ENTREPRENEURSHIP

DEVELOPMENT

Aqeel Muhammed K H

Roll No: 18LW2A1013

BBA LLB –IInd Semester

K.J.C College of Law,Bengaluru

Q1) Explain the different types of entrepreneurs?

Definition:

 An Entrepreneur is a person who has a role of an industrialist and forms an

organization for the commercial use. He is a change agent who transforms the

demand into supply by forecasting the needs of the society.

Based on the Type of Business:

1. Trading Entrepreneur:

As the name itself suggests, the trading entrepreneur undertake the trading

activities. They procure the finished products from the manufacturers and sell

these to the customers directly or through a retailer. These serve as the

middlemen as wholesalers, dealers, and retailers between the manufacturers and

customers.

2. Manufacturing Entrepreneur:

The manufacturing entrepreneurs manufacture products. They identify the needs

of the customers and, then, explore the resources and technology to be used to

manufacture the products to satisfy the customers’ needs. In other words, the

manufacturing entrepreneurs convert raw materials into finished products.

3. Agricultural Entrepreneur:

The entrepreneurs who undertake agricultural pursuits are called agricultural

entrepreneurs. They cover a wide spectrum of agricultural activities like

cultivation, marketing of agricultural produce, irrigation, mechanization, and

technology.

Based on the Use of Technology:

1. Technical Entrepreneur:

The entrepreneurs who establish and run science and technology-based

industries are called ‘technical entrepreneurs.’ Speaking alternatively, these are

the entrepreneurs who make use of science and technology in their enterprises.

Expectedly, they use new and innovative methods of production in their

enterprises.

2. Non-Technical Entrepreneur:

Based on the use of technology, the entrepreneurs who are not technical

entrepreneurs are non-technical entrepreneurs. The forte of their enterprises is

not science and technology. They are concerned with the use of alternative and

imitative methods of marketing and distribution strategies to make their business

survive and thrive in the competitive market.

Based on Ownership:

1. Private Entrepreneur:

A private entrepreneur is one who as an individual sets up a business enterprise.

He / she it’s the sole owner of the enterprise and bears the entire risk involved in

it.

2. State Entrepreneur:
When the trading or industrial venture is undertaken by the State or the

Government, it is called ‘state entrepreneur.’

3. Joint Entrepreneurs:

When a private entrepreneur and the Government jointly run a business

enterprise, it is called ‘joint entrepreneurs.’

Based on Gender:

1. Men Entrepreneurs:

When business enterprises are owned, managed, and controlled by men, these

are called ‘men entrepreneurs.’

2. Women Entrepreneurs:

Women entrepreneurs are defined as the enterprises owned and controlled by a

woman or women having a minimum financial interest of 51 per cent of the

capital and giving at least 51 per cent of employment generated in the enterprises

to women.

Based on the Size of Enterprise:

1. Small-Scale Entrepreneur:

An entrepreneur who has made investment in plant and machinery up to Rs 1.00

crore is called ‘small-scale entrepreneur.’

2. Medium-Scale Entrepreneur:

The entrepreneur who has made investment in plant and machinery above Rs

1.00 crore but below Rs 5.00 crore is called ‘medium-scale entrepreneur.’

3. Large-Scale entrepreneur:

The entrepreneur who has made investment in plant and machinery more than

Rs 5.00 crore is called ‘large-scale entrepreneur.’

Based on Clarence Danhof Classification:

Clarence Danhof (1949), on the basis of his study of the American Agriculture,

classified entrepreneurs in the manner that at the initial stage of economic

development, entrepreneurs have less initiative and drive and as economic

development proceeds, they become more innovating and enthusiastic.

Based on this, he classified entrepreneurs into four types:

These are discussed in seriatim:

1. Innovating Entrepreneurs:

Innovating entrepreneurs are one who introduce new goods, inaugurate new

method of production, discover new market and reorganise the enterprise. It is

important to note that such entrepreneurs can work only when a certain level of

development is already achieved, and people look forward to change and

improvement.

