UNIT -II

Entrepreneurial venture can be defined as an organisation that places innovation and

opportunism at its heart in order to produce economic or social value.
Venture- is a risky or daring undertaking or journey
Venture Concept- brings together experienced and qualified resources in order to extend
those of the enterprises. They help implement change management and reduce
risks. Venture Concepts consultants have launched new companies and can assist start-
ups or strategic joint-ventures.
Venture creation meaning:

The process of turning a new idea or technology into a business that can succeed
and will attract investors: Potential entrepreneurs trying to identify a
possible business idea, pay attention to everything in the media that relates
to venture creation

MOBILITY OF ENTREPRENEURS

Movement and mobility is an integral part of human life. Entrepreneurs, being

human beings, do also move from one location to another and also from one
occupation to another. This movement of entrepreneurs from one location to
another and from one occupation to another occupation may be termed as
entrepreneurial mobility.

Various factors influence entrepreneurial mobility. These factors may serve as

“pull” and “push” factors. Generally, the following factors do influence
entrepreneurial mobility:

(1) Education: Education enlarges one’s thinking and understanding. He/she

also enables to adjust with the different conditions more easily and clearly and
communicate others in a better manner. This is why an educated entrepreneur
tends to be more mobile than an uneducated entrepreneur.
(2) Experience: An entrepreneur’s past experience in business and industry
also increases his/her tendency to move. An experienced entrepreneur better
perceives the available opportunities, better analyses his/her strengths and
weaknesses and also understands the complexities involved in running an
enterprise.

(3) Availability of facilities: Entrepreneurs tend to move from the areas with
no or fewer facilities to the areas with more and better facilities. Ex., Govt.
facilities; availability of raw materials, labors, market facilities.

(4) Political conditions: Entrepreneurial mobility is also influenced by political

factors. Hortal, strike, red-tapism, bribe system, political pressure etc. affect the
entrepreneurial mobility seriously.

(5) Size of enterprise: Size of enterprises also has a vital effect on

entrepreneurial mobility. Generally, larger business houses are more mobile
than smaller business houses. Because a large size of the enterprise will have
the capability to start a new business at a new place.

Although one may add more factors to this list, yet the above five factors seem
to be the common ones influencing the entrepreneurial mobility.

OPPORTUNITY EVALUATION:
An entrepreneur would like to evaluate the opportunities for his products, both goods and
services, in the market. ... According to experts, opportunity evaluation is meant to assess
future opportunities and identify wealth creating resources that can be controlled and
utilized by the entrepreneur

MODELS FOR OPPORTUNITY EVUALATION:

External Factor Evaluation (EFE) matrix method is a strategic-management tool often
used for assessment of current business conditions. The EFE matrix is a good tool to
visualize and prioritize the opportunities and threats that a business is facing.

The EFE matrix is very similar to the IFE matrix. The major difference between the EFE
matrix and the IFE matrix is the type of factors that are included in the model. While the IFE
matrix deals with internal factors, the EFE matrix is concerned solely with external factors.

External factors assessed in the EFE matrix are the ones that are subjected to the will of
social, economic, political, legal, and other external forces.

How do I create the EFE matrix?

Developing an EFE matrix is an intuitive process which works conceptually very much the
same way like creating the IFE matrix. The EFE matrix process uses the same five steps as
the IFE matrix.

List factors: The first step is to gather a list of external factors. Divide factors into two
groups: opportunities and threats.

Assign weights: Assign a weight to each factor. The value of each weight should be
between 0 and 1 (or alternatively between 10 and 100 if you use the 10 to 100 scale). Zero
means the factor is not important. One or hundred means that the factor is the most
influential and critical one. The total value of all weights together should equal 1 or 100.
Rate factors: Assign a rating to each factor. Rating should be between 1 and 4. Rating
indicates how effective the firm’s current strategies respond to the factor. 1 = the response
is poor. 2 = the response is below average. 3 = above average. 4 = superior. Weights are
industry-specific. Ratings are company-specific.

Multiply weights by ratings: Multiply each factor weight with its rating. This will calculate
the weighted score for each factor.

Total all weighted scores: Add all weighted scores for each factor. This will calculate
the total weighted score for the company.

You can find more details about this approach as well as about possible values that the EFE
matrix can take on the IFE matrix page.

EFE matrix example

Total weighted score of 2.46 indicates that the business has slightly less than average
ability to respond to external factors. (See the page on IFE matrix for an explanation of
what category the 2.46 figure falls to.)

What should I include in the EFE matrix?

Now that we know how to construct or create the EFE matrix, let's focus on factors.
External factors can be grouped into the following groups:

 Social, cultural, demographic, and environmental variables:

 Economic variables
 Political, government, business trends, and legal variables

Below you can find examples of some factors that capture aspects external to your
business. These factors may not all apply to your business, but you can use this listing as a
starting point.

Social, cultural, demographic, and environmental factors...

- Aging population
- Percentage or one race to other races
- Per-capita income
- Number and type of special interest groups
- Widening gap between rich & poor
- Number of marriages and/or divorces
- Ethnic or racial minorities
- Education
- Trends in housing, shopping, careers, business
- Number of births and/or deaths
- Immigration & emigration rates

Economic factors...

- Growth of the economy

- Level of savings, investments, and capital spending
- Inflation
- Foreign exchange rates
- Stock market trends
- Level of disposable income
- Import and export factors and barriers
- Product life cycle (see the Product life cycle page)
- Government spending
- Industry properties
- Economies of scale
- Barriers to market entry
- Product differentiation
- Level of competitiveness (see the Michael Porter's Five Forces model)

Political, government, business trends & legal factors...

- Globalization trends
- Government regulations and policies
- Worldwide trend toward similar consumption patterns
- Internet and communication technologies (e-commerce)
- Protection of rights (patents, trade marks, antitrust legislation)
- Level of government subsidies
- International trade regulations
- Taxation
- Terrorism
- Elections and political situation home and abroad

IFE matrix or Internal Factor Evaluation matrix was created by Fred R. David and
is strategic management and analysis tool closely related to SWOT analysis, TOWS
analysis. It involves identification of key internal factors affecting
business organization. Method of IFE matrix is a subjective one but with numbers in the
construction. Overall scores are used for further analysis, setting priorities for business
plans and strategic goals. IFE matrix are also used to visualize impact of internal factors
on organization. Tool is closely related to EFE matrix and from both of them there is a
possibility to build IM matrix.

Internal Factors exampleedit

Strengths are the fields from which company may get the most profit and efficiency.
Mostly strengths should cover weaknesses and that means that the company has a
good management strategic. Strengths examples:

 income
 good position on a market (high market value)
 profitable, high value of shares
 good financial situation
 high level of marketing and / or promotion
 recognizable brand
 high quality products

Weaknesses are the fields which the company should take care of because those can
generate losses two ways: directly or any other companies on the market can expose
weak areas and that leads to losses. Weaknesses examples:

 unprofitable operations, low Return on Investment (RoI)

 high cost of doing business
 poor motivation of employees
 low quality products, and too expensive ones.

How to create IFE matrixedit

1. List advantages (strengths) and disadvantages (weaknesses) in the 1st column.
For the best results mention not less than 10 but not more than 20.
2. Match the characteristic with the Appropriate weight (range from 0.00 – 1.00).
When adjusting the position with the weight remember to use greater values for
the ones which have the biggest impact on company's efficiency. Similarly for the
less important ones use smaller scales. All weights needs to sum up to 1.0.
Numbers should be included in the 2nd column.
3. All positions from 1st column needs to be rated from 1 to 4. Weaknesses can
receive 1 (major) or 2 (minor) mark. Similarly strengths can receive 3 (minor) or 4
(major) rating. Above scales should be entered in the 3rd column.
4. Calculate the value of each factor by multiplying weight (2nd column) by factor
(3rd column).
5. Sum up the values of each single factor at the bottom of the table. The result is
called “overall weighted ratio”. When the total is <2.5 that means that the
company is in a poor condition, but if total >2.5 the company's situation is
excellent. In the situation if total equals to 2.5 there is a message for the
company that a lot of improvements can be done. Company
should work on strategy / procedures[1].
SWOT analysis vs IFE matrixedit
The main difference in IFE matrix and SWOT analysis is the way the features are
positioned. In IFE we have them positioned by factors and weights. What is more SWOT
analysis has a lot of different characteristics when IFE matrix should not include more
than 20 of them. Fulfilling every part of SWOT analysis can lead to over-analysis of one
single object. It will never be an issue with IFE matrix as taking too many points into
consideration results with each factor being underestimated. Even in the situation if we
are subjective and give untruthful weight for one of the characteristics it will not abolish
our matrix because this single one has a small weight (not important on the all picture). It
is crucial to realize that each of the characteristics is not as material as number (weights,
factors.

SWOT ANALYSIS

BUSINESSPLAN:
A business plan serves as the blueprint for how you will operate your business. While you need
to have a business plan to seek investors or get a loan for your company, the plan is actually
for your benefit. It provides a step-by-step guide as you start a new business or grow your
current company. It provides direction for every decision you make going forward.
To write a business plan you can use, however, it is necessary for you to understand the main

purposes of one.

1.MAINTAINING BUSINESS FOCUS:

A business plan contains all of your product information, manpower and financial estimates and
your plans for the future. As you look to grow your business, you should refer to your business

plan, according to the Small Business Administration. When you decide to make changes to your
business, those changes should be reflected in your business plan. When you make updates to

your business plan, you get to see how your proposed changes will affect your entire business.

Your business plan reminds you of why you started your business in the first place, what your

original goals were and how business changes will affect your original vision.
2.Securing Outside Financing

As you start your business, and even as your business moves along, you will constantly need to

concern yourself with financing your business. Financing concerns begin with the start-up costs
and then continue with business expansion and new product development. When you look for

outside financing, one of the first things the investor will want to see is your business plan,
according to Inc.com.

