A.M.

JAIN COLLEGE, SHIFT- II

MEENAMBAKKAM,
CHENNAI-114

Q&A

ENTREPRENEURIAL DEVELOPMENT
2016-17

PREPARED BY

Ms. R.SUGUNA , Asst Prof. B.Com (General)

Ms.SANDHANA PONNARASI, Asst Prof B.Com (General)

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 ENTREPRENEURIAL DEVELOPMENT
UNIT I
PART-A
1. Define entrepreneurship??
Entrepreneurship has traditionally been defined as the process of designing, launching and running a
new business, which typically begins as a small business, such as a startup company, offering a product, process
or service for sale or hire.[1] It has been defined as the "...capacity and willingness to develop, organize, and
manage a business venture along with any of its risks in order to make a profit."
2. Who is an entrepreneur?
An entrepreneur is a starter. An entrepreneur is an initiator, a challenger and a driver. Someone that creates
something new, either an initiative, a business or a company. He or she is the beginning (and sometimes the end)
of a venture, project or activity.

3. Define any three objectives of lead banks scheme??

Objectives of Lead Bank Scheme:
1 .Eradication of unemployment and under employment
2. Appreciable rise in the standard of living for the poorest of the poor
3. Provision of some of the basic needs of the people who belong to poor sections of the society

4. Define IDBI? State any 2 functions??

IDBI is the apex institution in the area of long term industrial finance. It was established under the IDBI Act 1964
as a wholly owned subsidiary of RBI and started functioning on July 01, 1964.
Functions:
1. Planning, promoting and developing industries with a view to fill the gaps in the industrial structure by
conceiving, preparing and floating new projects.
2. Providing technical and administrative assistance for promotion, management and expansion of industry.

5. Define SIDO? State any 2 functions?

It is an apex body and nodal agency for formulating, coordinating and monitoring the policies and programmes
for promotion and development of small-scale industries.
Functions:
A. To evolve a national policy for the development of small-scale industries,
B. to co-ordinate the policies and program’ of various State Governments,
c. To maintain a proper liaison with the related Central Ministries, Planning Commission, State Governments,
Financial Institutions etc.,
6. What is EDP and explain any 2 roles of EDP??
Meaning: As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities among the
people. In other words, it refers to inculcation, development, and polishing of entrepreneurial skills into a person
needed to establish and successfully run his / her enterprise.
Roles:
1. Great role in increasing the supply of new entrepreneurs to accelerate the process of industrialization.
2. Elimination of Unemployment & Poverty
3. Balanced Regional Development
4. Utilization of local resources

7. Define franchising??
Franchising is a business relationship in which the franchisor (the owner of the business providing the product or
service) assigns to independent people (the franchisees) the right to market and distribute the franchisor's goods
or service, and to use the business name for a fixed period of time.
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 8. What is IFCI??
IFCI, previously Industrial Finance Corporation of India, is an Indian government owned development bank to
cater to the long-term finance needs of the industrial sector. It was the first Development Financial
Institution established by the Indian government after independence

9. What is feasibility study?

An analysis and evaluation of a proposed project to determine if it (1) is technically feasible, (2) is feasible within
the estimated cost, and (3) will be profitable. Feasibility studies are almost always conducted where large sums
are at stake. It is also called feasibility analysis.

10. Define project?

Project is an individual or collaborative enterprise, possibly involving research or design that is
carefully planned to achieve a particular aim.
One can also define a project as a set of interrelated tasks to be executed over a fixed period and within certain
cost and other limitations.

PART B
1. Describe the function of an entrepreneur?
An entrepreneur performs all the functions right from the conveiving of an idea up to the establishment of an
enterprise. He is an opportunity seeker. He organize and co-ordinates the factors of production. His main function
are discussed below:

i. Generating business idea: generation of idea is the first and foremost function of an entrepreneur.
Essentially there are only two ways in which business ideas can be created namely i) Generating own idea, or
ii) developing some one else idea. The second is far more common because virtually every successful
business is a development of an earlier business concept.
ii. Determining business objectives: he should lay done his objectives clearly. He should clearly state the
nature if business and the type of business.
iii. Product Analysis: an entrepreneur should conduct market research in order that the data regarding the
product, which he like to manufacture, can be systematically collected regarding the demand of the product,
price of the product, size of the customer etc.,
iv. Promoting the enterprise: once the form of ownership is decided, the next step is undergoing the necessary
legal formalities as required under the relevant status if any to establish an organization.
v. Raising the necessary funds: finance is the life-blood of any business because all the activities of the
business depend upon it. Hence rising of finance is concerned has most important function if an entrepreneur.
He needs funds for purchasing assets, caring out day to day activities.
vi. Procurement of machine and material: machine and equipments are purchased and installed in the initial
stages itself. While purchasing them he should consider the aspects like details as to the technology adopted,
installed capacity of the machines, details of manufactures and suppliers of their machine
vii. Recruiting Men: recruiting the suitable persons for the various activities of the business is another
in=important function. An entrepreneur has to estimate the man power needed for the enterprise. Then he has
to buy down the selection process. He should devise suitable method for compensation. Arrangement should
be made for giving training to personal to the jobs which they have been recruiting.
from all the above function can be broadly categorized into three namely,
1. Risk-barring
2. Organization
3. Innovation.

2. Explain briefly the various classification of entrepreneurs.

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 Ans. Entrepreneurs are of many types. They may be classified based on many factors. They are found engaged in
various types of activities such as industrial, agricultural and commercial.
I. Classification Based on the behavior of entrepreneurs.
i. Nascent entrepreneur
A nascent-entrepreneur is an individual who is in the process of starting a new business. The concept of
nascent entrepreneur appears to reflect most closely the complex entrepreneurial process. They use
entirely different styles of problem solving, decision-making, and discovery when compared to non-
nascent entrepreneurs.

ii. Novice entrepreneur

A novice entrepreneur is an individual who has no prior business ownership experience as a business founder,
inheritor of a business, or a purchaser of a business.
iii. Habitual entrepreneur
A habitual entrepreneur is an individual who has prior business ownership experience. A nascent entrepreneur can
either be a novice entrepreneur or a habitual entrepreneur.
iv. Serial entrepreneur
A serial entrepreneur is an individual, who has sold or closed an original business, established another new
business, sold or closed that business, and continues this cycle of entrepreneurial behavior.
v. Portfolio entrepreneur
A portfolio entrepreneur is an individual who retains an original business and builds a portfolio of additional
businesses through inheriting, establishing, or purchasing them.
II. Based on American Agriculture
i. Innovative entrepreneurs
Innovative entrepreneur look at the opportunity for introducing a new technique of production process, or a new
commodity as a new market or even reorganize the enterprise.
ii. Imitative entrepreneurs
Limitative entrepreneurs are also known as adaptive entrepreneurs. They adopt successful innovation introduced
by innovative entrepreneurs. They do not involve in inventing new product, method etc.
iii. Fabian entrepreneurs
Fabian entrepreneurs are characterized by great caution and skepticism in practicing any change in their
organizations. They are easily adaptable to the changing environment. They adapt change only when they realize
that failure to adopt will lead to joss or collapse of the enterprise.

iv. Drone entrepreneurs

Drone entrepreneurs are characterized by a refusal to adopt and use opportunities to make change in production.
They are conservative they always feel comfortable with their old fashioned technology of production.

III. Classification based on the type of business carried on by them

i. Business entrepreneurs
Business entrepreneurs are individuals. They normally work alone and so they are also known as solo operators.
Business entrepreneurs conceive an idea of a new product or service, and start a business to produce that product
or service.
ii. Trading entrepreneurs
Trading entrepreneurs are undertaking trading only. They do not normally carryout production activities. They
identify potential markets, activities demand for their products and create a desire in the minds of buyers to buy
their products.
iii. Industrial entrepreneurs
They are essentially manufactures who identify the needs of customers and tailors to produce goods with
ingenuity to meet the marketing needs. Industrial entrepreneurs are called product-oriented persons.
iv. Corporate entrepreneurs
Corporate entrepreneurs are innovate in organising and managing a corporate body. They are called promoters.
They have special skills in planning, organizing, developing and managing a corporate enterprise.
v. Agricultural entrepreneurs
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 Agricultural entrepreneurs involve in agricultural activities such as raising and marketing of crops, fertilizers and
other inputs of agriculture.
IV. Based on technology adopted
i. Technical entrepreneurs
Technical entrepreneurs as the name implies are worried more about production and quality of goods produced.
They are not at all bothered about marketing. They improve the techniques of production.

ii. Non-technical entrepreneurs

Non-technical entrepreneurs are not concerned with the technical aspects of the product, which they are dealing.
They are concerned ore about marketing rather than production.

iii. Professional entrepreneurs

Professional entrepreneurs are those who are interested in establishing an enterprise not with an idea to manage it
but to sell it after it is set up and starts functioning. He sells outs the running business and starts another venture
with the sale proceeds.
V. Based on development stage
i. First generation entrepreneurs
First generation entrepreneurs are those who possess innovative skill. He is an innovator and combines his skill
and technology to produce a good marketable product or service. They do not possess any family business
background before hand.
ii. Modern entrepreneur
Modern entrepreneur keenly watch the changes in demand and start a venture to fulfil the current market needs.
They always produce goods and services as per the changing needs of the time.
iii. Classical entrepreneurs.
Classical entrepreneurs are those persons who are concerned more about customers as well as market. They take
business as an integral part of life. They normally start a venture of self-supporting nature.

3. State the qualities of an entrepreneur:

A close analysis of the concept of entrepreneur made in the preceding paragraphs reveals the following as the
qualities / traits of a successful entrepreneur:
1. Capacity to take risk. 16. Using feedback
2. Capacity to work hard 17. Taking initiative
3. Energetic 18. Handling failures
4. Drive 19. Locus of control
5. Self-confidence 20. Tolerance of uncertainty
6. Intelligence and knowledge 21. Flexibility
7. Ability to foresee future 22. Guarding business secrets
8. Willingness to change 23. Quality conscious
9. Ability to mobilize resources 24. Tactful
10. Ability to build up organization and 25. Have vision
administer 26. Information seeking
11. Ability to take decisions 27. Monitoring
12. Willingness to take responsibility 28. Welfare orientation
13. Innovativeness 29. Systematic planning
14. Desire for high achievement 30. Persuation
15. Capacity to solve problem

4. Give an account of advantages that an entrepreneur enjoys and obstacles he face.

Advantages of being an entrepreneur : There are many rewards associated with being an entrepreneur. They are
as below:
1. High degree of independence:
2. Getting to use a variety of skills and talents:

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 3. Freedom in making decisions:
4. Accountable only to himself:
5. Scope for tackling challenges:
6. Experiencing feeling of achievement and pride in attaining goals:
7. Potential for greater financial rewards:

Obstacles to an entrepreneur
1. Change and uncertainty:
2. Bewildering numbers of decisions:
3. Comfortable with taking risks:
4. Need many different skills and talents:
5. Ready to accept failures:

5. Distinction between an entrepreneur and a Manager.

Generally the two terms entrepreneur and manager are used interchangeably but they differ in their meaning.
1. Status:
An entrepreneur is the owner of his enterprise he makes his own investment and owns his business.
A Manager is just an employee in the enterprise which is owned and run by entrepreneur.
2. Target:
The main target of an entrepreneur is to start his venture by setting up as a sole trader of firm or a company.
He set his own goals and strives to achieve them.
The main goal or motive of a manager is give his services to an enterprise set up by someone else i.e., and
entrepreneur.
3. Decision making:
All of the policies and strategic decisions, like those comprising of expansion, diversification, take-overs,
mergers capital budgeting affairs, pricing policy etc. are taken by the entrepreneur.
While all those managerial operational decisions which would have impact on the short and medium – term
results ae taken by the managers.
4. Rectification of wrong decisions:
The wrong decisions taken by the entrepreneur may not be rectificable and may result in losses or even
closure of the unit.
Whereas the worng decisions taken by the manager can be amended and rectified by the entrepreneur.
5. Innovation:
An entrepreneur innovates and exploits his innovation commercially. He keeps on changing the factors
combination in order to increase profit and productivity. He acts an innovator also called a ‘change – agent’.
A Manager is merely an officer or an executive who is appointed for the promotion of the unit. He simply
implements the plans preparedby the entrepreneur and gives then practical shape. He is just a product of
change.
6. Risk bearing:
An entrepreneur being the owner of his unit undertakes all risks and unvertainty of running his experience.
A manager does not bear any risk because he is paid fixed slaalry.
7. Skills:
The skill expected from an entrepreneur is in the form of creativity, innovation, desire for high achievement,
intuition etc.
Whereas manager depends on public dealing abilities and conceptual abilities.
8. Qualification:
An entrepreneur doesn’t need to have distinct degree from a reputed university. Rather qualities like
foresightness, risk – taking, hard work, creative thinking etc. are more important.
On the other hand, a manager now a days need to possess degree in the stream of management theory and
practice. He has to appear for an interview to get a job.
9. Rewards:

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 The reward of an entrepreneur is the profit earned by him. Entrepreneur reward is uncertain and variable.
Higher the profits, better the rewards and vice-versa.
A manager gets his monthly salary as his reward for the services rendered by him and his rewards are certain
and fixed and regular.

