and franchisee in which the franchiser offers or is obligated to maintain a continuing interest in the business of the franchisee in such areas as know

RAMB
- 65 -

ENTREPRENEURSHIP BMS SEM VI how and training, wherein the franchisee operates under a common trade name, format and or procedure owned or controlled by the franchiser and in which the franchisee has or will make a substantial capital investment in his business from his own resources. ADVANTAGES Franchising agreement is a symbolic one for the franchiser and the franchisee. Following are the advantages that franchising provides to the franchisee. 1) Franchising makes the task of getting started easier because the franchisee gets a business format already market tested and found to work. Hence buying a franchise is so far safer than trying to start a new business. 2) It reduces chances for failure. Here significant to mention is that less than 10 percent of all franchise fails. In dramatic contrast with this is the fact that two out of every five entrepreneurs who start on their own fail within three years and eight out of every ten fail within ten years. 3) A well established franchise brings with it the very important advantage of recognition. Many new businesses experience lean months or years after start up. Obviously, the longer the period the business must experience it, the greater the chances of failure. With the well tested franchise, this period of agency may reduce to only weeks or perhaps just days. 4) Franchising may increase the franchisees purchasing power also. Because, being part of a large and that too recognized organization means paying less for a variety of things such as supplies equipment, inventory, services, insurance and so on. It also can mean getting better service from suppliers because of the importance of the organization (franchise) of you is part franchisee). 5) One gets the benefit of the franchisers research and development in improving the product. 6) The franchisee has the protected or privileged rights to franchise within a given area. 7) The prospects of obtaining loan facilities from the bank are also improved. 8) The banking of a known trading name (franchiser) becomes quite helpful while negotiating for good sites with setting agents or building owners.

RAMB
- 66 -

ENTREPRENEURSHIP BMS SEM VI

DISADVANTAGES Franchising is not an unmixed blessing. There are some disadvantages as well associated with a franchise arrangement. The main ones are listed as follows: 1) Unlike entrepreneurs who start their own business, the franchisees find no room or scope for enjoying their creativity. They have to work as per the given format. One classic example of regimentation in franchising can be found in the Mc Donalds restaurant organization. A Mc Donalds franchise is given very little operational latitude, indeed the operations manual attends to such minor details as when to boil the bearings on the potato slicer. The purpose of these restrictions is not to frustrate the franchises, but to ensure that each outlet is run in a uniform correct manner. 2) A number of restrictions are also imposed upon the franchisees. Restrictions may relate to remain confined to product line or a particular geographical location only. 3) Franchisees usually do not have the right to sell their business to the highest bidder or to leave it to a member of their family without approval from the franchiser. 4) Though the franchisee can build up goodwill for his or her business by his or her efforts goodwill still remains the property of the franchiser. 5) The franchisee may become subject to fail with the failure of the franchiser, another disadvantage facing franchisees is that franchisers generally reserve the option to buy back an outlet upon termination of the contract. Many franchisees become vulnerable to this option. As such, they operate under the constant fear of non- renewal of the franchise agreements. Then do these disadvantages mean that franchising is no longer desirable way to go small business? Certainly not franchising is a proven and complete business concept. In fact, what do they really mean is that the security that some people associate with franchising is an illusion? Hard work, realistic expectations, and very careful investigation are required if becoming a franchisee is to be a successful, satisfying experience. This underlines the need for evaluation of a franchising agreement.

END OF MODULE V
RAMB
- 67 -

ENTREPRENEURSHIP BMS SEM VI

MODULE-VI

ENVIRONMENTAL SCANNING AND SECTORAL STUDIES

Swot Analysis Entrepreneurial Environment Environmental Analysis Scope for Entrepreneurship in small business sector Entrepreneurship process of liberalization Changing Role of Entrepreneurship in the era of liberalization, privatization and globalization Entrepreneurship as a Catalyst for meeting global changes Creativity & Innovation Key sectors for the new age Entrepreneurs

RAMB
- 68 -

ENTREPRENEURSHIP BMS SEM VI

SWOT ANALYSIS
The business environment keeps changing. Government policies and regulations, economic conditions, social conditions, technological factors, competitive situation etc. Undergo changes. The environmental changes may open up new opportunities or pose new threats. Constant monitoring of the environment is therefore, necessary to identify the emerging opportunities and threats. In order to understand to what extent a firm will be able to exploit the opportunities and fight the threats, it is necessary to evaluate the strengths and weaknesses of the firm. Thus, an analysis of the strengths and weaknesses of the firm and the opportunities and threats in the environment that is the SWOT analysis is essential for framing the business strategies.