Private investors, banks or any other lending institution will want to see how you plan on running
your business, what your expense and revenue projections are and whether or not your plans for
the future are attainable with the business you have created. All of this can be answered by a

well-written and thorough business plan.

3.Fueling Ambitions and Mapping Growth

Starting your own business can seem like a daunting task if you have never done it before. When
you break down your business into a business plan, it can motivate you because it presents the

business in an organized fashion, according to the University of Colorado. When you spend the
time to outline your business in detail, you begin to understand what it will take to get your dream

off the ground. Following a business plan can help you to map out the growth of your company
and give you confidence when you need it.
4. Enlightening Executive Talent

As your business grows, you will need to consider adding executives to your team that can help

move your company in the right direction. A business plan will help executive talent see your
business vision and determine whether or not your company is a worthwhile investment of time

and resources.

Contents of Business Plan:

Having gone through the significance of business plan, it is now
clear that there is no substitute for a well-prepared business plan or
project report and also there are no shortcuts to preparing it. The
more concrete and complete the business plan, the more likely it is
to earn the respect of outsiders and their support in making and
running an enterprise. Therefore, the business plan needs to be
prepared with great care and consideration.

A good project report or business plan should contain the

following contents:
1. General Information:
ADVERTISEMENTS:

Information on product profile and product details.

2. Promoter:
His/her name, educational qualification, work experience, project
related experience.

3. Location:
ADVERTISEMENTS:

Exact location of the project, lease or freehold, locational

advantages.
4. Land and Building:
Land area, construction area, type of construction, cost of
construction, detailed plan and estimate along with plant layout.

5. Plant and Machinery:

Details of machinery required, capacity, suppliers, cost, various
alternatives available, cost of miscellaneous assets.

6. Production Process:
Description of production process, process chart, technical
knowhow, technology alternatives available, production
programme.

7. Utilities:
Water, power, steam, compressed air requirements, cost estimates,
sources of utilities.

8. Transport and Communication:

Mode, possibility of getting, costs.

9. Raw Material:
List of raw material required by quality and quantity, sources of
procurement, cost of raw material, tie-up arrangements, if any, for
procurement of raw material, alternative raw material, if any.

10. Manpower:
Manpower requirement by skilled and semi-skilled, sources of
manpower supply, cost of procurement, requirement for training
and its cost.

11. Products:
Product mix, estimated sales, distribution channels, competitions
and their capacities, product standard, input-output ratio, product
substitute.

12. Market:
End-users of product, distribution of market as local, national,
international, trade practices, sales promotion devices, and
proposed market research.

13. Requirement of Working Capital:

Working capital required, sources of working capital need for
collateral security, nature and extent of credit facilities offered and
available.

14. Requirement of Funds:

Break-up of project cost in terms of costs of land, building,
machinery, miscellaneous assets, preliminary expenses,
contingencies and margin money for working capital, arrangements
for meeting the cost of setting up of the project.

15. Cost of Production and Profitability of first ten years.

16. Break-Even Analysis

17. Schedule of Implementation

Significance of Business Plan:

Arguments are made for and against writing a business plan. The
argument advanced against writing business plan is that it involves
costs especially when some outside consultant or accountant or
lawyer is hired to write the business plan. One of the reasons for not
writing business plan is the fear of prematurely closing off the new
venture.

The major argument made in favour of writing business plan is

reducing anxieties and tensions in running business enterprise.
Writing business plan is especially useful for the entrepreneurs who
require financial help from the outside sources like banks and
financial institutions.

The reason is that the outside sources advance funds to

entrepreneurs based on the soundness of their enterprises as
reflected in business plans. In nutshell, writing a business plan is
not without its costs and sacrifices, nonetheless the benefits of it
outweigh its costs.

An objective without a plan is just a dream. Until committed to

papers intentions are seeds without soil, sails without winds or
mere wishes which do not lead to execution and without execution
there is no payoff. The preparation of a business plan or project
report is of great significance for an entrepreneur.

The business plan serves the two essential functions: First and most
important the business plan is like a road map. It describes the
direction the enterprise is going in, what its goals are, where it
wants to be, and how it is going to get there. It also enables an
entrepreneur to know that he is proceeding in the right direction.
Some hold the view that without well spelled out goals and
operational methods/tactics, most businesses flounder on the rocks
of hard times.
The second function of the business plan is to attract lenders and
investors. Although, it is not mandatory for the small enterprises to
prepare business plans, yet it is useful and beneficial for them to
prepare the project reports for various reasons. The preparation of
business plan is beneficial for those small enterprises which apply
for financial assistance from the financial institutions and the
commercial banks. It is on the basis of business plan or project
report that the financial institutions make appraisal if the enterprise
requires financial assistance or not.

If yes, how much. Similarly, other organisations which provide

various assistances such as work shed, raw material, seed/margin
money, etc. are also equally interested in knowing the economic
soundness of the proposal. In most cases, the quality of the firm’s
business plan weighs heavily in the decision to lend or invest funds.

Research evidence reveals that many firms, of course, start without

business plans. Speaking alternatively, their implementation stage
starts with no plan, i.e. guide-map. But, most of these firms realize
eventually in the hard rocks, of business environment that they
need to recreate their beginnings and write their business plans at
some point down the road.

The fact of the matter is that in todays highly uncertain and

competitive business environment, only the most reluctant
entrepreneur with the simplest business concept avoids writing a
business plan (Carter, Gartner and Reynolds 1995). The very
significance of business plan can be expressed as “if an
entrepreneur fails to write business plan, he plans to fail in his/her
business.”
 10 Initial Steps When Starting a Business
Here are ten simple steps that you can take to help develop your business idea and start your own
business.

Step 1: Know Yourself

It is often necessary to assess yourself before you can assess the potential of your business idea. Do
you know who will buy your product or service? What benefits does your product or service offer to
them and how much would they be willing to pay?

Use our experience to realise your business idea

Trying to come up with a business idea? Try our Ideas Generation Workshop
Step 2: Are you a Risk Taker?
Starting a new business can be an exciting and challenging time, however, it can also be a period of
uncertainty and risk. For some it can mean risking their life savings, secure employment and family
security. Are you fully prepared for this?

Step 3: Market Research

Market research is essential in helping you to identify your target market and getting to know your
potential customers. Conducting market research will also help you to identify who your competitors
are and how to compete effectively in a given market. Research is also effective in assessing demand
for a new product or service.

Step 4: Examine Your Business Requirements

 Consider the best location for the business
 Identify your basic equipment requirement and costs
 Will you need to employ more staff?
 Identify your Insurance requirements
Step 5: Calculate Investment Requirements
 Identify all start-up costs associated with the business
 Identify ways of financing your business venture
 Seek financial support and benefit from direct referral to Government Supports
Become aware of all financial supports we offer
Step 6: Developing your Marketing Strategy
 Marketing your enterprise is a fundamental aspect of starting up
 Research the most cost-effective methods of marketing your business
 Write your Marketing Plan
Attend one of our Marketing Workshops
Step 7: Developing Your Sales Plan
 Having assessed your business idea, estimate your selling price
 How will you promote the enterprise?
 Who/where is your target market (local/national/international)?
 What channels of distribution will be used?
 Determine the break-even point
Step 8: Decide on an appropriate legal business structure
It is important to research the types of business ownership to help you make the best decisions for
your business. You can choose whether you want a:

 Sole trader
 Partnership
 Limited Company
We can help steer your business from the beginning
Step 9: Be aware of legal obligations that will affect your business
 Register your business name with the Companies Registration Office (CRO). Visit www.cro.ie for
further information
 You will need to understand your tax obligations and register as self-employed with your local
revenue office. Visit www.revenue.ie for further information
 You will need to be aware of your statutory obligations such as trading licenses, planning permission,
insurance, health & safety, patents
Step 10: Write your Business Plan
Business Planning is fundamental to success in business. It is the key to making things happen and
reaching goals. A business plan can be used as an operating tool that will help you to make important
decisions and manage your business effectively, the business plan also has a number of other uses.

Startup Recognition:

Under the Startup India Action Plan, startups that meet the definition as prescribed
under G.S.R. notification 127 (E) are eligible to apply for recognition under the program.
The Startups have to provide support documents, at the time of application.
Eligibility Criteria for Startup Recognition:
a. The Startup should be incorporated as a private limited company or registered as a partnership
firm or a limited liability partnership
b. Turnover should be less than INR 100 Crores in any of the previous financial years
c. An entity shall be considered as a startup up to 10 years from the date of its incorporation
d. The Startup should be working towards innovation/ improvement of existing products, services
and processes and should have the potential to generate employment/ create wealth. An entity
formed by splitting up or reconsutrctuon of an existing business shall not be considered a
"Startup"

Read more at:

https://economictimes.indiatimes.com/small-biz/startups/what-different-states-are-doing-to-help-startups-
succeed-across-
india/articleshow/60961710.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

What different states are doing to help startups succeed across India

About a month ago in Lucknow, after flagging off the Union government’s Startup Yatra initiative, Uttar Pradesh
chief minister Yogi Adityanath announced a Rs 1,000-crore corpus to support emerging business through various
schemes.

“I believe if Uttar Pradesh takes an initiative in this direction, the country will march ahead,” he said. Adityanath
also announced the launch of a website and a call centre to address the concerns of startups, besides hosting
multiple editions of Startup Yat ..
Yatra in other major cities of India’s most populous state.