6. Explain the various important Internal factors of an entrepreneur in Detail.

PART C
1. Explain the Classification of Entrepreneurs?
Entrepreneurs in technology
We may broadly classify these entrepreneurs on the basis of use of technology as follows:
Technical entrepreneur: A technical entrepreneur is essentially compared to a crafts man. He develops improved quality of
goods because of the craftsmanship. He concentrates more on production than marketing.
Non technical entrepreneur: These are people who are not concerned with the technical aspects of the product in which
they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their
business.
Professional entrepreneurs: Professional entrepreneurs are a person who is interested in establishing a business but does
not have interest in managing or operating it once it is established. A professional entrepreneur is a person who is interested
in establishing a business but does not have interest in managing or operating it once it is established. A professional
entrepreneur sells out the running business and starts another venture with the sales proceeds.
Entrepreneurs and motivation
Pure entrepreneur: A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He
undertakes an entrepreneurial activity for his personal satisfaction in work, ego, and status.
Induced Entrepreneur: He is the person who is induced to take up an entrepreneurial task due to the policy measures of the
government that provides assistance, incentives, concessions, and necessary overhead facilities to start the venture. Most

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of the induced entrepreneurs enter entrepreneurship due to financial, technical and several other facilities provided to them
by the state agencies to promote entrepreneurship.
Motivated entrepreneur: New entrepreneurs are motivated by the desire for fulfillment. They come into being because of
the possibility of making and marketing some new product for the use of customers. If the product is developed to saleable
stage, the entrepreneur is further motivated by reward in terms of profit.
Spontaneous Entrepreneur: These entrepreneurs start their business because of their natural talents. They are persons with
initiative, boldness and confidence in their ability which motivate them to undertake entrepreneurial activity. Such
entrepreneurs have a strong conviction and confidence in their inborn ability.
Growth and Entrepreneurs
Growth Entrepreneur: Growth entrepreneurs are those who necessarily take up high growth industry which has substantial
growth prospects.
Super Growth Entrepreneurs: Super growth entrepreneurs are those who have shown enormous growth of performance in
their venture. The growth performance is identified by the liquidity of funds, profitability and gearing.
Entrepreneurs and stages of Development:
Entrepreneurs may also be classified as the first generation entrepreneur, modern entrepreneur and classical entrepreneur
depending upon the stage of development. They are explained below:
First-generation entrepreneur: A first generation entrepreneur is one who starts an industrial unit by innovative skills. He
is essentially an innovator, combining different technologies to produce a marketable product or service.
Modern entrepreneur: A modern entrepreneur is one who undertakes those ventures which go well along with the changing
demand in the market. They undertake those ventures which suit the current marketing needs.
Classical entrepreneur: A classical entrepreneur is one who is concerned with the customers and marketing needs through
the development of the self supporting venture. He is a stereotype entrepreneur whose aim is to maximize his economic
returns at a level consistent with the survival of the firm with or without an element of growth.
Others
Innovating Entrepreneurs: Men and women in this group are generally aggressive in experimentation who exhibit
cleverness in putting attractive possibilities into practice. One need not invent but convert even old established products or
services by changing their utility, their value, and their economic characteristics into something new, attractive and
utilitarian. This is the secret of these people.
Imitative entrepreneurs: These people are characterized by readiness to adopt successful innovations by entrepreneurs.
They imitate techniques and technology innovated by others. They are adoptive and more flexible.
By western standards, an imitative entrepreneur may be a pedestrian figure, an adopter an imitator rather than a true
innovator. He is more an organizer of factors of production than a creator. But in a poor country attempting to industrialize,
he is nevertheless a potent change producing figure. He can set in motion the chain reaction which leads to cumulative
progress.

2. Explain the Functions of Entrepreneurs?

These are the functions performed by an entrepreneur.
1. Planning of the project:
He is the organizer to conceive the idea of launching the project and to program the structure of business
.2.Management:
The entrepreneur is also responsible for the managementof business. He tries to have a least cost combination
of factors of production.
3. to Face Risks:
He faces uncertainly and bears risks in his business uncertainly comprising those risks against which it is not
possible to insure. He also faces the risk of other producers may enter the market
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 4. Distribution of Rewards:
He is responsible of distributing the rewards to all factors of production. He pays the reward in the shape of
rent, wage, and interest and bears the risk of profit or loss himself
5. Sale of Products:
An entrepreneur is also responsible of marketing, advertising. He wants to maximize his profits by selling his
product in the market.
6. Scale of Production:
He decided the scale of business in according with the provision of capital. Then, he takes the decision of what
where and how to produce goods.
Joint stock Organization
: In a partnership, the entrepreneurial functions are divided between the partners. But in public
limited company, the board of directors takes this responsibility with nationalized enterprise; the entrepreneurial
decisions are left to the government or a body to which government has delegated its powers.
8. Identifying entrepreneurial opportunity:
– There are many opportunities in the world of business. These are based on human needs like food, fashion,
education, etc., which are constantly changing. These opportunities are not realized
By common man, but an entrepreneur senses the opportunities faster than
Others.An entrepreneur therefore, has to keep his eyes and ears open and
Require imagination.

9– An entrepreneur should be capable of turning his ideas into reality. He collects information regarding the
ideas, products, practices to suit the demand in the market. Further steps are taken to achieve the goals in the
light of the information collected.
10. Feasibility study:
The entrepreneur conducts studies to assess the marketfeasibility of the proposed product or services. He anticip
ates problems andassesses quantity, quality, cost and sources of inputs required to run theenterprise. Such a blue
print of all the activities is termed as a 'business plan' or a ‘project report'.
11. Resourcing:
– The entrepreneur needs various resources in terms of money, machine, material, and men to running the
enterprise successfully. An essential function of an entrepreneur is to ensure the availability of all these resources
12. Setting up of the Enterprise:
– For setting up an enterprise the entrepreneur may need to fulfill some legal formalities. He also tries to find out
a suitable location, design the premises, install machinery and do many other things.
13. Managing the enterprise:
– One of the important functions of an entrepreneur is to run the enterprise. He has to manage men, material, and
finance and organize production of goods and services. He has to market each product and service, after ensuring
appropriate returns (profits) of the investment. Only a properly managed organization yields desired results.
14. Growth and Development:
– Once the enterprise achieves its desired results,
theentrepreneur has to explore another higher goal for its proper growth anddevelopment. The entrepreneur is
not satisfied only with achieving a set goal but constantly strives for achieving excellence

3. Explain the Qualities of Entrepreneurs?

Successful businesspeople have many traits in common with one another. They are confident and optimistic. They
are disciplined self starters. They are open to any new ideas which cross their path. Here are ten traits of the
successful entrepreneur.
1. Disciplined
These individuals are focused on making their businesses work, and eliminate any hindrances or distractions to their
goals. They have overarching strategies and outline the tactics to accomplish them. Successful entrepreneurs are
disciplined enough to take steps every day toward the achievement of their objectives.
2. Confidence

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 The entrepreneur does not ask questions about whether they can succeed or whether they are worthy of success. They
are confident with the knowledge that they will make their businesses succeed. They exude that confidence in everything
they do.
3. Open Minded
Entrepreneurs realize that every event and situation is a business opportunity. Ideas are constantly being generated
about workflows and efficiency, people skills and potential new businesses. They have the ability to look at
everything around them and focus it toward their goals.
4. Self Starter
Entrepreneurs know that if something needs to be done, they should start it themselves. They set the parameters
and make sure that projects follow that path. They are proactive, not waiting for someone to give them permission.
5. Competitive
Many companies are formed because an entrepreneur knows that they can do a job better than another. They need
to win at the sports they play and need to win at the businesses that they create. An entrepreneur will highlight their
own company’s track record of success.
6. Creativity
One facet of creativity is being able to make connections between seemingly unrelated events or situations.
Entrepreneurs often come up with solutions which are the synthesis of other items. They will repurpose products to
market them to new industries.
7. Determination
Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity for success. They are
determined to make all of their endeavors succeed, so will try and try again until it does. Successful entrepreneurs
do not believe that something cannot be done.
8. Strong people skills
The entrepreneur has strong communication skills to sell the product and motivate employees. Most successful
entrepreneurs know how to motivate their employees so the business grows overall. They are very good at
highlighting the benefits of any situation and coaching others to their success.
9. Strong work ethic
The successful entrepreneur will often be the first person to arrive at the office and the last one to leave. They will come
in on their days off to make sure that an outcome meets their expectations. Their mind is constantly on their work,
whether they are in or out of the workplace.
10. Passion
Passion is the most important trait of the successful entrepreneur. They genuinely love their work. They are willing to
put in those extra hours to make the business succeed because there is a joy their business gives which goes beyond the
money. The successful entrepreneur will always be reading and researching ways to make the business better.
Successful entrepreneurs want to see what the view is like at the top of the business mountain. Once they see it, they
want to go further. They know how to talk to their employees, and their businesses soar as a result.

4. Explain the Characteristics of Entrepreneurs?

1. Passion & Motivation
If there's one word that describes the fundamental trait in an entrepreneurship, it would be passion.
o Is there something that you can work on over and over again, without getting bored?
o Is there something that keeps you awake because you have not finished it yet?

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 o Is there something that you have built and want to continue to improve upon, again and again?
o Is there something that you enjoy the most and want to continue doing for the rest of your life?
Your demonstration of passion and motivation will determine your success in any entrepreneurial venture. From
building and implementing a prototype, to pitching your idea to venture capitalists, success is a function of passion
and determination. (For more, see: Turn Your Passion into a Profitable Side Business.)
2. Risk Taking
Entrepreneurs are risk takers ready to dive deep into a future of uncertainty. But not all risk takers are successful
entrepreneurs. What differentiates a successful entrepreneur from the rest in terms of risk? Successful entrepreneurs
are will to risk time and money on unknowns, but they also keep resources, plans and bandwidth for dealing with
"unknown unknowns" in reserve. When evaluating risk, a successful entrepreneur will ask herself, is this risk worth
the cost of my career, time and money? And, what will I do if this venture doesn't pay off?
3. Self-belief, Hard work & Disciplined Dedication
Entrepreneurs enjoy what they do. They believe in themselves and are confident and dedicated to their project.
Occasionally, they may show stubbornness in their intense focus on and faith in their idea. But the flip side is their
demonstrated discipline and dedication.
4. Adaptability & Flexibility
It’s good to be passionate or even stubborn about what you do. But being inflexible about client or market needs will
lead to failure. Remember, an entrepreneurial venture is not simply about doing what you believe is good, but also
making successful business out of it. Market needs are dynamic: changes are a recurring phenomenon. Successful
entrepreneurs welcome all suggestions for optimization or customization that enhances their offering and satisfies
client and market needs. A product you develop for yourself alone may qualify as a hobby, but a product for the
market should satisfy market needs.
5. Understand Your Offering – And Its Market
Entrepreneurs know their product offering inside and out. They also know the marketplace and its dynamics
inside and out. Remaining unaware of changing market needs, competitor moves and other external factors can
bring even great products to failure (for example, Blockbuster).
6. Money Management
It takes time to get to profitability for any entrepreneurial venture. Till then, capital is limited and needs to be
utilized wisely. Successful entrepreneurs realize this mandatory money management requirement and plan for
present and future financial obligations (with some additional buffer). Even after securing funding or going fully
operational, a successful businessman keeps a complete handle on cash flows, as it is the most important aspect
of any business.
7. Planning (But not Over-planning)
Entrepreneurship is about building a business from scratch while managing limited resources (including time,
money and personal relationships). It is a long-term commitment, and attempting to plan as much as possible at
the beginning is a noble impulse. In reality, however, planning for everything and having a ready solution for all
possible risks may prevent you from even taking the first step. Successful entrepreneurs do keep some dry
powder in reserve, but more importantly they maintain a mindset and temperament to capable of dealing with
unforeseen possibilities.
Do a feasibility analysis; identify time and capital thresholds; take the deep dive with your limited resources. If
your thresholds are crossed, look for alternatives and be prepared to take the next exit.
8. Networking Abilities
How do you tap your network for solutions? Many people seek comfort in commiseration: friends, colleagues and
neighbors are happy to complain with you about "the global slowdown,” poor demand, or unfair competition; but

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 that won't improve the bottom line. What do successful entrepreneurs do? They reach out to mentors with more
experience and extensive networks to seek valuable advice.
Having such networking abilities, including more experienced mentors, is a key characteristics of successful
entrepreneurs.
9. Being Prepared to Take the Exit
Not every attempt will result in success. The failure rate of entrepreneurial ventures is very high. At times, it is
absolutely fine to take the “practical” exit route and try something new, instead of continuing to make sunk
cost investments in the same venture. Many famous entrepreneurs weren't successful the first time around. But
they had the serenity and foresight to know when to cut their losses.
10. Entrepreneurs Doubt Themselves – But Not Too Much
You may ask yourself, am I an entrepreneur? And the very question may put you in doubt about the answer. Even
if you don't have the flair of Steve Jobs or the hair of Elon Musk, if you have the courage to ask yourself
intimidating questions – Can I do this? Do I want to do this? – You have the stuff to be an entrepreneur.
5. Explain the Types of Entrepreneurs?
Business entrepreneur: Business entrepreneurs are individuals who conceive an idea for a new product or service
and then create a business to materialize their idea into reality. They may set up a big establishment or a small
business unit. They are called small business entrepreneurs when found in small business units such as printing
press, textile processing house, advertising agency, readymade garments or confectionery.
Trading Entrepreneur: The trading entrepreneur is one who undertakes trading activities and is not concerned with
the manufacturing work. He identifies potential markets, stimulates demand for his product line and creates a desire
and interest among buyers to go in for his product line and creates a desire and interests among buyers to go in for
his product line and creates a desire and interests and buyers to go in for his product. He is engaged in both domestic
and overseas trade. Britain, due to geographical limitations has developed trade through trading
entrepreneurs.
Industrial Entrepreneurs: Industrial entrepreneur is essentially a manufacturer who identifies the potential needs of
customers and tailors a product or service to meet the marketing needs. He is product- oriented man who starts in an
industrial unit because of the possibility of some new product.
Corporate Entrepreneur: Corporate entrepreneur is a person who demonstrates his innovative skill in
organizing and managing corporate undertaking. A corporate undertaking is a form of business organization which
is registered under some statue or act which gives it a separate legal entity. A trust registered under Trust act or
company registered under the companies act is examples of corporate undertakings. A corporate entrepreneur is thus
an individual who plans, develops and manages a corporate body.
Agricultural Entrepreneur: Agricultural entrepreneur are those entrepreneurs who undertake agricultural activities
as raising and marketing of crops, fertilizers and other inputs of agriculture. They are motivated to raise agricultural
through mechanization, irrigation and application of technologies for dry land agriculture products.