2. Imitative Entrepreneurs:

These are characterised by readiness to adopt successful innovations inaugurated

by innovating entrepreneurs. Imitative entrepreneurs do not innovate the

changes themselves, they only imitate techniques and technology innovated by

others. Such types of entrepreneurs are particularly suitable for the

underdeveloped regions for bringing a mushroom drive of imitation of new

combinations of factors of production already available in developed regions.

3. Fabian Entrepreneurs:

Fabian entrepreneurs are characterised by very great caution and skepticism in

experimenting any change in their enterprises. They imitate only when it

becomes perfectly clear that failure to do so would result in a loss of the relative

position in the enterprise.

4. Drone Entrepreneurs:

These are characterised by a refusal to adopt opportunities to make changes in

production formulae even at the cost of severely reduced returns relative to other

like producers. Such entrepreneurs may even suffer from losses but they are not

ready to make changes in their existing production methods.

Following are some more types of entrepreneurs listed by some other behavioural

scientists:

1. Solo Operators:

These are the entrepreneurs who essentially work alone and, if needed at all,

employ a few employees. In the beginning, most of the entrepreneurs start their

enterprises like them.

2. Active Partners:

Active partners are those entrepreneurs who start/ carry on an enterprise as a

joint venture. It is important that all of them actively participate in the operations
of the business. Entrepreneurs who only contribute funds to the enterprise but do

not actively participate in business activity are called simply ‘partners’.

3. Inventors:

Such entrepreneurs with their competence and inventiveness invent new

products. Their basic interest lies in research and innovative activities.

4. Challengers:

These are the entrepreneurs who plunge into industry because of the challenges it

presents. When one challenge seems to be met, they begin to look for new

challenges.

5. Buyers:

These are those entrepreneurs who do not like to bear much risk. Hence, in order

to reduce risk involved in setting up a new enterprise, they like to buy the

ongoing one.

6. Life-Timers:

These entrepreneurs take business as an integral part to their life. Usually, the

family enterprise and businesses which mainly depend on exercise of personal

skill fall in this type/category of entrepreneurs.

Q2)What are the different phases of Entrepreneurship Development Progaram?

It is said that an economy is an effect for which entrepreneurship is a cause.

Entrepreneurship development has, therefore, become a matter of great concern

in all developed and developing countries all over the world. But the real problem

is how to develop entrepreneurship. Entrepreneurship development

programme(EDP) are deemed to offer the solution of this problem.

I. Pre-Training:
Pre-training phase consists of all activities and preparation to launch training

programme. Pre-training phase of EDP consists of the following activities :

1.Designing course-curriculum for training

It is essential for any EDP that whatever material for study or training is designed

should fulfil the needs or purpose of the EDP.The main objectives to be kept in

mind while designing the course curriculum are as follows:

a) To provide knowledge and information regarding entrepreneurship, role of

entrepreneur in economic development and available facilities regarding

establishment of enterprise to perspective entrepreneurs.

b) To provide motivation training to the prospective entrepreneurs in order to

develop right approach and behaviour towards business.

c) To provide and arrange for necessary course material important for

management and technical information.

d) To collect and provide information regarding various agencies engaged in

providing assistance to entrepreneurs to establish and run the enterprises.

e) To provide various project reports so that they can study and analyse the

feasibility of various projects with regard to marketing,technical and financial

aspects.
f) Arranging plant visits so that they may become familiar with real life

situations.This will help in inculcating the right behaviour and thoughts and in

developing a strong personality.

2. Selection of faculty

The success of an EDP depends upon able or well qualified experienced faculty or

resource persons.Thus selection of the proper faculty is an important part of pre-

training phase.For this teacher from various universities,professional institutes,

banks,research and development fields are invited.

3. Advertisement

Next important task is giving advertisement for EDP to be conducted. So that

maximum number of candidates can participate.Advertisement can be given in

local newspaper,educational institutes or employment exchange.

4. Selection of potential or perspective Entrepreneurs

For the success an EDP it is essential that only those participants take part who

really have qualities to be potential entrepreneurs.The selection of prospective

entrepreneurs can be made on following basis:

i. On the basis of information available from application form.

ii. On the basis of written examination to check the aptitude.

iii. On the basis of personal interview of the candidate.