Startup Yatra is a recent initiative of the Department of Industrial Policy and Promotion (DIPP) meant to create
statelevel buzz on entrepreneurship. It will run parallel to the Union government’s much-touted Startup India
action plan launched in January 2016. The new initiative is a consequence of several states formulating their own
startup policies. While Andhra Pradesh, Goa, Kerala and Rajasthan had their own startup polici ..
T-HUB
T-Hub leads India’s pioneering innovation ecosystem that powers next-generation
products and new business models. Since its incorporation in 2015, it has provided
1,100+ national and international startups access to better technology, talent, mentors,
customers, corporations, investors and government agencies.
 UNIT-III
What is a Micro, Small or Medium Enterprise?
The earlier concept of ‘Industries’ has been changed to
‘Enterprises’ • Enterprises have been classified broadly into:
(i) Enterprises engaged in the Manufacture / production of Goods
pertaining to any industry; &
(ii) Enterprises engaged in providing / Rendering of services.
• Manufacturing enterprises have been defined in terms of
investment in plant and machinery (excluding land & buildings)
and further classified into :
- Micro Enterprises - investment up to Rs.25 lakh.
- Small Enterprises - investment above Rs.25 lakh & up to Rs. 5
crore
- Medium Enterprises - investment above Rs. 5 crore & up to Rs.10
crore.
• Service enterprises have been defined in terms of their investment
in equipment (excluding land & buildings) and further classified
into:
- Micro Enterprises – investment up to Rs.10 lakh.
- Small Enterprises – investment above Rs.10 lakh & up to Rs.2
crore.
- Medium Enterprises–investment above Rs. 2 crore & up to Rs. 5
crore
It is not necessary to engage in manufacturing activity for self-
employment. One can set up service enterprises as well .

CHALLENGES OF MSMEs:

With agility and dynamism, the Indian MSME sector has shown admirable
innovation and adaptability to the recent economic downturn and recession. For
example, the GOI, have recently adopted the clustering and networking approach to
help these MSMEs to improve their competitiveness in the toughest times. Indian
MSMEs are also implementing new and innovative information and communication
technologies on a large scale like Software as a Service, and Infrastructure as a
Service to cope up with difficult situations. In spite of these measures the Indian
MSMEs are facing great challenges in the era of globalization and liberalization.
Some of the notable challenges are listed below:

1. [1]

High cost of credit: Access to adequate and timely credit at a reasonable

cost is the most critical problem faced by this sector. Recent studies on this
area by researchers (Levy 1993, Basu 2004, Seshasayee 2006, Das 2008 and
Nagpal et al. 2009) indicate the Indian SMEs are hindered by constraint of
poor credit availability. The major reason for this has been the high risk
perception among the banks about this sector and the high transaction costs
for loan appraisal. Further, players in MSME sector are not in a position to
provide collateral in order to avail loans from banks and hence denied access
to credit.

2. [2]

Procurement of raw materials at a competitive cost: The availability

of appropriate economic resources is important for business development
(Tustin 2003: 126, Goodall 2000a: 15, Czinkota and Ronkainen
2003:49).Footnote4 The necessary expertise and raw materials to put
entrepreneurial ideas into practice, to be competitive, survive during
unfavorable conditions and to grow (Robertson et al. 2003:313; Wickham
2001: 71).Footnote5 This is a growing challenge faced by this sector as
procurement for raw materials is carried out within local territory due to their
financial constraints and procurements are much smaller in scale as compared
to industry at large.

3. [3]

Inadequate infrastructure facilities, including power, water, roads,

etc. Lack of power/electricity infrastructures negatively affect the productivity
and profitability of manufacturing SMEs (Adelekan 2005; Akinwale 2010;
Doe and Asamoah 2014). To ensure competitiveness of the MSMEs, it is
essential that the availability of infrastructure, technology and skilled
manpower are in tune with the global trends. MSMEs are either located in
industrial estates set up m any decades ago or are functioning within urban
areas or have come up in an unorganized manner in rural areas. The state of
infrastructure, including power, water, roads, etc. in such areas is poor and
unreliable.

4. [4]

Lack of skilled manpower for manufacturing, services, marketing,

etc Deficiencies in the internal market environment are the main cause of
SME failures and revolve around managerial skills, knowledge of finance, and
minimal expertise in marketing and human resources (Ligthelm and
 Cant 2002). Although India has the benefit of a big pool of human resources,
the industry persistently faces deficit in manpower with skills set required for
manufacturing, marketing, servicing, etc.

Measures taken to promote the Indian MSME in the global market

The strategies taken to improve the manufacturing ability of the MSME sector is
expected to improve the competitiveness of their products and enhance the exports.
Measures such as higher value addition, cluster development, skill development and
training, thrust on standardization and quality, access to affordable credit, impetus
for innovation would be essential measures to promote the competitiveness of the
Indian MSMEs.

Cluster development
The Ministry of MSME has adopted the cluster developmentFootnote6 approach as a key
strategy for enhancing the productivity and competitiveness as well as capacity
building of MSMEs and their collectiveness in the country. The objective is to access
the latest tools, technology, design, and testing facilities for such enterprises,
upgrade infrastructural facilities. The promotion of clusters has become a popular
means of promoting competitiveness in MSMEs and this has been encouraged
through existing or potential agglomerations by provision of suitable infrastructure,
promotion of linkages among SMEs and with large firms, encouragement of local
support institutions.
Access to credit
In terms of timely access to adequate credit has been accorded a high priority for the
MSMEs. To address this problem, more coverage have been made under Credit
Guarantee Fund Scheme. The units under the category of Micro and Small
Enterprises can now avail collateral free loans up to Rs. 2.00 crore through select
financial institutions. Numerous start-ups in the working capital space are also trying
to make it convenient for SMEs to access credit without much difficulty.
Recently, the introduction of MUDRA as a specialized window with the aim of
targeting the micro enterprises is a major intervention made for broad basing
finance. The MUDRA loans are considered as a significant broad bases financial
structure.

Technological development
The Prime minister’s task force on MSMEs, set up under the chairmanship of the
principal secretary T K A Nair has suggested measures which include the need to
refine the current FDI policy to increase capacity, capability and technology
development. The group also agreed that there is a need to develop a symbiotic
relationship between the MSME clusters and technical institutions. Besides, to meet
modern-day challenges and to undertake technology upgradation, acquisition,
adaptation and innovation, a technology development fund of Rs.1000 crore, has
also been suggested. The Ministry is also focusing on high end skilling and
technological support through 18 Tool Rooms and Technology Development Centre
across the country. The Ministry of MSMEs has allotted an amount of Rs. 2200
crore with the support of the World Bank. This will enable it to establish 15 New
Technology Centers (TCs) under Technology Center Systems Project to improve the
overall productivity of the MSMEs. Additionally, there is also a Credit Linked Capital
Subsidy scheme.Footnote7
Government schemes
A host of other initiatives such as Make-In-India, Digital India, Start-Up India and
Skill India for the holistic growth of the Indian MSME sector have been taken by the
Government of India (GOI). The Make-In India was launched in September, 2014
and is a wider set of nation building initiative. The main objective was to transform
India into a global design and manufacturing hub. The Make in India is a different
kind of campaign. It provides framework for a vast amount of technical information
on 25 industry sectors and reach out to a vast local and global audience via social
media and constantly keep them updated about opportunities, reforms etc.
The Digital India revolution provides an ample opportunity for promotion of MSME
and also greater participation of MSME in the Information, Communication and
Telecommunication (ICT) sector. Digital enabled technologies can further allow
SMEs to develop their own market intelligence, spread scale without mass and access
global markets and knowledge networks at relatively low cost. The digital transition
facilitates the emergence of “born global” small businesses and provide new
opportunities for SMEs to augment their competitiveness in local and global
markets, through either product or service innovation. The use of digital technologies
can also ease SME’s access to skills and talent, through better job recruitment sites,
outsourcing and online task hiring, as well as connection with knowledge partners
(OECD 2017f). Skill India campaign was launched by Prime Minister on 15th July
2015 to train over 40 crore people in India in different skills by 2022. There are
several initiatives under this campaign such as National Skill Development Mission,
National Policy for Skill Development and Entrepreneurship, 2015, Pradhan Mantri
Kaushal Vikas Yojana, Skill Loan Scheme, and Rural India Skill. UK has entered into
a collaboration with India under the skill India programme.

Adopting corporate governance practices

Weak corporate governance of small firms, burdened further with poor availability of
crucial inputs, has made these firms extremely vulnerable. Good governance
practices in SMEs will help them grow or attract additional investors. Raising capital
has, for a long time, been seen as the major challenge facing SMEs. The absence of
good corporate governance practices makes it difficult for them to access finance
from banks or investors. Adoption of corporate governanceFootnote8 framework by
SMEs in India is indispensable for taking this sector to a high growth trajectory.
Development of human and natural resources
Human resource development issues are fundamental to improving SME
competitiveness. Empirical studies show that human capital is a significant
determinant of growth. The ability of SMEs to adjust to the competitive pressures
that come with trade liberalization and globalization will depend on the level of skills
available domestically. A major concern in the Indian context is the low productivity
and managerial ability of SMEs and the lower skill levels of the SME workers. The
human resource constraints have been affecting both the efficiency and productivity
of Indian SME sector.

Government of India measures

The GOI taken several initiatives in the field of Intellectual Property Rights (IPR),
including modifications in patent laws and innovation of the IPR / Patent Offices, as
a strategic response to the globalization of the economy. In a product patent regime,
Indian firms will need to relook for newer sources of growth. Improving awareness
on IPR amongst businesses, particularly MSMEs, means that they will be able to
make informed decisions for protecting their ideas and business strategies. The
Ministry of Micro, Small & Medium Enterprises (MSME) in India is conducting
workshops on various aspects of WTO, Anti-dumping seminars, IPR, etc. to sensitize
the Medium and Small Enterprise (MSEs) entrepreneurs and other stakeholders
about the likely impact of liberalization and globalization.