6. Difference between Entrepreneur and a Manager?

Behavioral Differences
The typical entrepreneur wants to "be in control" of his life (which is often the reason why he started the business),
of his business and especially of his employees.
The professional manager, on the other hand, enters a company which needs to delegate authority, since it has
reached the stage in its development where the entrepreneur can no longer "do it all himself".
Management Style
The entrepreneurial management style is very demanding, leaving very little room for error, and none at all for
actual failures, since in most cases the business is a "one man show", even if there are other employees.

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 The professional manager, however, must be tolerant of failure (and see it as a basis for learning) and develop an
administrative team, since a basic assumption is that responsibility in the organization must pass from the "all-
knowing" entrepreneur to people who still have to learn about the business.
i. The Moving Force
Entrepreneurial management is characterized by concepts such as "entrepreneurship", "creativity", "innovation",
and so on, indicators of the desire to create "something from nothing".
Professional management is characterized by concepts such as "order", "organization", "procedures", and so on,
indicating the desire to organize and maintain what exists.
ii. Growth
Entrepreneurial management is noted for its ability to react quickly and effectively to new business opportunities.
This ability is the foundation for rapid growth of the company in its entrepreneurial stage.
Professional management is noted for medium and long term strategic planning, which leads to controlled growth
of the company during the process of establishment.
iii. Organizational Structure
The entrepreneurial organization is characterized by its informal, flexible structure, which allows it to adapt to
changes required by its rapid growth.
Professional management, on the other hand, requires a formal and fairly rigid organizational structure, which
leaves no room for rapid reactions to business opportunities, but protects the organization from sudden collapse.
VI. Decision-Making
the entrepreneur usually makes decisions, even those of critical importance for his business, on the basis of his own
personal intuition and "gut feelings".
The professional manager makes decisions after collecting detailed information and reaching operative
conclusions, while relying on experts both from within and outside the organization.
VII. Definition of Aims
The entrepreneur describes his organization in terms of "vision", "dream" and "mission" and manages to give his
employees the feeling that they are working for a higher aim than just marketing a product and/or service.
The professional manager describes the company aims in terms of market segments, yield per worker and
profitability.
VIII. Attitude toward Money
Although the accepted myth is that entrepreneurs are driven by the desire for power and money, both theoretical
and empirical studies have shown that typical entrepreneurs are in fact driven by the desire for success rather than
power. This means that, in the eyes of most entrepreneurs, while money is a welcome by-product of their efforts, it is
not the reason for their efforts.
The professional business manager, on the other hand, looks at the business he manages through "financial eyes"
and defines its aims (usually in the short term only) purely in financial terms.
IX. Attitude toward Risk
The myths describe entrepreneurs as "wild risk-takers", although many studies have shown that in fact the typical
entrepreneur is very good at assessing risks.
On the other hand, the professional manager, who sees his task as strengthening and maintaining the company, is
naturally afraid of risks and tries to maintain the status quo.
X. Company Culture

13
The typical entrepreneur does not usually try to define a "culture" for the organization he sets up, since in most
cases he himself is the organization. The literature defines this situation as "the entrepreneurial organizational
culture", characterized by large doses of charisma and "manipulativeness".
The professional manager does try to establish a well-defined company culture, based on company values on one
hand and commercial aims on the other

7. What are the factors that influence Entrepreneurship?

Economic factors:
(a) Capital:
Capital is one of the most important prerequisites to establish an enterprise. Availability of capital helps an
entrepreneur to bring together the land of one, machine of another and raw material of yet another to combine them
to produce goods.
(b) Labour:
The quality and quantity of labour is another factor which influences the emergence of entrepreneurship.
Availability of labour makes entrepreneurship attractive. More than abundantly available labour, the presence of
skilled labour force is very important because such a workforce is generally less mobile than other resources.
(c) Raw Materials:
Raw materials are required for establishing any industrial activity and therefore have an influence in the
emergence of entrepreneurship. In the absence of raw materials, neither any enterprise can be established nor can
an entrepreneur emerge.
(d) Market:
It is not only the availability of capital, labour and raw materials but a readily available market that attracts
entrepreneurial activities. Ultimately, it is the market that fetches revenue for any business.
2. Social Factors:
Development of entrepreneurship in a society may take place not just because of better economic factors but
because of the presence of positive social factors. The following social factors influence the development of
entrepreneurship in a society.
(a) Social norm2s and values:
A society sets certain norms and values for the behavior of people who are part of that society. If people violate or
overstep these norms and values, certain restrictions are likely to be imposed on them. As a result, many people are
forced to accept certain types of jobs and tasks that reflect the social environment.
(b) Role models:
Societies that celebrate entrepreneurship and felicitate successful entrepreneurs in a way encourage many future
generations to take up entrepreneurial activities. This is because successful businessmen prove to be role models for
the society at large.
(c) Social pressure:
At times, entrepreneurship can emerge in a society due to social restriction too. If a society is orthodox, close and
imposes a lot of restrictions, then it is likely to backfire. People who are at the receiving end are likely to react
strongly and go in for change.
(c) Social pressure:
At times, entrepreneurship can emerge in a society due to social restriction too. If a society is orthodox, close and
imposes a lot of restrictions, then it is likely to backfire. People who are at the receiving end are likely to react
strongly and go in for change.
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 (d) Respect and Status:
If societies accord recognition and respect to people who dare to do something different and creative, it proves to
be an encouragement for others to do something enterprising. Therein lays the emergence of entrepreneurship.
(e) Security:
The view regarding role of social security in encouraging entrepreneurship development is rather divided. One
school of thought is of the view that people are more prone to take entrepreneurial risks in secure social
environments.
3. Psychological Factors
(a) Need Achievement:
According to David McClelland’s theory of need achievement, a constellation of personality characteristics which
are indicative of high need achievement is the major determinant of entrepreneurship development.
(b) Withdrawal of Status Respect:
E.E. Hagen attributed the withdrawal of status respect of a group to the genesis of entrepreneurship. Giving a brief
sketch of history of Japan, he concludes that she developed sooner than other non-Western society except Russia
due to two historical differences.
4. Government Actions
The government by its actions or failure to act also does influence both the economic and non-economic factors
for entrepreneurship. Any interested Government in economic development can help, through its clearly
expressed industrial policy, promote entrepreneurship in one way or other.

UNIT II
PART A
11. What is PERT??
The program (or project) evaluation and review technique, commonly abbreviated PERT, is a statistical tool,
used in project, which was designed to analyze and represent the tasks involved in completing a given project.
First developed by the United States Navy in the 1950s, it is commonly used in conjunction with the critical path
method (CPM).
12. What is network analysis??
Network analysis is the general name given to certain specific techniques which can be used for the
planning, management and control of projects
It can also be defined as Breaking down a complex project's data into
its component parts (activities, events, durations, etc.) and plotting them to show their interdependencies
and interrelationships.

13. Who is an innovator? what are the elements of innovation??

An innovator, in a general sense, is a person or an organization, who is one of the first to introduce into reality,
something better than before. Something that opens up a new area for others, and achieves an innovation.
The three internal elements:
• Knowledge–Seeing calls what you know your toolbox, and the more in-depth your knowledge of
something the more likely you will bring new aspects to light.
• Imagination—how you connect and combine ideas. Most people view themselves as puzzle builders in
which they do defined tasks as part of a whole. Innovators view themselves as quilters who combine to
create.
• Attitude—turning ideas into reality is rarely a smooth process, and requires relentless drive and
motivation.

15
 • The three external elements:
• Resources–While most people think only of money they need, resources should be viewed broadly to
include time, people, etc.
• Habitat–Where you do your work can contribute to the flow of ideas. A row of cubicles is hardly as
conducive to creativity as informal settings. A slide like the one in Pixar’s office isn’t frivolous, she says,
because it signals that the company.
• Culture–What Seeing calls the background music of a company affects how employees feel and, in turn,
what they produce.

14. What is enterprise??

Full Definition of enterprise
1: a project or undertaking that is especially difficult, complicated, or risky
2: readiness to engage in daring or difficult action: initiative <showed great enterprise in dealing with the
crisis>
3 a: a unit of economic organization or activity; especially: a business organization b: a systematic purposeful
activity <agriculture is the main economic enterprise among these people

15. Define small scale enterprise??

A small-scale enterprise is a business that employs a small number of workers and does not have a high volume of
sales. Such enterprises are generally privately owned and operated sole proprietorships, corporations or
partnerships. The legal definition of a small-scale enterprise varies by industry and country.

16. Explain district industries centre?

The District Industries Centre is the institution at the District level, which provides all the services and support
facilities to the entrepreneur for setting up of micro small and medium enterprises. This includes identification of
suitable schemes, preparation of feasibility reports, arrangements for credit facilities, machinery and equipment,
provision of raw materials and extension service.

17. What is environment scanning?

Environmental scanning is the acquisition and use of information about events, trends, and relationships in an
organization's external environment, the knowledge of which would assist management in planning the
organization's future course of action Environmental scanning is the acquisition and use of information about
events, trends, and relationships in an organization's external environment, the knowledge of which would assist
management in planning the organization's future course of action
18. Give the meaning of generation of ideas?
The process of creating, developing, and communicating ideas which are abstract, concrete, or visual. The
process includes the process of constructing through the idea, innovating the concept, developing the process,
and bringing the concept to reality.

19. What are incongruities?

An incongruity is a discrepancy, a dissonance, between what is and what ought to be, or between what is and
what everybody assumes it to be”, an incongruity is a symptom of an opportunity to innovate. It creates a n
instability in which quite minor efforts can move large masse and bring about a restructuring of the economic or
social configuration.
20. Who is Fabian entrepreneurship?
Fabian entrepreneurs are cautious and skeptical in experimenting change in their enterprises. Such
entrepreneurs are shy, lazy and lethargic. They are imitative by nature but are not determined and also lack
power. They imitate only when it becomes perfectly clear that failure to do so would result in a loss of the relative
position of the enterprise.

PART B
. Explain the important functions of Industrial financial corporation of India.
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Functions of IFCI
Direct financing is the main business of the corporation. It provides direct finance for promotional activities like starting
new ventures, expansion of capacity for replacement, renovation or modernization of the existing industrial units
particularly large and medium units. Originally, the IFCI was authorized to deal with requests for loan for Rs. 10 lakhs
and above. But now it is entertaining only applications above Rs. 2 crores.
Under Sec. 23 of the IFC Act, the corporation has been authorized to render its financial assistance in the following six
ways:
1. Guaranteening loans raised by industrial concerns from the capital market, scheduled banks or state co-operative
Banks which are repayable within a period of 20 years.
2. Granting loans either directly or by subscribing to the debentures of industrial concerns repayable within 25 years.
3. Underwriting of the issue of shares, bonds on debentures.
4. Subscribing directly to the stocks, shares, debentures and bonds issued by industrial aconcerns.
5. Acting as an agent of the Central Government and the World Bank (IBRD) in respect of loans sanctioned by them
to the industrial concerns.
6. Guaranteeing –
(i) Deferred payments for machinery imported from abroad or purchased within the country.
(ii) Foreign currency loans raised by industrial concerns from foreign institutions, and
(iii) Rupee loans raised by industrial concerns from scheduled banks or state co-operative banks or the public
market.
Besides it offers financial services such as equipment leasing, equipment procurement, buyers and suppliers credit,
finance to leasing and hire purchase concerns etc. IFCI provides merchant banking services and undertakes project
councelling, issue management and debenture trusteeship assignments. Further, IFCI undertakes promotional activities to
provide a stimulus to industrialization process.
The IFCI is also undertaking various promotional activities financed out of its benevolent reserve fund. The following
activities are worth mentioning.
1. Entrepreneurial guidance.
2. Technical consultancy organization.
3. Risk capital scheme
4. Technical assistance scheme.
There is no doubt that the IFCI has experienced impressive performance over the years.
2. Give a brief account of ICICI and its role in capital market.
Industrial credit and investment for corporation of india.
Ans. The creation of Industrial credit and Investment Corporation of India is another milestone in the growth of the
Indian Capital Market. It was incorporated in the year 1955, as a company registered under the Companies Act. It
was sponsored by a mission from the world bank for the purpose of developing small and medium industries in the
private sector.
To encourage industrial development in the private sector, a considerable provision of underwriting facility was
considered necessary to accelerate the phase of the industrialization to fil these gaps, the ICICI was established.
Objectives of the ICICI:
The major objective of the ICICI was to meet the needs of the industry for permanent and long-terms funds in the
private sector. In general, the major objectivies of the corporation are:
1. To assist in the creation, expansion and modernization of industrial enterprises in the private sector.
2. To encourage and promote the participation of private capital, both internal and external, in such enterprises.
3. To encourage and promote private ownership of industrial investment and expansion of markets.
4. To provide equipment finance
5. To provide finance for rehabilitation of industrial units.

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Functions of the ICICI
The corporation performs the following functions:
1. Providing finance in the form of long-term or medium term loans or quity participation.
2. Sponsoring and underwriting new issues of shares and other securities.
3. Guaranteeing loans from other private investment sources.
4. Marking funds available for reinvestment by revolving investment as rapidly as possible.
5. Providing project advisory services i.e., offering advice – (1) to private sector companies in the pre-
investment stages on government policies and procedures, feasibility studies and joint venture search, and (2)
to central and state governments on specific policy related issues.