II. Training phase:

The main objective of this phase is to bring desirable change in the behaviour of

the trainees. The purpose of training is to develop ‘need for achievement’ i.e.

motivation among the trainees. Accordingly, a trainer should see the following

changes in the behaviour of trainees:

 Is he or she attitudinally tuned very much towards his or her proposed

project idea?

 Is the trainee motivated to plunge into entrepreneurial career and beer

risks involved in it?

 How should he or she behave like an entrepreneur?

 What kinds of entrepreneurial traits the trainee lacks the most?

 Does the trainees possess the required skill in selecting the viable project,

mobilizing the required resources at the right time?

There are number of methods to provide Training:

1.Lecture method

In this method the instructor directly communicates with the participant with

regard to theory and practice tobe followed.The advantage of this method is that

queries or doubts in the mind of candidates are clearedon the spot.

2. Written instructions method

Under this method written material is provided to the participants for their

use.All important factors or elements required for setting up and running an

enterprise are provided in written form.

3. Demonstration or practical method

For better understanding of the candidates everything related to

entrepreneurship is aught by demonstrations.Every minute detail is explained by

giving demonstrations for the practical performance of the work.

4. Conferences

Under conference method,experts in various fields are invited to share their ideas

with the participants.The aim is to provide knowledge to trainees for improving

their effectiveness.

5. Meetings

Meetings provide opportunities to candidates to discuss various problems faced

by them.They discuss exchange ideas on various issues at firm conclusion

6. Individual training

Under these circumstances where one person is to be given information or

knowledge on a particular aspect,then individual training is imparted.

7.Group training
This method of training is best suited where group of individuals has to do

similar type of work and where similar type of instructions are to be given to all of

them.

 III. Post-training phase:

The ultimate objective of the entrepreneurship development programme is to

prepare the participants to start their enterprise. The success of the  EDP  can be

judged from the objectives it has achieved,that is how many participants actually

started their own enterprise after getting training. This phase involves

assessment to judge how far the objectives of the program have been achieved.

This is called Follow-up. In follow up following three things come:

 Was the programme conducted as per plans?

 If not what were the deviations, loopholes in the plan?

 Taking Corrective action to improve the weaknesses after identifying

them?

IV. Evaluation Phase:

The main objective of EDPs is to make the EDP trainee an enterprise creator.

Hence, it seems necessary to see whether, the objectives of EDPs is fulfilled or

not. In simple words, there is a need to have a retrospective look into how many
participants have actually started their own enterprises after completing the

training. This calls for the evaluation of EDPs.

The most recent and nationwide evaluation study on evaluation study on EDPs is

one carried out by the ‘Entrepreneurship Development Institute of India,

Ahmedabad (Awasthi abd Sebastian 1996).The main findings of this study are

presented in Table 12.2:

It is found that the effectiveness of the EDPs is around 26 per cent. In other

words, one out of every four trainees actually started his / her enterprise after

undergoing entrepreneurial training. However, the expected start-up rate is

slightly higher around 32 per cent. One way of evaluating the EDPs is to assess

their effectiveness in developing ‘need for achievement’ among the

entrepreneurs. This is also called the ‘qualitative evaluation of EDPs.

However, the effectiveness of EDPs cannot be considered as impressive because

about 07 out of every 10 trainees did not start enterprises after undergoing the

EDP training. It means there are some problems or lapses here and there in

conducting the EDPs’. Therefore, there lies the need for looking at the problems

and constraints of EDPs. One way of evaluating the EDPs is to assess their

effectiveness in developing ‘need for achievement’ among the entrepreneurs. This

is also called the ‘qualitative evaluation of EDPs.The behavioural scientists use

the following criteria to assess the effectiveness of EDPs in motivating the

entrepreneurs:

a. Activity level of the respondents

b. New enterprise established

c. Total investments made

d. Investments in fixed assets made

e. Number of people employed

f. Number of jobs created

g. Increase in profit

h. Increase in sales

i. Quality of product/service improved

j. Quicker repayment of loans

In other behavioural experiments, the impact of EDPs is measured with the help

of indices relating to the entrepreneurial behaviour. The entrepreneurial

behaviour is measured on the following four dimensions:

1. Planning Orientation

2. Achievement Orientation

3. Expansion Orientation

4. Management Orientation
Q3) Write short note on:

a. Franchising

b. Licensing with respect to SSI

Franchising is an arrangement where franchisor (one party) grants or licenses some

rights and authorities to franchisee (another party). Franchising is a well-known
marketing strategy for business expansion. A contractual agreement takes place
between Franchisor and Franchisee. Franchisor authorizes franchisee to sell their
products, goods, services and give rights to use their trademark and brand name.
And these franchisee acts like a dealer. In return, the franchisee pays a one-time fee
or commission to franchisor and some share of revenue. Some advantages to
franchisees are they do not have to spend money on training employees, they get to
learn about business techniques. Let us see the opportunities of franchising in India
with some examples.

Definition:

 A continuing relationship in which a franchisor provides a licensed privilege to

the franchisee to do business and offers assistance in organizing, training,

merchandising, marketing and managing in return for a monetary consideration.

Franchising is a form of business by which the owner (franchisor) of a product,

service or method obtains distribution through affiliated dealers (franchisees).

Meaning:

Franchising is basically a right which manufacturers or businesses give to others.

This right allows the beneficiaries to sell the products or services of these
manufacturers or parent businesses. These rights could even be in terms of access
to intellectual property rights.
The individual or business that grants the right to the franchise is called the
franchisor, while the beneficiary of the right is called the franchise. Franchising is a
business marketing strategy to cover maximum market share.

Franchising is a business relationship between two entities wherein one party

allows another to sell its products and intellectual property. For example, several
fast food chains like Dominos and McDonalds operate in India through franchising.

Examples of Franchising in India

 McDonald’s

 Dominos
 KFC
 Pizza Hut
 Subway
 Dunkin’ Donuts
 Taco Bell
 Baskin Robbins
 Burger King

Functioning of Franchising

Under a franchise, the two parties generally enter into a Franchise Agreement. This
agreement allows the franchise to use the franchisor’s brand name and sell its
products or services. In return, the franchisee pays a fee to the franchisor.

The franchisee may sell these products and services by operating as a branch of the
parent company. It may even use franchising rights by selling these products under
its own business venture.

The franchisor may grant franchising rights to one or several individuals or firms.
Consequently, if just one person gets these rights, he becomes the exclusive seller of
the franchisor’s products in a specific market or geographical limit.

In return, the franchisor supplies its products, services, technological know-how,

brand name and trade secrets to the franchise. It even provides training and
assistance in some cases.

Features of Franchising

Firstly, under a franchising agreement, the franchisor grants permission to the

franchise to use its intellectual properties like patents and trademarks.
Secondly, the franchise in return pays a fee (i.e. royalty) to the franchisor and may
even have to share a part of his profits. On the contrary, the franchisor provides its
goods, services, and assistance to the franchise.

Finally, both parties in a franchise sign a franchising agreement. This agreement is

basically a contract that states terms and conditions applicable with respect to the
franchise.

Advantages and Disadvantages of Franchising

Advantages to Franchisors

 Firstly, franchising is a great way to expand a business without incurring

additional costs on expansion. This is because all expenses of selling are borne
by the franchise.

 This further also helps in building a brand name, increasing goodwill and
reaching more customers.

Advantages to Franchisees

 A franchise can use franchising to start a business on a pre-established

brand name of the franchisor. As a result, the franchise can predict his
success and reduce risks of failure.

 Furthermore, the franchise also does not need to spend money on training
and assistance because the franchisor provides this.
 Another advantage is that sometimes a franchisee may get exclusive rights
to sell the franchisor’s products within an area.
 Franchisees will get to know business techniques and trade secrets of
brands.

Disadvantages for Franchisors

 The most basic disadvantage is that the franchise does not possess direct
control over the sale of its products. As a result, its own goodwill can suffer if
the franchisor does not maintain quality standards.

 Furthermore, the franchisee may even leak the franchisor’s secrets to

rivals. Franchising also involves ongoing costs of providing maintenance,
assistance, and training on the franchisor.

Disadvantages for Franchisees

 First of all, no franchise has complete control over his business. He always
has to adhere to policies and conditions of the franchisor.
 Another disadvantage is that he always has to pay some royalty to the
franchisor on a routine basis. In some cases, he may even have to share his
profits with the franchisor.