S- Strengths. W- Weaknesses. O- Opportunities. T- Threats. v STRENGTHS AND WEAKNESSES:

Strengths and weakness analysis is a real test for management. The strength and weaknesses would decide whether a company should continue in a business, take up new lines of business, as well as the strategy to be employed in doing so. For e.g. in case of some products, small scale units have definite advantage over large- scale units in costs. If a large scale unit were not able to compete with the small- scale units, in such a case, it would be wise on the part of the large unit to give up the business of such products. The strengths and weakness analysis is done by functional audit of different areas like marketing, finance, design/ engineering, operations etc. The audit is to be done on the basis of the quantity and quality of skills and the infrastructures support 3 available facilities in terms of physical facilities, resource available, speed and flexibility in arranging them.

RAMB
- 69 -

ENTREPRENEURSHIP BMS SEM VI

v OPPORTUNITIES AND THREATS:

Monitoring of the environmental changes is necessary to reshape the companys business and products, if needed, to ensure survival and growth. Certain changes in the environment may bring about new opportunities for some companies while they pose new threats for some others. For e.g. the new industrial policy of India has brought about enormous new business opportunities but at the same time it poses new threats or challenges to many existing firms because of the increase in competition. The existing firms should therefore, frame strategies to effectively fight the increasing competition. The primary reason of the environmental analysis is to identify the threats as well as the opportunities developing in the business environment. The search for opportunities may start on account of increased aspiration for performance of the organization. While the analysis of threat is to examine the development in the environment that may affect the current strategies ineffective and irrelevant and thus, affect the survival of the organization. The threats or opportunities for any business developed because the needs of the customer keep on changing. For e.g. a customer who was happy with the product now wants another because of change in his needs. In view of the above, many companies have to reframe their objectives and strategies in order to survive in the changing business environment.

ENTREPRENEURIAL ENVIRONMENT
Entrepreneurship environment refers to the various facets within which enterprises- big, medium and small and others have to operate. The environment therefore, influences the enterprise. By and large, an environment created by political, social, economic, national, legal forces etc influences entrepreneurship.

INTERNAL ENVIRONMENT (Micro Environment)

RAMB
- 70 -

ENTREPRENEURSHIP BMS SEM VI LEGAL ENVIRONMENT

SOCIOCULTURAL ENVIRONMENT
PRODUCT P R I C E P R O M O T I O N

COMPANY

PLACE

ECONOMIC ENVIRONMENT

POLITICAL ENVIRONMENT

TECHNOLOGICAL ENVIRONMENT

A) PRODUCT: The business has to produce a product that people want to buy. They have to decide which market segment they are aiming at age, income, geographical location etc. They then have to differentiate their product so that it is slightly different from what is on offer at present so that people can be persuaded to give them a try. In other words product is a bundle of satisfaction that a costumer buys. It represent solution to a customers problem .It is in this context that marketing definition of a product is more than just what the manufacturer understand it. B) PRICE: To a manufacturer, price represent quantity of money received by the firm or seller .To customer, it represent sacrifice and hence his perception of the value of product. The price must be high enough to cover costs and make a profit but low enough to attract customers. There are a number of possible pricing strategies. The most commonly used are:

RAMB
- 71 -

ENTREPRENEURSHIP BMS SEM VI PENETRATION PRICING charging a low price, possibly not quite covering costs, to gain a position in the market. This is quite popular with new businesses trying to get a toehold. CREAMING the opposite to penetration pricing, this involves charging a deliberately high price to persuade people that the product is of high quality. Luxury car makers often use this strategy COST PLUS PRICING this is the most common form of pricing. Costs are totaled and a margin is added on for profit to make the total price.