PART C
1. What are the functions of commercial banks?
Functions of Commercial Banks:
The major functions of Commercial Banks are as follows:
1. Acceptance of Deposits:
The main function of commercial banks is to accept deposits from the public. Banks maintains demand deposits
accounts for their customers and converts deposit money into cash and vice versa, at the direction of the latter.
Demand deposits are technically accepted in current accounts, which are with draw able any time by the
depositor by means of cheques.
Deposits are made in fixed deposit accounts which are with draw able only after a specific period. Thus, fixed
deposits are time liabilities of the banks. Deposits are also received in saving bank accounts subject to certain
restrictions on the amount receivable and with draw able. This is how banks pool the scattered savings of the
community and serve as the reserves of its savings.
2. Giving Loans and Advances:
Another function of commercial banks is to extend loans and advances out of the money which comes to them by
way of deposits to businessmen and entrepreneurs against approved securities such as gold or silver bullion,
government securities, easily saleable stocks and shares and marketable goods.
Bank advances to customers may be made in the following ways:
(i) Overdrafts, (ii) discounting bills, (iii) money-at-call and short notice, (iv) loans and advances (v) various
forms of direct loans to traders and producers.
3. Using Cheque System:
Banks also render important services by providing an expensive medium of exchange, such as cheques. In modern
business transactions, the use of cheques to settle debts is found to be much more convenient than the use of cash.
In fact, the cheque is also known as the most developed credit instrument.
4. Other Functions:
Commercial banks also perform a multitude of other non-banking functions which may be classified as (a) agency
services and (b) general utility services.
(a) Agency services:
The bankers perform certain functions for and on behalf of their customers, such as:
(i) To act as executor, trustee and attorney for the customer’s will.
(ii) To collect or make payments for bills, cheques, promissory notes, interest, dividends, rents, subscriptions,
insurance premium, etc. For these services, some charges are usually levied by the banks.
(iii) To remit funds on behalf of the clients by drafts or mail or telegraphic transfers.

18
 (iv) To arrange income-tax experts to prepare income tax returns for their customers, and help them to get refund
of income tax in appropriate cases.
(v) To work as correspondents, agents or representatives of their clients.
(b) General Utility Services:
The modem Commercial banks usually perform certain general utility services for society, such as:
(i) Bank drafts and traveler’s cheques are issued in order to provide facilities for transfer of funds from one part
of the country to another.
(ii) Letter of credit may be given by the banks to their customers to enable them to go abroad.
(iii) Dealing with foreign exchange or finance foreign trade by accepting or collecting foreign bills of exchange.
(iv) Shares floated by Government, Public bodies and corporations may be underwritten by banks.
(v) Banks arrange the safe deposit vaults, to the customers, for their valuables.
(vi) Banks also compile statistics and business information relating to trade, commerce and industry. Some banks
may publish valuable journals or bulletins containing research on financial economic and commercial matters.

2. What are the functions of NABARD?

NABARD gives high priority to projects formed under IRDP.
1. It provides refinance for IRDP accounts in order to give highest share for the support for poverty alleviation
programs run by IRDP.
2. Other than the activities included under IRDP, it also makes the service area plan, to provide backward and
forward linkages and also infrastructural support.
3. NABARD also prepares guidelines for promotion of group activities under its programs and provides 100%
refinance support for them.
4. It is making efforts to establish linkages between Self-help Group(SHG) that are organized by voluntary
agencies for poor and needy in rural areas and other official credit agencies.
5. It refinances to the complete extent for those projects that are taken under the ‘National Watershed
Development Programmed‘and the ‘National Mission of Wasteland Development‘.
6. It also has a system of District Oriented Monitoring Studies, under which, study is conducted for a cross
section of schemes that are sanctioned in a district to various banks, to ascertain their performance and to
identify the constraints in their implementation, It also initiates appropriate action to remedy them.
7. It also supports Vikas volunteer Vahini programs which offer credit and development activities to poor
farmers.
8. It also inspects and supervises the cooperative banks and RRBs to periodically ensure the development of the
rural financing and farmers’ welfare.
9. NABARAD also recommends about licensing for RRBs and Cooperative banks to RBI.
10. NABARD also provides assistance and support for the training and development of the staff of various other
credit institutions, that are engaged in credit distributions.
11. It also runs programs for agriculture and rural development.
12. It is engaged in regulations of the cooperative banks and the RRB’s, and manages their talent acquisition
through IBPS CWE conducted across the country.

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 UNIT III
PART A
1 . What is Intrapreneurship?
Intrapreneurship is acting like an entrepreneur within a larger organization. Intraprenuers are usually highly
self-motivated, proactive and action-oriented people who are comfortable with taking the initiative, even within
the boundaries of an organization, in pursuit of an innovative product or service. The intrapreneur has the
comfort of knowing that failure does not have a personal cost as it does for an entrepreneur, since the
organization absorbs losses arising from failure.

2. State any three characteristics of entrepreneur?

Self confidence – a belief in their own abilities and ideas.
Being innovative/inventive – being able to generate ideas, either for new products/services or new ways of
applying them.
Self motivation and determination – the drive to keep going and see things through.
3. What is Brain Storming?
Process for generating creative ideas and solutions through intensive and freewheeling group discussion.
Every participant is encouraged to think aloud and suggest as many ideas as possible, no matter seemingly how
outlandish or bizarre.

4. What is Parametric Analysis?

An analysis taken to describe, analyze and examine the different relations amongst various parameters,
for e.g. schedules and costs.

5. List out any three sources of Business ideas?

1. Look within yourself and examine your skills, talent, passion
2. 2. Keep up with current events and be ready to take advantage of business opportunities
3. Invent a new product or service
6. What is collective notebook method?
In the collective notebook method a small notebook that easily fits in a shirt pocket is prepared. It includes a
statement of the problem, blank pages, and any pertinent background data.
7. What is Venture Capital?
venture capital (VC) is a type of private equity,[1] a form of financing that is provided by firms or funds to
small that are deemed to have high growth potential, or which have demonstrated high growth (in terms of
number of employees, annual revenue, or both). Venture capital firms or funds invest in these early-stage
companies in exchange for equity–an ownership stake–in the companies they invest in.
8. What do you mean by Export Finance?
Export financing describes the activity of governments helping companies by financing their export activities.
They offer low interest rate loans that the company could otherwise not obtain at a rate lower than market price.
9. What is Factoring?
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts
receivable (i.e., invoices) to a third party.
10. What is Capital Structure?

20
The capital structure is how a firm finances its overall operations and growth by using different sources of funds.
Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock,
preferred stock or retained earnings.

21
 PART B
1. Explain the various sources of idea.
Various entrepreneurship researches have looked at the source of entrepreneurs ideas. These studies have shown
that the sources of their ideas are unique and varied. In one survey, 60 percent of respondents said working in the
same industry were the major source of ideas for a business. The various sources of idea are:-
1. Personal interests or Hobbies:
2. Entrepreneurs work experiences etc:
3. Products and services currently available:
4. Discussion with people:
5. Success of friends and relatives:
6. Experience of existing entrepreneurs:
7. Short supply / excess demand for certain goods :
8. Advertisements:
9. Exhibitions and Trade Fairs:
10. Research Institutions:
11. Creative thinking:
12. Recycling of Waste Materials:
13. Improving Existing Products:
2 .Discuss the various methods of appraising a project.
Financial institutions appraise a project proposeal by using different methods. Selection criteria are typically
identified as financial and non-financial. A short description of each of which is given below:
I. Fiancial Criteria
1. Pay Back Method
2. Return on Investment
3. Direct Cash Flow Method
i) Internal Rate of Return Method
ii) Net present Value Method
iii) Profitability Index
II. Non – financial Criteria.
Financial return, while important, does not always reflect strategic importance. A firm may support
projects that do not have high profit margins for other strategic reasons such as:
1. To capture larger market share.
2. To make it difficult for competitors to enter the market.
3. To develop new product.
4. To develop core technology to be used in next generation
5. To reduce dependency on unreliable suppliers.
6. To prevent government intervention and regulations.

PART C
1. What is Project Identification? Explain Internal and External Constraints in Project Identification?
Project identification is the first step in the strategic planning process. Before spending significant time and
resources on a project, restoration practitioners should be able to identify the biological importance and
likelihood of restoration success at potential project sites
Internal Constraints:
At the organizational level, internal control objectives concern the reliability of financial reporting,
timely feedback on the achievement of operational or strategic goals, and compliance with laws and regulations.
With this in mind, we can summarize internal constraints as anyone or any combination of the following:

22
• Equipment: The way equipment is used limits the ability of the system to produce more salable goods/services.
• People: Lack of skilled people limits the system; mental models also cause negative behaviors that become
constraints.
• Policy: A written or unwritten policy prevents the system from making more goods/services.
The list of potential internal constraints is long: employees may not have the proper skills to use specific types of
equipment, policy may organize the processes in an imperfect manner, equipment may depreciate faster than
expected, employees may be absent or inefficient, policy may limit resource allocation to inventory and
warehousing, etc. Internal constraints are a constant concern for the managers who must try to minimize them by
continually optimizing the system. For example, if employees lack specific skills, management may want to refine
its hiring policies.
External Constraints:
In their attempts to maximize existing profits, business managers must consider both the short- and long-term
implications of decisions made within the firm and the various external constraints that could limit the firm's
ability to achieve its organizational goals. These constraints can be organized into three categories:
• Scarcity
• Contracts
• Legalities
The first external constraint, resource scarcity, refers to the limited availability of essential inputs (including
skilled labor), key raw materials, energy, specialized machinery and equipment, warehouse space, and other
resources. Moreover, managers often face constraints on plant capacity that are exacerbated by limited
investment funds available for expansion or modernization.
Contractual obligations also constrain managerial decisions. Labor contracts, for example, may constrain
managers' flexibility in worker scheduling and work assignments. Labor contracts may also restrict the number of
workers employed at any time, thereby establishing a floor for minimum labor costs.
Finally, laws and regulations have to be observed. Legal restrictions can constrain production and marketing
decisions. Examples of laws and regulations that limit managerial flexibility include: minimum wage, health and
safety standards, fuel efficiency requirements, anti-pollution regulations, and fair pricing and marketing
practices.

2. How will you classify the Project?

Classifications of Projects
The projects are basically defined in two aspects or categories: one is defensive project and other is aggressive
project.
Defensive Project: Is the project initiated to stabilize and sustain the current business situation. Aggressive
Project: Is the project initiated to enter into new business in a commercial manner and majorly depends upon the
future prospective rather than the current scenario.
There is other classification of projects as well which is based on the need of execution and the time, these can be
categorized as:
Normal Project: Where the time limits are set and adequate.
Brash Project: Where additional cost are involved to gain time.
Disaster Project: Anything is allowed to gain time.

23
Projects can be further classified into various other classifications like national and international projects,
industrial and non-industrial projects, on the basis of technology, size, ownership, public or private projects,
need, expansion or diversification projects.
Each of these is discussed as follows:
1. National and International Projects: This kind of projects is categorized on the basis of geographical
location set as countries. If one country tries to build projects with other foreign country, such projects
are said to be International projects and when it is done in one’s own country, then it is said to be a
domestic or national project.
2. Industrial and Non-industrial Projects: The projects initiate in one’s own country with an objective to
make money and for commercialization, are called industrial projects. For example, a car
manufacturing is an industrial project. While the project which are done for the upliftment of the
society and majorly done with social welfare objectives, are called non-industrial projects. For
example Building of a canal, agricultural development comes under non-industrial projects; these are
mainly carried up by the government.
3. Projects based on Technology: These are largely high technology projects which require lots of
investment and works on new or non-existent technologies like rocket launch project, space projects,
etc. and some other are those projects which use technology which are already proven like a software
ERP project, automobile automation project, etc.
4. Projects based on its size: These projects are based on investment size or capacity of plant to offer
goods or services. This can be further classified down to small, medium and large scale projects.
Project above the investment of 100 million dollars is considered as large projects.
5. Project based on ownership: This can be further classified as public sector project, private sector
project and joint sector project.
1. Public Sector Projects: Projects which are of the state, center or both forms of governments,
are known as public sector projects.
2. Private Sector Projects: Projects with a complete ownership of promoters and investors is
known as private sector projects. Owners may be an individual, partnership firm or a
company. These projects are mostly done with an objective to earn profit and thus have a
commercial nature.
3. Joint Sector Projects: In these projects, there exist a partnership between the entrepreneurs
and the government; it may be from state government or the central government. These types
of partnership occur on the grounds of expertise and laisioning work and government
arranges for the fund in large amounts. For example, Project of Metro Train, Dams,
Information technology parks, Electricity plants and other similar natured projects.
6. Need based projects: Projects are basically driven by certain needs of the organization and these needs
furthers forms the basis of project categorization as Balancing Project, Modernization Project,
Expansion Project, Diversification Project, Rehabilitation Project and Plant Relocation Project.
1. Balancing Project: Augmenting or strengthening the capacity of particular area within a
chain of entire production plant with a purpose of scaling to the capacity in order to have
optimum utilization, is balancing project.
2. Modernization Project: Upgrading the technology to increase the productivity and inevitable
approach of technology is called modernization project.
3. Expansion Project: When the production capacity of goods and services is to be increased,
the project that is undertaken is known as expansion project.
4. Diversification Project: Project undertaken by the organization to completely divert from its
core business is called diversification project. For example, if a Petroleum company decides

24
 to enter into Information Technology business, then the project will be known as
diversification project.
5. Rehabilitation Project: When a project is started to revive a loss bearing company, is known
as rehabilitation project.
6. Plant Relocation Project: When an organization decides to shift his plant from one location
to another, the project started will be known as relocation project

3. Explain the stages of project formulation?

1. Feasibility Analysis: • First stage in project formulation. • Examination to see whether to go in for a detailed
investment proposal or not. • Screening for internal and external constraints
2. Techno-Economic Analysis: • Screens the idea to-Estimate of potential of the demand for goods/services. •
Choice of optimal technology. • This analysis gives the project a platform for preparation of detailed project
design.
3. Project Design and Network Analysis: • It is the heart of the project entity. • It defines the sequence of events
of the project. • Time is allocated for each activity. • It is presented in a form of a network drawing. • It helps
to identify project inputs, finance needed and cost-benefit profile of the project.
4. 4. Input Analysis: • Its assesses the input requirements during the construction and operation of the project. •
It defines the inputs required for each activity. • Inputs include materials, human resources. • It evaluates the
feasibility of the project from the point of view of the availability of necessary resources. • This aids in
assessing the project cost.
5. 5. Financial Analysis: • It involves estimating the project costs, operating cost and fund requirements. • It
helps in comparing various project proposals on a common scale. • Analytical tools used are discounted cash
flow, cost-volume-profit relationship and ratio analysis. • Investment decisions involve commitment of
resources in future, with a long time horizon. • It needs caution and foresight in developing financial
forecasts.
6. 6. Cost- Benefit Analysis: • the overall worth of a project is considered. • The project design forms the basis
of evaluation. • It considers costs that all entities have to bear and the benefit connected to it.
7. 7. Pre-investment Analysis: • The results obtained in previous stages are consolidated to arrive at clear
conclusions. • Helps the project-sponsoring body, the project-implementing body and the external consulting
agencies to accept/reject the proposal.

