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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

GURU HARKRISHAN INSTT. OF MANAGEMENT

Ques 1:- Define entrepreneur and entrepreneurship. Explain Characteristics & types of entpreneur.

Ans:- Introduction- The word “Entrepreneur” has been taken from the French language where it cradled &

originally meant to designate an organizer of musical or other entertainments. Definition:- Entrepreneur, A person who creates some new events, organizes factors of production, undertakes risk & handles economic uncertainty involved in new enterprise/ venture. Entrepreneurship:- A set of attributes that an entrepreneur possesses & practices to establish & run the enterprise.

Characteristics/ Qualities:- 1. Hard work:- Willingness to work hard distinguishes a successful entrepreneur from unsuccessful one,
Characteristics/ Qualities:-
1.
Hard work:- Willingness to work hard distinguishes a successful entrepreneur from unsuccessful
one, The entrepreneur with his tedious, sweat filled hours & persevnance revive their business even
from on verge of failure.
2.
Desire for High Achievement:- The entrepreneurs have a strong desire to achieve high goals in
business.
3.
Highly optimistic:- The successful entrepreneurs are not distributed by the present problems faced
by them. They are Optimistic for future that the situations will become favorable to business in future.
4.
Independence:- One of the common characteristics of the successful entrepreneurs has been that
do not like to be guided by others and to follow their routine.
5.
Foresight:- The entrepreneurs have a good foresight to know about future business environment.
6.
Good Organizer:- Different resources required for production are dive reed from each other. It is the
ability of the entrepreneurs that brings together all resources required for starting up an enterprise &
then to produce goods.
7.
Innovative:- Entrepreneur create ideas into useful applications by combining resources in new of us
usual ways to provide value to society for new or improved products, technology or services.
8.
Time Management:- A successful entrepreneur maintain a perfect time Management in each & every
step.
9.
Others:-
-
Effective Communication
-
Analytical Ability
-
Perseverance
-
Independence
Types of Enterprenurers:-
1.
Innovation Entrepreneurs:- Innovating Entrepreneurs is who introduces new goods, inaugurates
method of production, discover new market and re-organizes the enterprise.
2.
Imitative Entrepreneurs:- These are characterized by readiness to adopt successful innovations
inaugurated by innovating enterprises. Imitative entrepreneurs do not innovate the changes
themselves they only imitate techniques & technology involved by others.
3.
Fabian Entrepreneurs:- are characterized by very great caution & skepticism in experimenting any
change in their enterprises. They imitative only when it become perfectly clear that failure to do so
would result in a loss of the relative position in the enterprise.
  • 4. Drone Entrepreneurs:- They are characterized by a refusal to adopt opportunities to make changes in production formulas even at the cost of severely reduced returns relative to others like producers. Such entrepreneurs may even suffer from losses but they are not ready to make changes in their existing production methods.

According to Behavioral Scientists Some other types of Entrepreneurs:-

  • 1. Salo Operators:- Salo Operators who extent ally work alone & if needed at all employ a few employees.

  • 2. Active Partners:- are those entrepreneurs who start/ carry on an enterprise as a joint venture.

  • 3. Inventors:- Such entrepreneurs with their competence & inventive invent new products. Their basic interest lies in research & innovate activities.

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

  • 4. Challenges:- These are the entrepreneurs who plunge into industry because of the challenges it present. When one challenge seems to be met, they begin to look for new changes.

  • 5. Buyers:- These are those entrepreneurs who do not like to bear much risk. Here in order to reduce risk in valued in setting up a new enterprise, they like to buy the on going one.

  • 6. Life timers:- These entrepreneurs take business as an integral part to their life.

Ques 2: - “An entrepreneur has to perform a number of functions as a vital factor of production”. Discuss. Ans:- Functions of an Entrepreneurs:-

  • 1. Idea generation and scanning of the best suitable idea.

  • 2. Determination of the business objectives.

3. Production analysis and market research. 4. Determination of form of ownership / organization. 5. Raising
3.
Production analysis and market research.
4.
Determination of form of ownership / organization.
5.
Raising necessary funds.
6.
Procuring machine and material.
7.
Completion of promotional formalities.
8.
Recruitment of men.
9.
Undertaking the business operations.
10. Making Changes
Others:- Risk Bearing, Organize Innovator
Functions of Entrepreneur:-
(I)
(II)
(III)
Primary Function
Other Function
Functions Important for developing countries
(I) Primary functions:-
(a)
Planning:- Planning process covers steps:-
i.
ii.
iii.
iv.
Scanning of the best suitable idea.
Selection of product line.
Determination of business organization.
Estimation of the capital needed.
v.
vi.
vii.
viii.
ix.
Selection of capital resources
Selection of location.
Studying the govt. rules relations & policies.
Selecting the way to fulfill the govt. facilities.
Study of availability of work force.
x.
Study of market strategy to be adopted.
(b)
Organizations:- co-coordinators- land, labour and capital.
(c)
Decision – Making:-
-
Determination of the business objectives of the enterprise.
-
Decision regarding procurement of machine, material, men, money and market.
-
Decision regarding requisition of efficient technology & new equipments.
-
Decision regarding development of a market for the product.
-
Maintenance of good relations with public authorities & with society at large.
  • (D) Management:- Men, Machine, Material, Money, Land, Labour & Capital for the enterprise.

  • (E) Innovation:- Implies “doing of new things or doing of things that are already being done in a new ways”.

Schumpeter 5 Forms:-

  • - Launching of new product in the market.

  • - Introduction of new technology in the production.

  • - Creation of new market

  • - Discovery of new & better resources of raw material.

  • - Creation of monopoly or breaking up monopoly.

  • (F) Risk Baring

  • (G) Uncertainty Bearing (Trade Credits, trends of market.)

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

(II) Other Functions:-

  • (a) Diversification of production)

  • (b) Expansion of the enterprise

  • (c) Maintaining cordial employer-employee relations

  • (d) Tackling of labour problems.

  • (e) Co-ordination with outside agencies.

(iii) Functions Important for developing countries

(a) Management of Scarce resources (b) Dealing with public bureaucracy (c) Acquiring & overseeing assembly of
(a)
Management of Scarce resources
(b)
Dealing with public bureaucracy
(c)
Acquiring & overseeing assembly of this factory
(d)
Industrial designing & reengineering
(e)
Marketing of product and responding to competitions.
(f)
Industrial new product.
(g)
Perception of market opportunities
(h)
Financial & Production Management
(i)
Management of customers and suppliers relations
(j)
Management (Public bureaucracy)
Ques 3:- (A) Explain in brief role of Entrepreneur in Economic Growth.
(B) Explain briefly the various theories of entrepreneurship.
(C ) Model of Entrepreneurship/ Entrepreneur.
Ans:- (A)Role of entrepreneur in Economic Growth:-
Economist’s View:- The position of the entrepreneur in modern production is like that of the director of a
play. Modern economic development is closely linked with production. Modern production is highly complex.
According to modern economic development has at least three aspects:-
(i)
The entrepreneur co-ordinates.
(ii) The entrepreneur takes risk.
(iii) The entrepreneur innovates.
Importance of Entrepreneur in Economic Development:- The economic development of a country too a
large extent depends on human resources. Entrepreneurs are action-oriented highly motivated individuals
who take risks to achieve goals: An entrepreneur is one who looks for opportunities, identifies opportunities &
seizes opportunities mainly for economic gain. In fact, entrepreneurship is the dynamic need of a developing
nation and sustain the process of economic development in the following ways:-
(a)
Employment Generation:- Growing unemployment particularly educated unemployment is an astute
problem of the nation. With the help of entrepreneur economic growth providing direct & indirect
employment to many more.
(b)
National Income:- Consists of goods and services produced in the country and those imported. The
goods and services produced one for consumption with in the country as well as to meet the demand
of exports. The domestic demand increase with ever increasing population and standards of living.

(c)

Dispersal of economic power:- The world affairs have been dominated by power. There have been

two types of power: Muscles power & economic power. Economic power is the natural outcome of industrial and business activity. Industrial development normally can lead to concentration of economic power in few hands.

(d)

(e)

Balanced Regional Development:- Balanced Regional development leads to a large number of public benefits like road, transport, healthy education, entertainment etc.

Harness Locally available resources and entrepreneurship:- India is considered to be very much rich in natural resources. In spite of more than four decades of planned development a large number of states have remained economically quite backward.

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

(f)

Reducing unrest and social A tension amongst Youth: - Many problems associated with youth

unrest and social tension are rightly considered to be due to youth not being to be engaged in productive work. In the changing environment where we are faced with the problem of recession in wage employment. Opportunities, alternative to wage career is the only viably option. The country is required to divert the youth with latent entrepreneurial traits from wages career to self-employment career.

(g)

(h)

Innovation in Enterprise: - Business enterprises need to be innovative for their survival and better performance.

Improvement in living standards: - Entrepreneurs set up industries, which remove scarcity of essential commodities and introduce new products.

(i) Economic Independence: - Entrepreneurship is essential for national self-reliance. (b) Theories of entrepreneurial/ entrepreneurship divided
(i)
Economic Independence: - Entrepreneurship is essential for national self-reliance.
(b)
Theories of entrepreneurial/ entrepreneurship divided into main three views:-
The economist’s View: - According to economists entrepreneurship and economic growth will take
place in those situations where particular economic conditions are most favorable.
Sociologist’s view:- Sociologists argue that entrepreneurship is most like to emerge under a specific
social culture. According to them social, sanctions are responsible for the emergence of
entrepreneurship.
Psychologist’s View: - According to psychologists view main characteristics are:-
-
The capacity to with stand social opposition.
-
Energy of will and mind to overcome fixed habits of thought.
-
An institutional capacity of see things in a way, which after wards proves correct.
Important:- Theory of Entrepreneurship:-
(i)
Entrepreneurship: A function of Innovative:- Joseph A. Schumpeter (1934). Under this theory
developed five types of events: -
-
Introduction of a new product in the market.
-
New production technology
-
It may arise on account of a new market
-
New Sources.
-
New organization of any industry.
(ii) Entrepreneurship: A function of group level pattern:- Frank W. Young was reluctant to accept the
entrepreneurial characteristics at the individual level.
(iii) Entrepreneurship: A function of Management Skills & Leadership:- Bert F. Hoselitz (1952) maintain
a managerial ability and more Important he must have ability to lead.
(iv) Entrepreneurship: An Organization Building Function:- Frederick Harbison (1960)
(v)
Entrepreneurship: A function of High Achievement:- McClelland (1961)
(vi) Entrepreneurship: Input Templating shap filling function (1968) Liebenstein.
(vii) Entrepreneurship: A function of Status withdrawal:- Eeverlt Hagen (1962)
(viii) Entrepreneurship: A function of Social, Political and Economic Structure: - Kunkul (1970)
(ix) Entrepreneurship: A function of Religion beliefs:- Max Weber (1972)

(C ) Model of Entrepreneurship:-

(a)

According to Kao:- A conceptual Model of Entrepreneurship:-

(b)

AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 (f) Reducing unrest and social A tension amongst

The Person

Entrepreneurship

The Environment

AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 (f) Reducing unrest and social A tension amongst
AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 (f) Reducing unrest and social A tension amongst

The Organization

AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 (f) Reducing unrest and social A tension amongst
AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 (f) Reducing unrest and social A tension amongst

The Task

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

- The Person:- Personality, Skills, Experience, Motives -The Task:- Perceiving opportunity Marshalling resources providing leadership. -The environment:- Infrastructure, rules & regulations state of technology. -The Organization:- Structure, Rules, Policies, Culture, Human Resources System, Communication System.

(b) The integrated Model: - T V Rao (1975) Entrepreneurial Disposition

AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 - The Person:- Personality, Skills, Experience, Motives -The
Percepting Factors Acquisition of Personal Resources Acquisition of Material Resources Starting the Business (iii) According to
Percepting Factors
Acquisition of Personal Resources
Acquisition of Material Resources
Starting the Business
(iii) According to B.S.Venkta Rao (1975)
Stimulation
Identification
Development
Promotion
Follow up
(iv) According to M M Pakhari (1977)
Stimulatory
Support
Sustaining Activities
Ques
4:-
Define
entrepreneurship
Development
Programme.
Discuss
various
needs,
Content,

Importance, Phases and Problems of EDP’s in India?

Ans:- EDP become a matter of great concern in all developed and developing countries all over the world.

Need/ Objectives of EDP: -

(i) Develop and Strengthen their entrepreneurship Development Programmes are achievement. (ii) Analyze environmental set up relating to small industry & small industry & small business. (iii) Select Product. (iv) Formulate project for the product. (v) Understand the process & procedure unvalued insetting up a small enterprise. (vi) Know the sources of help & support available for starting a SSI. (vii) Know the pros & cons on becoming an entrepreneur. (viiii) Appreciate the needed entrepreneurial discipline.

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

(ix) Develop passion for integrity and honesty. (x) Develop a broad vision about the business.

(xi) Enable to communicate clearly & effectively. (Xii)Acquire the necessary managers skills required to run a small enterprise. Courses Contents and Curriculum of EDP’s: -

  • 1. General Introduction to entrepreneurship:- First of all, the participants are exposed to a general knowledge. Of entrepreneurship such as factors affecting small scale industries. The role of entrepreneurs in economic development the facilities available for establishing small- scale enterprises.

  • 2. Motivation Training:- The training inputs under this aim at inducing & increasing the need for achievements among the participations

3. Management Skills- Running a business, whether large or small, requires the management skill. Since a
3.
Management Skills- Running a business, whether large or small, requires the management
skill. Since a small entrepreneur cannot employ a management experts to manage his/ her
business. He/ She needs to be imparted basic and essential managerial skills in the functional
areas like finance, production & marketing.
4.
Support System & Procedure:- The participants also need to be exposed to the support
available from different institutions and agencies for setting up the running SSI.
5.
Fundamentals of Project Feasibility Study: - Under this input the participants are provided
guidelines on the effective analysis of feasibility or viability of the particular point in view of
marketing, organization, technical, financial & social aspects.
6.
Plant Visits:- In order to familiarize the participants with real life situations in small business,
plant visits are also arranges. Such trips help the participants know more about a
entrepreneurs behaviour, personality, thoughts and aspirations.
Phases of EDP’S-
I.
II.
III.
Pre Training Phase
Training Phase
Post Training Phase
I. Pre Training phase: - The activities and preparations requited to launch the training Programmes came
under this phase. This phase accordingly includes the following: -
-
Selection of entrepreneurs.
-
Arrangement of infrastructure
-
Tie up of guest faculty for the training purpose.
-
Arrangement for inaugurations of the programme
-
Selection of necessary tools, techniques to select the suitable entrepreneurs.
-
Arrangement for publicity media campaigning for the programme.
-
Develop of application form.
-
Finalization of training syllabus.
II. Training Phase- It is to bring desirable change in the behaviour of the trainees.
According a trainee should see the following changes in the behaviour after the trainees.
-
Ideas, role
-
Skills, Traits
-
Behaviour
-
Mobilizing resources
-
Motivation

III. Post Training Phase (Follow-up)

  • - How to start their enterprises.

  • - Policies/ Guidelines Evaluation of EDP’s: -

Developing entrepreneurship has become a movement in India in the recent years EDP’s have been considered as an effective instrument for developing entrepreneurship in the countryside. Hundred’s of EDP’s are conducted by same 686 organizations to import entrepreneurial training to participants in

thousands

Major 4 dimensions help entrepreneurs: -

  • - Planning Orientation

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

  • - Achievement Orientation

  • - Expansion Orientation

  • - Management Orientation

Problems faced by EDP’s: -

  • 1. Trainer:- motivations are not found up to the mark on motivating the trainees to start their own enterprises.

  • 2. EDP organizations lack in commitment & sincerity in conducting the EDP’s.

  • 3. The authentic attitude of the supporting agencies like banks and financial institutions.

  • 5. Selection of wrong trainees also leads to low success rates of EDP’s.

  • 6. Non-conductive environment & constraints make the trainer-motivators roll

Ques 5:- Short Notes on:-

(A) Incentives & Subsidies (B) Creativity, Innovation (C) Sources of Financing (D) Working Capital Financing Ans:
(A)
Incentives & Subsidies
(B) Creativity, Innovation
(C)
Sources of Financing (D) Working Capital Financing
Ans: - (A) Incentive & Subsidies: - Incentive is a general one & includes concessions subsidies & bounties.
Subsidy denotes a single lump sum, which is given by a government to an industry. It is granted to an
Industry, which is considered essential in the national interest. The term bounty denotes bonus or financial
aid, which is given by a government to an industry to help it complete with other units in a nation or in a
foreign market.
Advantages: -
-
They act as a motivational force.
-
They encourage the entrepreneurs to start industries in backward areas.
-
Develop new entrepreneurs
-
Reduce the overall problems of small-scale entrepreneurs.
Problems: -
1.If implemented not properly.
2.Favouritism & corruption have crept into the administrative machinery, which has caused much financial
strain on the exchequer.
(B)
Creativity, Inventions & Innovations: - are often used interchangeably particularly in everyday
language. Creativity carries implications of originality and productivity. Inventions, the creation of new
products, processes & technologies not previously known to exist.
Innovation refers only to the first use of new thing or idea.
Major points in above discuss points: -
Preparation
Illumination
Incubation
Verification
(C)
Sources of Financing:- Any project new or existing one needs funds for two important purposes. They
are fixed capital and working capital.
Fixed Capital: - Investments made in the fixed asses that are required for permanent use in
the enterprise. For eg. Machinery, Building
Working Capital: - Funds that business keeps on hand to use in buying materials, office
supplies & fixtures & other items & services requires in the day to day running of a business
undertaking. For eg. Raw Material, Debtors

Major Sources:-

  • 1. Internal Sources: - Under this sources funds are raised from with in the enterprise itself. For eg. Life

Insurance.

  • 2. External Sources: - In short funds reused from other than internal sources are from external sources.

    • (D) Working capital Financing/ Working Capital requirements/ The need for and significance of

adequate working capital in the successful functioning of SS enterprise. Ans:- Introduction:- Working Capital is the life blood of a business. Its adequate planning and proper

management is necessary for the successful operations & continued existence of a business.

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

Definition:- Working Capital are those funds which a business keeps on hand to use in buying materials,

office suppliers and Fixtures and other items and services required in the day to day running of a business undertaking. It is also known as circulating & revolving capital.

In working capital compose of two parts:-

  • - Regular/fixed

  • - Variable

Concept of working capital: -

(i) Gross working Capital GWC = Total Current Assets (ii) Net Working Capital NWC = CA-CL

Need and Significance of working capital: -

  • - Necessary Liquidity

- Smooth functioning - Increasing firm’s value - Maximization of profits - Length of operating cycle.
-
Smooth functioning
-
Increasing firm’s value
-
Maximization of profits
-
Length of operating cycle.
-
Nature of business.
Sources of working Capital financing: -
Loans from commercial banks.
Public deposits
Trade Credit
Discounting bills of exchange
Advances from customers
Bank Overdraft
Management of Working Capital: - means managing different Components of current assets & current
liabilities.
-
Management of Cash
(i)
Controlling the level of cash
(ii) Controlling inflows of cash
(iii) Controlling outflows of cash
(iv) Optimum use of surplus cash.
-
Management of Inventory: -
(i)
Model
(a)
Economic Ordering Quantity
-
Management of Accounts Receivable.
Ques 6:- Explain Small Scale Industry and Sick Small Scale Industry.
Ans:- Small Scale Industry:- An Industry with investment limit up to Rs. 5 Crore in Plant & Machinery.
Types of Small Scale Industry:-
1.
Manufacturing Industries.
2.
Feeder Industries
3.
Serving Industries
4.
Ancillary to Large Industries
  • 5. Mining or quarrying

Characteristics:- SSI is beautiful because of its following important characteristics:

  • 1. A small scale Industry is generally a one-man show.

  • 2. SSI has a lesser gestation period, the period after which the return on investment starts.

  • 3. Small Industrial undertakings is generally localized catering to the local & regional demands.

  • 4. Small Industries are fairly labour intensive with comparatively smaller capital investment.

  • 5. Using local resources, small units are decentralized & dispersed to rural areas. Thus, the development of SSI in rural areas promotes more balanced regional development.

Rationale of Small Scale Industries So established can broadly be classified onto 4 arguments:-

  • 1. Employment Argument:- In new of India’s Scarce Capital resources and abundant labour, the most important arguments and value highly in favor of the SSI’s that they have a potential to create

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AIM COLLEGE-HISAR

ENTREPRENEUR DEVELOPMENT (CP-401)

Contact: 92533-50008, 94164-43238

immediate large-scale emp0loymenht opportunities. The increasing emphasis on SSI’s in developing countries like India seems largely from the widespread concern over unemployment hovering in the country.

  • 2. Equality argument:- One of the arguments put forward in favor of the SSI’s is that they ensure a more equitable distribution of national income & wealth. This is accomplished because of the two major considerations:

    • - Compared to the ownship of large-scale units, the ownship pattern in SSI is more widespread.

    • - Their more labour intensive nature.

  • 3. Decentralization Argument:- Impresses the necessity of regional dispersal of industries to promote

  • balanced regional development in the country. Big Industries are concentrated every where on urban areas. But,
    balanced regional development in the country. Big Industries are concentrated every where on urban
    areas. But, Small Scale Industries can be located in rural & semi-urban areas to use local resou8rces
    & to cater to the local demands.
    4. Latent Resources Argument:- This argument suggests that small enterprises are capable of
    mopping up latent & unutilized resources like hoarded wealth & ideal entrepreneurial ability etc.
    Objectives:-
    1)
    2)
    To generate immediate & large scale employment opportunities with relatively low investment.
    To eradicate unemployment problem from the country.
    3) To encourage dispersal of industries to all over country covering small towns, villages &
    economically logging regions.
    4)
    5)
    6)
    To bring backward areas too in the main stream of national development.
    To promote balanced regional development in the whole country.
    To ensure more equitable distribution of national income.
    7)
    To encourage effective mobilization of country’s untapped resources.
    8)
    To improve the level of living of people in the country.
    Major role of small enterprises in economic development of small-scale industries contributes to the
    increase in per capita Income economic development in various ways. It generate immediate employment
    opportunities with relatively low capital/ Investment, promotes more equitable distribution of national income,
    make effective mobilization of untapped capital & human skills and leads to dispersal of manufacturing
    activities all over the country leading to growth of villages, small towns & economically lagging regions. This
    promotes to balanced regional development. Major growth of Internal & external strategy:-
    I.
    II.
    Internal Growth Strategy:- These imply that enterprises grow their own without joining hands with
    other enterprises expansion & diversification have been the popular forms of Internal Growth
    Strategy.
    External Growth Strategy:- enterprises grow by joining hands with their enterprises:-
    -
    Expansion
    -
    Diversification
    -
    Joint Venture
    -
    Merger
    -
    Sub-Contracting
    -
    Franchising
    Problems of SSI: -
    1.
    Problem of Raw-Material
    2.
    Problem of Finance
    • 3. Problem of Marketing

    • 4. Problem of Under-utilization of capacity.

    • 5. Problem of technology.

    • 6. Problem of inadequate availability of credit facility.

    • 7. Problem of managerial skills.

    SICK INDUSTRY: - An Industry which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth & has also suffered from cash losses in such financial year immediately preceding such financial year.

    Sick Small Scale Industry: - A Small unit when:

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    AIM COLLEGE-HISAR

    ENTREPRENEUR DEVELOPMENT (CP-401)

    Contact: 92533-50008, 94164-43238

    (j)

    any of its borrowal accounts has became a doubtful advance i.e., principle or interest in respect of

    any of its borrowal accounts has rmi8nded overdue for a period exceeding 2 and ½ years and (ii) there is erosion in the net worth due to accumulated cash losses to the extent of 50% or more of its peak net worth during the preceding two accounting years. Path of Industrial Sickness:-

    Healthy Unit

    Tending towards

    Incipient of

    Sick

    Sickness

    Sickness

    • 1. 1. Cash Profit (-)

    Cash Profit (+)

    2. 2. NWC (+) NWC (+)
    • 2. 2. NWC (+)

    NWC (+)

    2. 2. NWC (+) NWC (+)
    2. 2. NWC (+) NWC (+) All (-)

    All (-)

    • 3. 3. NW (+)

    Net Worth (+)

    02 or more (-)

    Major Symptoms of Industrial Sickness:-

    1. Persisting shortage of cash 2. Deteriorating financial ratios. 3. Widespread use of creative accounting. 4.
    1.
    Persisting shortage of cash
    2.
    Deteriorating financial ratios.
    3.
    Widespread use of creative accounting.
    4.
    Continuous tumble (fall down) in the prices of the shares.
    Ques 7: - Define feasibility Study? Explain various steps involved in preparing a project feasibility
    report? How to prepare feasibility report?
    Ans:- How to prepare feasibility report:- The success of an entrepreneur depends upon the entrepreneur
    doing the right thing at the right time. Starting a new enterprise is a very challenging & rewarding task. An
    entrepreneur has to take numerous decisions, right time from the conception of a business idea, upto the
    start of production. Hence, the identification of the project to be undertaken requires an analysis of the
    project in depth. Therefore, a techno-economic feasibility of the project has to be conducted before preparing
    a feasibility report of the business.
    Feasibility Analysis: - An entrepreneur, has to formulate a project, when a project idea is developed.
    Project formulation is a process whereby; the entrepreneur makes an objective and independent assessment
    of various aspects of an investment proposition of a project idea for determining it as total impact and also for
    determining its liability.
    Feasibility Analysis the project idea is examined from the point of when proposal or not
    idea is examined the context of interval and external constraints.
    ..
    Hence, the project
    In F.A. 3 alternatives: -
    -
    First, the project idea seems to be feasible, then we proceed with the idea & go to the next
    stage.
    -
    Second, the project idea is not feasible then, we abandon the idea.
    -
    Third, we are unable to arrive at a conclusion for want to adequate data, then, we make efforts
    to collect the required data & design development.
    Although every feasibility analysis is different & is tailored to the product, its goal is to identify the strength &
    weakness of the project.
    Planning of the Techno-economic feasibility(TEF) to the Project: -
    Techno-Economic Feasibility refers to the estimation of project demand potential & choice of optimal

    technology. A project may produce goods or services; it is imperative to know the market for such goods or services produced T-EF makes an analysis of the market & technology. TEF analysis gives to the project an individual and sets the stage for deterled design development. Feasibility Report: - A Feasibility Report of a new enterprise or of an expanding enterprise consists of some background information about the industry to which the enterprise submitting the report in general. It also contains the economic information financial data, technical details which serve a finite number of discrete economic processes or cost structure of the Industry concerned. The main purpose of the report is providing information that is required for the project appraisal. This report would enable to financing agencies to purposefully evaluate the project before extending financial assistance.

    Feasibility Report: Contents: -

    • 1. Objectives & Scope of the Report

    • 2. Project Characteristics i.e., the specifications, uses and application, standards, quality etc.

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    • 3. Market position and trends i.e. the installed capacity, production and anticipated demand, export prospects & information an import & export, price, structure & trends.

    • 4. Raw materials requirements prices, sources & properties of raw materials.

    • 5. Manufacturing processes, selection of process, project schedules & techniques.

    • 6. Plant & Machinery, i.e. equipments instruments, laboratory equipments, electric load & water supply arrangements, sources of plant & machinery.

    • 7. Requirements of land area, building, construction. Schedule.

    • 8. Financial implications i.e. fixed & working capital investment project cost & profitability.

    • 9. Marketing channels, then trading practices & marketing strategies.

    10. Requirements of personnel, labour expenses on wage payment. A feasibility report contains the economic information, financial data, and technical data etc. of the project to be undertaken. It can be prepared with the help of organizations like the small industries service Institute (SISI) & small Industries Development Organization (SIDO) A feasibility report is prepared after conducting a prefeasibility study (A various opportunities or alternatives available) & feasibility study (a detail study of an alternatives chosen). Considerations while preparing a Feasibility Report: - It is prepared only after conducting a prefeasibility

    study & detailed feasibility study. Feasibility Study: - Provides information an economic, technical, managerial, commercial &
    study & detailed feasibility study.
    Feasibility Study: - Provides information an economic, technical, managerial, commercial & financial
    requirements in detail. It covers all the aspects of an investment project.
    Prefeasibility Study: - an analysis is made on the various opportunities available, economic, alternatives,
    technical details, financial availability, raw-material availability for various opportunities.
    Some Important factors to be considered while preparing a feasibility report are as follows: -
    (A)
    Technical Considerations:- It establishes whether the project is technically feasible or not. It provides
    an opportunity for a consideration of the effects o0f various technical alternatives on employment, ecology,
    infrastructure demands, capital services, balance of payments and other factors.
    Technical Consideration Include:-
    (i)
    A description of two project, including specification relating to the physical, mechanical & chemical
    properties as well as the uses of the product.
    (ii) A description of the selected manufacturing process showing detailed floe charts, and presenting the
    alternative process which may have been considered and the justification for the adoption of the selected
    process.
    (iii) A determination of the plant size & production schedule, which includes the expected volume fir a given
    time period on the basis of start up & technical factors.
    (iv) Selection of Machinery & equipment including specification. Equipment to be purchased and its origin,
    quotations from suppliers, delivery dates, terms of payment and a comparative analysis of alternatives in
    terms of cost, reliability, performance & spare parts availability.
    (v)
    An identification of plans location and a design of the plant layout.
    (vi) A study of the availability of raw materials, terms of payments, sources of supply and continuity of supply.
    (vii) An estimate of labour required and the supervision required for the manufacture of the product.
    (viii) A determination of the type & quality of wasp to be disposed of waste disposal methods, its costs and
    the necessary clearance from proper authorities.
    (ix) An estimate of the production cost of the project.
    (B)
    Economic Consideration:- Economic factors have to be taken into consideration while preparing a

    feasibility report. Economic data relates to market, which can be obtained from secondary sources like government agencies, trade associations, chamber of commerce, trade directors & other publications. Data can also be obtained through primary sources like interviews, mailed questionnaire & market survey.

    Economic Consideration Include:-

    • (i) Identifying the market potential in terms of current demand for the product & projected future demand. The

    entrepreneur should use relevant Stastical criteria for this purpose. For ex.:- A Potential text book publisher may find out the number of students enrolled in the concerned subject/ of text book uses and the proportion of demand. (ii)The cost & project at different price levels have to be taken into considerations.

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    (iii) The competitors both direct (similar project) Indirect (substitutes) have to be analysed. It helps in identifying the strengths, strategies etc., of the competitors & have strategies superior to the competitors can be analysed. (iv) Data relating to general economic trends such as per capita income, level of consumption expenditure, inventories, new orders etc. Have to be considered. (v) Data concerning price structure, discount pattern & sources of market information have to be collected (C) Financial Considerations:- help the project to evaluate the different measures of commercial profitability & the magnitude of financial required. It requires the assembly of the market & technical cost estimated into various perform statements. Financial Consideration include:- (i) Assessment of total cost, initial capital requirements & cash flows relating to the project timings. (ii) A financial analysis showing returns investment returns on equity, break-even volume & price analysis. (iii) Supporting scheduled for financial projection, stating the assumption made as to the collection period of sales, inventory levels, payment period of purchase expenses & the elements of production cost, selling administrative & financial expenses. (iv) The details with regard to sources of fund such as equity share, preference share, long term loans, bank loans, trade credit etc. (D) Consideration of Managerial Competence / Managerial Commercial:- A proper assessment of the number and skills of staff required for the preparing a feasibility report for this purpose an appropriate organization structure is decided. Then the skills & talents required to man the structure are determined.

    Managerial competence considerations include: - - Activity analysis involving anticipated workflow & the activities in valved
    Managerial competence considerations include: -
    -
    Activity analysis involving anticipated workflow & the activities in valved in the projects.
    -
    Grouping of activities into tasks, which employees can perform effectively.
    -
    Classification of tasks as the building blocks of the organization structure.
    -
    Determining inter-relationship between different positions to decide the chain of command.
    (E) Implementation Schedule:- is also of great consideration while preparing a feasible report. The
    implementation schedule is prepared to ensure timely competition of the project.
    It helps in saving time & cost delays in project completion may Leoparadise the financial viability of the
    project.
    An implementation schedule includes when to apply for term-loan, procurement of land site, construction of
    factory shed getting water & power connections, purchase of plant, installation of plant, recruitment of human
    resources, trial production & the time for commencement of commercial production.
    Consideration
    While Preparing
    Feasibility Report
    Technical Consideration
    Economic Consideration
    Financial Consideration
    Managerial Competence
    AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 (iii) The competitors both direct (similar project) Indirect
    AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 (iii) The competitors both direct (similar project) Indirect

    Implementation Schedule

    Performa of Feasibility REPORT:-

    FR scheme for the manufacture of Title/ Name of the firm: -

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    1. Introduction (a) Scope (b) Product (c) Process (d) Marketing (e) Location (f) Sources of finance/
    1.
    Introduction
    (a)
    Scope
    (b)
    Product
    (c)
    Process
    (d)
    Marketing
    (e)
    Location
    (f)
    Sources of finance/ repayment schedule
    2.
    Scheme
    (a)
    Land & building
    (b)
    Machinery & equipments
    (c)
    Testing equipments
    (d)
    Total non-recurring expenditure
    (a+b+c+d)
    (e)
    Staff & Labour
    Indirect
    Direct
    No. & wages p.m.
    (f) Raw material & Consumables
    No. & wages p.m.
    Per month on single shifts basis with specifications)
    (a)
    Indigenous (b) Imported
    (g)
    Other Items of Expenditure (p.m. on single shift basis)
    -
    Power & water charges
    -
    Advertising & traveling
    -
    Transport
    -
    Commission to agents
    (h)
    Total recurring expenditure: -
    (f)
    +
    (g)
    +
    (h)
    (i)
    Working capital for 3 months: -
    (3 X recurring expenditure)
    (j) Total Investment required: -
    (a)
    Non-recurring expenditure
    (b) Working capital for 3 months
    (k) Total cost of Production: -
    -
    Total recurring expenditure
    -
    Depreciation on machinery & equipments
    -
    Depreciation on building
    -
    Maintenance charges
    -
    Interest on total investment
    -
    Welfare for staff
    -
    Office Stationary & Postage etc.
    (l)
    Profit & Loss Account: -
    • - By sales of quantity of @ Rs. (ex-factory exclusive of applicable taxes)

    • - Cost of production

    • - Profit (i) & (ii)

      • (m) Other fixed Investments: -

    • - Packing & Forwarding charges

      • - Electrification & Installation Charges

      • - Cost of tools/ fixtures

      • - Cost of office equipments.

    • 3. Profitability & Projections: - (generally for about 5 to 10 years)

      • - Phase of activity

      • - Profitability of phases

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    • 4. Infrastructure: -

    Locational Advantages

    - - Availability of material/ power/ water/ labour - Government Policy 5. Break-Even Point: - -
    -
    -
    Availability of material/ power/ water/ labour
    -
    Government Policy
    5.
    Break-Even Point: -
    -
    Fixed Cost (exclusive Salaries/ rent/ interest on investment & administrative cost)
    -
    Variable cost (direct labour/ direct material/ Income-tax/ commissions & Admn. Cost)
    For eg.
    1 term of cost
    Fixed + Variable
    =
    Total
    Fixed
    Variable
    Total
    Material
    Labour
    Other Expenditure
    Rs.
    Rs.
    Rs.
    Rs.
    Rs.
    Rs.
    Rs.
    Rs.
    Rs.
    Q
    =
    F
    =
    P
    =
    F
    P-V
    Fixed Cost
    Sales price per unit
    V
    =
    Variable cost per unit
    6.
    Name & Address of Suppliers
    -
    Raw Materials
    -
    Machinery & equipments
    7.
    Remarks
    (Signature of the Consultant)
    Seal & Date
    FEASIBILITY PLANNING:-
    Feasibility Plan: - An initial written plan comprising all the elements of a good business plan with objective
    of determining whether a new venture can be expected to succeed. Feasibility Planning encompasses the
    full range of business planning activities, but it seldom requires the depth of research or detail expected for
    an established enterprise
    Fundamentals of a Feasibility Plan: -
    -
    Developing a hood plan
    -
    Protecting the business
    -
    Making the plan readable
    Eight common elements in a Feasibility Plan: -
    1.
    Executive Summary (product or Services)
    2.
    Business Concept (major objectives)
    3.
    Product services
    4.
    Market Research & Analysis
    5.
    Market Plan (strategy to complete pricing promotion distribution)
    • 6. Manufacturing or Operations

    • 7. Entrepreneurial Team (profile of finders)

    • 8. Financial Documentation (assess & liabilities)

    A model of New Venture: - Feasibility Planning (4 Stages)

    1. Pre-Start up Stage: - The period during which entrepreneurs plan the venture and so the preliminary work of obtaining resources & getting organized prior to stand up.

    Business Concept defined =

    Purpose

    Produce Market Study = Research

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    Financial Planning

    =

    how, what, why

    Pre-Start up Implementation

    =

    purchase equipments

    • 2. Start-Up stage:- The initial period of business when the entrepreneur must position the venture in a market

    and make necessary adjustment to assure survival.
    and make necessary adjustment to assure survival.
    Sales Revenue Growth Position 3. Early Growth Stage:- A period of often rapid development and growth
    Sales
    Revenue
    Growth
    Position
    3.
    Early Growth Stage:-
    A period of often rapid development and growth when the venture may undergo
    major changes in markets, finances and resources utilization.
    4.
    Later Growth Stage:- The evaluation of a venture into a large company with active competitors in an
    established industry when professional Management may be more important.
    Ques 8(A) Write a not eon legal aspects of entrepreneurship?
    Ans:- Legal
    Aspects of Entrepreneurship:- Economic Activity is daily increasing in complexity.
    Governmental legislation, awakening social conscience, economic necessities- all play their roles in the
    creation and existence of enterprises. Entrepreneurship has several dimensions and an entrepreneur is
    expected to know them thoroughly to
    be successful. One such dimension is
    a legal dimension.
    An
    entrepreneur is concerned with law from the very beginning. From the point of view of ownership, there are,
    in the private sector, four forms of organization t run a business unit. They are as follows: -
    a)
    Sole Proprietorship
    b)
    Partnership firm
    c)
    Joint Stock Company
    d)
    Co-operative undertaking
    Hindu joint family Firm can be considered as the fifth form, although this is fast losing ground as a form of
    business organization.
    Thus, conforming to legal requirements will be the first thing for starting an enterprise. Then, of course, any
    enterprise has to be run within the legal framework doing business according to mercantile law, labour laws,
    tax laws etc.
    Forms of Legal Ownership
    Enterprise
    Commercial Industrial
    Private Sector
    Public Sector
    Individual Ownership Group Ownership
    Sole Proprietorship
    (i) Partnership
    (ii) Company
    (iii) Co-operative Society
    (iv) Hindu Joint Family Firm
    (i) Govt. Deptt.
    (ii) Public Corporation
    (iii) Company

    I. Sole Proprietorship Business:- This is the oldest form of business ownership. It is also the simplest and most natural.

    Characteristics/ Features:-

    1)

    One-man ownership

    2)

    Personal Control

    3)

    Total or undivided risk

    4)

    Liability is unlimited

    Suitability

    1)

    When enterprise is small in size.

    2)

    When little capital is required.

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    3)

    4)

    5)

    Where risk involved is not heavy. When control by one man is sufficient.

    Where personal attention to customer’s needs and tastes is important.

    Advantages: -

    1)

    2)

    3)

    4)

    5)

    6)

    7)

    Ease of formation Complete degree of control Promptness in decision-making Maintenance of survey Fallibility in operation Catering to individual tastes. Minimum Governmental regulation

    Disadvantages: - 1) 2) Limited amount of capital Limited managerial ability 3) 4) 5) Liability is
    Disadvantages: -
    1)
    2)
    Limited amount of capital
    Limited managerial ability
    3)
    4)
    5)
    Liability is unlimited
    Risk is heavy
    Uncertainty of continuity
    Partnership: - The law of partnership is contained in the Indian partnership Act, 1932. The act defines
    partnership as “ the relation between persons who have agreed to share the profits of a business caries on
    by all or any of them acting for all”.
    The essential characteristics of partnership are: -
    1)
    2)
    3)
    4)
    5)
    Association of two or more persons
    Agreement
    Business
    Sharing of profits
    Mutual Agency
    A Partnership is based on an agreement. The partnership agreement may be made orally or in writing or may
    be implied from the course of dealings among partners. However, all the essential elements of a valid
    contract must be present.
    Legal Implications of partnership: -
    1)
    2)
    3)
    Legal Position – Not a legal entity
    Liability – Unlimited, joint and individual
    Utmost good faith
    4)
    5)
    6)
    7)
    Implied Authority – each partner is an agent and hence has an implied authority bind all the partners.
    Unanimity of consent is a must
    Non-transferability of share or interest without the consent of other partners.
    Dissolution – Unless there is an agreement to the contrary, death or insolvency of a partner dissolves
    the firm.
    Registration of a Partnership firm: -
    The Partner ship Act does not provide for the compulsory registration of firms. Bur Indirectly, by creating
    certain disabilities from which an unregistered firm suffers, it makes registration advantageous.
    (2)Partnership Deed

    Though a partnership is constituted by agreement between the parties, it need not necessarily be in writing. It may be of the most informal character, even oral, though the business of partnership may involve millions of rupees, or on the other hand, it may be an elaborate written document called the Deed of partnership or

    Articles of partnership, and drafted by a lawyer. Where the partners have decided to enter into a deed of partnership, it should be stamped according to the provisions of the stamp Act. A properly drawn up Deed of Partnership should ordinarily cover the following points:-

    • 1 Name of the firm together with the names of the partners composing it.

      • 2. The nature of business and the duration of partnership.

      • 3. The amount of capital each partner undertakes to contribute and the manner of its contribution.

      • 4. The ratio for sharing profit & loss.

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    • 5. Salaries, commissions, etc, if any, payable t5o partners, and also any drawings which may be

    allowed.

    • 6. Valuation goodwill

    • 7. Matters relating to retirement, death and admissions of partners ..

    • 8. Settlement of account at the dissolution of the firm.

    • 9. Arbitration Clause

    10. Ant other clause or Clauses found necessary.

    (3) Company form of enterprise: -

    For enterprise, which require huge capital base, individual

    proprietorship or partnership may not be able to supply the required capital. Therefore, it becomes necessary to have another form of organization through which large sums of money could be arranged from a large number of people who are either not capable of running business enterprises or have no time to do so. They will, however, be willing to invest their savings in a business provided they are assured that their money is safe and they will not be called upon to pay anything more than what they undertake to invest. The form

    suitable to serve these purposes is found to be a ‘Limited Company’. This firm enables the
    suitable to serve these purposes is found to be a ‘Limited Company’. This firm enables the entrepreneurs to
    get the necessary capital from friends, relatives, general public etc. retaining at the same time, the control
    and management in their own hands. Joint Stock Company is, in fact, much better than partnership form of
    business.
    In Joint Stock Companies, the capital is contributes by a large group of people known as shareholders.
    Some of the labour Laws an entrepreneur should be familiar with:
    1.
    Workmen’s Compensation Act, 1923
    2.
    Trade Union Act, 1926
    3.
    Payment of wages Act, 1936
    4.
    Industrial Disputes Act, 1947
    5.
    Minimum Wages Act, 1948
    6.
    Factories Act, 1948
    7.
    Employees Provident Funds and Family Pension Fund Act, 1952
    8.
    Employees State Insurance Act, 1952
    9.
    Payment of Bonus Act, 1965
    10. Payment of Gratuity Act, 1972

    Ques 8 (B):- What are the criteria for project criteria? Ans:- Project Identification & Selection (PIS) Meaning of Project:- The success on failure of an enterprise largely depends upon the project. In simple words, a project is an idea or plan that is intended to be carried out. The dictionary meaning of a project is that it is a scheme, design; a proposal of something intended or devised to be achieved. Acc to Newman, “A project typically has a distinct mission that it is designed to achieve and a clear termination point, the achievement of the mission.” Gillinger defines the project: - “As the while complex of activities involved in using resources to gain benefits. A project can be defined as a scientifically evolved wok plan devised to achieve a specific objective, time duration and complexity, yet they partake of the following three basic attributes(i) A course of action.(ii) Specific Objectives,(iii)Definite Time Perspective.

    PROJECT CLASSIFICATION-

    • (I) Quantifiable: and Non-quantifiable Projects:- Projects for which a plausible

    quantitative assessment of benefits can be made are called ‘quantifiable projects’. Projects concerned with Industrial development power generation, mineral development fall in this category. On the contrary, non-quantifiable projects are those in which a plausible quantitative assessment cannot be made. Projects involving health education and defence are the examples of non-quantifiable projects. (II) Sectrol Projects: - Acc to this classification, a project may fall in any one of the following

    sectors:

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    • Agriculture and Allied Sector

    • Irrigation and Power Sector

    • Industry and Mining Sector

    • Transport and Communication Sector

    • Social Services Sector

    • Miscellaneous Sector

    The Project classification based on economic sectors is found useful in resource allocation more especially at
    The Project classification based on economic sectors is found useful in resource allocation more especially
    at macro levels.
    (III) Techno-Economic Projects: - Projects Classification based on techno-economic
    characteristics fall in this category. This type of classification includes factors intensity-
    oriented classification, causation-oriented classification and magnitude-oriented
    classification. These are discussed as follows:-
    (a)Factor Intensity-Oriented Classification: - Based on factor intensity classification, projects may be
    classified as capital intensive or labour intensive. If large investment is made in plant & Machinery, the
    projects will be termed as ‘Capital Intensive’. On the contrary, projects involving large number of human
    resources will be termed as ‘Labour Intensive’.
    (b) Causation-Oriented Classification: - Where causation is used as a basis of classification, projects may
    be classified as demand based or raw material based projects. The very existence of demand for certain
    goods or services makes the project demand-based and the availability of certain raw materials, skills or
    other inputs makes the project raw material-based.
    (C) Magnitude-Oriented Classification: - In case of magnitude-oriented classification, based on the size of
    investment involved in the projects, the projects are classified into large scale, medium-scale or small scale
    projects.
    (I)Project Identification: -
    If you ask any one intending entrepreneur what project he/she will select, the obvious answer would be “a
    project having a good market”. But, the question is how without knowing the product could one determine the
    market? Whose market will one find out without knowing the item, i.e. Product? Idea generation about a few
    projects provides a way out of above tangle.
    Idea Generation:-
    Project selection process stats with the generation of a product idea. In order to select the most promising
    project, the entrepreneur needs to generate a few ideas about the possible projects he/ she can undertake.
    The projects ideas can be discovered from various – Internal & External sources. These may include:-
    i.
    ii.
    iii.
    iv.
    Knowledge of potential customer needs
    Watching emerging trends in demands for certain products
    Scope for producing substitute product
    Going through certain professional magazines catering to specific interests like electronics,
    computers etc.
    v.
    vi.
    vii.
    viii.
    ix.
    Success stories of known entrepreneurs or friends or relatives.
    Making visits to trade fairs and exhibitions displaying new products and services
    Meeting with Govt. agencies
    Ideas given by the knowledgeable persons
    Knowledge about the Government Policy, concession and incentives, list of items reserved for
    exclusive manufacture in small scale sector and
    x.
    A new product introduced by the competitor

    All of these sources putting together may give a few ideas about the possible projects to be examined as the

    final project. This is also described as ‘Opportunity scanning and identification’.

    After going through the above process, imagine that you have been able to get five project ideas as a result

    of above analysis. These five project ideas are:

    • 1. Nut and bolt manufacturing (Industry)

    • 2. Lakhani Shoes (Industry)

    • 3. Photocopying Unit (service- based Industry)

    • 4. Electro-type writer servicing (service-based industry)

    • 5. Poloythene bags for textile industry (ancillary industry)

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    From above list, now one project idea will be finally selected going through the following selection process.

    (II) Project Selection:-

    Project selection starts from where project identification ends. After having some project ideas, these are analysed in the light of existing economic conditions, the government policy and so on. A tool generally used for this purpose is, what is called in the managerial jargon, SWOT Analysis. The intending entrepreneur analyses his/ her strengths and weaknesses as well as opportunities/ competitive advantages and threats/ challenges offered by each of the project ideas. On the basis of the analysis, the most suitable idea is finally selected to convert it into an enterprise. The process involved in selecting a

    project out of some projects is also described as the “zeroing in process”.

    What follows from above analysis is that there is a time interval involved in between project identification and project selection. But, in some cases, there may be almost no time gap between the two. An imaginary case can illustrate it. Two friends Nikhil and Chinmoy were traveling from Guwahati to Delhi by North East Express. Their train

    stopped at Allahbad. Some teenagers with guava baskets crowded the compartment. Almost every passenger purchased guava.
    stopped at Allahbad. Some teenagers with guava baskets crowded the compartment. Almost every
    passenger purchased guava. So did Nikhil and Chinmoy also. They started eating guava. Chinmoy told to
    Nikhil: “The guava are really delicious. Nikhil nodded. They reached Delhi by evening and parted company.
    While Chinmoy went to his home, Nikhil took Brahmputra Mail to Allahbad. He contacted shopkeepers in
    Allahbad who were selling guavas. He finalized a business deal for them to send a packet of 1000 kgs of
    guavas daily to De3lhi. Thus, Nikhil’s business started from the third day when he was selling guavas in
    Delhi.
    Here, one pertinent question for us is how did this idea make its headway into a business opportunity for
    Nikhil? In its answer, what can we mention is that Nikhil must have a turned question in his mind like:
    (i)
    (ii)
    (iii)
    Who will buy his guavas?
    What will be the size of the packets and what will be its price?
    How much will be the cost of per K.G. of guava?
    Project identification and selection is half done in the process of establishing an enterprise. The entrepreneur
    needs to analyze other related aspects also like raw material, potential market, labour, capital, location,
    forms of ownership etc. It is necessary to mention that each of these aspects has to be evaluated
    independently and in relation to each other. This forms a continuous and “back and forth” process as shown
    in figure:
    Product
    Ownership
    Raw Material
    Location
    Interdependence
    AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 From above list, now one project idea will

    Working Capital

    AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 From above list, now one project idea will

    Process

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    Market
    Market
    Labour
    Labour
    AIM COLLEGE-HISAR ENTREPRENEUR DEVELOPMENT (CP-401) Contact: 92533-50008, 94164-43238 From above list, now one project idea will

    AIM COLLEGE-HISAR

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    Contact: 92533-50008, 94164-43238

    Ques 8 (C ):- Define achievement Motivation? How it is promoted? With achievement theory? Ans:- Achievement Motivations:- One’s drive to overcome challenges and obstacles to achieve the set goal McClelland’s Acquires Need Theory:- According to David McClelland (1960’s) – 3 types of needs as a result of one’s life experience. These three needs are:

    • 1. Need for affiliation: - These refer to needs to establish and maintain friendly and warm relations with others.

    • 2. Need for power: - These mean the one’s desire to dominate and influence others by using physical objects and actions.

    • 3. Need for Achievement: - This refers to one’s desire to accomplish something with own efforts. This

    implies one’s will to excel in his/ her efforts. Achievement Motivation: - The need for achievement plays an important role in making an entrepreneur as successful. It is in an inner spirit that activates an entrepreneur to strive for success. In simple terms, need for achievement is the desire to do well. The empirical evidences support the hypotheses that need for

    achievement contributes to entrepreneurial success. Hence, there is the need for developing achievement motivation for developing
    achievement contributes to entrepreneurial success. Hence, there is the need for developing achievement
    motivation for developing entrepreneurship in an economy.
    How to develop achievement motivation:-
    David McClelland, a well-known behavioral scientist of USA holds the view that achievement motivation can
    be developed through training and experience. For this, McClelland conducted his experiments with groups
    of businessmen in three countries, i.e., Malawi, India and Equador. He carried out a separate full-fledged
    training programme in India to instill Achievement motivation in the minds of entrepreneurs. His successful
    experiment is popularly known as ‘Kakinada Experiment’. Following is a brief description of the same.
    KAKINADA EXPERIMENT: -
    Kakinada is an industrial town in Andhra Pradesh. The experiment started in January 1964. The main
    objective of the experiment was to break the barrier of limited aspirations by inducing achievement
    motivation. A total of fifty-two persons were selected from business and industrial community of the town.
    They were given an orientation programme at small Industry Extension Training Institute (SIET), Hyderabad.
    The participants were grouped into three batches. They were put under training for 3 months.
    The training programme was designed in such a way that it could help the trainees improve imagination and
    enable them introspect their motivation. Accordingly, the programme included the following items in its
    syllabi:
    1.
    The individuals strived to attain concrete and regular feedback.
    2.
    The participants sought models of achievement to emulate.
    3.
    The participants thought of success and accordingly set plans and goals.
    4.
    The participants were encouraged to think and talk to themselves in a positive manner.
    The impact of this training programme on the participants behaviour was observed after a period of
    two years. The observations were encouraging. It was found that those attended the programme
    performed better than those did not. The participants need for achievement was assessed by using
    Thematic Appreciation Test (TAT). In this TAT, ambition related pictures were displayed to the
    trainees and then they were asked to interpret the picture and what is happening in the picture.
    Thereafter, all the themes related to achievement were counted and, thus, the final score
    represented one’s need for achievement. McClelland reached to this conclusion that the training

    programme positively influenced the entrepreneurial behaviour of the participants. As regards caste,

    the traditionally beliefs ad imitation of western culture, they did not determine one’s behaviour as an

    entrepreneur. That the need for achievement motivation can be developed more especially in younger minds is well supported by the cross-country experiments. For example, a junior Achievement Programme’ is started in the United States of America with a view to instill achievement motivation in the minds of younger generation. Similarly, in United Kingdom, ‘Young Enterprise’ programme has been started with the same objective of inducing achievement motivation in younger minds. The above said experiment/ programmes have made us to realize that entrepreneurship is to be developed from a very young age. Accordingly, efforts have been made to develop a school

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    curriculum that would result in a high need for achievement among the students. For this purpose, the success stories drawn from history and legends of the indigenous culture are introduced in course curriculum to induce in young minds the ‘need for achievement’ and strong desire to do something good/ great they grow up. This is because the younger minds are more suspect able to change.

    Ques 9:- Discuss the need for institutional support to entrepreneurs/ SSI.

    Ans:- Need for Institutional Support:- Starting a business or industrial unit say, enterprise in short-requires various resources and facilities. Small scale enterprises, given their small resources, find it difficult to have these their own. Finance has been an important resource to start and run an enterprise because it facilitates the entrepreneur to procure land, labour, material, machine and so on from different parties to run his/ her enterprise. Hence, finance is considered as life-blood: for an enterprise. Institutional Support to Small Entrepreneurs:-

    I. National Small Industries Corporation Ltd. (NSIC):- The national small Industries corporation Ltd., an enterprise under
    I. National Small Industries Corporation Ltd. (NSIC):- The national small Industries corporation
    Ltd., an enterprise under the Union Ministry of Industries, was set up in 1955 to promote, aid and
    foster the growth of small scale industries in the country. NSIC provides a wide range of services,
    predominantly promotional in character to small-scale industries. Its main functions are:-
    II. Small Industries Development Organization (SIDO):- Small Industries Development
    Organization is a subordinate office of the Department of SSI & ARI. It is an apex body and nodal
    agency for formulating, coordinating and monitoring the policies and programmes for promotion and
    development of small-scale industries. Development commissioner is the head of the SIDO. He is
    assisted by various directors and advisors in evolving and implementing various programmes of
    training and management consultancy, industrial investigation, possibilities for development for
    different types of small-scale industries, development of industrial estates etc. The main functions
    of SIDO are classified into
    To provide machinery on hire-purchase scheme to small-scale industry.
    To provide equipment leasing facility.
    To help in export marketing of the products of small-scale industries.
    To participate in bulk purchase programme of the Government.
    To develop prototype of machines and equipments to pass on to small-scale industries for
    commercial production.
    To distribute basic raw material among small-scale industries through raw material depots.
    To help in development and up gradation of technology and implementation of modernization
    programmes of small-scale industries.
    To impart training in various industrial trades.
    To set up small-scale industries in other developing countries on turn-key basis.
    To undertake the construction of industrial estates.

    (i)

    (ii)

    (iii)

    co-ordination industrial development extension

    These functions are performed through a national network of institutions and associated agencies crated for specific functions at present. The SIDO functions through 27 offices, 31 small industries Service Institutes (SISI), 37 extension Centres, 3 product-cum-process Development Centres, and 4 production centers. All small scale industries expect those failing within the specialized boards and agencies like KVIC, coir Boards, Central Silk Board etc. fall under the purview of the SIDO.

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    Main functions performed by SIDO:-

    Functions relating to Co-ordination:-

    To evolve a national policy for the development of small scale industries.

    To maintain a proper liaison with the related Central Ministries, Planning Commissions, State

    To co-ordinate the policies and programmes of various State Governments

    Govt., Financial Instt. Etc. To co-ordinate the programmes for the development of industrial estates.

    Functions relating to Industrial Development:-

    To reserve items for production by small-scale industries

    To collect data on consumer items imported and then, encourage the setting of industrial units to produce these items by giving coordinated assistance. To render required support for the development of ancillary units, and To encourage small-scale industries to actively participate in Govt. Stores Purchase Programme by giving them necessary guidance, market advice and assistance.

     Functions relating to Extension: -     To make provision of technical services
    Functions relating to Extension: -
    To make provision of technical services for improving technical process, production planning,
    selecting appropriate machinery, preparing factory layout and design.
    To provide consultancy and training services to strengthen the competitive ability of small-
    scale industries.
    To render marketing assistance to small-scale industries to effectively sell their products
    To provide assistance in economic investigation and information to small-scale industries.
    III.Small Scale Industries Board (SSIB): - The Govt. of India constituted a Board, small scale
    Industries Board in 1954 to advise on development of small scale industries in the country. The
    SSIB is also known as Central Small Industries Board. The range of developmental work in small,
    tiny7 and village industries in he State/ Union Territories under their
    jurisdiction. .
    Incorporation
    under the Companies Act has provided SSIDCs with greater operational flexibility and wider scope
    for undertaking a variety of activities for the benefit of the small sector.
    The important functions performed by SSIDCs include: -
    To procure and distribute scarce raw material.
    To supply machinery on hire purchase system
    To provide assistance for marketing of the products of small-scale industries.
    To construct industrial estates/ sheds, providing allied infrastructure facilities and their
    maintenance.
    To extend seed capital assistance on behalf of the state govt. concerned. Provide
    management assistance to production units.
    Small Industries Service Institutes(SISIs):- The small Industries Services Institutes are set up to
    provide consultancy and training to small entrepreneurs – both existing and prospective. The

    activities of SISIs are coordinated by the Industrial Management training division of the DCSSI’s office. There are 28 SISIs include:-

    The main functions of SISIs include:-

    • To serve as interface between Central and State Govt.

    • To render technical support services.

    • To conduct entrepreneurship development programmes.

    • To initiate promotional programmes.

    The SISIs also render assistance in the following areas:

    i.

    Economic Consultancy/ Information/ EDP Consultancy.

    ii.

    Trade and market information.

    iii.

    Project Profiles

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    iv.

    State Industrial Potential Survey

    • v. District Industrial Potential surveys Modernization and in plant studies.

    vi.

    vii.

    Workshop facilities Training in various trade/ activities. III. District Industries Centres (DICS):- The district Industries Centres programme was started on May 8, 1978 with a view to provide integrated administrator framework at the district level for promotion of small-scale Industries in rural areas. The DIC’s are envisaged as a single window interacting agency with the entrepreneur at the district level. Services and support to small entrepreneur are provided under single roof through the DIC’s. They are the implementing arm of the Central and State Governments of the various schemes and programmes. Registrations of small industries is done at the district industries centers. The SEEUY/ PMRY for employment generation is also implemented by the DIC’s.

    viii.

    The organizational structure of DIC’s consist’s of one General Manager, four Functional Managers and three Project
    The organizational structure of DIC’s consist’s of one General Manager, four Functional Managers
    and three Project Managers to provide technical service in the area relevant to needs of district
    concerned. Management of the DIC’s is done by the State Governments. The scheme has now
    been transferred to the states and from the year 1993-94, funds will not be provided by the central
    government to the States for running the DIC’s.
    Functions:- The DIC’s role is mainly promotional and developme3ntal. To attain this, they have to
    perform the following main functions:-
    To conduct industrial potential surveys keeping in view the availability of resources in terms of
    material and human skill, infrastructure, demand for product, etc. To prepare techno-economic
    surveys and identify product lines and then to provide investment advice to entrepreneurs.
    To prepare an action plan to effectively implement the schemes identified.
    To guide entrepreneurs in matters relating to selecting the most appropriate machinery and
    equipment, sources of its supply and procedure for procuring imported machinery, if needed,
    assessing requirements for raw materials etc.
    To appraise the worthiness of the various proposals received from entrepreneurs.
    To assist the entrepreneurs in marketing their products and assess the possibilities of ancillarisation
    and export promotion of their products.
    To undertake product development work appropriate to small industries.
    To conduct artisan training programmes.
    To function as the technical arms of DRDA in administering IRD and TRRYSEM programmes.
    Industrial Estates:- Industrial Estates is yet another institutional measures to promote industrialization in the
    country. In India, Industrial estates have been utilized as an effective tool for the promotion and growth of
    small-scale industry. They have also been used as an effective tool to decentralize industrial activity to rural
    and backward areas. Industrial estates are also known by different names eg. Industrial region, industrial
    park, industrial area, industrial zone etc.
    Let us consider a few definitions on Industrial estates given by different authors and agencies.
    Thus, an Industrial estate is a place where the required facilities and factory accommodation are provided by
    Government t5o the entrepreneurs to establish their Industries there.

    Types of Industrial Estates:-

    Industrial Estates classified on various bases. The prominent ones are:-

    • 1. On the basis of functions: - On the basis of functions, Industrial Estates are broadly classified into two types:- (a) General type Industrial Estate (b) Special type Industrial Estates.

    • 2. On the basis of Organizational Set-up:- On the basis, (Industrial estates are classified into four following types:-

      • (a) Govt. Industrial Estates

      • (b) Private Industrial Estates

      • (c) Co-operative Industrial Estates

      • (d) Municipal Industrial Estates

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    • 3. On the basis of other Variants:- Init Ind. Estates classified into following types:-

    • (a) Ancillary Industrial Estates:- In such Industrial Estates, only those small-scale units are housed which

    are ancillary to a particular large industry. Like HMT, Banglore.

    • (b) Functional Industrial Estates: - Ind. Units manufacturing the same products are usually housed in these

    Industrial estates. These Industrial estates also serve as a base for expansion of small units into larger units. (c ) The Workshop Bay:- Such types of Industrial estates are constructed mainly for very small firms engaged in repair work.

    Objectives of Industrial Estates:-

    • i. To provide infrastructure and accommodation facilities to the entrepreneurs. To encourage the development of small-scale industries in the country. To decentralize industries to the rural and backward areas. To encourage ancillarisation I surrounding major Industrial units, and

    ii.

    iii.

    iv. v. To develop entrepreneurship by creating a congenial climate to run the industries in these
    iv.
    v.
    To develop entrepreneurship by creating a congenial climate to run the industries in these areas.
    Industrial Estates in India:- One of the major handicaps faced by small scale industries in India has been
    either lack or insufficient infrastructure facilities. In order to provide small-scale unit6s the readymade
    buildings/ factory sheds at subsidies rates, infrastructure facilities and the proximity of other industrial units,
    the idea of establishing, industrial estates was first adopted in India by the small-scale Industries Board at its
    meeting help in January 1955. As a result, the first Industrial estate in India was set up at RajKot, in Gujrat in
    September 1955. Since then, there is no looking back. By now, the number of industrial estates in the
    country had gone upto more than 650. – Making it to largest programme of its king in the world.
    Specialized Institutions:-
    In addition to the above institution, the government has also set up the following specialized institutions to
    boost the growth of all types pf small-scale industries in the country:
    (1) Central Institute of Took Design, Hyderabad:- The central government set up this Institute in 1968 with
    the help of UNDP and ILO to help small-scale industries by imparting specialized training to the personnel
    working in the design and manufacture of tools, jigs, fixtures, dies and moulds. The other functions
    performed by it are:
    (a) To offer consultancy and advisory services and assistance in the design and development of tools.
    (b) To suggest proper measures to improve the standard of tools, tooling elements, jig components, fixtures,

    dies etc. (c ) To offer the needed tool room facility. (2) Central tool room training center:- In order to provide tool room services and facilities in design, manufacture and training the Government has set up four tool room training centers located at Banglore, Calcutta, Ludhiana and New Delhi. (3) Central Institute of Hand tool, Jalandhar:- This institute has been set up with a view to provide improved technology, raw materials design and testing for handloom industry. This is the only institute of its kind in the country located at Jalandhar. (4) Institute for design of Electrical measuring Instruments, Mumbai:- This institute was set up in 1969 with the assistance from UNDP. It was set up to provide technical consultancy services in the matters relating to design and development of electrical and electronic instruments, tool designing and fabrication and training. (5) National Institution of Entrepreneurship and small business development, New Delhi: - It is an apex national level institute of its kind set up at New Delhi, 1983. Its main functions are to coordinate research and training in entrepreneurship development and to impart specialized training to various categories of entrepreneurs. (6) National Institute of Small Industries Extension Training, Hyderabad:- This institute was set up in

    1956 to develop the required manpower for running small scale industries in the country. Accordingly, its main functions are:- (a)To impart training to the persons engaged in small-scale industries. (b)To undertake research studies relating to development of small scale industries. (c )To enter into agreements to provide consultancy services to small industries in the country. (7) Other Institutes:- Following are some of the important institutes set up by the Government for development of small scale industries:- (a) Electronic Training and service Institute, Nanital

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    • (b) Central Machine Tools Ltd, Banglore

    • (c) Sports goods and Leisure Time equipment, Meerut

    • (d) Central Institute of Plastics Engineering and tools, Madras

    • (e) National Institute of Foundary and Forging Technology, Ranchi

    Technical Consultancy Organization (TCO’s)

    A network of Technical Consultancy Organizations was established by the All India Financial Institutions in the seventies and eighties in the collaboration with state-level financial institution and commercial banks to cater to the consultancy needs of small industries and new ewntrepreneu7res. At present there are 17 TCO’s operating in various states which are:-

    • 1. Andhra Pradesh Industrial and R=Technical Consultancy Organization Ltd. (APITCO)

    • 2. Bihar Industrial & Technical Consultancy Organization Ltd. (BITCO)

    3. Gujrat Industrial & Technical Consultancy Organization Ltd. (GITCO) 4. Haryana-Delhi Industrial Consultants Ltd. (HARDICON) 5.
    3.
    Gujrat Industrial & Technical Consultancy Organization Ltd. (GITCO)
    4.
    Haryana-Delhi Industrial Consultants Ltd. (HARDICON)
    5.
    Himachal Consultancy Organization Org. Ltd. (HIMCO)
    6.
    Industrial and Technical Consultancy Org. of TamilNadu Ltd. (ITCOT)
    7.
    Jammu & Kashmir Industrial and Technical consultancy org. Ltd.(J&KITCO)
    8.
    Karnataka Ind. & Technical Consultancy Org. Ltd. (KITCO)
    9.
    Madhya Pradesh Consultancy Org. Ltd. (MPCON)
    10.
    Maharashtra Ind. & Technical Consultancy Org. Ltd (MITCON)
    11.
    North-Eastern Industrial Consultants Ltd.(NECON)
    12.
    North-Eastern Ind. And Technical Consultancy
    Org. .
    Ltd. (NEITCO)
    13.
    North-India Technical Consultancy Org. Ltd. (NITCON)
    14.
    Orrisa Industrial and Technical Consultancy Org. Ltd. (ORITCON)
    15.
    Rajasthan Consultancy Org. Ltd. (RAJCON)
    16.
    U.P. Industrial Consultants Ltd. (UPICO)
    17.
    West Bengal Consultancy Org. Ltd. (WEBCON)
    Functions of TCO’s:- Initially, TCO’s functions were focused on pre-investment studies for small and
    medium scale enterprise. Over the years, they have diversified their functions to include the following:-
    To prepare project profiles and feasibility profiles.
    To undertake industrial potential surveys.
    To identify potential entrepreneurs and provide them with technical and management assistance.
    To undertake market research and surveys for specific products.
    To supervise the project and where necessary, render technical and administrative assistance ..
    To undertake export consultancy for export-oriented projects based on modern technology.
    To conduct entrepreneurship development programmes.

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