Recently, the Finance Minister of India in the upcoming budget proposed to reduce
the tax rate of MSMEs reporting turnover of less than Rs. 50 crore to 25% from the
existing 30%. He declared that this benefit will cover 96% of Indian companies filing
income tax returns in India. Also, in a drive to promote digital way of doing business,
a lower tax rate of 6% has been proposed to small Indian companies having turnover
of less than Rs. 2 Crore. To enlarge the existing market size of MSME, it was
proposed that the Ministries and Departments of Central Government shall procure
20% of goods and services from Micro and Small Scale Enterprises as a part of Public
Procurement Policy, MSE order 2012. The Government of India is further firming up
its existing policies through various new announcements and initiatives. For
example, a part of the Ease of Doing Business and to formalize the MSME sector,
Udyog Aadhar Memorandum (UAM) was notified in September, 2015. The system
offered page single point registration to avoid delays and is considered to be one of
the path-breaking initiative. With the announcement of the ‘One Nation One Tax’
approach under Goods and Service Tax, Indian MSME can definitely unleash their
real potential. For enhancing the competitiveness of the Indian MSMEs, National
Manufacturing Competiveness Programme has been launched. The objective of the
scheme is to enhance the value chain of the MSME sector and make it more efficient
and competitive in the global market. Lastly, the GOI have launched
schemes/programmes for technology upgradation, development of clusters of such
industries, making collateral free bank credit available up to US$ 1, 25,000, creating
awareness among these industries regarding export-related issues, etc.

Launching of the IPR proposal

The Intellectual Property RightsFootnote9 (IPR) proposal for “Enhancing awareness
about the (IPR) was launched to enable the Indian MSME to be more competitive in
the global environment”. The IPR project is said to be effected with a total
expenditure of US$ 12.5 million over a time-period of five years. The Intellectual
property rights protection plays an important role in attainment of competitive
beneficial position in the context of technological gain for further achieving higher
economic growth.
Separate umbrella organization
A centralized umbrella organization focused on the development of the Indian
MSME sector, may seek more attention of the policy makers. The Ministry of MSME,
Reserve Bank of India, and Small and Industrial Development Bank of India have
always provided numerous initiatives in the advancement, financing and growth of
Indian MSMEs. However, an umbrella organization is always welcome which will
provide additional support including technological support, design output,
facilitating raw material supplies, marketing support, etc. for the Indian MSMEs.

Low value addition

The average technology value-addition in manufactured products exported by the
Indian Industry is around 8%. It is comparatively low when compared to other
developing nations. The low value addition is especially found in sectors such as
Gems and Jewellery, where value addition is negligible. Goods such as engineering
goods and leather goods also lag behind in terms of value addition. Hence there is a
need to increase their value addition in the future.

Memorandum of understanding
To exploit the potential of MSME, the Ministry of MSME have entered into long term
agreements, Memorandum of Understanding, Joint Action Plan with 19 countries
such as Tunisia, Romania, Rwanda, Mexico, Uzbekistan, Lesotho, Srilanka, Algeria,
Sudan, Cote d Ivore, Egypt, Republic of S.Korea, Botswana, Indonesia, Vietnam,
Mauritius, Sweden, UAE and others. The Ministry of MSME and NSIC have also hold
discussions with foreign delegations for enhancement of bilateral cooperation for the
mutual benefits of MSMEs of two countries.

To compete in the global market, International Cooperation (IC) Scheme is being

slowly implemented by the Ministry of Micro, Small and Medium Enterprises
(MSME). It’s an ongoing scheme since the Ninth Plan and has continued in the
twelfth Plan with an earmarked outlay of Rs. 24.50 crore. The main objective of the
scheme is technology infusion, modernization and promotion of exports. Under the
financial year 2015–16, Rs. 4 crore has been allotted for the purpose of
modernization and boosting of exports. Given the vital link between technological
innovation and international competitiveness, a challenge for the future policy maker
is to incorporate the innovation system concerns with the links related to the area of
trade and investment framework.

Conclusion and future measures

The aim of this study was to make an in-depth analysis of how Indian MSMEs can
withstand itself in the global market despite the numerous challenges in the various
forms. It was found that there are a number of challenges prevalent in the Indian
Economy such as high cost of credit, difficulty of procurement of raw materials at a
competitive price, inadequate infrastructural facilities, and lack of skilled manpower.
A case study of the Indian Coir industry was taken. It revealed that although exports
have increased in the global market, the export earnings have not increased much
over the last years. The Coir industry is facing stiff competition from the synthetic
exporters (especially China). To overcome such problems, investment in better
technology over the time is a viable solution to promote the coir product in the global
market. In is generally seen, that technological development helps to differentiate a
product from its competitors/rivals product. The GOI has taken several measures
from time to time for technological development of the Indian MSMEs so that it can
improve its competitiveness in the international market. To counter the other
challenges too, new schemes and programs such as Make-In India, Skill India and
Digital India have been launched over the years.
The findings indicate that in spite of focusing in the development of technology based
products the other important challenges also needs to be addressed simultaneously.
Challenges such as access to credit, development of adequate infrastructure (power,
electricity), supply of raw materials and training of laborers to be hired by the
MSMEs also do exist. Hence, all these challenges are required to be addressed
simultaneously for the overall success of Indian MSMEs in the export market. Lastly,
the study will guide the MSMEs who are yet to enter the global market as to what are
the tentative challenges, how they can be overcome and how can the GOI assist them
in entering the global market in the long run.

To remain competitive and increase the share in the globalized world, the Indian
MSMEs need to consistently upgrade their technology in the ever-changing
globalized world. The Indian MSMEs may employ external consultants or resort to
other measures on a continuous basis. Indian MSMEs can also opt for technology
transfer such as vertical technology transferFootnote10 or horizontal technology
transfer.Footnote11 The horizontal technology transfer is the most common phenomenon
among the MSMEs since it can accomplish multiple tasks through the horizontal
technology transfer. Therefore, it is expected that through diversified use of
technology apart from using the other important factors of production, the MSMEs
can enhance their productivity, reduce their costs, expand their scale of production,
resort to new product development, increase their product sales and market share
and most important penetrate into the global or international market. Lastly, if the
Indian Economy is to sustain a growth rate of 8 to 10% in the coming decade, a
strong and vibrant MSME sector is vehemently required. Indian MSMEs have the
potential to become global enterprises. Constant efforts in various forms and active
GOI support/schemes should definitely boost the Indian MSMEs to become
international players in the coming decade.
India should increasingly embrace a network of innovation and increase their
partnership with other research institutions, universities and other organizations.
The MSME, are not coming forward for adopting IPR as a business strategy and a
means for enhancing competitiveness and becoming an efficient player in the global.
There is widespread lack of consciousness about IPR as a tool for creating a
competitive edge in the trade & technology market and for value addition to the
business. The Indian MSME sector needs more information, orientation and facilities
for protecting their intellectual powers and show a positive approach towards
creation, protection and management of IPR to compete in the global market and
experience a business growth. This will further motivate and enable towards the
launching of the IPR proposal in the Indian Economy.

The ability of MSMEs (especially those involving innovations and new technologies)
to access alternative sources of capital like angel funds/risk capital needs to be
enhanced considerably to encourage entrepreneurship. Removing fiscal/regulatory
impediments to the use of such funds by the MSMEs should serve this
purpose. Venture/ Risk capital could be other alternative option to finance the
MSMEs.

According to studies conducted, very few organizations or clusters under the MSME
sector use ICT to their advantage. MSMEs need to understand that the benefits
outweigh the costs of ICT adoption. ICT adoption can help introduce greater process
efficiency in MSMEs and help to focus on the core focus areas of innovation. The
development of an efficient ICT infrastructure as well as improved interoperability
and standards are important to access global markets as they facilitate information
exchange and communication as well as participation in e-commerce platforms
(BIAC, B20 China, World SME Forum, SME Finance Forum 2016; OECD 2017a).

Developing countries are investigating significantly in their education (mainly basic)

and training systems. However, linkages between education and training strategies
and SME enterprise development strategies are still weak. The education and
training systems influence the level of entrepreneurial activity. There should be an
increase in training programmes by the industry associations to upgrade the skills of
the workers on a daily basis with introduction of new technology. Further, labor laws
should also be simplified.

There is also an urgent need to administer and invest in the Human resource (HR)
functionFootnote12 within the Indian MSMEs. The Indian MSME need to significantly
invest in HR functions to compete in the global market. The role of human resources
in enhancing firm efficiency and effectiveness is well established. According to the
resource based view of management, irrespective of the firm size, employees are
strategically important and indispensable resources to achieve an organization’s
objective.
Lack of critical infrastructure and poor supporting facilities and inadequate access to
important services like water, power supply, and road & rail connectivity have
increased the operational costs of MSME making them less competitive. Use of solar
or renewable energy needs to be encouraged in rural areas. To upgrade the
infrastructural facilities, the Ministry (MSME) has adopted the cluster development
approach as a key strategy for improving competitiveness of Indian MSME.

The Indian tax system has been criticized along several lines as to be deemed
undesirable for the business environment, number of payments required, and
procedure for filing payments and non-uniformity across states associated with
taxation (Ease of Doing Business Index, International Finance Corporation, World
Bank 2014). The Ease of Doing BusinessFootnote13 has significantly improved from 131st
position among 190 countries to 130th position in 2018. The improvement of the
Ease of doing business can be indicated as a good indicator for the conducive
performance of Indian MSME.
Lastly, the Government of India is fully aware of the challenges of globalization and
has taken appropriate measures for preparing the MSME to meet the challenges of
liberalization and globalization. All these combined future measures will help the
Indian MSMEs get improved access in the global markets.

Who will assist in identifying the activity?