25
 UNIT IV
PART A
1. What do you mean by Project Report?
The project report is a document, which gives an account of the project proposal to ascertain the prospects of the
proposed plan/activity. The project report contains detailed information about: Land & building required.
Manufacturing Capacity per annum. Manufacturing Process.
2. What is CPM?
Network analysis technique used in complex project plans with a large number of activities. CPM diagrams (1)
all activities, (2) time required for their completion, (3) and how each activity is related to the previous and next
activity. A sequence of activities is called a 'path,' and the longest-path in the diagram is the critical path. It is
'critical' because all activities on it must be completed in the designated time, otherwise the whole project will be
delayed. Also called critical path analysis or critical path methodology.
3. What is Hire Purchase and Leasing?
Hire purchase (HP) or leasing is a type of asset finance that allows firms or individuals to possess and control an
asset during an agreed term, while paying rent or installments covering depreciation of the asset, and interest to
cover capital cost.
4. What are Capitalization and its types?
The term capitalization, or the valuation of the capital, includes the capital stock and debt. According to another
view it is a word ordinarily used to refer to the sum of the outstanding stocks and funded obligations which may
represent wholly fictitious values.
Types:
Over Capitalization
Under-Capitalization
5. What do you mean by Working Capital Requirements?
Working capital requirement. The required value of funds that a company is required to keep on hand in order to
be able to pay its debt obligations and other business related expenses. Several factors go into the determination
of this requirement.
6. What is DIC? State any 2 functions of DIC?
District Industries Centers (DICs) have emerged since 1978 as the model agency for development of small and
village industries. It provides all the support services needed for development of SSI in the country.
Functions of DIC:
1. Identification of entrepreneurs
2. Provisional registration
3. Permanent registration

7. State any 2 needs for Project Formulation?

Selection of appropriate technology
Influence of External Economies
Dearth of Technically Qualified Personnel
Resource mobilization

26
8. What is Personal Efficiency?
Personal efficiency is the speed at which the system achieves the goals under specific conditions, with a certain quality
and optimal cost or speed of transition from current state to the desired one. It depends on: Personal goals. Usefulness of
the result. Resources used.

9. What is UTI? State any 2 functions of UTI?

Unit Trust of India (UTI) is a statutory public sector investment institution which was set up in February 1964 under the
Unit Trust of India Act, 1963.
Functions of UTI:
(i) To accept discount, purchase or sell bills of exchange, promissory note, bill of lading, warehouse receipt, documents of
title to goods etc.,
(ii) To grant loans and advances.
(iii) To provide merchant banking and investment advisory service.
(iv) To provide leasing and hire purchase business.

10. Who are called First Generation entrepreneur?

First Generation Entrepreneurs is a synonym for New Entrepreneurs. Before setting up a new entrepreneurship an
entrepreneur needs to complete various procedural and legal hurdles. The difference between a First Generation
Entrepreneur and an established entrepreneur is they have nothing to lose. A new entrepreneur can invest a small amount
with the risk of losing it.

PART B
1. Explain the entrepreneurial competencies (or) “Entrepreneurs are made not born” discuss.
Ans : In the past people used to believe that entrepreneurs are born and not made. It was thought that only those
persons who have got business family back round can become successful entrepreneurs. Now-a-days this viewpoint
has given place to the thinking that persons possessing proper knowledge and skill acquired through education and
experience can become successful entrepreneur. This opinion has been strengthened by David C.Mc Clelland,
through his study, has identified a set of entrepreneurial competencies that result in superiod performance, his major
finding was that the possession of competencies is necessary for superior performance. He has listed the following
major competencies, which can have bearing on the performance of entrepreneurs.
1. Initiative : It refers to the during entrepreneur who initiates a business activity.
2. Looking for opportunities : An enterprising entrepreneur is always on the look out for opportunities, as and
when these arise.
3. Information seeker : he is always searching for the information form all quarters in his pursuit of reaching
business goals.
4. Persistence : He is not cowed down by failures and believes in try again.
5. Quality conscious : He has a strong huge to excel to beat the existing standards.
6. Commitment to work : He is prepared to put in everything, at his command, fr accomplishing his goal.
7. Efficiency Seeker : He is to make an earnest effect for completing the desired task and that too within
minimum coast and time.
8. Proper planner : He is firm believer in meticulous planning and proper execution for the attainment of
desired goials.
9. Problem solver : he is all time busy in finding out ways and means for tiding over the difficult times
10. Self confidence : he has full confidence on his strengths and ab
11. Assertive : He is ready to put his firm foot a head for promotion of interests of his ventures.
12. Persuasive : He as convincing ability and can make people and d what he wants them to do.
27
 13. Efficient monitor : He keeps an eye over the work thereby ensuring that everything happen the way he.

2. Explain the concept of Entrepreneurial Development?

Entrepreneurial development is essentially an educational process of an endeavour in human resource development.
However, entrepreneurship cannot grow in vaccum. It requires an environment in which an entrepreneur can learn
and discharge his functions.
Entrepreneurship development consists of four basic issues viz. i) The availability of material resources, ii)
Selection of real entrepreneurs, iii) The formation of industrial units and iv) Policy formulation for the development
of the region. All there issues are closely inter-related. Given the resources and the entrepreneurs expected to
exploit them, the focal issue that remains is that of the type of the industrial unit, particularly because it affects the
proper utilization of raw material and the marketing of the product. An interaction of the first two variables, and
the marketing of the product. An interaction of the first two variables, and the round work created by the third on
depends on the specific policies which constantly super wise the direction of the process of economic development
of the region.
Development of an entrepreneur means inculating entrepreneurial traits into a person, imparting the required
knowledge, developing the technical, financial, marketing and managerial skills, and building the entrepreneurial
attitude. The process of entrepreneurial development involves equipping a person with the information used for
enterprise building and sharpening his entrepreneurial skills.
Entrepreneurship development is an organized and systematic development. It is now regarded as a tool of
industrialization and a solution to unemployment problem. The objective of entrepreneurial career and to make
him capable of perceiving and exploiting successfully the opportunities for enterprise. One trained entrepreneur
can guide others on how to start – their own enterprise and approach various institution. In fact trained entrepreneurs
become catalysts of developing industry and economic.

PART C
1. Difference between entrepreneur and entrepreneurship?
1) Entrepreneur is a person. Entrepreneurship is a process.

2) Entrepreneur is an organizer. Entrepreneurship is an organization.

3) Entrepreneur is an innovator. Entrepreneurship is an innovation.

4) Entrepreneur is a risk bearer. Entrepreneurship is a risk bearing.

5) Entrepreneur is a motivator. Entrepreneurship is a motivation.

6) Entrepreneur is a creator. Entrepreneurship is a creation.

7. Entrepreneur is a visualize. Entrepreneurship is a vision.

8. Entrepreneur is a leader. Entrepreneurship is a leadership.

9. Entrepreneur is an imitator. Entrepreneurship is an imitation.

2. State the objectives of Entrepreneurial Development?

The major objectives of the Entrepreneurship Development Programmes (EDPs) are to:
a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for achievement.
b. Analyze environmental set up relating to small industry and small business.
c. Select the product.

28
 d. Formulate proposal for the product.
e. Understand the process and procedure involved in setting up a small enterprise.
f. Know the sources of help and support available for starting a small scale industry.
g. Acquire the necessary managerial skills required to run a small-scale industry.
h. Know the pros and cons in becoming an entrepreneur.
i. Appreciate the needed entrepreneurial discipline.
j. Besides, some of the other important objectives of the EDPs are to:
k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise and strive for their
realization.
l. Prepare him / her to accept the uncertainty in running a business.
m. Enable him / her to take decisions.
n. Enable to communicate clearly and effectively.
Develop a broad vision about the business.
p. Make him subscribe to the industrial democracy.
q. Develop passion for integrity and honesty.
r. Make him learn compliance with law.

3. Write the functions of DIC?

The main functions of DIC are: (1) To prepare and keep model project profiles for reference of the entrepreneurs.
(2) To prepare action plan to implement the schemes effectively already identified.
(3) To undertake industrial potential survey and to identify the types of feasible ventures which can be taken up
in ISB sector, i.e., industrial sector, service sector and business sector.
(4) To guide entrepreneurs in matters relating to selecting the most appropriate machinery and equipment,
sources of it supply and procedure for importing machineries.
(5) To provide guidance for appropriate loan amount and documentation.
(6) To assist entrepreneurs for availing land and shed equipment and tools, furniture and fixtures.
(7) To appraise the worthiness of the project-proposals received from entrepreneurs.
(8) To help the entrepreneurs in obtaining required licenses/permits/clearance.
(9) To assist the entrepreneurs in marketing their products and assess the possibilities of ancillarization.
(10) To conduct product development work appropriate to small industry.
(11) To help the entrepreneurs in clarifying their doubts about the matters of operation of bank accounts,
submission of monthly, quarterly and annual returns to government departments.
(12) To conduct artisan training programmed.
(13) To act as the nodal agency for the district for implementing PMRY (Prime Minister Rojgar Yojana).
(14) To function as the technical consultant of DRDA in administering IRDP and TRYSEM programme.
(15) To help the specialized training organizations to conduct Entrepreneur development programme. In fine
DIC’s function as the torch-bearer to the beneficiaries/entrepreneurs in setting up and running the business
enterprise right from the concept to commissioning.
So the role of DIC’s in enterprise building and developing small scale sector is of much significance.

4 . What are the problems of EDP?

i. No Policy at the National Level. Though Government of India is fully aware about the importance of
entrepreneurial development, yet we do not have a national policy on entrepreneurship. It is expected that

29
 the government will formulate and enforce a policy aimed at promoting balanced regional development of
various areas through promotion of entrepreneurship.
ii. Problems at the Pre training Phase. Various problems faced in this phase are — identification of business
opportunities, finding & locating target group, selection of trainee & trainers etc.
iii. Over Estimation of Trainees. Under EDPs it is assumed that the trainees have aptitude for self employment
and training will motivate and enable the trainees in the successful setting up and managing of their enterprises.
These agencies thus overestimate the aptitude and capabilities of the educated youth. Thus on one hand the EDPs
do not impart sufficient training and on the other financial institutions are not prepared to finance these risky
enterprises set up by the not so competent entrepreneurs.

iv. Duration of EDPs. An attempt is made during the conduct of EDPs to prepare prospective entrepreneurs
thoroughly for the various problems they will be encountering during the setting up and running of their
enterprises. Duration of most of these EDPs varies between 4 to 6 weeks, which is too short a period to instill
basic managerial skills in the entrepreneurs. Thus the very objective to develop and strengthen entrepreneurial
qualities and motivation is defeated.

v. Non Availability of Infrastructural Facilities. No prior planning is done for the conduct of EDPs. EDPs
conducted in rural and backward areas lack infrastructural facilities like proper class room suitable guest
speakers, boarding and lodging etc.

vi. . Improper Methodology. The course contents are not standardized and most of the agencies engaged in EDPs
are themselves not fully clear about what they are supposed to do for the attainment of pre-determined goals.
This puts a question mark on the utility of these programmes.

vii. Mode of Selection. There is no uniform procedure adopted by various agencies for the identification of
prospective entrepreneurs. Organizations conducting EDPs prefer those persons who have some project ideas
of their own and thus this opportunity is not provided to all the interested candidates.

viii. Non Availability of Competent Faculty. Firstly there is problem of non availability of competent teachers and
even when they are available, they are not prepared to take classes in small towns and backward areas. This
naturally creates problems for the agencies conducting EDP.

ix. Poor Response of Financial Institutions. Entrepreneurs are not able to offer collateral security for the grant
of loans. Banks are not prepared to play with the public money and hence they impose various conditions for
the grant of loans. Those entrepreneurs who fail to comply with the conditions are not able to get loan and
hence their dream of setting up their own enterprises is shattered. Helpful attitude of lending institutions will
go a long way in stimulating entrepreneurial climate.

30
 UNIT V
PART A
1. What is SIDBI? State any 2 Objectives of SIDBI?
Small Industries Development Bank of India is an independent financial institution aimed to aid the growth and
development of micro, small and medium-scale enterprises (MS was incorporated initially as a wholly owned
subsidiary of Industrial Development Bank of India.
Objectives of SIDBI:
i) Initiating steps for technological up gradation and modernization of existing units;
(ii) Expanding the channels for marketing the products of the small scale sector.
2. What is Diversification?
In finance, diversification is the process of allocating capital in a way that reduces the exposure to any one
particular asset or risk. A common path towards diversification is to reduce risk or volatility by investing in a
variety of assets.
3. What is SIPDCO? State any 2 Roles?
Small Industries Development Corporations (SIDCO) are state-owned companies or agencies in the states of
India which were established at various times under the policy of Government of India for the promotion small
sale industries. A few of the SIDCOs are: Kerala Small Industries Development Corporation Limited.
Roles of SIDCO:
SIDCO supplies scarce raw materials
SIDCO provides marketing assistance
SIDCO assists in Bills discounting
SIDCO provides Export marketing assistance
SIDCO set up Captive power plants
SIDCO promotes women entrepreneurs
4. What do you mean by “The Taguchi Method” ?
Quality control methodology that combines control charts and process control with product and process
design to achieve a robust total design. It aims to reduce product variability with
a system for developing specifications and designing them into a product or process. Named after its inventor, the
Japanese engineer-statistician Dr. Genichi Taguchi who also developed the quality loss function.