C) PLACE: The business must have a location that it can afford, and that is convenient and suitable for customers and any supplier. D) PROMOTION: Promotion means moving from one end to another. Promotion means all those tools that a marketer uses to take his product from the factory to the customer and hence involves advertising, sales promotion, personal selling, public relations publicity and merchandising. Customers have to be made aware of the product. The two main considerations are target market and cost. A new business will not be able to afford to advertise on national television, for instance and would not wish to because its market will be local to start with. Leaflets, billboards, advertisements in local newspapers, Yellow Pages and word of mouth would be more appropriate.

v EXTERNAL ENVIRONMENT (Macro Environment)

External Environment: Also known as Macro Environment, are the uncontrollable factors which a company must monitor and respond to. They consist of economic, political, technological, social-cultural and legal. Economic Environment: It consists of factors that affect consumer purchasing power and spending patterns. Markets require purchasing power as well as people. Economic conditions, economic policies and economic systems are the important external factors that constitute the economic environment of a business. For example, the economic conditions of a country, the nature of the economy, the stage of development of the economy, economic resources, the

RAMB
- 72 -

ENTREPRENEURSHIP BMS SEM VI level of income, the distribution of income and assets etc. are among very important determinants of business strategies. Technological Environment: Technology is the most dramatic force shaping peoples lives. Factors such as technological development, stages of development, change and rate of change in technology and research and development affect marketing strategies. Also the cost of technology acquisition, impact of technology on human beings and the environmental effects of technology affect marketing decisions. Political environment: Political environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals in a society. The main political trends are: (a) Substantial amount of legislation regulating business. (b) Growth of public interest groups and (c) Changing government agency enforcement. Socio-cultural environment: The basic beliefs, values and norms shape the society and its people. Even when people of different cultures use the same basic product, the mode of consumption, condition of use, purpose of use or the perception of the product attributes may vary so much so that the product attributes, method of promoting the product may have to be varied to suit the characteristics of different markets. Even the value and beliefs associated with colour vary significantly between different cultures. Legal environment: Government all over the world are an important aspects of their economy and even in the so called free economy, viz.US, government intervention in industry is a reality. The extent of intervention varies .while in US this is relatively low; in developing countries this is quite high. India ,for example ,has had a history of a controlled economy with the government deciding the rules of the game ,be it the extent of foreign private investment ,or goods to be exported or imported or even whether a unit can be allowed to produce a product Regulation in advertising ,like ban on advertising a specific product like cigarettes, pan masala, liquor and distribution of goods as in the case of kerosene and earlier in case of food product too, is the reality of Indian scenario.

RAMB
- 73 -

ENTREPRENEURSHIP BMS SEM VI

ENVIRONMENTAL ANALYSIS
This integrated approach which is the key to the development of backward areas implies a very careful environment analysis or research study of the target groups of beneficiaries, their activities and differential needs and the practical modes of operation by which their activities can be linked with the covering enterprise. Unless these studies are made meticulously, the entire planning will only give unproductive results. Most of the development schemes fail to benefit the target clientele because elaborate linkages are not identified and built up. An imaginative study should 1. Identify the beneficiaries or target groups. 2. Analyze the environment for immediate feasible enterprises in an integrated manner. 3. Delineate the linkages and institutional arrangements. 4. Recommend appropriate organizational structures to provide necessary promotional support. Unfortunately, in most of the studies on backward areas, there is a tendency to make generalizations and ignore the specific details of feasible projects. As a result, immediate perception of concrete opportunities by interested entrepreneurs is left in confusion. Sometime! Area studies make a general statement of demand and resources and recommend certain enterprises, which are not immediately feasible due to important reasons unaccounted for in such studies. It is also not seriously contemplated whether the recommended enterprises are feasible within the capabilities and investment capacity of the target- group. In short, most of the studies fail to disconcern the real issues of growth in the target area and fail to identify the concrete and specific needs of these endowments like resource skill etc. to flourish. Enunciation of general objectives, generic beneficiaries tend to blur the distinct contours of one homogeneous group from the other. Also, the extension of certain standard facilities or services does not serve their actual needs. All this possibly happens because in such basic studies we fail to identify clearly the targetgroups and their specific problems, and make theoretical studies on resources and demand in an impersonal manner, as a result of which even the schemes devised on the basis of such studies tend to become too impersonal and rigid. Sometimes, the scheme become so flexible on account of a standardized petrified approach that in some most genuine cases demanding a certain departure from the fixed framework, the scheme is incapable of giving requisite help. It is therefore, absolutely necessary that any action plan for a backward area must first identify the target- group, identify the specific