MSME Development Institutes can assist you in identifying the
activity based on the Industrial Potential Survey and product
specific market studies. District Industries Centers/State Directorate
of Industries also facilitate in identification of a suitable activity.
What steps are required for identifying the activity
 A preliminary market study of product(s) or service(s) needs to be
undertaken to analyse consumption and availability pattern. If there
is a gap in demand and supply, the activity considered ideal for
selection.
Where is market information available?
Market information is available with MSME Development
Institutes (MSMEDIs) and DIC's of respective states/areas. Market
Survey reports on various items and Industrial potential surveys of
particular areas provide the information about the market potential
of items. Industry and Trade associations, specialized institutions
like PPDC can also provide such information.
Is there any agency providing guidance on marketing potential?
MSMEDI and State Governments agencies viz. DICs and SIDCs
provide guidance on market potential. The gap in demand & supply
can be established through potential surveys and market
assessments with the help of these agencies.
Where can the enterprise be set up?
MSME DI and State Governments agencies viz. DICs and SIDCs
provide guidance on market potential. The gap in demand & supply
can be established through potential surveys and market
assessments with the help of these agencies.
What are the inputs required for setting up an enterprise?
The following major inputs are required for setting up an enterprise:
1. Land, building or shed
2. Machinery and equipments
3. Raw Materials
4. Power and Water
5. Skilled manpower
6. Capital
Are there any projects suitable for non-technical and inexperienced
entrepreneurs?
There are many projects, which are suitable for non-technical and
inexperienced entrepreneurs. Skilled manpower and technical
personnel can be hired according to needs. Entrepreneurs can also
join special short term training programmes. MSMEDI's, DIC's,
NSIC etc. provide intensive consultancy to such first generation
entrepreneurs.
How can a new entrepreneur compete with the existing
manufacturers?
A prospective entrepreneur can take the advantage of opting for the
latest technology and production process and operate at higher
volume of operation. This leads to reduced production cost and
production of quality goods and services. A new entrepreneur can
thus provide improved quality goods and services at lower cost and
further tap the market with innovative marketing approach.
MAJOR CAUSES OF SICKNESS IN SMALL SCALE INDUSTRIES
Small Scale Industries (SSIs) play vital role in the economic
development of a country. Some SSIs turn out to be sick due to
various reasons. Some of the major causes for sickness in small scale
industries

1. INADEQUACY OF WORKING CAPITAL

Some units turn out sick due to inadequacy of working capital. There
may exists delay in sanction of working capital by financial
institutions. Industrial units find it difficult to meet out day to day
operations due to the time gap between sanction of term loan and
working capital needs. Shortage of Working Capital is one of the main
reasons for sickness.
2. NON-AVAILABILITY OF CREDIT
Sickness in SSI sector may be attributed to non-availability of credit.
Delay in getting loans may result in stoppage of work or lead to
production loss. Low production may lead to reduced sales which in
turn may lead to financial loss.

3. POOR AND OBSOLETE TECHNOLOGY

Some industrial units use technology which is outdated. Out dated
technology may affect the quantity and quality of production. This
results in production loss and reduces demand for the goods.
4. NON AVAILABILITY OF RAW MATERIAL
Some units may require raw material which are scarcely available.
Sometimes, the raw material required by the unit may not be
available in abundance. Hence, this affects the production and the
sales of the goods. If the raw material is not abundantly available,
then the industrial units have to spend a large amount of money to
buy them. This may result in financial loss.

5. MARKETING PROBLEMS
Sometimes, the industrial units may not know as to how to create
demand for the products. Lack of marketing knowledge may result in
less demand for the goods. Similarly, there may be less demand for
the goods produced by the SSI due to competition or change in the
taste of the buyers.

For example, lot of units producing dyes and ceramics have been
found sick in Gujarat and Tirupur.

6. ERRATIC POWER SUPPLY

Shortage in power supply affects the industries. This results in delay
in production of goods and leads to financial losses.

7. LABOUR PROBLEMS
The relationship between the employer and the employees may not
be cordial. Some of the labour problems such as strike, lay off, lock
out may lead to industrial sickness.

8. POOR MANAGEMENT
The entrepreneur must be a good planner, organizer and a manager.
If the Industrial Unit promoters lack managerial skills, then it may
lead to several problems.
9. INADEQUATE ATTENTION TO R&D
Industries have to allocate a part of money in research and
development to survive and compete with competitors. Failure to
focus on the above may lead to industrial sickness

10. DIVERSION OF RESOURCES

If the employer utilizes the funds obtained for the business for any
personal purposes, then diversion of funds will lead to industrial
sickness. The funds used for personal purposes cannot be
regenerated and hence it may result in delay in payment of loans or
financial crisis for the borrower of the loan.

11. GLOBALIZATION
Small scale industrial units may find it very difficult to compete
with large scale industries and foreign competitors. Inability of the
units to face growing competition due to liberalization and
globalization may lead to industrial sickness.
12. DISPUTE AMONG PARTNERS
There may arise dispute between the partners or family members
running the unit. This results in stoppage of work and leads to
industrial sickness.

13. OVERAMBITIOUS PROJECTS

The project may not be technically feasible, such an overambitious
project is one of the reasons for industrial sickness.

REMEDIAL MEASURES TO OVERCOME SICKNESS

Some of the remedial measures to curb and overcome sickness in
industrial undertakings are as follows:

1. IDENTIFYING SICKNESS AT INITIAL STAGE

Sickness in Small Scale Industries are not a sudden phenomenon but
it is a gradual process taking 5 to 7 years eroding the health of a unit
beyond cure. Therefore, the identification and detection of the
sickness at incipient stage is the first and foremost measure to detect
and reduce industrial sickness. Sickness must be identified at initial
stage.

2. FINANCIAL ASSISTANCE
Lending agencies need to relax their lengthy process and other norms
for extending credit to the SSIs. To combat the incidence of sickness
financial institutions should grant credit without delay to SSI sector.

A number of initiatives can be undertaken to overcome credit

problems such as:.

1. Increasing Working capital limit.

 2. Enhancing the powers of bank managers of specialized bank
branches in offering credit to SSI.
3. Strengthening the mechanism for discounting bills.
4. Reduced rate of interest.
These measures would improve the flow of credit and keep a check
on the incidence of sickness.

3. IMPROVING INFRASTRUCTURE
Infrastructure facilities can be improved by setting up industrial
estates. Common testing centres etc., infrastructural problems can be
solved by improving the roadways, waterways, establishing
telecommunication systems.
4. TECHNOLOGY UP-GRADATION
Funds may be provided by the financial institutions for adoption of
advanced technology. Similarly, some sort of training may be
provided for use of the latest technology to overcome technological
problems. Technological up-gradation can help to overcome
technological obsolescence.

5. MARKETING ASSISTANCE
Marketing assistance may be provided to entrepreneurs for
marketing the goods produced by them. Government must help to
market the goods. Government and Non Government Organizations
(N.G.Os) can come forward for marketing the goods produced by the
SSI sector. The problem of poor marketing of the products can be
solved by coordinated efforts of entrepreneurs and promotional
agencies.
6. LIQUIDATION
It is better to wind up the business when there is no possibility to
revive the unit.

7. GOVERNMENT INTERVENTIONS
Interventions must be made by the government to prevent sickness.
Periodic review of financial statements can help to identify and
prevent sickness at initial stage.

8. TRAINING
A proper environment must be created where an entrepreneur will
be educated and will have a proper knowledge, skill and experience
about internal and external environment of business to compete with
large-scale industries and multinational companies.

9. REHABILITATION
Potentially viable sick units should be dealt well for the purpose of
rehabilitation. Rehabilitation is a remedy considered for industrial
units, which have already become sick and for the units that are on
the verge of collapse.

Under the provisions of SICA, 1985, the Government of India has

established Board for Industrial and Financial Reconstruction
(BIFR) in January 1987 for determining the preventive, ameliorative,
remedial and other measures which are required to be taken in
respect of sick industrial company and for expeditious enforcement
of rehabilitation schemes.

The main objective of SICA is to determine sickness and expedite the

revival of potentially viable units or closure of unviable units (unit
here in refers to a Sick Industrial Company). It was expected that by
revival, idle investments in sick units will become productive and by
closure, the locked up investments in unviable units would get
released for productive use elsewhere.

The measures taken by BIFR are

1. Legal
2. Financial restructuring
3. Managerial
REHABILITATION PROGRAMMES
Taking into consideration the many sick micro, small and medium
(MSM) industries, the MSM policy has provided a separate package
for rehabilitation of such industries in India.

The policy proposes to set up a rehabilitation fund for sick industries,

which will be managed by the Industries Commissioner and the
Director of Industries and Commerce. Funds will be infused into the
committee based on the recommendation of a State-Level
Rehabilitation Committee (SLRC).

The rehabilitation fund, among other things, will be used for meeting
75 percent of the cost of the cause that made the industry unviable,
and to sanction an interest subsidy of 4 per cent for two years on
rehabilitation/bridge loans up to Rs.15 lakh to the sick MSM
industries.

The rehabilitation measures would ensure that most units under

lockout would be able to open at an early date and appealed to MSM
units to avail of the facilities the government was providing them.

The rehabilitation programme involves the following depending

upon the nature of sickness.

1. Change of Management
2. Development of a suitable management information system
3. Settlement with the creditors for payment of their dues in a
phased manner, taking into account the expected cash
generation as per viability study.
4. Determination of the sources of additional funds needed to
refinance.
5. Modernization of plant and equipment or expansion of an
existing programme or even diversification of the products being
manufactured.
6. Concession or relief or assistance allowed by the state level
corporation, financial institutions and Central Government.