5. What is Financial Appraisal?

Financial appraisal is an objective evaluation of the profitability and financial strength of a Business unit. Many
a times, the terms financial performance appraisal and financial statement analysis are used as synonymous. The
techniques of financial statement analysis are used for the purpose of financial appraisal.
6. What is Business Opportunities?
A business opportunity involves sale or lease of any product, service, equipment, etc. that will enable the
purchaser-licensee to begin a business. The licensor or seller of a business opportunity usually declares that it
will secure or assist the buyer in finding a suitable location or provide the product to the purchaser-licensee. This
is different from the sale of an independent business, in which there is no continued relationship required by the
seller.
7. What do you mean by Rural Entrepreneur?

31
 Rural entrepreneurs are those who carry out entrepreneurial activities by establishing industrial and business
units in the rural sector of the economy. In other words, establishing industrial and business units in the rural
areas refers to rural entrepreneurship.
8. What is Affiliation?
In a business setting, this is the necessity for managers to build warm and caring relationships in order to
motivate their fellow employees. Different types of employees need different levels of affiliation; for example:
those who need more of a sense of belonging make good support staff, but they may not make
as effective a leader.

9. What is Market Research?

Market research is any organized effort to gather information about target markets or customers. It is a very
important component of business strategy.[1] The term is commonly interchanged with marketing research.

PART B
1. What are the objectives of Entrepreneurial training?
Entrepreneurial training is provided through Entrepreneurial Development Programmes.
The main aim and objectives of EDPs are:
1. To attract people to entrepreneurial development programmes through effective promotion.
2. To make them aware of the various available business opportunities.
3. To motivate and strengthen entrepreneurial quality.
4. To develop the course content and the curriculum of the programme, keeping the view the characteristics and
the factors influencing entrepreneurial growth.
5. To develop management related skills like problem solving, decision making, communication, opportunity
indentification, interpersonal, team building, etc.
6. To make participants aware of the various laws, procedures etc., relating to the entrepreneurship.
7. To develop passion and interest in entrepreneurship.
8. To conduct research and study on the effectiveness of the various, programmes, schemes, market potential of
various business opportunities, etc.

2. Discuss the achievements of Entrepreneurial Development Programmes.

Entrepreneurship plays a very important role in the economic development. Entrepreneurs act as catalytic agents
in the process of industrialization and economic growth. Technological progress alone cannot to economic
development unless technological break through are put to economic use by entrepreneurs. EDP enables
entrepreneurs in initiating and sustaining the process of economic development in the following ways.
1. Creation of employment opportunities
2. Capital formation
3. Balanced regional development
4. Use of local resources
5. Improvement in per capital income
6. Improvement in the standard of living
7. Economic independence
8. Preventing industrial slums
9. Reducing social tension
10. Facilitating overall development

3. Discuss the problems faced by Entrepreneurial development programmes (EDPs).

Organising and conducting EDPs is not an easy task. It involves many problems. Which lead to low level of
performance. Some of such problems are explained below.
(i) Lack of specialized organizations:

32
 Lack of adequate number of specialized organization is first and foremost problem of EDPs. Even the
organizations, which are functioning in the field, are lack in commitment and sincerity. In most of the cases,
EDPs, are used as a means for generating funds for these organizations. Hence, there is lack of motivation
among the organizations to create interest among participants to become entrepreneurs.

(ii) Lack of Trainers:

Trainers are not found in adequate number. Even those who are available are not available are not dedicated to
their job. There are not found up to the level to motivate the participants to start their ventures.
(iii) Lack of conductive environment
Lack of conductive environment is another problem of EDPs. It makes the trainers role ineffective.
(iv) Selection of wrong trainees:
Trainees selected for attending EDPs should have interest in the field of entrepreneurship. Otherwise, it will
be a mere waste. EDPs are conducted to motivate the trainees to start their own ventures. If it does not result
in creating interest in starting a venture, will result in utter failure of the EDP.
(v) Selection of wrong projects:
Projects selected should be of potential ones so that entrepreneurs can succeed in their ventures. But most of the
time, the projects selected are unsuitable to the situation and trends prevalent in the business environment. The
main reason for that is lack of knowledge of the pat of trainees as well as trainers.
(vi) Apathetic Attitude of the support agencies:
Apathetic attitude of the support agencies such as banks, financial institutions etc. to support entrepreneurs stands
as another hurdle in the success of EDPs.
(vii) Lack of entrepreneurial environment and culture:
In our country, thre is lack of entrepreneurial environment and culture, which is a must for the healthy development
of entrepreneurship in the country. If the environment is not conductive, entrepreneurs may find it difficult to start
their venture.
(viii) Lack of support:
After training, entrepreneurs need adequate counseling, support services etc. for grounding their projects. In our
country, follow – up action is not adequate, which creates lot of troubles to entrepreneurs.

4. Discuss the various types of growth strategies adopted by business firms.

Growth strategies are broadly classified into two types namely,
1. Internal strategies and
2. External strategies
The pictorial representation of these strategies at:
I. Internal strategies
Internal strategies refer to the strategies that are followed by the enterprises on their own without involving other
enterprises. In other words, they grow on their own. Examples of internal strategies are expansion and
diversification of units.
i. Expansion:
Expansion is one of the means of internal growth strategies. It refers to increase in the same line of activity. It
is a natural growth of business taking place is course of time. It takes place in any of the following forms:
- Expansion through penetrating the market.
- Expansion through the development of the product.
- Expansion through the development of the product.
ii. Diversification:
Diversification is another form through which firms grow internally. As expansion can be followed up to a
limit extent, diversification is evolved to grow further. In expansion, firms concentrate on the existing
product/market only where growing is possible only to a certain point. This necessitates the need for adding
new products / markets to the existing line of product. This is what is called diversification.
Diversification is of four types such as – horizontal diversification, vertical diversification concentric
diversification and conglomerate diversification.
II External strategies:
33
 External strategies are opposite to internal strategies. These strategies are adopted involving other enterprises
also. The popular forms of external strategies are – joint ventures, mergers, sub-contracting etc.
1. Joint venture:
Joint venture is one of the types of external strategy followed by business concerns. It is a temporary
partnership between two or more firms to undertake jointly to complete a specific venture. The parties
entering the venture by means of an agreement are known as co-ventures. The agreement entered will come
to an end on the completion of the work for which it was formed. The co-ventures take part in the operations
of the ventures equally and share the profits a losses in their agreed ratio. However, in the absence of such
agreement, the profits / losses are shared equally.
2. Merger:
Another type of external growth strategy is merger it refers to combination of two or more existing
enterprises into one. It may take place in two ways namely (i) Absorption and (ii) Amalgamalgamation. If
one enterprise is acquired by another it is called absorption. On the other hand, if two or more enterprises
join into one to form a new concrn it is what is called amalgamation. Thus,m in the care of absorption, no
new firm is formed where as in the case of amalgamation, a new firm is formed. Like diversification,
merger is also of four types namely.
2.Vertical merger.
3. Concentric merger
4. Conglomerate merger.
3. Sub-contracting
Sub-contracting refers to a mutually beneficial commercial relationship between two companies it is also called
ancillarisation. In sub-contracting, contractor places order with sub-contractor for the production of parts,
components, assemblies or sub-assemblies to be incorporated into a product sold by the contractor. Sub contractor
produces accordingly and supplies the same. In large scale industries, sub-contracting is common because they do
not produce all goods on their own.
Sub- contracting is of two types such as:
1) Industrial sub-contracting and 2) Commercial sub contracting. Sub-contractors normally work for more than
one contract.

5. Discuss the problems of women entrepreneurs.

Being a successful entrepreneur is so difficult becase it is not easy to research. Man, organize, launch, and manage an
entrepreneurial venture successfully. Besides due to race/gender, entrepreneurs face some additional challenges.
Especially, minority and women entrepreneurs face all sorts of challenges. The problems faced by women entrepreneur
are detailed below:
1. Problem of finance:
2. Conflict between work and family
3. Shortage of Raw material
4. Stiff competition
5. Limited Mobility
6. Low literacy rate among women
7. Male-dominated society
8. Lack of motivation
9. Low achievement need
10. Low Risk-bearing capability
11. Discrimination in upbringing

6. Explain the entrepreneurial competencies.

In the past people used to believe that entrepreneurs are born and not made. It was thought that only those persons
who have got business family back round can become successful entrepreneurs. Now-a-days this viewpoint has

34
 given place to the thinking that persons possessing proper knowledge and skill acquired through education and
experience can become successful entrepreneur. This opinion has been strengthened by David C.McClelland,
through his study, has identified a set of entrepreneurial competencies that result in superior performance, his major
finding was that the possession of competencies is necessary for superior performance, his major finding was that
the possession of competencies is necessary for superior performance. He has listed the following major
competencies, which can have bearing on the performance of entrepreneurs.
1. Initiative : It refers to the during entrepreneur who initiates a business activity.
2. Looking for opportunities: An enterprising entrepreneur is always on the look out for opportunities, as and when
these arise.
3. Information seeker : He is always searching for the information from all quarters in his pursuit of reaching
business goals.
4. Persistence : He is not cowed down by failures and believes in try again.
5. Quality conscious : He has a strong huge to excel to beat the existing standards.
6. Commitment to work : He is prepared to put in everything, at his command, for accomplishing his goal.
7. Efficiency Seeker : He is to make an earnest effect for completing the desired task and that too within minimum
cost and time.
8. Proper planner : He is firm believer in meticulous planning and proper execution for the attainment of desired
goals.
9. Problem solver : He is all time busy in finding out ways and means for tiding over the difficult times.
10. Self confidence : He has full confidence on his strengths and abilities.
11. Assertive : He is ready to put his firm foot ahead for promotion of interests of his ventures.
12. Persuasive : He has convincing ability and can make people do what he wants them to do.
13. Efficient monitor : He keeps an eye over the work thereby ensuring that everything happen the way he wants
that it should happen.
14. Employers well wisher : He is ready to undertake all necessary measures aimed at promoting welfare of
workers, working in his enterprise.
15. Effective strategist : He is out to devise most effective strategies aimed at promoting the objective of his
enterprise.
James J. Berna has listed the following competences is a successful entrepreneur.
1. He is an enterprising person
2. He is always growth oriented
3. He welcomes the introduction of advanced and improved technology.
4. He looks for any change like a watch dog.
B.C. Tandon highlights the following four qualities in a successful entrepreneur and there are –
1. He is enough risk bearer.
2. He is ready to adopt change if the situation warrants.
3. He has ability to marshal the resources at his command.
4. He is a good organizer as well as a good manager.
All the above mentioned competencies result in superior performance.
N.P. Singh states in his book, “Emerging Trends in Entrepreneurship Development” that EDP is not merely a
training. It is a process of enhancing the motivation, knowledge and skills of the potential entrepreneurs,
arousing and reforming entrepreneurial behavior and assisting them in developing their own ventures.

7. Discuss the problems of the women entrepreneur

1. Problem of finance
The main challenge, which women entrepreneurs face, is getting the funding they need to start and grow their
business. Access to capital is a serious issue of minority and women entrepreneurs.
2. Conflict between work and family
Another challenge that women entrepreneurs, particularly, face is the conflict between work and family.
Although this issue cam, and does, arise for male entrepreneurs also, it is especially acute for women because
many child-rearing and family responsibilities fall on them.
3. Shortage of raw material

35
 Security of raw materials is yet another challenge that women entrepreneurs face. They suffer-from higher
prices and lower discount rates.
4. Stiff competition: Women entrepreneurs face intense competition for their goods from organized sector
and male entrepreneurs. This is because they do not have enough they do not have enough funds to spend on
advertisement, canvassing and publishing their products.
5. Limited mobility
In our country, mobility of women is highly limited on account of various reasons. They cannot travel
freely from one place to another for business reasons. In order to set up an organization, entrepreneur has to get
sanctions at varied levels from various government departments all of which require free mobility.
6. Low literacy rate among women
Rate of literacy among women is very low in India. Education is important for a person to be aware of least
technology, business trends, market knowledge etc.
7. Male-dominated society
Male-domination is still the order of the day in our country. Equality between sexes is only on paper, speeches,
constitution etc. in practice, still women are considered weak in all respects.
8. Lack of motivation
Fear to failure is too much in women than men. This fear creates no motivation in them. Hence, lack of
motivation among women entrepreneurs is considered as another barrier, which stands in the development of
women entrepreneurs.
9. Low achievement need
Need for achievement is the most important pre-requisite for success in entrepreneurship in India lacking.
10. Low risk-bearing capability
Generally, women in India are confined to the four walls of the house. They are less educated and thus, e
conomically backward. This reduces their risk-bearing capability while running theenterprise.
11. Discrimination in upbringing
Right from early childhood, girls are taught into be aggressive or independent. Initially they depend upon
parents, later upon husbands, and in old age upon sons.