RAMB
- 74 -

ENTREPRENEURSHIP BMS SEM VI services they need for monitoring their enterprises and devise an appropriate structural support for comprehensive coverage of their needs.

SCOPE FOR ENTREPRENEURSHIP IN SMALL BUSINESS SECTOR

Small- scale business provides good scope for the growth of entrepreneurial activities .An entrepreneur has good opportunity and vast scope in selling service rather than manufacturing a product. The entrepreneur can achieve better results if the size of the business is small. It is for this reason that small firms have higher productivity, greater efficiency and low labour turnover. The scope for entrepreneurial activities in small business sector can broadly be classified into: 1. Industrial sector 2. Agricultural and allied industrial sector 3. Service sector INDUSTRIAL SECTOR

Small scale industries occupy an important place in the industrial sector. They have contributed over 40% in the gross industrial production in 1998. Small- scale industries: The basic objectives underlying the development of small- scale are the increase in the supply of manufactured goods, promotion of capital information the development of indigenous entrepreneurial talents and skills and the creation of broader employment opportunities. This sector provides a wider scope for the potential entrepreneur to develop his or her own industry. There is a good scope and enormous potential to use technology based products in the small- scale sector. An entrepreneur can exploit a profitable venture in any of the industries reserved for exclusive department under the small- scale sector. There are as many at 384 items for exclusive purchase from the small- scale industries. Small- scale industries play an important role in increasing the national income, in meeting the shortage of consumers goods, in promoting balanced regional development, in reducing inequalities in the distribution of income and wealth and in relieving the economic pressure on land and over crowding in urban areas. Outdated technology, shortage of finance, shortage of raw material and inadequate marketing facilities are some of the problems faced by small entrepreneurs.

RAMB
- 75 -

ENTREPRENEURSHIP BMS SEM VI AGRICULTURAL AND ALLIED INDUSTRIAL SECTOR

There is a vast cope for entrepreneurial activities in the agricultural sector. By establishing a link between agriculture and allied industries, the rural entrepreneur can exploit opportunities in areas of farming, agricultural processing and marketing. The government has given priority to IRDP programme and ensured adequate flow of credit to small and marginal farmers through re-financing facilities and by establishing national bank for agriculture and small development. Trade: Trading takes place in wholesaling and retailing. It may be in domestic or overseas market. The retailer entrepreneur makes the goods available at the time and places the consumer wants them. He may decide to start single line store, specialty shop, departmental store etc. trade in overseas market is in wholesale. The business environment directly influences the growth of entrepreneurship in a particular line of trade. The trade policy of India has been directed to promote export. Hence incentives and facilities have been provided to the entrepreneurs to motivate them to develop export. SERVICE SECTOR

The service sector has gained importance for the entrepreneurs because of its rapid expansion. Service sector includes all kinds of business and provides opportunities to the entrepreneurs in business such as hotels, tourist services, personal services such as dry cleaning, beauty shops, photographic studies, auto repair, electric repair shops, wielding repair etc. Transport: They provide time and place utilities in urban and rural areas to both men and material. The different modes or transport are of immense importance in the areas, which are not served by roads and railways. There is a scope for entrepreneur to design prototypes of new carts with the application of indigenous technology so that they may have better mobility and greater carrying capacity. The primary need in the rural area is an efficient system of road transport. The rural economy has a good opportunity for an entrepreneur to develop some business. They can exploit possibilities for a venture in some shops or services. Entrepreneurship flourishes in small business sector for they have enormous opportunities in manufacturing and non- manufacturing activities. The government is keen in encouraging the competitive strength of the small scale producers and it has taken a number of measures such as: The establishment of a network of industrial estates through ought the country where work sheds equipped with the necessary facilities made available to prospective entrepreneurs on subsidized rental basis.

RAMB
- 76 -

ENTREPRENEURSHIP BMS SEM VI The reservation of a number of products for the exclusive production to small sector The introduction of ancillarization programme under which large and small industries are to be linked in a harmonious productive relationship The supply of machines on hire purchase basis to the small entrepreneurs on easy terms of payment Technical counseling to small units so as to improve their efficiency and viability

These are golden opportunities for the prospective entrepreneurs to selfemployed independent businessman. The future is very bright.

ENTREPRENEURSHIP AND PROCESS OF LIBERALIZATION

The process of liberalization and privatization initiated since 1991 is trying to make environment more conducive to growth of entrepreneurship. Many areas like telecommunication, power, generation, oil and natural gas, coal and steel, civil aviation, banking etc. which were earlier reserved for public sector are now made open to private participation also. The process of liberalization has opened the floodgates of entrepreneurial opportunities. Private initiative and funds have started flowing into these sectors. Reforms have swept all major sectors of the economy, opening up the country for the easier movement of the population and material across the national boundaries. Foreign trade and investment regime points to liberal order which is welcome to domestic and foreign private sector entrepreneurs. The opening up has been substantial and going by the ratio of foreign trade turnover to GDP and flows of market based foreign capital, India had truly entered the global regime. The world is shrinking into a global village due to economic interdependence and the revolution in communication technology. Globalization has become the password. Today changes are taking place at a greater pace and the world is passing through an exciting stage of technological progress on several fronts. Technology is perhaps the most important resource for any nation. Invention, innovation, adoption of new technologies, processes and their commercialization are the major factors in wealth creation and making the country technologically superior, which in turn, leads to economic supremacy. India has a large reservoir of qualified science and technology

RAMB
- 77 -

ENTREPRENEURSHIP BMS SEM VI manpower and the necessary infrastructure for indigenous R&D and industrial development. It cannot lag behind in this regard and should be prepared to be a global player in its own right in the coming century. Now we face the implication of anew international economy, which is less energy- intensive and more knowledge- intensive. New materials are reducing the demand for ferrous and non- ferrous materials; transportation costs are falling as products become lighter and smaller; international communication is instantaneous. It is a new order in which central planning by large institutions is becoming less effective, and small- scale enterprises are becoming more efficient and effective. Entrepreneurs and new enterprises, rather than governments and major corporations are the instruments of change. The relative growth of the information/service sector in the new international economy that is emerging is removing many of the traditional barriers. In this sector, geography access to capital and access to resources is of less importance.

CHANGING ROLE OF ENTREPRENEURSHIP IN THE ERA OF LIBERALIZATION, PRIVATIZATION AND GLOBALIZATION

Challenges of liberalization, privatization and globalization call upon the entrepreneurship to play amore creative and dynamic role than ever before. Entrepreneurship can now set the goal of making India a developed country. They need not just aspire but make it a mission take it up and accomplish it. Ignited mind of entrepreneurs can be powerful resources, which can help India, becoming a big economic power in the years to come. It is indeed characteristic of entrepreneurs to have foresight, a vision and skill to see an opportunity and exploit it. Globalization, which means integration with the world economy, brings the influence of external sources into our society. Experts have pointed out that these are economic of trade or market forces and the have a beneficial influence in developing our core competencies in area which have a competitive advantage. As already discussed we have a good scope for developing our services. Entrepreneurs have to exploit this opportunity and with their sense of efficiency help the service sector to start, grow and develop perfectly. Direct linkages of technology to the nations strategic strengths are becoming clear since the last decade. Entrepreneurs have to realize that technology is the core strength of our nation and therefore help it get on the path of technological development. By core strength and competency it is meant that in certain areas we have