INDUSTRIAL SICKNESS

According to these studies the symptoms of sickness in SSIs include failure to pay
statutory liabilities like Provident Fund and Employee State Insurance (ESI)
contributions, failure to pay timely installment of principal amount and interest
amount on loans taken from financial institutions and through public deposits,

Table-3.1: Growth of various stages of Industrial Sickness Sr. No. Stage of Sickness
Characteristics of Sickness 1 2 3 1. Industrial Units Functional areas, viz. production,
marketing, finance and personnel are normal and efficient. Generating profits. Current ratio is
more than one and net worth is positive, Debt-equity ratio is satisfactory. 2. Tending towards
sickness Initial aberration in some of the functional areas mentioned above. Decline in profit
during last year. Losses anticipated in current year. 3. Incipient sickness Deterioration in the
above functional areas continue. Cash losses incurred in previous year are expected to
continue in current year. Deterioration anticipated in debt-equity ratio during current year. 4.
Sickness Unit‟s functional areas become inefficient. Cash losses incurred in last year
expected in current and next year. Current ratio is less than one and worsening debt-equity
ratio. Source: Gupta & Khanka (2007). According to the 4 th All India MSME Census
symptoms of sickness are as follows:  Unit incurring financial loss/Not being able to
produce above break-even point  Unit incurring continuous losses  Unit having negative
equity  Unit having excess of current liabilities over current assets  Unit making defaults in
payment of principal sums with interest  Unit having low capacity utilization  Unit having
worsening debt-equity ratio The worsening signals of industrial sickness may be discernible
quite early in the life of an early stage. Some of the important symptoms/signals revealing
sickness of industrial units identified by RBI (2002) are briefly presented here: 1. Frequent
return of cheques issued by the party/inability of the party to promptly honour the bills drawn
on them. 67 2. Non-submission/Delayed submission of stock statements/financial statements
Non-submission of data to banks and financial institutions, irregularity in maintenance of
bank accounts. 3. Lack of healthy fluctuations in CC account. 4. Default in payment of
interest charged to borrowal account and default in payment of term loan installments.
Shortage of liquid ffunds to meet short-term financial obligations. 5. Frequent request for
excess grants/enhancement of limits/adhoc limits without corresponding increase in sales. 6.
Low/declining capacity utilization 7. Poor current ratio 8. Decline in the quality of product
manufactured or service rendered 9. Delay or default in the payment of statutory dues, such
as provident fund, sales tax, excise duty, employees state insurance, etc. 10. Decline in
technical efficiency 11. Lack of healthy movement of stocks and excessive/rising level of
inventories/stock inspection.
 UNIT-IV

Meaning:
Marketing management facilitates the activities and functions
which are involved in the distribution of goods and services.

ADVERTISEMENTS:

According to Philip Kotler, “Marketing management is the analysis,

planning, implementation and control of programmes designed to
bring about desired exchanges with target markets for the purpose
of achieving organisational objectives.

It relies heavily on designing the organisations offering in terms of

the target markets needs and desires and using effective pricing,
communication and distribution to inform, motivate and service the
market.” Marketing management is concerned with the chalking out
of a definite programme, after careful analysis and forecasting of
the market situations and the ultimate execution of these plans to
achieve the objectives of the organisation.

Further, their sales plans to a greater extent rest upon the

requirements and motives of the consumers in the market. To
achieve this objective, the organisation has to pay heed to the right
pricing, effective advertising and sales promotion, distribution and
stimulating the consumers through the best services.

To sum up, marketing management may be defined as the process

of management of marketing
programmes for accomplishing organisational goals and objectives.
It involves planning, implementation and control of marketing
programmes or campaigns.
Importance of Marketing Management:
ADVERTISEMENTS:

Marketing management has gained importance to meet increasing

competition and the need for improved methods of distribution to
reduce cost and to increase profits. Marketing management today is
the most important function in a commercial and business
enterprise.

The following are the other factors showing importance of

the marketing management:
(i) Introduction of new products in the market.

(ii) Increasing the production of existing products.

(iii) Reducing cost of sales and distribution.

(iv) Export market.

(v) Development in the means of communication and modes of

transportation within and outside the country.

(vi) Rise in per capita income and demand for more goods by the
consumers.

7 Elements used in Marketing Mix for

Services
Seven elements used in marketing mix for service are as follows: (1)
Product (2) Price (3) Place (4) Promotion (5) People (6) Physical
evidence (7) Process.

Marketing Mix:
1. Product:
The service product requires consideration of the range of services
provided, the quality of services provided and the level of services
provided. Attention will also need to be given to matters like the use
of branding, warranties and after-sale service. The service product
mix of such elements can vary considerably and may be seen in
comparisons of service range between a small local building society
and one of the largest in the country; or between a small hotel
offering a limited menu range and a four star hotel offering a wide
range of meals.

2. Price:
Price considerations include levels of prices, discounts allowances
and commissions, terms of payment and credit. Price may also pay
a part in differentiating one service from another and therefore the
customers perceptions of value obtained from a service and the
interaction of price and quality are important considerations in
many service price sub mixes.

3. Place:
The location of the service providers and their accessibility are
important factors in services marketing. Accessibility relates not
just to physical accessibility but to other means of communication
and contact. Thus the types of distribution channels used (e.g. travel
agents) and their coverage is linked to the crucial issue of service
accessibility.

4. Promotion:
Promotion includes the various methods of communicating with
markets whether through advertising, personal selling activities,
sales promotion activities and other direct forms of publicity, and
indirect forms of communication like public relations.

ADVERTISEMENTS:

Expanded mix for services:

Because services are usually produced and consumed
simultaneously, customers are often present in the firm’s factory,
interact directly with the firm’s personnel, and are actually part of
the service production process. Also, because services are intangible
customers will often be looking for any tangible cue to help them
understand the nature of the service experience.

These facts have led services marketers to conclude that they can
use additional variables to communicate with and satisfy their
customers. For example, in the hotel industry the design and decor
of the hotel as well as the appearance and attitudes of its employees
will influence customer perceptions and experience.

Acknowledgment of the importance of these additional

communication variables has led services marketers to adopt the
concept of an expanded marketing mix for services shown in the
three remaining columns in Table 2.1. In addition to the traditional
four Ps, the services marketing mix includes people, physical
evidence, and process.

5. People:
All human actors who play a part in service delivery and thus
influence the buyer’s perceptions: namely, the firm’s personnel, the
customer, and other customers in the service environment. All of
the human actors participating in the delivery of a service provide
cues to the customer regarding the nature of the service itself. How
these people are dressed, their personal appearance their attitudes
and behaviors all influence the costumers perceptions of the service.

The service provider or contact person can be very important. In

fact, for some services, such as consulting, counselling, teaching,
and other professional relationship – based services, the provider is
the services. In other cases the contact person may play what
appears to be a relatively small part in service delivery, for instance,
a telephone installer, an airline baggage handler, or an equipment
delivery dispatcher. Yet research suggests that even these providers
may be the focal point of service encounters that can prove critical
for the organization.

6. Physical Evidence:
The environment in which the service is delivered and where the
firm and customer interact, and any tangible components that
facilitate performance or communication of the service. The
physical evidence of service includes all of the tangible
representations of the services – such as brochures, letterhead,
business cards, report formats, signage, and equipment. In some
cases it includes the physical facility where the service is offered, for
example, the retail bank branch facility.

In other cases, such as telecommunication services, the physical

facility maybe irrelevant..In this case other tangibles such as billing
statements and appearance of the repair truck may be important
indicators of quality. Especially when consumers have little on
which to judge the actual quality of service they will rely on these
cues just as they rely on the cues provided by the people and the
service process. Physical evidence cues provide excellent
opportunities for the firm to send consistent and strong messages
regarding the organization’s purpose, the intended market
segments, and the nature of the service.

7. Process:
The actual procedures, mechanism and flow of activities by which,
the service is delivered the service delivery and operating systems.
The actual delivery steps the customer experiences, or the
operational flow of the service, will also provide customers with
evidence on which to judge the service.

Some services are very complex, requiring the customer to follow a

complicated and extensive series of actions to complete the process.
Highly bureaucratized services frequently follow this pattern, and
the logic of the steps involved often escapes the customer.

Another distinguishing characteristic of the process that can

provide evidence to the customer is whether the service follows a
production-line/standardized approach or whether the process is an
empowered/customized one. None of these characteristics of the
service is inherently better or worse than another.

Rather, the point is that these process characteristics are another

form of evidence used by the consumer to judge service. For
example, two successful airline companies, Southwest in the United
States and Singapore Airlines, follow extremely different process
models. Southwest is no-frills (no food, no assigned seats), no
exceptions, low-priced airline that offers frequent, relatively short
length domestic flights.
All of the evidence it provides is consistent with its vision and
market position. Singapore Airlines, on the other hand, focuses on
the business traveler and is concerned with meeting individual
traveler needs. Thus, its process is highly customized to the
individual, and employees are empowered to provide nonstandard
service when needed. Both airlines have been very successful.

The three new marketing-mix elements (people, physical evidence,

and process) are included in the marketing mix as separate
elements because they are within the control of the firm and any or
all of them may influence the customer’s initial decision to purchase
a service, as well as the customer’s level of satisfaction and
repurchase decisions.

Certainly Marketing managers in services markets need to

undertake research about the markets and market segments for
which their respective marketing mixes are shaped. Wherever
possible the services marketing manager will need to research and
analyses the characteristics of the markets served. It is these
problems of conducting such analysis and research that we now
examine (Figure 2.1).
1. Developing a marketing strategy involves two tasks. These are
selecting target markets and formulating marketing mixes.

2. In services marketing adaptations and adjustments may be

required, although the processes of devising marketing strategies
and formulating marketing mixes are similar irrespective of market
type. In the analytical stage preceding strategy formulation,
common questions posed about all products may give rise to
different answers for services.

4. The marketing mix may have to be revised for use in services

contexts. In particular people, processes and physical evidence may
have to be incorporated into the marketing mix framework.

The formulation process of marketing mixes in services

markets is much the same as in other types of markets
typically this involves:
(a) Separating the offering into its components or sub mixes;

(b) Coordinating the sub mixes into the marketing mix.

The specific marketing mix adopted by a particular organization will

of course vary according to circumstances (e.g. level of demand,
range of service being offered). The marketing mix process then is a
constant one of fashioning and reshaping the component elements
in response to changing market circumstances and needs.

Inevitably there is much overlap and interaction between the

various components of a marketing mix. Decisions cannot be made
on one component of the mix without considering their impact
upon the other components.