8. Define SSI. Describe its role in the Indian economy.

i. Minimum capital
Small industries need smaller amount of capital when compared to large industries. But the return is relatively
quick. Hence, it is found suitable to a country like ours where there is deficiency of capital.
ii. Employment opportunities
Small industries are labour intensive industries: so they provide more employment opportunities. Further, they
have greater scope for self-employment. therefore, these industries are more important in developing countries
like ours where labour is abundant and the unemployment problem is more acute.
iii. Quick capital formation
As the return on capital is quick, the generated cash can be reinvested. This would lead to quick capital
formation.
iv. Skill light
Small industries can be carried out with their own family members who have little training. That means lesser
skill is enough for running the unit. Hence, these industries are called skill light industries.
v. Import light
Small industries invest a relatively minimum portion of their capital in imported equipments and raw materials
when compared to large units.
vi. Quick yielding
36
 In case of small industries, the gestation period will be less. Therefore, their yielding is quick.
vii. Balanced development
1. Reduce the regional imbalances
2. Help to lap the rural resources, and
3. Stop the moving of people from the rural areas to the urban areas.
viii. Even distribution of income and wealth
Since the small industries provide for regional balanced development, even distribution of income and wealth is
also possible.
ix. Flexibility
Small industries can quickly adjust with the changing conditions and habits of the people without much
dislocation. So there industries are more flexible when compared to larger one.
x. Better labour-management relationship
In small industries, management has a personal contact with its workers. So the chance for industrial dispute are
less.
xi. Less pollution
Pollution ill be comparatively less in the care small scale industries.

9. Given an account of advantage that an entrepreneurs enjoys and obstacles he face.

Ans. Advantage of being an entrepreneurs they are many rewards associated with in being entrepreneur.
1. High degree of independence
Entrepreneurs primarily prefer entrepreneurship because of its independence.

2. Getting to use a variety of skills and talents

Being an entrepreneur a person is required to acquire a variety of skills and talents. Such skills and talents ill not
only improve his efficiency.
3. Freedom in making decisions.
entrepreneur is occupying a pivotal position is his business. He only takes all business decisions. He need not
consult anybody for the purpose.
4. Accountable only to himself
As entrepreneur is a boss, he need not answer to anybody himself and not to anybody he is accountable only to
himself and not to anybody else.
5. Scope of tackling challenges
Certain risks can be avoided but not all. Hence he will be definitely getting opportunity to tackle challenges.
Obstacles to an entrepreneur
1. Changes and uncertainty
Entrepreneur deals with future, which is uncertain and subject to change.
2. Comfortable with taking risks
Business is always subject to changes with changes come uncertainiti3s and risk.
3. Need many different skills and talents
It may occur due to change in technology, fashion, tastes of the customers and policies of government etc.
4. Ready to accept failures
Entrepreneur must be comfortable with the potential of failure. As stated already, carrying on a business is not an
easy job, which is exposed to many kinds of risks. So he should always be prepared to manage the failure

PART C
1. What are the Advantages and disadvantages of Franchising?
Ten advantages of franchising
• The risk of business failure is reduced by franchising. Your business is based on a proven idea. You can check how
successful other franchises are before committing yourself.

37
• Products and services will have already established a market share. Therefore there will be no need for market
testing.
• You can use a recognized brand name and trade mark. You benefit from any advertising or promotion by the owner of
the franchise - the 'franchisor'.
• The franchisor gives you support - usually as a complete package including training, help setting up the business, a
manual telling you how to run the business and ongoing advice.
• No prior experience is needed as the training received from the franchisor should ensure the franchisee establishes
the skills required to operate the franchise.
• A franchise enables a small business to compete with big businesses, more so than an independent small business, due
to the pool of support from the franchisor and network of other franchisees.
• You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same
territory.
• Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good
reputation.
• You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the
network.
• Relationships with suppliers have already been established.
Eight disadvantages of franchising
• Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing
management service fees and you may have to agree to buy products from the franchisor.
• The franchise agreement usually includes restrictions on how you can run the business. You might not be able to make
changes to suit your local market.
• You may find that after time ongoing franchisor monitoring becomes intrusive
• The franchisor might go out of business.
• Other franchisees could give the brand a bad reputation, so the recruitment process needs to be thorough
• You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor.
• All profits (a percentage of sales) are usually shared with the franchisor.
• The inflexible nature of a franchise may restrict your ability to introduce changes to the business to respond to the
market or make the business grow.

2. Difference between PERT and CPM?

Difference between PERT and CPM | PERT vs. CPM
Basic PERT CPM

Stands for PERT stands for “Program Evaluation and CPM stands for “Critical Path Method”.
Review Technique”.

Model It is a probabilistic model under which the It is a deterministic model under which
result estimated in a manner of probability. the result is ascertained in a manner of
certainty.

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 Time It deals with the activities of uncertain time. It deals with the activities of precise well
known time.

Jobs It is used for onetime projects that involve It is used for completing of projects that
activities of non-repetitive nature. involve activities of repetitive nature.

Orientation It is activity oriented in as much as its result It is even oriented, in as much as its
is calculated on the basis of the activities. results are calculated on the basis of the
events.

Dummy Activities It does not make use of dummy activities. It makes use of dummy activities to
represent the proper sequencing of the
activities.

Cost It has nothing to do with cost of a project. It deals with the cost of a project
schedules and their minimization.

Estimation It finds out expected time of each activity on Its calculation is based on one type of
the basis of three types of estimates. time estimation that is precisely known.

Time PERT is restricted to time variable. CPM includes time-cost trade off.

3. What are the Advantages of being an Entrepreneur?

Advantages of being an entrepreneur:
1. You do what you love: This may very well be the first and most important reason. There is absolutely no point
in living your life without passion. There needs to be something that gets you out of bed in the morning and your
career should definitely take that blame. Most of the people you probably know work from 9 a.m. to 5 p.m. and
chances are they look up at the clock on the wall at least twice every hour. Why? Simple: they don’t love what
they do (at least not entirely). If your heart is not fully committed to your employment then you’re wasting your
time and time, as we all know, is money. A great deal of your day is invested in work. You might as well enjoy it.
“If you love what you do, you’ll never have to work a day in your life.” –Confucius
2. Flexibility: Let’s face it: one of the most attractive aspects of being an entrepreneur is the flexibility
factor. Being tied down to just one area holds you back from fulfilling all of your skills. Entrepreneurs carry a
loaded agenda. You want to be able to complete every single task that you propose yourself and being flexible
optimizes the chances of that happening. Flexibility also means that you’re not on a set schedule. Life throws
curveballs at you and being an entrepreneur allows you to make adjustments, even if they appear to be last
minute. Flexibility allows you to become a “jack of all trades and a master of none.”
3. you are your own boss: When you’re an entrepreneur, most of the times you don’t have to worry about
this because you are your own boss. You make the rules as you go along. You do, however, need to
establish some sort of discipline in order to know how well you can work alone. Being an entrepreneur isn’t
for everyone but if you have a certain skillet required to develop on your own then I highly encourage it.
“Being a boss is great. You get to choose which eighteen hours a day you work.”
4. You create your future: We live in a world of uncertainty. As an entrepreneur, you have a vision that is
embedded in your head. Regardless of what happens, you will forever see yourself making that dream
happen. Not knowing can be seen two different ways: you either see it as a problem or see it as part of the
fun. Entrepreneurship is all about embarking on a journey fueled by gut instinct. If you trust that what you see
inside your head is feasible then you should do everything within your power to make it a reality. “The best
way to predict the future is to create it.”
5. Perpetual vacation: Going back to what I stated in the beginning, being an entrepreneur doesn’t feel like
work. As a result, freedom is a constant in your life. If you’re free to roam around and be yourself twenty four
hours a day and seven days a week, you won’t feel the urge to take time off in the form of a vacation.
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 Entrepreneurs don’t hate Mondays. An entrepreneur doesn’t look forward to the weekend. We don’t punch a
clock. Entrepreneurship is basically a perpetual vacation if you manage your time wisely and follow your
own rules. Once you learn that: “the sky is the limit.”
6. You are viewed as a leader: An entrepreneur is seen in the eyes of many as a figure that sets trends and
innovates in their own right. These are just two of the qualities that separate a leader from a follower.
Leaders take risks and hustle. A follower simply goes with the flow of the river. A leader asks questions while
a follower aimlessly looks for answers. Being a leader can be a double-edged sword. Yes, it can make or
break you but the thrill of being in the driver’s seat on the road to life should be plenty of motivation to
succeed.

4. Difference between Entrepreneur and Intrapreneur AND TRADITIONAL MANAGER?

CHARACTERISTICS ENTREPRENEUR INTRAPRENEUR TRADITIONAL
MANAGER
PRIMARY MOTIVES Wants freedom, goal Wants freedom and Wants promotion and
oriented, self reliant, and access to corporate other traditional
self motivated resources, goal oriented corporate rewards power
and self motivated, but motivated,
also responds to
corporate rewards and
recognition.
TIME ORIENTATION Uses and goals of 5 to 10 End goals of 3 to 15 Responds to quotes and
year growth of the years, depending on the budgets ; to weekly,
business as guides; takes type of venture; urgency monthly, quarterly, and
action how to next step to meet self imposed and annual planning
along the way corporate time tables horizons; and to the next
promotion or transfer,
TENDENCY TO Gets hand dirty; may Gets hands dirty; may Delegates action;
ACTION upset employee by know how to delegate but supervising and
suddenly doing their when necessary, does reporting takes most
work, what needs to be done, energy,
SKILLS Knows business Professional management Professional
intimately; more business ; often business school management ; often
acumen then managerial trained; uses abstract business school trained;
or political skills; often analytical tools, people- uses abstract analytical
technically trained if in management and political tools, people-
technical business; may skills, management and
have had profit and loss political skills,
responsibility in the
company,
ATTITUDE TOWARDS Self confident, optimistic Sees others being in Self confident and
COURAGE AND and courageous, charge of his or her courageous; many are
DESTINY destiny; can be forceful cynical about the system
and ambitious but may be but optimistic about their
fearful of others ability to ability to outwit it.
do him or her in,
FOCUS OF Primarily on technology Both inside and outside; Primarily on events
ATTENTION and marketplace, sells insiders on needs of inside corporation,
venture and market place

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ATTITUDE TOWARDS Likes moderate risk;
RISK invests heavily but expects
to succeed,
USE OF MARKET Creates needs; creates
RESEARCH products that often cannot
be tested with market
research; potential
customers do not yet
understand them; talks to
customers and forms own
opinion,
but also focuses on
customers.
Like moderate risks; Cautions,
generally not afraid of
being fired, so sees little
personal risk,
Does own market Has market studies done
research and initiative to discover needs and
market evaluation, like guide product
the entrepreneur. conceptualization,

5. What are the problems of Women Entrepreneurs?

1. Problem of Finance:
Finance is regarded as “life-blood” for any enterprise, be it big or small. However, women entrepreneurs suffer
from shortage of finance on two counts.
Firstly, women do not generally have property on their names to use them as collateral for obtaining funds from
external sources. Thus, their access to the external sources of funds is limited.
2. Scarcity of Raw Material:
Most of the women enterprises are plagued by the scarcity of raw material and necessary inputs. Added to this
are the high prices of raw material, on the one hand, and getting raw material at the minimum of discount, on the
other. The failure of many women co-operatives in 1971 engaged in basket-making is an example how the
scarcity of raw material sounds the death-knell of enterprises run by women
3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of money for canvassing and
advertisement. Thus, they have to face a stiff competition for marketing their products with both organized sector
and their male counterparts. Such a competition ultimately results in the liquidation of women enterprises.
4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various reasons. A single woman asking for room is
still looked upon suspicion. Cumbersome exercise involved in starting an enterprise coupled with the officials
humiliating attitude towards women compels them to give up idea of starting an enterprise.
5. Family Ties:
In India, it is mainly a women’s duty to look after the children and other members of the family. Man plays a
secondary role only. In case of married women, she has to strike a fine balance between her business and family.
Her total involvement in family leaves little or no energy and time to devote for business.
Support and approval of husbands seem necessary condition for women’s entry into business. Accordingly, the
educational level and family background of husbands positively influence women’s entry into business activities.
6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause of socio-economic
problems. Due to the lack of education and that too qualitative education, women are not aware of business,
technology and market knowledge. Also, lack of education causes low achievement motivation among women.
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 Thus, lack of education creates one type or other problems for women in the setting up and running of business
enterprises.
7. Male-Dominated Society:
Male chauvinism is still the order of the day in India. The Constitution of India speaks of equality between sexes.
But, in practice, women are looked upon as able, i.e. weak in all respects. Women suffer from male reservations
about a women’s role, ability and capacity and are treated accordingly. In nutshell, in the male-dominated Indian
society, women are not treated equal to men. This, in turn, serves as a barrier to women entry into business.
8. Low Risk-Bearing Ability:
Women in India lead a protected life. They are less educated and economically not self-dependent. All these
reduce their ability to bear risk involved in running an enterprise. Risk-bearing is an essential requisite of a
successful entrepreneur.
In addition to above problems, inadequate infrastructural facilities, shortage of power, high cost of production,
social attitude, low need for achievement and socioeconomic constraints also hold the women back from entering
into business.

6. What are the problems faced by small Industries in India?

(1) Finance:
Finance is one of the most important problem confronting small scale industries Finance is the life blood of an
organization and no organization can function proper у in the absence of adequate funds. The scarcity of capital
and inadequate availability of credit facilities are the major causes of this problem.
Firstly, adequate funds are not available and secondly, entrepreneurs due to weak economic base have lower
credit worthiness. Neither they are having their own resources are others prepared to lend them. Entrepreneurs
are forced to borrow money from money lenders at exorbitant rate of interest and this upsets all their calculation.
After nationalization, banks have started financing this sector. These enterprises are still struggling with the
problem of inadequate availability of high cost funds. These enterprises are promoting various social objectives
and in order to facilitate then working adequate credit on easier terms and conditions must be provided to them.
(2) Raw Material:
Small scale industries normally tap local sources for meeting raw material requirements. These units have to face
numerous problems like availability of inadequate quantity, poor quality and even supply of raw material is not
on regular basis. All these factors adversely affect t e functioning of these units.
Large scale units, because of more resources, normally corner whatever raw material that is available in the
open market. Small scale units are thus forced to purchase the same raw material from the open market at very
high prices. It will lead to increase in the cost of production thereby making their functioning unviable.
(3) Idle Capacity:
There is under utilization of installed capacity to the extent of 40 to 50 percent in case of small scale industries.
Various causes of this under-utilization are shortage of raw material problem associated with funds and even
availability of power. Small scale units are not fully equipped to overcome all these problems as is the case with
the rivals in the large scale sector.
(4) Technology:
Small scale entrepreneurs are not fully exposed to the latest technology. Moreover, they lack requisite resources
to update or modernize their plant and machinery Due to obsolete methods of production, they are confronted
with the problems of less production in inferior quality and that too at higher cost. They are in no position to
compete with their better equipped rivals operating modem large scale units.

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(5) Marketing:
These small scale units are also exposed to marketing problems. They are not in a position to get first hand
information about the market i.e. about the competition, taste, liking, disliking of the consumers and prevalent
fashion.
With the result they are not in a position to upgrade their products keeping in mind market requirements. They
are producing less of inferior quality and that too at higher costs. Therefore, in competition with better equipped
large scale units they are placed in a relatively disadvantageous position.
In order to safeguard the interests of small scale enterprises the Government of India has reserved certain items
for exclusive production in the small scale sector. Various government agencies like Trade Fair Authority of
India, State Trading Corporation and the National Small Industries Corporation are extending helping hand to
small scale sector in selling its products both in the domestic and export markets.
(6) Infrastructure:
Infrastructure aspects adversely affect the functioning of small scale units. There is inadequate availability of
transportation, communication, power and other facilities in the backward areas. Entrepreneurs are faced with
the problem of getting power connections and even when they are lucky enough to get these they are exposed to
unscheduled long power cuts.
Inadequate and inappropriate transportation and communication network will make the working of various units
all the more difficult. All these factors are going to adversely affect the quantity, quality and production schedule
of the enterprises operating in these areas. Thus their operations will become uneconomical and unviable.
(7) Under Utilization of Capacity:
Most of the small-scale units are working below full potentials or there is gross underutilization of capacities.
Large scale units are working for 24 hours a day i.e. in three shifts of 8 hours each and are thus making best
possible use of their machinery and equipments.
On the other hand small scale units are making only 40 to 50 percent use of their installed capacities. Various
reasons attributed to this gross under- utilisation of capacities are problems of finance, raw material, power and
underdeveloped markets for their products.
(8) Project Planning:
Another important problem faced by small scale entrepreneurs is poor project planning. These entrepreneurs do
not attach much significance to viability studies i.e. both technical and economical and plunge into
entrepreneurial activity out of mere enthusiasm and excitement.
They do not bother to study the demand aspect, marketing problems, and sources of raw materials and even
availability of proper infrastructure before starting their enterprises. Project feasibility analysis covering all
these aspects in addition to technical and financial viability of the projects, is not at all given due weight-age.
Inexperienced and incomplete documents which invariably results in delays in completing promotional
formalities. Small entrepreneurs often submit unrealistic feasibility reports and incompetent entrepreneurs do not
fully understand project details.
Moreover, due to limited financial resources they cannot afford to avail services of project consultants. This
result is poor project planning and execution. There is both time interests of these small scale enterprises.
(9) Skilled Manpower:
A small scale unit located in a remote backward area may not have problem with respect to unskilled workers,
but skilled workers are not available there. The reason is Firstly, skilled workers may be reluctant to work in
these areas and secondly, the enterprise may not afford to pay the wages and other facilities demanded by these
workers.
Besides non-availability entrepreneurs are confronted with various other problems like absenteeism, high labour
turnover indiscipline, strike etc. These labour related problems result in lower productivity, deterioration of
43
 quality, increase in wastages, and rise in other overhead costs and finally adverse impact on the profitability of
these small scale units.
(10) Managerial:
Managerial inadequacies pose another serious problem for small scale units. Modern business demands vision,
knowledge, skill, aptitude and whole hearted devotion. Competence of the entrepreneur is vital for the success of
any venture. An entrepreneur is a pivot around whom the entire enterprise revolves.
Many small scale units have turned sick due to lack of managerial competence on the part of entrepreneurs. An
entrepreneur who is required to undergo training and counseling for developing his managerial skills will add to
the problems of entrepreneurs.
The small scale entrepreneurs have to encounter numerous problems relating to overdependence on institutional
agencies for funds and consultancy services, lack of credit-worthiness, education, training, lower profitability and
host of marketing and other problems. The Government of India has initiated various schemes aimed at improving
the overall functioning of these units.

7. What are the steps for Starting a Small Industries?

Registration of an existing or proposed small scale enterprise is voluntary and not compulsory. It has no statutory
basis. But, registration is beneficial for the enterprise itself because it makes the unit eligible for availing the
benefits given by the Central or State Governments for the promotion of SSIs. Some of the incentives so obtained
by them relate to credit guarantee scheme; priority sector lending; capital subsidy; reduced customs duty; ISO-
9000 certification reimbursement; power tariff subsidies; exemptions under tax laws; etc.

The State Directorate or Commissioner of Industries or District Industries Centers (DIC's) is the concerned
authorities for registration of small scale units. This registration is both location specific and product specific.
Like in certain State capitals and metropolitan cities, it is granted to only those units which are located in the
designated industrial areas/estates.
A small scale unit is generally subjected to two types of registration. Initially, a provisional registration is
granted for the proposed enterprise. It is termed provisional because the enterprise is yet to come into existence.
It is granted for a specified period of time during which the unit is expected to be setup. A 'Provisional
Registration Certificate (PRC)' enables the unit to obtain :- (i) term loans and working capital from financial
institutions, banks under priority sector lending; (ii) facilities for accommodation, land and other approvals; (iii)
no objection certificates (NOCs) and clearances from regulatory bodies such as pollution control board, labour
regulations, etc.Once the unit has commenced commercial production, it is granted permanent registration. It is a
life time registration given after physical inspection of the enterprise and scrutiny of certain documents. Some of
the formalities required to be completed for seeking permanent registration are:-
• Clearance from the municipal corporation
• State pollution control board clearance
• Sanction from the electricity board
• Ownership/tenancy rights of the premises where unit is located
• Copy of partnership deed/Memorandum of articles of association in case of a private limited company
• Sale bill of product manufactured
• Sale bill of each end product
• Purchase bill of each raw material
• Purchase bill of machinery installed
• BIS/QC certificate if applicable
• An affidavit giving status of the unit, machinery installed, power requirement, etc.
44
 The registration certificate so issued by the concerned authority is seen as a proof of the unit being a small scale
unit. It enables the unit to get several concessions like:-
• Income tax exemption and Sales tax exemption as per the State Government policy.
• Incentives and concessions in power tariff, etc.
• Price and purchase preference for goods produced.
• Availability of raw material depending on existing policy.

Though, provisional registration is not compulsory for getting a permanent registration. But, a
provisional certificate enables the unit to apply to the various departments and agencies for assistance
in setting up of the enterprise.
Such a registration procedures is generally uniform across the States. However, there may be some
modifications done by individual States. For example, certain States may have a 'SIDO registration
scheme' and a 'State registration scheme'. But, whatever be the registration scheme, the main purpose is
to maintain statistics and a roll of such units for providing incentives as well as to create nodal centers
at the Centre, State and District levels to promote SSIs. It gives recognition to the industrial unit and
helps in generating a database for policy planning.
A small scale unit may also become liable for de-registration, if it crosses the investment limits; starts
manufacturing any new item or items that require an industrial license or other kind of statutory license;
or does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial
undertaking.

8.What is the general format of feasibility report?

Conducting a feasibility study is one of the key activities within the project initiation phase. It aims to analyze and
justify the project in terms of technical feasibility, business viability and cost-effectiveness. The study serves as a
way to prove the project’s reasonability and justify the need for launch. Once the study is done, a feasibility study
report (FSR) should be developed to summarize the activity and state if the particular project is realistic and
practical. Let’s find out what FSR means, why it’s important and how to write it.
FSR Definition
What is a feasibility study report (FSR)? In simple terms, it’s just a document that aims to identify, explore, and
evaluate a project’s solutions to save time and money. The following definition gives a broader understanding of
the document:
A Feasibility Study Report (FSR) is a formally documented output of feasibility study that summarizes results of
the analysis and evaluations conducted to review the proposed solution and investigate project alternatives for
the purpose of identifying if the project is really feasible, cost-effective and profitable. It describes and supports
the most feasible solution applicable to the project.
The report gives a brief description of the project and some background information. Formally this document is
the starting point for running the Pre-Charter Sub-Phase. In practice, it signifies that the sponsor can proceed
with deciding on project investment and make necessary assignments to the project manager.
FSR Importance
The process to write the report is called feasibility study reporting. Often it is a responsibility of the project
manager to control such a process. The importance of writing the report consists in providing legal and technical
evidence of the project’s vitality, sustainability and cost-effectiveness. The reporting process allows the senior
management to get the necessary information required for making key decisions on budgeting and investment
planning. A well-written feasibility study report template lets develop solutions for:
▪ Project Analysis because an example of FSR helps link project efficiency to budgeted costs.
▪ Risk Mitigation because it helps with contingency planning and risk treatment strategy development.

45
 ▪ Staff Training because the report can be used by senior management to identify staffing needs as well as
acquire and train necessary specialists.
The process of reporting is the trigger to run the project investing process through underpinning the business
case document, stating the reasons for undertaking the project, and analyzing project costs and benefits.
Steps to Writing A FSR Example
How to write a feasibility study report? Regardless of project size, scope and type, there are several key steps to
writing such an important document. Let’s view the steps in detail.
1. Write Project Description
At this step, you need to collect background information on your project to write the description. For
example, your company needs to increase online sales and promote your products/services on the Web. Then
in the first part of your report you could write the next description:
“This project is website development to promote the products/services in Internet and increase online sales through
encouraging customers to visit the website and make online bargains.”
2. Describe Possible Solutions
In order to take this step to write a feasibility study report template, you’ll need to perform alternatives and make a
description of possible solutions for your project. For example, in your FSR template your e-commence project
might have the following solutions description:
“This project can be undertaken by the implementation of the two possible solutions: 1) Online Shop; 2) Corporate
Website. Each of the solutions is carefully analyzed, and necessary information required for making the final
decision is available for the management team.”
3. List Evaluation Criteria
now it’s time to set and define evaluation criteria for possible solutions. This step of feasibility study report writing
requires you to investigate the solutions and put them against a set of evaluation criteria. For example, you could
add the following criteria to your report:
“The possible solutions of this project are evaluated and compared by the following criteria: 1) Concept Spec.; 2)
Content Audit; 3) Technical Design Spec.; 4) Launch Schedule & Time-frames.”
4. Propose the Most Feasible Solution
Once the criteria are used to evaluate the solutions, your next step for writing a feasibility study report is to
determine the most economically reasonable and technically feasible solution which lets the company 1) keep to
optimal use of project resources and 2) gain the best possible benefit. For example, your report might include:
“After the evaluation of the possible solutions, the most feasible solution for this project is identified and selected, so
the project turns to be cost-effective, vital and practical.”
5. Write Conclusion
the final step of the feasibility study reporting process requires you to make a conclusion by summarizing the
project’s aim and stating the most feasible solution. For example, the conclusion of your FSR might be:
“This project’s purpose is to develop a sophisticated and original design of the website that will contribute to online
sales increasing, attract the target customer’s attention, and be cost-effective. The most feasible solution for the
project has been chosen and approved and now is ready for further elaboration.”
Also, look at this Project Feasibility and Option Analysis Template to find out how to perform an analysis of
alternative approaches.
Content Requirements for Sample Feasibility Report
The content of sample feasibility report is formatted and structured according to a range of requirements which may
vary from organization to organization. Meanwhile, there are common suggestions, which are listed below.
Front Matter

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To begin with writing a sample feasibility report, first you need to create a title page that provides a descriptive yet
concise title, your (i.e. author’s) name, email, job position, and also the organization for which you’re writing the
report. Next, you must include an itemized list of contents that provides headings and sub-headings sequenced the
same way as they are structured in the report body. Also add a list of all material (tables, figures, illustrations, and
annexes) used within the doc. Remember that the title page shouldn’t be numbered and that no more than 4-5 pages
should be dedicated to the front matter.
Report Body Format

Because there are many different styles and requirements for formatting the body of feasibility study report, it may
be difficult for you to select right format for your report, so I suggest you discuss this issue with your curator or
supervisor who should provide you with right styling and format requirements.
Meanwhile, there are several common suggestions as follows:
▪ Each page of the report body needs to include a descriptive header with an abbreviated title for the report, the
author’s name and page number (at the right top)
▪ Structure the report by headings and sub-headings and indicate this structure within the document content
▪ Make sure headings are properly formatted (i.e., flush left, indented, etc.) on each page
▪ Use the same style for headings throughout the entire report template
▪ Never use too larger or too small font (font should have a professional look, 10-12 point)
▪ Use the same citation style (e.g., CBE, APA, etc.) for formatting sources used in your feasibility study template
Report Template Sections

The following list provides an outline of the key sections to be included in report content:
▪ Executive Summary – a description of the problem/opportunity highlighted in the study, the purpose of the
report, and the importance of the research for your target audience
▪ Background – a more detailed description of the feasibility study, who it was carried out, and whether it was
implemented elsewhere
▪ Analysis – an examination and evaluation method employed in the conducting your feasibility study
▪ Alternatives and Options – an overview of any alternative proposals or options and their features in
comparison to the main proposal of the study
▪ Cost-Benefit Evaluation – a rigorous analysis method that was implemented to examine and evaluate the main
proposal for cost-benefit effectiveness and to demonstrate the tech feasibility, economic practicality, social
desirability, and eco soundness of the proposal.
▪ Conclusion – a summary of the work done and your own conclusions regarding your analysis
▪ Recommendations – a series of recommendations practices and follow-up actions based on your conclusions
Back Matter

One last thing you need to consider when writing your feasibility study report template is that the report should
include a Reference page that lists all reference material (articles, books, web pages, periodicals, reports, etc.) cited
in your document. This page should be styled appropriately.
Additionally, you can create an Appendix page that provides detailed discussions of all criteria used in analyzing
feasibility and examples of each criterion. This page should also be styled appropriately.

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