RAMB
- 78 -

ENTREPRENEURSHIP BMS SEM VI inherent strength and therefore show better result in a shorter period of time. Indian human resource based is one of the greatest core competencies. India is known for A-1 class entrepreneurs. The Indian entrepreneurial history is rich with examples or entrepreneurs who have contributed towards Indias economic activity even during the colonial rule and in the face of all opposition. Indians not only have a greater learning capability but also competitive entrepreneurial spirit. It is this spirit that is to be released to meet the challenges of 21st century. India has the core strength of its natural resources. It is abundant supplies of most of them; it has a vast coast line, which stores resource and energy supply. The can become our future strength if entrepreneurs, exploit them and put them to productive use. Entrepreneurs role is even called upon to explore undersea resources. Services in India have a vast scope of development in India. Entrepreneurs are called upon to study and identify Indias strong base and to initiate activities in those specific areas, there are technologies that dramatically change Indias social and economic conditions. India can excel and usher in a new era in agriculture. India can emerge as a global power in terms of agricultural produce and agro- based industries. Entrepreneurs have the p [potential to explore the spirit of adventure, the capability to initiate, organize and undertake risks and the ability to face challenges. It is the role of an entrepreneur that is called upon in this new era the role of innovating and imitating entrepreneurs. The slogan of the entrepreneurs in the new international scenario, in the words of Subrahmanya Bharathi can be We will take many mines, And take out gold and many other things, And go eight directions to sell these, And bring home many things! Changing role of entrepreneurs may be summed up as follows: In the era of liberalization, privatization and globalization, an entrepreneur will have to v v v v Explore and exploit opportunities for trade in the world economy Discover, utilize, and develop the core strength of the economy. Conduct R&D activities to meet the global standards Improve the quality of technology and quality of manufacture to be able to complete well with foreign competition.

RAMB

- 79 -

ENTREPRENEURSHIP BMS SEM VI v v v v v v v v v Reduction of cost of production to make the product/service available at a competitive price. Undertake advertising, sales promotion, marketing, packaging effectively for capturing foreign markets. Develop new products, new areas of production for widening the countries trade. Search new markets and capture more and more markets. Expanding the geographical base of the marketing. Increase production to accelerate economic growth rate Come up with innovative ideas to solve financial, economic and other problems of the countries. Play the role of imitating entrepreneurs i.e. study the latest changes in the advanced countries- and use them gainfully. Utilize the underutilized/ unutilized capacity so that full benefits can be enjoyed e.g. Hydropower capacities are still unutilized.

ENTREPRENEURSHIP AS A CATALYST FOR MEETING GLOBAL CHANGES AND CHALLENGES

The relationship between entrepreneurship and economic growth development has already been analyzed. The later is the result of entrepreneurship. Every process of economic growth/ development is the outcome of changes that occur in various spheres. Infact one cannot imagine either of them without a change. Change is therefore the essence of growth and development. Entrepreneurs are some times called carriers or agents of change. It is in this context that entrepreneurs are known as catalysts of change. In the capacity of catalyst an entrepreneur reaches for opportunities and areas- where changes can be expected and are necessary. An innovative entrepreneur is instrumental in bringing about a change. He introduces new ideas, new techniques, new combinations, discovers new sources of supplies etc. An imitating entrepreneur on the other hand uses the changes launched by others. Changes and entrepreneurship go together. Drucker says, Entrepreneurs see changes as the norm and all healthy. Usually they do not bring about the changes themselves. But the entrepreneur always searches for change, responds to it and exploits it as an opportunity. Entrepreneurs have to play an important role- the role of catalysts in the new international scenario that is going to open the economy to new areas and prospects. Entrepreneurs are supposed to visualize and utilize the opportunities that are going to occur. The world trade is going to open doors to new challenges.

RAMB
- 80 -

ENTREPRENEURSHIP BMS SEM VI New and changed approaches will have to be adopted for meeting these challenges successfully. As a catalyst an entrepreneur will have to:v Foresee prospect changes in the global economic and social environment. He will also have to be instrumental in bringing about changes. Absorb new inventions and innovations in the technological sphere as technology plays an important role in the world of trade and commerce. Initiate new activities in both business and non- business spheres. In the capacity of an innovative entrepreneur. He has to introduce new combination of resources, come up with bright ideas to utilize underutilized resources, to put them to multiple uses and apply them to new and unknown activities. Bring about an attitudinal change in the minds of the people and the society in general. A conservative and religious society or a society that is bound by customs and traditions cannot take full advantage of entrepreneurial opportunities. An entrepreneur may have to strive to convert the society into a dynamic, rational and a progressive one. He may have to influence the government into bringing about economic reforms of various types for exploiting global opportunities. Exploit change and use it not only for his and for the benefit of his organization but also for the benefit of his economy.

v v

Entrepreneurs play a crucial role in the development of an economy. They play the role of catalysts of change and are capable of converting an underdeveloped economy into a developing one and a developing economy into a developed one. Global changes and challenges may be compared to a knife. A knife when used properly brings benefits or serves as a tool for work. The same knife can cut and harm if used wrongly. Entrepreneurs have to convert global changes and challenges into opportunities, exploit them effectively and intelligently so that the economy emerges a winner, a beneficiary of globalization and not as its victim.

CREATIVITY
Creativity implies conceptualizing, visualizing or bringing into being something that does not yet exist. It is about curiosity and observation. In the history of science, there are interesting examples of creativity occurring at the

RAMB
- 81 -

ENTREPRENEURSHIP BMS SEM VI same time with no contact between the individuals involved. Newton and Leibritz created the mathematics of calculus in the seventeenth century quite independently of each other, despite their allegations of plagiarism. Creativity seems to come out of the blue triggered by a problem to be solved or an idea to be expressed. Its roots and origins are mysterious and unknown but its existence cannot be denied. This meta- physical aspect has meant that science has shied away from the topic though it is now becoming a subject of serious study among cognitive scientists and experimental psychologists. Entrepreneurs are familiar with ideas that suddenly come to mind and are not too concerned with their origins. This is the starting point of the entrepreneurial process. We see creativity as a talent, an innate ability, though we recognize that it can be developed and that there are techniques that promote creativity and problem solving. Creativity is also a function of how people feel. Some are more creative under pressure whilst others need complete relaxation. Some use divergent thinking in their creativity whilst others prefer convergent thinking. One thing that seems common to all forms of creativity is joy. Einstein comments that the idea that the gravitational field has only a relative existence was the happiest thought of my life. His creative genius had come up with the idea of relativity and it made him happy. There is an intense personal satisfaction in having come up with something new and novel. This is one reason why entrepreneurs see their activities as fun. There is the joy of creativity all around them. For the entrepreneur, creativity is both the starting point and the reason for continued success. It is the secret formula by which he or she overcomes obstacles and outsmarts the competition. Arguably every one of us has the ability to be creative but do we all use and exploit this ability? Many of us simply do not act creatively much of the time. Possibly we are not motivated and encouraged perhaps we do not believe in ourselves and the contribution and difference we could make. There is certainly a skills and technique element to creativity- in a business context, for example, we can be taught creative thinking and behaviour in the context of decision making but this is clearly only part of the explanation. The issue of making is also a critical element. Many people have the ability to play a musical instrument. They have a skill and possibly natural talent and they can be taught more skills and techniques whilst they are willing to persevere and practice. Furthermore, some people who play music naturally appreciate the meaning the composer was trying to convey when the work was written. Others have to be taught this interpretation. Some people simply see things that others cannot until they are given a detailed explanation. The same implies to opportunity spotting.

RAMB
- 82 -

ENTREPRENEURSHIP BMS SEM VI People who miss the valuable opportunities that others see first often have access to the same information but it means something different to them. Discovery consists of looking at the same thing as everyone else and thinking something different. In just the same way many young people can dribble, head and pass a football, and their skills can be improved with coaching. But when they watch a football match or play in one are they able to see the whole game? Can they spot goal scoring opportunities and positions and get there ahead of a defender? Most people who watch team sports such as football simply follow the movement of the ball exactly as the television camera tends to do. They ignore or miss the emerging patterns as the other players move of the ball in search of good positions. This partially explains why we do not all seem to see the same game evolve, even though we are present at the same match.

INNOVATION
Innovation builds creativity when something new, tangible and value creating is developed from the ideas, innovation can be focused on the theme of being better-incremental improvements-as well as the theme of being radically different. The former will often form the world of the entrepreneur, who us attempting to make his or her organization d stronger than his rivals .The later is often ,but certainly not always, reserved for the true entrepreneur, who is more concerned with doing something genuinely new and different rather than improving on ideas that have gone before. Innovation is about seeing the creative new idea through to completion, to final application but, of course, this will not necessarily be a business. It is the entrepreneur who builds a business around the idea and innovation. Both can e difficult roads and require courage and perseverance as well as creativity and imagination. These are attributes that the entrepreneur brings and his or her role in innovation is crucial. There are the basic approaches with innovation, which are not mutually exclusive, and we have seen illustrated in the stories in part two. First, it is possible to have a problem and to be seeking solution, or at least a resolution. Edwin Land invented Polaroid camera because his young daughter could not understand why she had to wait for the pictures to be printed when he took her photograph. Second, we might have an idea in effect a solution and be searching for a problem to which it can be applied 3Ms. Post- it notes happened when a 3m employee created a glue with only loose sticking properties, and a college applied it to a need he had for making page in a manuscript. Third, we might identify a need and design something that fits. James Dysons dual cyclone cleaner came about because of his frustration

RAMB
- 83 -

ENTREPRENEURSHIP BMS SEM VI with his existing machine, which was providing inadequate for cleaning up the dirt and dust he generated when he converted an old property. Generating opportunities form ideas requires us to attribute meaning to the ideas. Ideas from in our minds and at this stage they mean something to us, personally. Typically, they became a real opportunity when we expose the ideas and share them with other people, who may well have different perceptions, attribute different meanings and see something we miss initially. This process of exploration is fundamental for determining where the opportunities for building new values are. In other words, innovation comes from the way we use our ideas. Crucially the person with the initial idea may not be the person who realizes where the real opportunity lies. An inventor is not always an opportunityspotter and often not a natural project champion. Picasso claimed that great people steal ideas and create opportunities where others cannot see the potential. Creativity is the talent of the inventor and innovation is the talent of the project champion who turns ideas into reality. Entrepreneurs do both these things but they do more. They do not just complete the successful application of an idea; they build something of value in the process. The Sony walkman provides an excellent illustration of what happens. The idea came to Sony co- founder Akio Morita when he was questioning why he was finding it difficult to listen to music when he was in public places or walking round a golf course. The idea became an innovative new product and a valuable opportunity when Morita shared his idea with other colleagues in Sony, and existing technologies and competencies were used to develop the compact personal radio with adequate playing time from its batteries and individual headphones. The project was championed, resourced and implemented. Personal cassette and CD players have systematically joined the original radio. It was simply a great idea that rejuvenated Sony at the time it was conceived; and it has brought value and affected the lives of millions of people around the world. This endeavors to pull the stand together. Creativity (the idea) is the starting point whether it is associated with invention or opportunity spotting. This creativity is turned to a practical reality (a product, for example) through innovation. Entrepreneurship then sets that innovation in the context of an enterprise (the actual business), which is something of recognized value. To be exploited fully and effectively, creativity and innovation need to be supported by certain talents and aspects of temperament. We also need a base of knowledge, which we use to help generate and develop our new ideas. In part of this is developed through our experiences but it also needs to be supplemented further by certain key skills. In very simple terms, talent and

RAMB

- 84 -

ENTREPRENEURSHIP BMS SEM VI temperament combined with knowledge helps us find out and discover new possibilities. Key skills can enhance the discovery process, whilst other skills help us design and craft new opportunities from the ideas.

KEY SECTORS FOR THE NEW AGE ENTREPRENEURS

v v v v v Cyber Cafes Bio Tech Apparels Rural Products like Handicrafts etc Beauty Parlours

Wish u ALL THE BEST for your Exams!!!! Feedback about this study material can be emailed @ ramkishen123@rediffmail.com

...THE END
RAMB
- 85 -