Also the precise elements and their importance within any

marketing mix at any point in time will vary. The outline that
follows therefore indicates some of the key areas to which
marketing managers need to devote their attention in formulating
their marketing mixes for services markets. It is illustrative not
comprehensive. Service organizations will almost certainly need to
adapt it in their strategy planning.
The 5 Key Success Factors Of Business
– No. 4: Marketing
This is the fourth in a series of posts on the 5 Key Success Factors of Business which
can ensure your success and stand the test of time.

Today we want to give insights into what

the world’s best companies do regarding marketing – also called customer relations,
sales and responsiveness.
As a reminder, the 5 Key Success Factors are:
 Strategic Focus (Leadership, Management, Planning)
 People (Personnel, Staff, Learning, Development)
 Operations (Processes, Work)
 Marketing (Customer Relations, Sales, Responsiveness)
 Finances (Assets, Facilities, Equipment)
Here’s what the world’s best companies do for Success Factor No. 4, Marketing:
 We have defined target markets in which we can sustain our advantage.
 We continuously monitor customer needs, values and satisfaction.
 Our unique brand positioning is built on a sustainable advantage.
 We attract new customers with targeted communications in multiple media.
 We gain new customers with strategic selling and database tracking systems.
 We manage customer expectations and perceptions to ensure satisfaction.
 We keep customers informed in language they understand.
 We encourage customer feedback and communicate it internally to everyone.
 We ensure customer enthusiasm with a proprietary interaction process.
 We monitor competitor moves and market trends to be proactively prepared.

The 5 Key Success Factors Of Business

– No. 4: Marketing
This is the fourth in a series of posts on the 5 Key Success Factors of Business which
can ensure your success and stand the test of time.
Today we want to give insights into what the world’s best companies do
regarding marketing – also called customer relations, sales and responsiveness.
As a reminder, the 5 Key Success Factors are:
 Strategic Focus (Leadership, Management, Planning)
 People (Personnel, Staff, Learning, Development)
 Operations (Processes, Work)
 Marketing (Customer Relations, Sales, Responsiveness)
 Finances (Assets, Facilities, Equipment)
Here’s what the world’s best companies do for Success Factor No. 4, Marketing:
 We have defined target markets in which we can sustain our advantage.
 We continuously monitor customer needs, values and satisfaction.
 Our unique brand positioning is built on a sustainable advantage.
 We attract new customers with targeted communications in multiple media.
 We gain new customers with strategic selling and database tracking systems.
 We manage customer expectations and perceptions to ensure satisfaction.
 We keep customers informed in language they understand.
 We encourage customer feedback and communicate it internally to everyone.
 We ensure customer enthusiasm with a proprietary interaction process.
 We monitor competitor moves and market trends to be proactively prepared.


 BRANDING:

 Branding is a process which involves creating a specific name,

logo, and an image of a particular product, service or company.
This is done to attract customers. It is usually done through
advertising with a consistent theme.

 Branding aims to establish a significant and differentiated

presence in the market that attracts and retains loyal customers.
A brand is a name, term, symbol, or other feature that
distinguishes an organization or product from its rivals in the
eyes of the customer. Brands are used in business, marketing,
and advertising.

 Features of Branding
 Targetability
 Branding should be planned according to the targeted audience.
No business firm can target the entire population. Business
owners should identify the type of people who are buying their
products and services. Research should be done on the basis of
age, gender, income, the lifestyle of their customers, etc.

 Awareness
 The percentage of people who are aware of a brand is known as
brand awareness. Well established companies have the benefit
of a high level of brand awareness. Brand awareness can be
increased with the help of advertisement on TV, radio,
newspaper or social media marketing and advertising. Logos
also help companies build brand awareness, as people often
recognize brands by these symbols or diagrams.

 Loyalty
  Brand loyalty is the highest achievement or apex of any
company. A customer who buys the product of a particular
company extensively is known as a brand loyalist. Many
consumers prefer using certain brands of clothing, deodorants
or tubes of toothpaste, for example. They like how these brands
benefit them. Brand loyalty can be build by staying in touch
with the customers, asking them for their reviews.

 Consistency
 Consistency is necessary for a brand. A brand must remain
consistent. Small businesses make numerous promises in
commercials and ads about their brands, and consumers expect
companies to continue living up to these promises. Their
products should also be effective

NEW TECHNIQUES IN MARKETING

1. Keep Adding Something New

Every time you add something new to your business you create an opportunity to get more sales.
For example, something as simple as adding new information on your web site creates another
selling opportunity when prospects and customers visit your site to see the new information.

Adding a new product or service to the list of those you already offer usually produces a big
increase in sales. The added product increases your sales in 3 different ways:

 It attracts new customers who were not interested in your current products and services.
 It generates repeat sales from existing customers who also want to have your new product.
 It enables you to get bigger sales by combining 2 or more items into special package offers.
2. Become a Valuable Resource
Look for ways you can be a resource for your prospects and customers. Supply them with free
information. Help them do things faster, easier, less expensively. You get another opportunity to
sell something every time they come back to you for help.
3. Separate Yourself from Your Competition
Find or create a reason for customers to do business with you instead of with someone else
offering the same or similar products. For example, do you provide faster results, easier
procedures, personal attention or a better guarantee?
Determine the unique advantage you offer to customers that your competitors do not offer.
Promote that advantage in all of your advertising. Give your prospects a reason to do business
with you instead of with your competition and you'll automatically get more sales.

. Promote the End Result

Your customers don't really want your product or service. They want the benefit produced by
using it.

For example, car buyers want convenient transportation with a certain image. Dental patients
want healthy and good-looking teeth without suffering any pain. Business opportunity seekers
want personal and financial freedom for themselves and their family.

Make sure your web pages, sales letters and other sales messages are promoting the end result
your customers want.
5. Anticipate Change
Change is the biggest challenge to your business success. The days are gone when a business
could constantly grow by simply repeating what it did successfully in the past ...or even recently.
Aggressive, innovative competitors and rapidly changing technology make it impossible.

Expect change and prepare for it. Don't wait until your income declines to take action. Develop
the habit of looking for early signs that something is changing. Then confront it before you start to
lose business.

International trade, economic transactions that are made

between countries. Among the items commonly traded are
consumer goods, such as television sets and clothing; capital goods,
such as machinery; and raw materials and food. Other transactions
involve services, such as travel services and payments for foreign
patents (see service industry). International trade transactions
are facilitated by international financial payments, in which the
private banking system and the central banks of the trading nations
play important roles.
International trade and the accompanying financial transactions are
generally conducted for the purpose of providing a nation with
commodities it lacks in exchange for those that it produces in
abundance; such transactions, functioning with other economic
policies, tend to improve a nation’s standard of living. Much of the
modern history of international relations concerns efforts to
promote freer trade between nations. This article provides a
historical overview of the structure of international trade and of the
leading institutions that were developed to promote such trade.
 The Theory Of International Trade

Comparative-advantage analysis

The British school of classical economics began in no small measure

as a reaction against the inconsistencies of mercantilist
thought. Adam Smith was the 18th-century founder of this school;
as mentioned above, his famous work, The Wealth of
Nations (1776), is in part an antimercantilist tract. In the book,
Smith emphasized the importance of specialization as a source of
increased output, and he treated international trade as a particular
instance of specialization: in a world where productive resources are
scarce and human wants cannot be completely satisfied, each nation
should specialize in the production of goods it is particularly well
equipped to produce; it should export part of this production,
taking in exchange other goods that it cannot so readily turn out.
Smith did not expand these ideas at much length, but another
classical economist, David Ricardo, developed them into the
principle of comparative advantage, a principle still to be found,
much as Ricardo spelled it out, in contemporary textbooks on
international trade.

Simplified theory of comparative advantage

For clarity of exposition, the theory of comparative advantage is

usually first outlined as though only two countries and only
two commodities were involved, although the principles are by no
means limited to such cases. Again for clarity, the cost of production
is usually measured only in terms of labour time and effort; the cost
of a unit of cloth, for example, might be given as two hours of work.
The two countries will be called A and B; and the two commodities
produced, wine and cloth. The labour time required to produce a
unit of either commodity in either country is as follows:
India: Trade
The volume of India’s foreign trade, given the diversity of its economic base, is low. There is, moreover, a
chronic and large foreign trade…

cost of production (labour time)

country A country B

wine (1 unit) 1 hour 2 hours

cloth (1 unit) 2 hours 6 hours

As compared with country A, country B is productively inefficient.

Its workers need more time to turn out a unit of wine or a unit of
cloth. This relative inefficiency may result from differences in
climate, in worker training or skill, in the amount of available tools
and equipment, or from numerous other reasons. Ricardo took it
for granted that such differences do exist, and he was not concerned
with their origins.

Country A is said to have an absolute advantage in the production of

both wine and cloth because it is more efficient in the production of
both goods. Accordingly, A’s absolute advantage seemingly invites
the conclusion that country B could not possibly compete with
country A, and indeed that if trade were to be opened up between
them, country B would be competitively overwhelmed. Ricardo,
who focused chiefly on labour costs, insisted that this conclusion is
false. The critical factor is that country B’s disadvantage is less
pronounced in wine production, in which its workers require only
twice as much time for a single unit as do the workers in A, than it is
in cloth production, in which the required time is three times as
great. This means, Ricardo pointed out, that country B will have a
comparative advantage in wine production. Both countries will
profit, in terms of the real income they enjoy, if country B
specializes in wine production, exporting part of its output to
country A, and if country A specializes in cloth production,
exporting part of its output to country B. Paradoxical though it may
seem, it is preferable for country A to leave wine production to
country B, despite the fact that A’s workers can produce wine of
equal quality in half the time that B’s workers can do so.
The incentive to export and to import can be explained
in price terms. In country A (before international trade), the price of
cloth ought to be twice that of wine, since a unit of cloth requires
twice as much labour effort. If this price ratio is not satisfied, one of
the two commodities will be overpriced and the other underpriced.
Labour will then move out of the underpriced occupation and into
the other, until the resulting shortage of the underpriced
commodity drives up its price. In country B (again, before trade), a
cloth unit should cost three times as much as a wine unit, since a
unit of cloth requires three times as much labour effort. Hence, a
typical before-trade price relationship, matching the underlying real
cost ratio in each country, might be as follows:
country A country B

Price of wine per unit $5 £1

Price of cloth per unit $10 £3

The absolute levels of price do not matter. All that is necessary is

that in each country the ratio of the two prices should match the
labour–cost ratio.

As soon as the opportunity for exchange between the two countries

is opened up, the difference between the wine–cloth price ratio in
country A (namely, 5:10, or 1:2) and that in country B (which is 1:3)
provides the opportunity of a trading profit. Cloth will begin to
move from A to B, and wine from B to A. As an illustration, a trader
in A, starting with an initial investment of $10, would buy a unit of
cloth, sell it in B for £3, buy 3 units of B’s wine with the proceeds,
and sell this in A for $15. (This example assumes, for simplicity, that
costs of transporting goods are negligible or zero. The introduction
of transport costs complicates the analysis somewhat, but it does
not change the conclusions, unless these costs are so high as to
make trade impossible.)
So long as the ratio of prices in country A differs from that in
country B, the flow of goods between the two countries will steadily
increase as traders become increasingly aware of the profit to be
obtained by moving goods between the two countries. Prices,
however, will be affected by these changing flows of goods. The wine
price in country A, for example, can be expected to fall as larger and
larger supplies of imported wine become available. Thus A’s wine–
cloth price ratio of 1:2 will fall. For comparable reasons, B’s price
ratio of 1:3 will rise. When the two ratios meet, at some
intermediate level (in the example earlier, at 1:21/2), the flow of
goods will stabilize.
Amplification of the theory

At a later stage in the history of comparative-advantage theory,

English philosopher and political economist John Stuart
Mill showed that the determination of the exact after-trade price
ratio was a supply-and-demand problem. At each possible
intermediate ratio (within the range of 1:2 and 1:3), country A
would want to import a particular quantity of wine and export a
particular quantity of cloth. At that same possible ratio, country B
would also wish to import and export particular amounts of cloth
and of wine. For any intermediate ratio taken at random, however,
A’s export-import quantities are unlikely to match those of B.
Ordinarily, there will be just one intermediate ratio at which the
quantities correspond; that is the final trading ratio at which
quantities exchanged will stabilize. Indeed, once they have
stabilized, there is no further profit in exchanging goods. Even with
such profits eliminated, however, there is no reason why A
producers should want to stop selling part of their cloth in B, since
the return there is as good as that obtained from domestic sales.
Furthermore, any falloff in the amounts exported and imported
would reintroduce profit opportunities.
In this simple example, based on labour costs, the result is complete
(and unrealistic) specialization: country A’s entire labour force will
move to cloth production and country B’s to wine production. More
elaborate comparative-advantage models recognize production
costs other than labour (that is, the costs of land and of capital). In
such models, part of country A’s wine industry may survive and
compete effectively against imports, as may also part of B’s cloth
industry. The models can be expanded in other ways—for example,
by involving more than two countries or products, by adding
transport costs, or by accommodating a number of other variables
such as labour conditions and product quality. The essential
conclusions, however, come from the elementary model used above,
so that this model, despite its simplicity, still provides a workable
outline of the theory. (It should be noted that even the most
elaborate comparative-advantage models continue to rely on certain
simplifying assumptions without which the basic conclusions do not
necessarily hold. These assumptions are discussed below.)
As noted earlier, the effect of this analysis is to correct any false first
impression that low-productivity countries are at a hopeless
disadvantage in trading with high-productivity ones. The
impression is false, that is, if one assumes, as comparative-
advantage theory does, that international trade is an exchange of
goods between countries. It is pointless for country A to sell goods
to country B, whatever its labour-cost advantages, if there is nothing
that it can profitably take back in exchange for its sales. With one
exception, there will always be at least one commodity that a low-
productivity country such as B can successfully export. Country B
must of course pay a price for its low productivity, as compared with
A; but that price is a lower per capita domestic income and not a
disadvantage in international trading. For trading purposes,
absolute productivity levels are unimportant; country B will always
find one or more commodities in which it enjoys a comparative
advantage (that is, a commodity in the production of which its
absolute disadvantage is least). The one exception is that case in
which productivity ratios, and consequently pretrade price ratios,
happen to match one another in two countries. This would have
been the case had country B required four labour hours (instead of
six) to produce a unit of cloth. In such a circumstance, there would
be no incentive for either country to engage in trade, nor would
there be any gain from trading. In a two-commodity example such
as that employed, it might not be unusual to find matching
productivity and price ratios. But as soon as one moves on to cases
of three and more commodities, the statistical probability of
encountering precisely equal ratios becomes very small indeed.
The major purpose of the theory of comparative advantage is to
illustrate the gains from international trade. Each country benefits
by specializing in those occupations in which it is relatively efficient;
each should export part of that production and take, in exchange,
those goods in whose production it is, for whatever reason, at a
comparative disadvantage. The theory of comparative advantage
thus provides a strong argument for free trade—and indeed for
more of a laissez-faire attitude with respect to trade. Based on this
uncomplicated example, the supporting argument is simple:
specialization and free exchange among nations yield higher real
income for the participants.
The fact that a country will enjoy higher real income as a
consequence of the opening up of trade does not mean, of course,
that every family or individual within the country will share in that
benefit. Producer groups affected by import competition obviously
will suffer, to at least some degree. Individuals are at risk of losing
their jobs if the items they make can be produced more cheaply
elsewhere. Comparative-advantage theorists concede that free trade
would affect the relative income position of such groups—and
perhaps even their absolute income level. But they insist that the
special interests of these groups clash with the total national
interest, and the most that comparative-advantage proponents are
usually willing to concede is the possible need for temporary
protection against import competition (i.e., to allow those who lose
their jobs to international competition to find new occupations).

Nations do, of course, maintain tariffs and other barriers to imports.

For discussion of the reasons for this seeming clash between actual
policies and the lessons of the theory of comparative advantages.
 UNIT-V
GROWTH & STRATEGIC PLANNING IN
ENTREPRENEURSHIP
Entrepreneurship does not take place in isolation, it depends on several factors. The
growth of entrepreneurship results from some economic factors input & certain
environmental conditions. In fact, for the development & growth of Entrepreneurship, a
number of micro and macro factors must be considered, such as financial and economic
factors-limited liability and greater mobility of capital, low taxes and tax incentives, good
chance to make high profit, good banking with easily available credit, free trade with
limited tariffs, lower labor cost, political factors like a stable and chaos free political
system, political biasness, legal factors- uniform commercial law and regulations, strong
legal support for private property, infrastructural factors like strong educational and
training facilities, good transportation system, strong telecommunication and distribution
networks, state factors including support from large corporations, research and
development, public-private partnership, innovation, socio-cultural factors like
encouragement and support from family & society, social status, social integration, social
security, & last but not the least personal factors like optimistic, hard workers, accept
responsibility, desire to achieve, risk oriented, opportunity seekers. (Khan, 2005)
Moreover if an entrepreneur plans to grow his business he must understand the growth
strategy he will adopt depending on the nature of his business.

INTRODUCTION
Strategy

In order to understand strategic planning we need know about strategy. Strategy is

grounded in the array of competitive moves and business approaches that the
management/entrepreneur depends on to produce successful performance. Strategy is
management’s game plan for strengthening the organization’s position, pleasing
customers, and achieving performance targets.

Without a strategy, managers have no thought-out course to follow, no road map to

manage by & no action program to produce the intended result. Strategy is
management’s plan and actions for organizing resources and skills taking into
consideration the threats & opportunities in the environment to achieve the mission,
vision and objectives of the business to establish a sustainable competitive position.
(Chell, Haworth & Brearley 1991)

Strategy involves a series of related decisions & actions with respect to organization’s
goals, takes into account internal strengths & weaknesses and external opportunities
threats.

Good strategy and good strategy execution are the most trustworthy signs of good
management.
MARKETING STRATEGIES

Market Penetration

Growth through market penetration does not involve moving into new markets or
creating new products; it's an attempt to increase market share using your current
products or services. Carry out this strategy by lowering the price of a product or
service, or by increasing marketing efforts to lure customers away from
competitors.

Product Development

Product development means creating new products to serve the same market. For
example, a company that produces ice cream for institutional buyers expands its
line to include gelato and sorbet. The company can sell these new products to
existing customers and grow its business without tapping new markets.

Market Development

Market development involves introducing your products or services to new markets.

You may want to enter a new city, state or even country. Or you can target a
market segment. For instance, a bakery that produces breads for the consumer
market could enter into the commercial market by baking breads for restaurants
and retailers.

Diversification

Diversification is the most radical form of growth. It involves creating a totally new
product for a completely new market. This is the riskiest growth strategy because
it's the most uncertain. Failure is a distinct possibility, although the potential of a
high payoff may be worth the risk for companies with sufficient financial means.

THE VALUATION CHALLENGE IN

ENTREPRENEURSHIP:

What is valuation?
Valuation is the process of determining the economic value of a business or
company – it reflects both past performance and expectations of future performance.
Valuation can be arrived at through objective analysis, but the final price is that at
which the seller is willing to sell and the buyer willing to buy.
Why value your enterprise?
Entrepreneurs need to put a value on their business in order to raise finance or
equity. Investors need to put a value on the businesses to ensure adequate return
on investment.

There are a number of other reason to value a business including: assisting with
bank negotiations, buying out shareholders and creating share options for
employees.

It is useful to have several valuation methodologies in your toolbox to provide a

rational basis for determining valuation. No valuation method should be used in
isolation. Below we outline some of the methods and suggest ways in which they
might be used:

It is important to understand which methods are most appropriate for the size of your
business, and also for your ambitions – social and otherwise:
THE FINAL HARVEST ON NEW VENTURE: