KAILASH WOMEN’S COLLEGE

DEPARTMENT OF COMMERCE (CA)

STUDY MATERIAL

CLASS : III B.COM (CA)

PAPER NAME : ENTREPRENEURIAL DEVELOPMENT

PAPER CODE :

SEMESTER : SIXTH SEMESTER

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ENTREPRENEURIAL DEVELOPMENT
UNIT-I
Entrepreneur- Meaning- Types – Qualities of an Entrepreneur- Characteristics of Entrepreneur- Classification
of Entrepreneur- Factors influencing entrepreneurship- Role of entrepreneur in economic development-
Women entrepreneurs: Challenges and Opportunities.

UNIT-II
Problems of entrepreneurs- Women entrepreneurs- Concept of women entrepreneurs- Features of Women
entrepreneurs- Women entrepreneurship in India- Growth and problems of Women entrepreneurs-
Suggestions to promote Women entrepreneurship- entrepreneurial Development Programmes (EDP)

UNIT- III
Business idea generation- identification of business opportunities- Feasibility- Marketing- Financial-
economic- Technical- Managerial- Project appraisal- Project report.

UNIT- IV
MSMW- Meaning- Features- Role- Problems- Rural entrepreneurship- Meaning- Need and Problems- Small
scale sector in India- rationale and objectives of SSI- problems of SSI-Sickness of Small Scale Units-Causes
and Revival.

UNIT-V
Financial assistance and services; DIC- SIPCOT- SIDBI- TIIC- NSIC- SIDO- SIDC- KVIC- SIDBI-EDII.

TEXT BOOK

1. ENTREPRENEUR DEVELOPMENT – S.S. KHANKA

2.
3. FUNDAMENTAL OF ENTREPRENEURSHIP AND SMALL BUSINESS- --- RENU

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 QUESTION PAPER PATTERN

ENTREPRENEURIAL DEVELOPMENT

Time: 3 Hours Max. Marks: 75

PART – A (15 x 1 = 15 Marks)

Answer All Questions

(Multiple choice questions)

PART – B (2 x 5= 10 Marks)

Answer any Two questions

(One Question from each unit with internal choice)

PART – C (5 x 10 = 50 Marks)

Answer all the questions

(One Question from each unit)

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 UNIT-I
INTRODUCTION:
Entrepreneur is an Economic Agent who plays a vital role in the economic development of a country.
Economic development of a country refers steady growth in the income levels. This growth mainly depends
on its entrepreneurs. An Entrepreneur is an individual with knowledge, skills, initiative, drive and spirit
of innovation who aims at achieving goals. An entrepreneur identifies opportunities and seizes Opportunities
for economic benefits.
Entrepreneurship is a dynamic activity which helps the entrepreneur to bring changes in the process of
production, innovation in production, new usage of materials, creator of market etc. It is a mental attitude to
foresee risk and uncertainty with a view to achieve certain strong motive. It also means doing something in a
new and effective manner.
ENTREPRENEUR
The word, entrepreneur, derived from the French word”Entrepreneur” which means to undertake. Only in
18th century the word, entrepreneur was coined by Richard cantillon (1680-1734), an Irish economist.
MEANING
One, who organizes, manages and assumes the risks of a business or enterprise is known as “entrepreneur”.
A person who sets up business is known as “Entrepreneur”. One, who plans, owns, organizes and manages a
concern and bear risks in expectation of good earnings.
Entrepreneur is a catalytic agent of change and works for the good of people and society. Not only he
envisages new opportunities, new technologies, new processes, new lines of production and new products but
also coordinates all other activities.
DEFINITION
Peter.F.Drucker defines an entrepreneur as one who always searches for change, responds to it and
exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit
changes as an opportunity for different business or service.
In 1934, Joseph Schumpeter said that an entrepreneur is an innovator and develops untried
technology.
In 1958, Hagen explained an entrepreneur as an economic man who tries to maximize his profit through
innovations.
In 1964, Peter Drucker said that an entrepreneur is an energetic moderate risk taker.
ENTREPRENEURSHIP
 Entrepreneurship can be described as a process of action an entrepreneur undertakes to establish his
enterprise.
 Entrepreneurship is a creative activity. It is the ability to create and build something from practically
nothing. It is a knack of sensing opportunity where others see chaos, contradiction and confusion.
 Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks and derive benefits
by setting up a venture. It comprises of numerous activities involved in conception, creation and
running an enterprise.
DEFINITION
According to “Peter Drucker” Entrepreneurship is defined as ‘a systematic innovation, which consists in
the purposeful and organized search for changes and it is the systematic analysis of the opportunities such
changes might offer for economic and social innovation".

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Entrepreneurship is a discipline with a knowledge base theory. It is an outcome of complex socio-economic,
psychological, technological, legal and other factors. It is a dynamic and risky process. It involves a fusion of
capital, technology and human talent. Entrepreneurship is equally applicable to big and small business, to
economic and non-economic activities.
TYPES OF ENTREPRENEUR:
Entrepreneurs are found to be in various types and of varying sizes. We may broadly classify them as follows
I.According to the types Of Business:
1. Business entrepreneurs: They are individuals who conceive an idea for a new product or service and
then create business to convert their idea into reality. They are responsible for production and marketing of
the new products and services and for tapping resources in their search to make the business opportunity a
success.
2. Trading Entrepreneurs is one, who undertakes trading activities and is not concernedwith production. He
identifies potential markets, stimulates demand and creates a desire and interest among the discerning buyers
to go for his product/service.
3. Industrial Entrepreneur is essentially a manufacturer who identifies the potential needs of consumers and
tailors a product or service according to the market needs.
4. Corporate Entrepreneur is a company who is an artificial person in the eyes of law, demonstrating his
innovative skill in organizing and managing a corporate undertaking.
5. Agricultural entrepreneurs are those who undertake agricultural activities, such as, raising and marketing
of crops.
II .According to the use of Technology:
According to the use of technology used, the entrepreneur may be classified as technical and non-technical
and professional entrepreneur. Even amongst the technical entrepreneurs the level and updating decides
whether one is a high-tech or low tech entrepreneur.
1. Technical entrepreneur is essentially compared to a ‘master craftsman’, who develops improved quality
goods because of his technological expertise. In this type concentration is more on production than on
marketing. Depending on the level of updated technology used the entrepreneur is called as high-tech or low-
tech entrepreneur.
2. Professional Entrepreneur is a person who is interested in establishing a unit, but does not have interest
in managing it, one it is established. A professional entrepreneur sells out the established and starts another
venture, conceiving new ideas and developing newer projects.
3. Non-technical Entrepreneur are those who are not concerned with the technical aspects of the product,
but concerned only with marketing and distributed for their business.
4. High-tech entrepreneurs who concerned with updated technical aspects of their product whereas low-tech
entrepreneurs deal in products which are not that updated and complex in technology.
III. According to the growth
Any entrepreneurs venture looks forward to success, diversification and growth which provide not only
psychological satisfaction, but also sufficient profits.
1. Growth entrepreneur is one who undertakes a venture in high growth industry with sufficient prospects.
2. Super growth entrepreneurs have shown enormous growth by infusing high liquidity, profitability and
leverage.
IV.According to the motivation of entrepreneurs:
1. Pure entrepreneur is one who is motivated by economic and psychological rewards like personal
satisfaction, ego, and status etc.

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2. Induced entrepreneur is one who takes up due to the inducement of the government like incentives,
subsides, concessions, etc.
3. Motivated entrepreneur become one self-fulfillment. He is responsible for producing and marketing a
new product for consumer’s use.
4. Spontaneous entrepreneur is one who is having natural talent, initiative, boldness, self belief, etc., which
motivate him to become an entrepreneur.
V.According to the stages of development:
1. First generation entrepreneur is one who has become an entrepreneur by his innovative skill, bringing
out a marketable product or service.
2. Modern entrepreneur is one who develops the product according to the market demand which is dynamic
and changing over a period of time.
3. Classical entrepreneur is a stereotype entrepreneur whose aim is to maximum the economic returns for
the sake of survival of the unit. He is unduly worried about growth of the firm.
VI. According to the area:
Entrepreneurs are classified depending on the geographical location of their venture as either urban or as
rural entrepreneurs.
VII.According to the scale of operation:
Entrepreneurs are classified depending on the scale of operation and original investment as small scale
entrepreneur or as large scale entrepreneur.
VIII.Others
1. Imitative entrepreneurs are characterized by their readiness to adopt successful innovation by imitating
techniques and technologies innovated by others.
2. Entrepreneurs are bright executives in big corporations who leave their jobs because of their
entrepreneurial urge and drive.
QUALITIES OF AN ENTREPRENEUR
 Risk-taker
 Innovator
 Organizer
 Creator
 Self-Confident
 Optimistic
 Decision-maker
 Business Planning
 Courage to Face Adversities
 Leadership
1. Risk-taker:
The performance of an enterprise is the outcome of risk bearing by the entrepreneur. The risk taking is the
reward which enables the entrepreneur to maxim mum his profits.
2. Innovator:
Entrepreneurship is a creative activity by means of team work, which innovate new methods, techniques,
produces, processes, new sources of raw materials and commodities. The process of innovation results in
entrepreneurship development.
3. Organizer:

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Building an organization requires lots of skills and one can build an organization effectively by delegating
responsibility to others. Here, the entrepreneurs should be good leaders. Entrepreneurship lays more emphasis
on skills and creative.

4. Creator:
Creativity, as a field knowledge, seeks to explain how humans, either individuals, reach solutions that are both
novel and useful. Innovation means the effort to create purposeful ventures.
5. Self-Confident:
It is necessary for an entrepreneur to be self confident. He should have faith I himself, only then the he can
trust others.
6. Optimistic:
An entrepreneur should approach his take with a hope of success and optimistic attitude. He attempts any task
with the hope that he will succeed rather than with a fear of failure. Such a hope of success enhances his
confidence and drives him towards success.
7. Decision-maker:
In addition to the innovation, entrepreneur has to take appropriate decisions under uncertainty. This decision
making activity is one of the important features of entrepreneurship
8. Business Planning:
Planning is really nothing more than decision making that is, deciding what to do how to do and when to do.
It is vital for the success of a business. As a business person puts it planning.
9. Courage to Face Adversities:
Entrepreneurs face the adversities boldly and bravely. They refuse to be beaten and become tougher during
adverse situations. They have faith I themselves and attempt to solve the problems even under pressure. Every
unpredictable situation is a challenge before them hich they overcome and survive through.
10. Leadership:
Leadership is the process of influencing and supporting others to work enthusiastically towards achieving
objectives. It is a critical factor that not only helps an entrepreneur to identify his goals but also motivates and
assists him in achieving then stated goals.
CHARACTERISTICS OR FEATURES OF AN ENTREPRENEUR
 Innovation
 Risk taking
 Decision making
 Organization
 Skillful Management
 Accepting Challenges
 Resource Mobilization
 Earning Profits
 Making the enterprise a success
 Team Work

1. Innovation:
Entrepreneurship is a creative activity by means of team work, which innovate new methods, techniques,
produces, processes, new sources of raw materials and commodities. The process of innovation results in
entrepreneurship development.
2. Risk Taking:
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The performance of an enterprise is the outcome of risk bearing by the entrepreneur. The risk taking is the
reward which enables the entrepreneur to maxim mum his profits.

3. Decision Making:
In addition to the innovation, entrepreneur has to take appropriate decisions under uncertainty. This decision
making activity is one of the important features of entrepreneurship
4. Organization:
Building an organization requires lots of skills and one can build an organization effectively by delegating
responsibility to others. Here, the entrepreneurs should be good leaders. Entrepreneurship lays more emphasis
on skills and creative.
5. Skillful Management:
The entrepreneur usually lacks managerial and technical know-how as well as marketing, production and
personnel management skills. Managerial skills and leadership are the most important characteristics of
entrepreneurship.
6. Accepting Challenges:
One of the important features of entrepreneurship is to accepting the challenges with a view to exist in the
competitive globalize economy.
7. Resource Mobilization:
An entrepreneur’s job is to fill the gaps through mobilization of resources. An entrepreneur has to marshal all
the inputs to release final products.
8. Earning Profits:
Profit is the reward of risk-taken by an entrepreneur. Higher the rate of risk, more the profits. The performance
and existence of the entrepreneurship is measured is the form of profits.
9. Making the Enterprise a Success:
The succession of an enterprise depends upon the efficiency and effectiveness of entrepreneurs traits. The
entrepreneurship will operate with more productive capacity by implementing such trials in appropriate
manner.
10. Team Work:
Team work is the important phenomena for the success of an entrepreneurship. It is the contribution of group
of individuals working collectively in the enterprise for attainment of specific objective.
CLASSIFICATION OF ENTREPRENEURS:
1. Innovating Entrepreneurs:
An innovating entrepreneur is one who introduces new goods, inaugurates new method of production,
discovers new market and reorganizes 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 characterized 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 type of entrepreneurs are particularly suitable for the under-
developed regions for bringing a mushroom drive of imitation of new combinations of factors of production
already available in developed regions.
3. Fabian entrepreneurs:

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 Fabian entrepreneurs are characterized 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 characterized 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.
NATURE (OR) FEATURE OF ENTREPRENEURSHIP
1. Economic Activity:
Entrepreneurship is a primarily an economic function because it involves the creation and operation of an
enterprise. It is basically concerned with the production and distribution of goods and services.
2. Creative Activity:
Entrepreneurship is a creative response to changes in the environment. It involves innovation or
introduction of something new & better. An entrepreneur is a change agent.
3. Purposeful Activity:
The entrepreneur who creates and operates an enterprise seeks to earn profits through satisfaction of
needs of customers. Therefore, entrepreneurship is a goal oriented activity.
4. A Function of Risk bearing:
Risk is an inherent and inspirable element of entrepreneurship. An entrepreneur guarantees rent to the
landlord, wages to employees, and interest to investors in the hope of earning more than the expenses.
He assumes the uncertainty of future. In the pursuit of profits there is every possibility of loss.
5. An organizing function:
An entrepreneur brings together various factors of production. He coordinates and controls the efforts
of all the persons engaged in his enterprise. He harnesses land, labour, capital and other resources for
the benefit of the mankind. Therefore, an entrepreneur is an organization builder.
6. Gap Filling Function:
The gap between human needs and the available products and services gives rise to entrepreneurship.
An entrepreneur identifies this gap and takes necessary steps to fill the gap. He introduces new
products & services, new methods of production or distribution, new sources of inputs and new market
for this purpose.
7. Dynamic Process:
Entrepreneurship is a dynamic function. Entrepreneurs thrive on changes in the environment which
bring useful opportunities for business. Flexibility is the hallmark of a successful entrepreneur.
8. Innovative Function:
Entrepreneurship is an innovative function as it involves doing things in a new & better way.
Innovation may take several forms eg., a new product, a new market of production, not yet applied in
a particular branch of manufacturing, etc.,
FUNCTION OF ENTREPRENEUR
 Production planning functions
 Marketing functions
 Public relations functions
 Controlling functions
 Decision making functions
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  Motivation functions
 Innovative functions
 Leadership functions
 Financial functions
 Technological functions
 Project functions
 Profit functions
1. Production planning functions:
Production denotes the activity of creating goods and services. In practical life production means industrial
activities involving manufacturing, mining, processing, packaging etc., Production planning involves the
organization of an overall manufacturing system to produce a product
2. Marketing Functions:
Marketing is the performance of business activities that direct the flow of goods and services from the producer
to the consumer. The marketing functions of an entrepreneur necessary to determine consumer wants, needs,
taste and fashions to supply goods and services.
3. Public Relations Functions:
Public relations of an entrepreneur are in the form of dealing with public bureaucracy, customer and supplier
relations and human resources management.
4. Controlling Functions:
Controlling is determining what is being accomplished, that is evaluating the performance and if necessary,
applying corrected measures. So, that the performance takes place according to plan.
5. Decision making Functions:
Decision making is both managerial function and an organizational process. It is process of choosing between
alternative to achieve a goal. The entrepreneur considers three major stages of decision making activities.
Intelligence, Design & choice activity.
6. Motivate Functions:
The entrepreneur is capable of inspiring confidence in people, and has the ability to motivate them to work
with him fulfilling the economical goals set by him.
7. Innovative Functions:
An entrepreneur is an innovator who introduces something new in an economy. Innovation involves problem
solving and an entrepreneur is a problem solver. An entrepreneur does things in a new and better way.
8. Leadership Functions:
The entrepreneur is also a leader. He influences others for the achievement of a goal in a given situation.
Entrepreneur has two important leadership functions, Function to incorporate interpersonal competence &
Function to incorporate administrative competence.
9. Financial Functions:
Financial decision of an entrepreneur is a two dimensional aspect. One dimensional of the financing decision
whether there is an optimum capital structures and in what proportion should funds be raised to maximum the
returns? The second aspect of the financing decision is the determination of the appropriate capital structure.
10. Technological Functions:
The entrepreneur’s technological functions are in the form of Industrial Engineering & Upgrading Production
Processes and product quality.
11. Project Functions:

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A project is a one time, time bound and objective oriented major effort involving the coordination of various
skills and resources. A potential entrepreneur can gather a number of project opportunities from the wide
variety of sources.
12. Profit Function:
Knight identifies the entrepreneur as a recipient of pure profit. Pure profit, in the words of Knight, with regard
to the entrepreneur, is bearing the cost of uncertainly. The entrepreneur must identify the profit functions.
Factors influencing entrepreneurship
I. Economic factors:
1.Lack of adequate basic facilities:
Certain basic facilities lake modern communication, transport, water, power latest technology etc are
very essential for undertaking innovative activities. Unfortunately these facilities are not adequate in the less
developed countries. Hence, entrepreneurs are discouraged to undertake business ventures.
2. Non-availability of capital:
It is one of the most important prerequisites to establish an enterprise. Capital is therefore, regarded as
lubricant to the process of production. With an increase in capital investment, capital-output ratio also tends
to increase. This results in increase in profit which ultimately goes to capital formation. This suggests that as
capital supply increases, entrepreneurship also increases.
3. Non-availability of raw materials and finished goods:
Supply of raw materials is not regular throughout the year. Hence they have to be stocked in plenty
during the periods of supply, which also requires huge amount of capital.
4. Greater risk involved in business:
Risk is greater in any business venture. Greater degree of risk involved in business may disappoint the
entrepreneur.
5. Non-availability of skilled labor:
The quality rather quantity of labor is another factor which influences the emergence of
entrepreneurship. It is noticed that cheap labor is often less mobile. Adam Smith also considered division of
labor as an important element in economic development. According to him, division of labor which itself
depends upon the size of the market leads to improvement in the productive capacities of labor due to an
increase in the dexterity of labor. In developing countries labor is not trained and hence lacks industrial skills.
The traditional skills are insufficient for modern industrial jobs.
II. Social factors:
1. Customs and traditions:
If customs and traditions play a dominant role in production decision-making rather than the critical
assessment of facts, then entrepreneurship will not be encouraged.
2. Rationality of the society: A society is said to be rational when decisions regarding resource utilization are
based on empirical facts and standards. But most of the developing countries are irrational in nature which
affects the entrepreneurial growth.
3. Social system:
The social system prevailing in the country also affects entrepreneurship. For example, in a society
where the joint family system is vogue, entrepreneurship cannot be developed.
4. Social set-up:
The social set-up affects entrepreneurship. For example, in some societies, e3ducation, research and
training are given very little importance which affects entrepreneurship.

III. Cultural factors:

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 The cultural factors prevailing in a country decide the level of entrepreneurship activities in that
country. If the culture does not attach great value to business talents, then people may not prefer any business
venture.
IV. Personality factors:
1. Suspect personality:
In developing countries, the entrepreneur is looked upon with suspicion. People tend to see in
entrepreneur a suspect personality. They see the entrepreneur only as profit maker and an exploiter. Thus, the
public opinion has become against to entrepreneurship.
2. Emergence of planning:
In most of the countries planning imposes controls and this goes against the very basic personality of
entrepreneur.
V. Psychological factors:
According to McClelland “need achievement” motive induces entrepreneurship. Besides need
achievement entrepreneurs seek power, prestige, security and service to the society?
ROLE OF ENTREPRENEURS IN ECONOMIC DEVELOPMENT
 Co-ordinating role
 Agent role
 Role of innovation
 Risk assumption role
 Imitating role
 Capital formation role
 Balancing role
 Status transformation role
 Employment generation role
 Export promotional role
1. Co-ordinate role
The essential function of an entrepreneur is to co-ordinate the various factors of production. Co-ordination
involves selection of the right type of factors, employment of each factor in the right quantity use of the best
technology, division of labour etc.
2. Agent role
Entrepreneurs are aptly called “agents of change”. Entrepreneur act as agent of economic development by
opportunities and putting them in to action. Entrepreneurs, seizing opportunities setup business undertaking
and industries and thereby make economic transformation.
3. Role of innovation
Innovation is a key to entrepreneurship. Innovation implies the commercial application of an invention as an
innovator, the entrepreneurs assumes the role of a pioneer and entrepreneurs assume the role of a pioneer and
an industrial leader. Entrepreneurs have contributed many innovations in developing new products and in the
existing products and services.
4. Risk assumption role
The most important function of an entrepreneur is the assumption of risk. Every productive venture involves
risk and production cannot take place if people do not come forward to bear risk.
5. Imitating role
Entrepreneurs in developing countries take the role of imitators who generally copy the innovations introduced
by the innovative entrepreneurs of the developed countries. They copy the organization, technology and the
product of innovation from other developed region.
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 6. Capital formation role
Entrepreneur promotes capital formation by mobilizing the idle savings of the public. Again the profits they
earn lead to saving of wealth which ultimately goes to capital formation.
7. Balancing role
Developing countries like India aims at decentralized industrial structure to remove the regional imbalance in
the levels of economic development. Entrepreneurs play a dominant role to achieve balanced regional
development by starting small scale industries.
8. Status transformation role
Entrepreneur create wealth, generate employment and income and thereby, they increase the standard of living
of the people. People are able to have a better standard of living by getting improved products and comforts
supplied by entrepreneurs.
9. Employment generation role
Entrepreneurs with high achievement and motivation come forward to establish business and industrial
ventures which provide immediate large scale employment. Thus entrepreneurs help to reduce the
unemployment problems in the country.
10. Export promotional role
Entrepreneurs also promote a country’s export trade which is an important ingredient to economic
development.
DIFFERENCE BETWEEN ENTREPRENEURS AND MANAGERS
POINTS ENTREPRENEURS MANAGERS
Motives The main motive of an entrepreneur is But the main motive of a manager is
to start a venture by setting up an to render his services in an enterprise
enterprise. He understand the venture already set up by someone else.
for his personal gratification
Status An entrepreneur is the owner of the The manager is the servant of the
enterprise enterprise owned by the entrepreneur.
Risk bearing An entrepreneur being the owner of The manager as a servant does not
the enterprise assumes all risks and bear any risk involved in the
uncertainty involved in running the enterprises
enterprise
Rewards The rewards of an entrepreneurs gets A manager gets salary as reward for
for bearing risk involved in the the services rendered by him in the
enterprise is profit which is highly enterprise. Salary of a manager is
uncertain certain and fixed
Innovation Entrepreneurs himself think over what But what a manager does is simply to
and how to produce goods to meet the execute the plans prepared by the
changing demand of the customers. entrepreneurs does a manager simply
Hence he acts as innovator also called translates the entrepreneurs ideas into
as “change agent” practice

QualificationAn entrepreneurs needs to possess On the other hand a manager needs to

qualities and qualification like, high possess distinct qualification in terms
achievement motive, risk bearing of sound knowledge in management
ability etc both the theory and practice.
MEANING OF INTRAPRENEUR
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 A new breed of entrepreneur is coming to the force in large industrial organization, they are called
Intrapreneur
Difference between entrepreneurs and intrapreneur
Points Entrepreneurs Intrapreneur
Dependency An entrepreneurs is independent in But an entrepreneurs is dependent on
his operations the entrepreneurs
Raising of funds An entrepreneurs himself raises Funds are not raised by the
funds required for the enterprise entrepreneurs
Risk Entrepreneurs bear the risk involved An Intrapreneur does not fully bear
in the business the risk involved in the enterprise.
Operation An entrepreneur operates from An Intrapreneur operated from within
outside the organization itself
ROLE OF ENTREPRENEURS
Entrepreneurs play their role in different capacities such as innovators, generators of employment
opportunities, and developers of economy. A brief discussion on these roles of entrepreneurs is made in the
forthcoming pages.
1. Role of Entrepreneur as Innovators in Economic Development
ROLE OF ENTREPRENEURS

As As Developers
As Generators of
Innovators Of Economy
Employment

Opportunities
1. Introduction of New 1. Capital Formation
Combinations in the 2. Generation of Employment
Production means 3. Promotion of Balanced
Regional Development
2.Technological 4. Reduction of Concentration
Progress of Economic Power
3. Leading the 5. Effective use of Resources
Organization 6. Inducing of Backward and
4. Implementation of forward Linkages
Skills 7. Promoting Export Trade

1. Introduces New Combinations in the Means of Production

As an innovator, entrepreneur brings out new products, new techniques of production, opens up a new
market, finds out new sources of raw materials, a novel use for existing products, a new type of
organization etc. All these result in growth and development of a country’s economy through increased
supply of products, savings in production cost etc.

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2. Enables Progress in Technology
Entrepreneurs make use of potential technical knowledge, which enables continuous technological
progress. It removes diminishing returns because technological progress leads to innovation, and
consequently results in steady increase in total output and per capita output.
3. Aims of Leadership
As Peter. F. Drunker says, “ a successful innovation aims at leadership” because leadership is a most
logical attribute of entrepreneur to bring about economic development.
4. Implements Skills
Entrepreneur makes use of his conceptual skills to bring about improvement in the quality of the product.
It is a continuous function of an entrepreneur. There is no end to it.
Role of Entrepreneur in Generating Employment Opportunities
Entrepreneurs play an important role in generating employment opportunity, which is vital to the
overall long-term economic health of nations. They initiate, stimulate, promote and maintain economic
activities as to production and distribution of goods. Hence they are considered as an integral part of
socio-economic transformation. Entrepreneurs perform a significant role in establishing tiny, micro,
and small scale industrial enterprises.
Role of Entrepreneur in Increasing Economic Growth
The important role that entrepreneurs play in the economic development of a country can be described
as shown here below:
1. Capital Formation
Capital formation is the most crucial element for economic growth. It is always necessary to increase
the rate of capital formation so that the economy accumulates a large stock of machines, tools,
equipments, which can be geared into production by the entrepreneur. Entrepreneurship promotes
capital formation by mobilizing the idle saving of the public.
2. Generates Employment
Entrepreneurs establish small scale industrial units and thereby generate employment opportunities. It
helps in the reduction of unemployment problem, which is the root of all socio-economic problems.
Promotes Balanced Regional Development
Entrepreneur plays a crucial role in bringing about social stability and balanced regional development.
Entrepreneur, as a catalyst of change, tries to bring about balanced regional development in the
following ways:
1. Establishing industries in rural and backward areas.
2. Establishing agro-based industries so as to co-ordinate the dispersal process and develop
agriculture.
3. Utilizing indigenous technology for creating of enterprise in backward areas.
4. Developing handicraft and cottage industries sector to bring about balanced regional development.
5. Establishing industries in rural and backward regions and availing concessional finance,
investment subsidy, transport subsidy, etc. provided by the government.
3. Reduces Concentration of Economic Power
The responsibility of social stability lies on his shoulder. He brings about it through the following
ways:
1. Minimizing poverty.
2. Diffusing prosperity and checking expansion of monopolies.
3. Equitable distribution of income.
4. Creating employment opportunities.
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 4. Effective Use of Resources
Entrepreneurs are needed in a society so that natural resources and human resources can be exploited
most effectively for the general welfare of mankind.
5. Induces Backward and Forward Linkages
Entrepreneurs induce change in the economy by way of forward and backward linkages. Establishment
of a large scale unit generates several ancillary industries as well as several other industries, which grow
by utilizing the raw materials and by-products produced by the mother plant. In this way, entrepreneurs
supplement the economic growth.
6. Promotes Countrys Export Trade
Last but no means the least it also promotes countrys export trade, which is an important ingredient to
economic development.
The role of entrepreneur is of fundamental importance as far as export promotion and import
substitution are concerned. The role of entrepreneur in promotion of exports and substitution of imports
for the development of the country is discussed below:
Export Promotion
It promotes exports and thereby it ensures the following:
1. Minimum dependence on imports from abroad.
2. Exploring of new markets
3. Foreign exchange earnings.
4. Minimizing the burden of debt servicing.
Women Entrepreneurs:
Women entrepreneurship refers to the process of creating, managing, and developing a business enterprise
by a woman or group of women. It involves the identification of opportunities, developing and executing
business strategies, managing financial resources, and taking calculated risks to achieve business objectives.

According to the general concept, women entrepreneur may be defined as a women or a group of women
who initiate, organize and operate a business enterprise.

Challenges for Women entrepreneurs:

1. Problem of Finance

The access of women to external sources of funds is limited as they do not generally own properties in their
own name. Financial institutions too do not consider women in general creditworthy as they are skeptical of
their entrepreneurial capabilities of women. They impose stringent condition which discourages women to
avail themselves of loan assistance from banks. In this context, they are pushed to rely on their own savings
and small loans from friends and relatives. Because of the limited funds, women entrepreneurs are not able to
effectively and efficiently run and expand their business.

2. Limited Mobility

Indian women cannot afford to shed their household responsibilities towards their family even after they
plunge into the venture started by them. This restricts the mobility of women entrepreneur significantly. The
domestic responsibilities do not allow women entrepreneurs to freely move out of business enterprises in
connection with business activities.

3. Lack of Education

16
Illiterate and semi -literate women entrepreneurs encounter a lot of challenges in their entrepreneurial journey
with respect to maintaining accounts, understanding money matters, day-to-day operations of the company,
marketing the products, applying technology etc., This reduces the efficiency of operating the business
successfully.

4. Lack of Network Support

The successful operation of any venture irrespective of the size depends upon the network of support extended
by various constituencies like family members, friends, relatives, acquaintances, neighbours, institutions and
so on. Women entrepreneurs need much needed psychological support and wiser counselling especially during
the time they actually encounter challenges. But it is reported that women entrepreneurs get very limited
support in times of crisis from most of these constituencies.

5. Stiff Competition

Women entrepreneurs have to face acute competition for their goods from organised sector and from their
male counterparts. Since they are not able to spend liberally due to financial constraints, they are not able to
compete effectively and efficiently in the market.

6. Sensitivity

Women are more prone to a variety of emotions. Being mother, women are vulnerable to many emotions.
They tend to have sympathy and empathy for others. This trait does not allow women entrepreneurs to take
objective decisions in many contexts during the course of running the entrepreneurial venture. Besides, the
weak emotions do not allow them to tolerate failures and disappointments arising during the normal course of
their entrepreneurial journey. This inherently tone downs the effectiveness of their functioning.

7. Lack of Information

Women entrepreneurs are reported not to be generally aware of subsidies and incentives available for them
due to their poor literacy levels or due to their pre occupation with household responsibilities. This lack of
knowledge or limited knowledge about subsidies prevents them from availing themselves of special
concessions, benefits and incentives awarded by Government and other agencies.

8. Dependent culture

In India, women however educated and talented are groomed to be dependent on their parents, life partners
and children during the various phases of their life cycle. They could not take decisions on their own in many
contexts due to this dependency factor. They have to take permission from their support groups to engage in
any purposeful and gainful activity. They are not treated as equals unlike women in western countries. This
cultural barrier does not allow them to start and manage their ventures according to their free will and pleasure.

0ppertunities for women entrepreneurs:

17
 UNIT-II

Problems of entrepreneurs- Women entrepreneurs- Concept of women entrepreneurs- Features of Women

entrepreneurs- Women entrepreneurship in India- Growth and problems of Women entrepreneurs-
Suggestions to promote Women entrepreneurship- entrepreneurial Development Programmes (EDP)
1.PROBLEMS OF ENTREPRENEUR.
1.Absence of entrepreneurial skill:
Most of the women entrepreneur in India takes training without entrepreneurial mind. According to a
study, involvement of women in small scale sector as owners stands at just 7%. They may take a unit out of
compulsion that may not be a successful one.
2.Finanial problems:
Even trained entrepreneurs are not in a position to obtain loans from banks and financial institutions.
Reason is that banks hesitate to lend money to women entrepreneurs on a ccount of inadequate collateral
securities.
3.Marketing problems:

18
 As the marketing sector is dominated by male entrepreneurs, women entrepreneurs continuously face
the problem in marketing their products. Particularly they are cheated by middlemen at various stages.
4. conflicts:
Women entrepreneurs have to play home role also (house wife). They find it difficult to spend adequate
time with their family members, as a result of which they are unable to satisfy the needs and requirements of
them. It creates conflict or difference opinion among the family members.
5.Loan facilities:
Though women entrepreneurs constitute about 50% of population, only 5% women have purchased
51% of shares of small scale industries. Because most of them are unable to get loan on account of inadequacy
of collateral or additional securities.
6.Shortage of raw materials:
They are unable to identify the right choice of raw materials. In 1970’s most of the women
entrepreneurs failed on account of shortage of raw materials.
7.Unhealthy competition:
Women entrepreneurs face unhealthy competition while producing and marketing their products.
8.Male dominated society:
The Indian law speaks about equality between male and female. But, in practice, women entrepreneurs
are always dominated and controlled by male entrepreneurs.
WOMEN ENTREPRENUR:
INTRODUCTION:
Women entrepreneur is the process in which women intiate a business gather all resoures undertakes
risks face challenges provides employment to others and manages the business independently.
MEANING:
Women entrepreneur refers to business or organization started by a women or group of women.There
has been a change in role of women due to growth in eduction urbanization industrialization and awareness
of democratic values.
DEFINITION:
According to be defintion given by government of india- Awomen entrepreneur is defined as an entriprise
owned and controlled by women having a minimum financial interest of 51% of the capital and giving at least
51% employment generated to women.
FEATURES OF WOMEN ENTREPRENEURS?
Following are main entrepreneurial traits of women entrepreneurs.
1. Imagination:
It refers to the imaginative approach or original ideas with competitive market. Well planned approach is
needed to examine the existing situation and to identify the entrepreneurial opportunities.
2. Attribute to work hard:
Enterprising women have further ability to work hard. The imaginative ideas have to come to a fair play. Hard
work is needed to build up an enterprise.
3. Persistence:
Women entrepreneurs must have an intention to fulfill their dreams. They have to make a dream translated in
to an entry.
4. Ability and desire to take Risk:
The desire refers to the willingness to take risk and ability to the proficiency in planning, making forecast,
estimates and calculations. Profits are the reward of risk.
Concept of Women Entrepreneurs
19
 1. Exploring Prospects: A business cannot be launched until and unless a business opportunity
survey is conducted. A woman entrepreneur too, like her male counterpart, has to explore a
business unit.
2 Undertaking Risks: Business is frill of uncertainties; the entrepreneur has to undertake risks arising
out of both the economic as well as the non-economic uncertainties.
3. Innovation or imitation of goods/services become an integral part of an entrepreneurial activity.
4. Administering, co-ordinating etc.: A woman entrepreneur, like a male entrepreneur, is the whole
and soul of her enterprise. She has to organize, co- ordinate and administrate the activities of her
organization.

Women Entrepreneurship in India:

Women are generally perceived as home makers with little to do with economy or commerce. But this picture
is changing. In Modern India, more and more women are taking up entrepreneurial activity especially in
medium and small scale enterprises.

Even as women are receiving education, they face the prospect of unemployment. In this background, self
employment is regarded as a cure to generate income .The Planning commission as well as the Indian
government recognizes the need for women to be part of the mainstream of economic development. Women
entrepreneurship is seen as an effective strategy to solve the problems of rural and urban poverty.

Traditionally, women in India have been generally found in low productive sectors such as agriculture and
household activities. Human Development Report 2004 ranks India 103 in Gender related Development Index
(GDI). As per 2001 census; women constitute nearly half of India’s population. Out of this total, 72% were
engaged in agriculture, 21.7% in other non agricultural pursuits with only 6.3% in household industries.

Women entrepreneurs in India are handicapped in the matter of organizing and running businesses on account
of their generally low levels of skills and for want of support system. The transition from homemaker to
sophisticated business woman is not that easy.

20
Role and contribution of women entrepreneurs in India
In India, women d
ominate the micro enterprise sector both in rural and urban areas. According to the central statistical
authority women account for close to 70 per cent of the mi- cro enterprises in India are run by women.
However, their par- ticipation in small, medium and large enterprises diminishes. Beyond the participating
in productive activities such as agri- culture, trade and industry, women have multiple roles in so- ciety.
i) Capital formation:

Entrepreneurs mobilise the idle savings of the public through the issue of industrial securities .
Investment of public savings in industry results in productive utilisation of national resourc- es. The rate of
capital formation increases, which is essential for rapid economic growth
ii) Improvement in Per capita Income:

women entrepreneurs in India have also been exploiting the opportunities the opportunities. They
convert the latent and idle resources like land, labour and capital in to national in- come and wealth in the
form of goods and services. They help increase the country’s net national product and per capita which are
important yardsticks for measuring the economic growth
iii) Generation of employment:

Women entrepreneur in India are playing an important role in generating employment both directly
and indirectly. By setting up small scale industries, they offer jobs to people
Social Contribution:
Women entrepreneurs are also contributing towards improv- ing the balanced regional development
and improvement of living standards in the country.
i)Balanced Regional Development:
Women entrepreneurs in India to remove regional disparities in economic development. They set up
industries in backward areas to avail of the resources concessions and subsidies of- fered by government.
Ii) Improvement in living standards:
With the setting up of small scale industries, reduction of scar- city of essential commodities and
introducing new products can be achieved. Women entrepreneurs in this country are producing variety of
goods on a large scale and offering them at low rates, as a result, achieving improvement in the stand- ard
of life.
iii) Innovation:
Innovation is the key to entrepreneurship. It implies the com- mercial application of an invention. As
an innovator, the entre- preneur assumes the role of a pioneer and an industrial leader. Entrepreneurs have
contributed many innovations in the de- veloping new products and in the existing products and servic- es.
All these have resulted in economic development by way of generating employment, more income etc.,
Other contributions:
Women entrepreneurs are the main actresses in charging the culture of the society. In our country,
women are workaholics and participate outside the house and develop the sense of independence and the
like.
Thus women entrepreneurs in our country are directly or indi- rectly playing an important role in
environmental protection, back ward and forward integration and are acting as charge agents, thus
contributing to the economic growth of the country.

PROBLEM OF WOMEN ENTREPRENEUR:

Women entrepreneurs encounter two sets of problems, general problems of entrepreneurs and problems
specific to women entrepreneurs. These are discussed as follows:
1. Family ties:

21
 Women in India are very emotionally attached to their families. They are supposed to attend to all the
domestic work, to look after the children and other members of the family. They are over burden with family
responsibilities like extra attention to husband, children and in laws which take away a lots of their time and
energy. In such situation, it will be very difficult to concentrate and run the enterprise successfully.
2. Male dominated society:
Even though our constitution speaks of equality between sexes, male chauvinism is still the order of the
day. Women are not treated equal to men. Their entry to business requires the approval of the head of the
family. Entrepreneurship has traditionally been seen as a male preserve. All these puts a break in the growth
of women entrepreneurs.
3. Lack of education:
Women in India are lagging far behind in the field of education. Most of the women (around sixty per
cent of total women) are illiterate. Those who are educated are provided either less or inadequate education
than their male counterpart partly due to early marriage, partly due to son’s higher education and partly due
to poverty. Due to lack of proper education, women entrepreneurs remain in dark about the development of
new technology, new methods of production, marketing and other governmental support which will encourage
them to flourish.
4.Social barriers: The traditions and customs prevailed in Indian societies towards women sometimes stand
as an obstacle before them to grow and prosper. Castes and religions dominate with one another and hinders
women entrepreneurs too. In rural areas, they face more social barriers. They are always seen with suspicious
eyes
5. Shortage of raw materials:
The scarcity of raw materials, sometimes nor, availability of proper and adequate raw materials sounds
the death-knell of the enterprises run by women entrepreneurs. Women entrepreneurs really face a tough task
in getting the required raw material and other necessary inputs for the enterprises when the prices are very
high.
6. Problem of finance:
Women entrepreneurs stiffer a lot in raising and meeting the financial needs of the business. Bankers,
creditors and financial institutes are not coming forward to provide financial assistance to women borrowers
on the ground of their less credit worthiness and more chances of business failure. They also face financial
problem due to blockage of funds in raw materials, work-in-progress finished goods and non-receipt of
payment from customers in time.
7. Tough competition:
Usually women entrepreneurs employ low technology in the process of production. In a market where
the competition is too high, they have to fight hard to survive in the market against the organised sector and
their male counterpart who have vast experience and capacity to adopt advanced technology in managing
enterprises
8. High cost of production:
Several factors including inefficient management contribute to the high cost of production which stands
as a stumbling block before women entrepreneurs. Women entrepreneurs face technology obsolescence due
to non-adoption or slow adoption to changing technology which is a major factor of high cost of production.

9.Low risk-bearing capacity:

Women in India are by nature weak, shy and mild. They cannot bear the amount risk which is essential
for running an enterprise. Lack of education, training and financial support from outsides also reduce their
ability to bear the risk involved in an enterprises.
10 Limited mobility:

22
 Women mobility in India is highly limited and has become a problem due to traditional values and
inability to drive vehicles. Moving alone and asking for a room to stay out in the night for business purposes
are still looked upon with suspicious eyes. Sometimes, younger women feel uncomfortable in dealing with
men who show extra interest in them than work related aspects.
11. Lack of entrepreneurial aptitude:
Lack of entrepreneurial aptitude is a matter of concern for women entrepreneurs. They have no
entrepreneurial bent of mind. Even after attending various training programmes on entrepreneur ship women
entrepreneurs fail to tide over the risks and troubles that may come up in an organisational working.
12. Limited managerial ability:
Management has become a specialised job which only efficient managers perform. Women entrepreneurs
are not efficient in managerial functions like planning, organising, controlling, coordinating, staffing,
directing, motivating etc. of an enterprise. Therefore, less and limited managerial ability of women has become
a problem for them to run the enterprise successfully.
13. Legal formalities:
Fulfilling the legal formalities required for running an enterprise becomes an upheaval task on the part of
an women entrepreneur because of the prevalence of corrupt practices in government offices and procedural
delays for various licenses, electricity, water and shed allotments. In such situations women entrepreneurs find
it hard to concentrate on the smooth working of the enterprise.
14. Exploitation by middle men:
Since women cannot run around for marketing, distribution and money collection, they have to depend
on middle men for the above activities. Middle men tend to exploit them in the guise of helping. They add
their own profit margin which result in less sales and lesser profit.
15. Lack of self confidence:
Women entrepreneurs because of their inherent nature, lack of self-confidence which is essentially a
motivating factor in running an enterprise successfully. They have to strive hard to strike a balance between
managing a family and managing an enterprise. Sometimes she has to sacrifice her entrepreneurial urge in
order to strike a balance between the two.
Step Taken By Government to Develop Women Entrepreneurs in India:

The growth and development of women entrepreneurs required to be accelerated because

entrepreneurial development is not possible without the participation of women.
Therefore, a congenial environment is needed to be created to enable women to participate actively in
the entrepreneurial activities. There is a need of Government, non-Government, promotional and regulatory
agencies to come forward and play the supportive role in promoting the women entrepreneur in India.
The Government of India has also formulated various training and development cum employment
generations programs for the women to start their ventures. These programmes are as follows:
1. Steps taken in Seventh Five-Year Plan:
In the seventh five-year plan, a special chapter on the “Integration of women in development” was introduced
by Government with following suggestion:

(i) Specific target group:

It was suggested to treat women as a specific target groups in all major development programs of the country.
(ii) Arranging training facilities:
It is also suggested in the chapter to devise and diversify vocational training facilities for women to suit their
changing needs and skills.
(iii) Developing new equipments:

23
Efforts should be made to increase their efficiency and productivity through appropriate technologies,
equipments and practices.
(iv) Marketing assistance:
It was suggested to provide the required assistance for marketing the products produced by women
entrepreneurs.
(v) Decision-making process:
It was also suggested to involve the women in decision-making process.
2. Steps taken by Government during Eight Five-Year Plan:
The Government of India devised special programs to increases employment and income-generating activities
for women in rural areas. The following plans are lunched during the Eight-Five Year Plan:
(i) Prime Minister Rojgar Yojana and EDPs were introduced to develop entrepreneurial qualities among rural
women.
(ii) ‘Women in agriculture’ scheme was introduced to train women farmers having small and marginal
holdings in agriculture and allied activities.
(iii) To generate more employment opportunities for women KVIC took special measures in remote areas.
(iv) Women co-operatives schemes were formed to help women in agro-based industries like dairy farming,
poultry, animal husbandry, horticulture etc. with full financial support from the Government.
(v) Several other schemes like integrated Rural Development Programs (IRDP), Training of Rural youth for
Self employment (TRYSEM) etc. were started to alleviated poverty.30-40% reservation is provided to women
under these schemes.
3. Steps taken by Government during Ninth Five-Year Plan:
Economic development and growth is not achieved fully without the development of women entrepreneurs.
The Government of India has introduced the following schemes for promoting women entrepreneurship
because the future of small scale industries depends upon the women-entrepreneurs:
(a) Trade Related Entrepreneurship Assistance and Development (TREAD) scheme was lunched by Ministry
of Small Industries to develop women entrepreneurs in rural, semi-urban and urban areas by developing
entrepreneurial qualities.
(b) Women Comkp0onent Plant, a special strategy adop0ted by Government to provide assistance to women
entrepreneurs.
(c) Swarna Jayanti Gram Swarozgar Yojana and Swaran Jayanti Sekhari Rozgar Yojana were introduced by
government to provide reservations for women and encouraging them to start their ventures.
(d) New schemes named Women Development Corporations were introduced by government to help women
entrepreneurs in arranging credit and marketing facilities.
(e) State Industrial and Development Bank of India (SIDBI) has introduced following schemes to assist the
women entrepreneurs. These schemes are:
(i) Mahila Udyam Nidhi
(ii) Micro Cordite Scheme for Women
(iii) Mahila Vikas Nidhi
(iv) Women Entrepreneurial Development Programmes
(v) Marketing Development Fund for Women
4. Consortium of Women entrepreneurs of India provides a platform to assist the women entrepreneurs to
develop new, creative and innovative techniques of production, finance and marketing.
There are different bodies such as NGOs, voluntary organizations, Self-help groups, institutions and individual
enterprises from rural and urban areas which collectively help the women entrepreneurs in their activities.
5. Training programmes:
The following training schemes specially for the self employment of women are introduced by government:
(i) Support for Training and Employment Programme of Women (STEP).
24
(ii) Development of Women and Children in Rural Areas (DWCRA).
(iii) Small Industry Service Institutes (SISIs)
(iv) State Financial Corporations
(v) National Small Industries Corporations
(vi) District Industrial Centres (DICs)
6. Mahila Vikas Nidhi:
SIDBI has developed this fund for the entrepreneurial development of women especially in rural areas. Under
Mahila Vikas Nidhi grants loan to women are given to start their venture in the field like spinning, weaving,
knitting, embroidery products, block printing, handlooms handicrafts, bamboo products etc.
7. Rashtriya Mahila Kosh:
In 1993, Rashtriya Mahila Kosh was set up to grant micro credit to pore women at reasonable rates of interest
with very low transaction costs and simple procedures.
Functions of woman entrepreneurs:

1. Planning

Planning is the basic managerial function of woman entrepreneur. It helps in determining the course of
action for achieving various entrepreneurial objectives like what to do when to do, how to do and who will
do a particular task.
2. Organizing
Every woman entrepreneur needs personnel to look at the different aspect of the enterprise.
She sets up the objectives, goals to be achieved by its personnel. The function of organizing is to arrange,
guide, coordinate, direct and control the activities of other factors of production i.e. men, materials, money,
and machines so as to accomplish the objectives of the enterprise.
3. Staffing:
Every woman entrepreneur has to perform the function of staffing which includes manpower planning,
recruitment, selection, and training, placement of manpower, development, promotion, transfer and appraisal
and determination of employee remuneration.

25
4. Directing
Directing is concerned with carrying out the desired plans. It initiates organized and planned action and
ensures effective performance by subordinates towards the accomplishment of group activities.
5. Leadership
A woman entrepreneur has to issue various orders, instructions and guide her subordinates in their work to
improve their performance and achieve enterprise objectives. It is the ability to build up confidence and zeal
among people and to create an urge in them to be a successful leader, she must possess the qualities of
foresight, drive, initiative, self-confidence, and personal integrity.
6. Motivation:
Woman entrepreneur has to provide some personal incentive to the subordinates to motivate, persuade and
inspire them for contributing their best towards the achievement of enterprise objectives.
7. Supervision:
After giving instructions, the woman entrepreneur has to see that the given instructions are carried by
subordinates at work to get the required and directed work done and to correct the subordinates whenever
they go wrong.
8. Coordination
Coordination is one of the most important functions. It creates a team sprite and helps in achieving goals
through collective efforts to provide unity of action in the pursuit of common objectives.
9. Controlling
Controlling is the process which enables to get its policies implemented and take corrective actions if the
performance is not according to the pre-determined standards.
Characteristics of a successful Indian woman entrepreneur
Courage
Courage is one of the most important characteristics of an woman entrepreneur. They many have the
passion to start their own business, it's the courageous ones who succeeds in their career.

Sound and strong mind with clear vision

A disturbed mind of the woman acts as a hindrance and she cannot achieve success in her venture. There
could be exceptional cases where such women could succeed in their chosen field, of course, with great
difficulty by crossing all the hurdles of life. A successful woman remained balanced and stays calm under all
circumstances and has a sound mind. She do not gets disturbed or panicky for small setbacks in her ventures.
A woman with a sound mind has the ability to take the right decision which helps her to succeed in her
business. She has the ability to visualize the requirements of the society and is clear about the requirements
of the society. A successful woman always thinks out of the box to provide what is required in the most
satisfying way. This helps in achieving further success. She has a clear vision which forms the basis for a
successful career life, of course personal life too.

Self-confident and bold

Self-confidence is one of the most important characteristics for a successful life. A confident woman has
tremendous faith in herself and her abilities. She can easily resist the changes in the consumer market and
succeed in her business. A woman who is bold has the inner strength to face and cross the hurdles of life, if
any, with an open mind.
Goal oriented
Most of the successful business women set targeted goals in spite of their family responsibilities. They work
hard for achieving their set goal/s. Women who are goal oriented, work harder and succeed in her business.
Hard working with an optimistic approach

26
A majority of successful women entrepreneurs have an optimistic approach. She is capable of transforming
her ideas into reality through her optimistic approach. They work hard with the hope of success and do not
give room to fear of failure in their mind. They remain strong and determined during adverse situations and
try to come out of it. Hard work is one of the greatest abilities of a successful woman entrepreneur. She
willingly works hard for achieving her goals. She takes up every work with a challenging mind and with an
orientation to achieve success. She doesn't take up work for the sake of doing it or just for earning few
bucks.
Capable of taking risks
She is capable of confidently taking risks and is efficient in making the risk, a rewarding one.
Assertiveness and decision making
A successful woman entrepreneur takes various decisions on various activities of her enterprise with
assertiveness. She takes firm decisions on the type of venture she undertakes and the way of doing /
handling it. She is clear, creative and assertive in her decision making.
Work-life balance
She can efficiently cope up with the stress levels in a better way by spending value time with her children,
spouse and family members. She very well knows how to balance her work-life which is one of the keys to
successful business. She makes time to spend with her children and supports them in every possible way
without any excuses of busy work life.
Build and develop their networks
One of the most prominent characteristics of a successful woman entrepreneur is she is keen on meeting new
people and thus tries to grow her business contacts. She readily socializes with people whom she thinks are
useful in developing her business. She will never miss the social events / gatherings and she is keen on
increasing her circle. She is a good relationship builder and develops mutually beneficial relationship in the
society.
Good organizer and manager
Good organizing skills and managerial skills are the important traits of a woman entrepreneur. She is
competent in developing / building a good organization. She efficiently co-ordinates with her employees and
effectively manages the finances / capital. To expand her business and achieve her targeted goals, she
occasionally organizes minor events like sales and exhibitions etc.
Leadership qualities

A successful woman entrepreneur exhibits high leadership qualities. She is capable of influencing her
employees and creates an enthusiastic work environment for them. She supports them in all possible ways
and encourages for a good team work to achieve targeted goals.
Profit-oriented and effective utilization of time

A successful business woman is mostly profit-oriented and focuses / works for her business growth.
Problems in Growth of Women Entrepreneurship:
In India, There are a number of problems regarding the growth of women entrepreneurship which are given
below:
1.The absence of Definite Agenda of Life:
Educated women do not like the limitation of their life within the narrow boundary of the house. They want
equal opportunity and respect from their partners as well as from society. However, in India, some women
have reached good positions in the business world. Yet, most of the women are either illiterate or semi-literate
in rural India. They haven’t got a proper idea of self-esteem and self-respect. The question that arises
immediately is how they can attain self-respect and have a definite agenda to reach a good position in society.
2. An absence of Balance between Family and Career Obligations:

27
 Women, in general, are concerned about family duties. They show no equal concern for the duties in a career.
Women in India dedicate many of their lives to the welfare and care of their family members. But they fail to
use their talent to create an extra income source for their families. It will also make them self-reliant. Some
women have no least idea of self-reliance and can never think of it. But women need the support of the family
members to succeed in business and extend their business and management.
3. Poor Degree of Financial Freedom:
There is very poor financial freedom for women in Indian families, especially in uneducated and rural families.
Women in these families can’t take any decision on their own to take up entrepreneurship without the family
members’ consideration. They have to consider also social ethics and traditions for women. A woman can’t
commence any business or any economic activity to become independent even if she is financially dependent.
Thus the dependency has become a vicious one for women in India.
4.No Direct Ownership of the Property:
There is no doubt that the right of property is given as a legal provision in India. But the right to property for
women is still a question mark. Very few women have on paper the right of property, but they are actually not
aware of this right. They become aware of it when there are problems in the family due to family disputes.
Most of the women do not enjoy their right to property and they have been treated just as more relatives to the
family. It is a cause which keeps them in a ‘pervasive cycle of poverty’.
5.The paradox of Entrepreneurial Skill and Finance:
Women from both the economically poor and rich families suffer from the paradox of “have and have no skills
of entrepreneurship. Women from economically rich families have the capital to invest, but they may lack
good entrepreneurial skills. On the other side, women from an economically poor family have good
entrepreneurial skills but they haven’t got any financial support from their family member or relatives. Thus
the problems of women entrepreneurship are in a state of paradox.
6.No Awareness about Capacities of individuals:
capacity should be created by increasing the level of education. It is very unfortunate that the educational
system in India is facing a failure in creating awareness of ability and capacity of women and their hidden
talent and power for handling economic activities. There is an increase in the level of education for women
and social awareness to the role that women play in society, but it applies only to women in urban India and
not in rural India. The environment in the urban area is favorable for identifying and creating awareness about
women capacity and capability for doing many things. On the contrary, the atmospheres in the rural areas are
unfavorable for identifying and developing the capacity and ability of women.
7.Low Ability to Bear Risk:
The women in India are taught naturally by several things to depend on the male members of her family from
their girlhood period. They are prevented from taking any risk even if they are ready to take any risk and have
the ability to bear it. But despite the restriction put on women, some women have proved that they have the
capacity to face and bear risks in entrepreneurial activities. They have identified their rights, capacities
potentials, as well as they, become aware of the potential situations. As a result, they have entered various
business and professions. Therefore, the government should try through conducting many awareness
programs for women to make them identify and develop their risk-bearing capacities.
8.Problems of Work with Male Workers:
It is true that many women have skills for doing business, but they hesitate to work with male workers and
sometimes male workers are not ready to work with women entrepreneurs. Most of the women entrepreneurs
are of the opinion that semi-educated or uneducated class of workers cannot visualize and accept a “female
boss” in their work field.
9. Negligence by Financial Institutions:
Banks and financial institutions play an important role of financiers to entrepreneurs in the developing
countries for small and medium-size firm operators do not borrow from the capital market. But, these banks
28
and financial institutions underestimate the women entrepreneurs, are reluctant to provide credit to them
because of their traditional mindset about women.
10. Lack of Self-confidence:
Women have a strong mental outlook and an optimistic attitude which create fear in them of committing
mistakes while working. Women’s potential for entrepreneurial development cannot be accepted by the family
members and the society, which always look down them. Women must face boldly such situation and develop
their 68 self-confidence to break such barriers, but women in India feel that they need a well-secured life for
developing their self-confidence. Thus they are not both mentally and economically self-reliant.
11.Lack of Professional Education:
The main causes of the low rate of women entrepreneurship in our country are poverty and illiteracy. Parents
are unwilling to send their daughters to study professional education. Sometimes, many women lack their
entrepreneurial bent of mind even though they take training through attending the entrepreneurial development
program.
12.Mobility Constraints:
They never like to leave their place for business activities and prefer to stay and do business in their residential
areas. Mobility is an important quality for an entrepreneur. As women entrepreneurs tend to do business in
their local area of living and are seen disproportionately in their areas of birth or living.
Suggestions for women entrepreneurship:
o Do not be afraid to fail. You have to move outside of your comfort zone. ...
o Get feedback. Feedback is critical to validate your business. ...
o Keep learning. The key to growth, innovation and success is knowledge. ...
o Become an expert. ...
o Ask for what you need. ...
o Minimize negative people. ...
o Network. ...
o Have BIG plans.
1. Do not be afraid to fail.
You have to move outside of your comfort zone. Resumes that include failures are great proof that you have
taken the necessary risks in your journey. Often, women are more affected by failure and let it affect their
confidence. Don't let it. Failure is an invesitable part of success from which we lear
2. Get feedback.
Feedback is critical to validate your business. Competitive research can also help you understand what
customers want. You will need to go beyond researching on your competitor's websites. Read reviews, find
articles about them, and interview their customers. Pay particular mind to negative reviews and ask people
specifically what they wish they were getting out of the product or service they're using from your competition.
3. Keep learning.
The key to growth, innovation and success is knowledge. Every successful entrepreneur I have met is an avid
learner. In fact, the average CEO reads up to 60 books a year. If you don't like reading, try audio books, online
classes, masterminds and/or continuing education classes at a local university.
4. Become an expert.
The marketplace has shifted, but people still value authenticity and expertise. You can showcase your
knowledge through speaking, public relations and/or even blogging. You want to be as visible as possible so
make a wish list of places you want to be seen that range from TV to YouTube and podcasts. Guest blogging is
another great way to gain exposure.
5. Ask for what you need.
As you navigate through your business, you will come across resources that you need ranging from capital to
knowledge. Figure out what you need at each stage and ask everyone. It is often the most unlikely people that
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will give you the insight you are looking for. Ask people you meet in person, ask in Facebook and LinkedIn
groups and ask your personal network.
6. Minimize negative people.
You will meet a lot of doubters and people who do not get or understand your vision. Try to avoid these
people or at least any work conversation with people that do not inspire you to move forward.
7. Network. Network. Network.
If you want to build a large and successful business, you cannot do it alone. You need to get over your fear of
rejection and network like it's your job. The amount of collaboration and connections that can be gained by a
large but close network is invaluable.
8. Have BIG plans.
Women often underestimate their own potential and fail to dream big enough. It is important to tap into the
inner reason behind your business and really think about the legacy you want to leave behind.
I always think about Ellen Johnson Sirleaf, President of Liberia, who said, "The size of your dreams must
always exceed your current capacity to achieve them. If your dreams do not scare you, they are not big
enough."
9. Support #DontDoItAlone.
Female entrepreneurs can shorten the path to success by learning from the success and failures of others. It is
important to have both mentorship and accountability to make sure you do not get stuck in your own head or
the overwhelming amount of information on the web.
At HaveBIGplans.com, we strive to empower women and millennials to becoming business owners and
guiding established entrepreneurs toward prosperity with coaches and mentors who have actually had real
world success as business owners.
10. Be confident.
Believe you can do it and you are most of the way there. Entrepreneurship does not follow any "hockey
stick-like" projection and looks more like a staircase at best. It is important to maintain confidence a

ENTREPRENEURIAL DEVELOPMENT PROGRAMME

INTRODUCTION :
Entrepreneur is the person with a vision, with the drive and with the ability to bear risk. He is the ‘spark
plug’ who transforms the economic scene. Hence, it is said that an economy is an effect for which
entrepreneurship is the 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 programmes (EDP) are deemed to offer the solution to this problem.
The process of entrepreneurial development incorporates equipping a prospective entrepreneur with
institutional support system and back up used for enterprise development and sharpening his entrepreneurial
competencies.

MEANING:
Entrepreneurship Development Programme (EDP) means “a Programme designed to help a person
in strengthening and fulfilling his entrepreneurial motive and in acquiring skills and capabilities necessary for
playing his entrepreneurial role effectively. Towards this end, it is necessary to promote his understanding of
motives, motivation pattern, their impact on behavior and entrepreneurial value.
Thus, EDP is designed to identify persons with entrepreneurial abilities and to train them to set up
new enterprise. In a simple way, it deals with careful identification and potential entrepreneurs need based
entrepreneurial training and pre and post project implementation.
OBJECTIVES OF ENTREPRENEURIAL DEVELOPMENT PROGRAMME
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1. To develop and strengthen their entrepreneurial quality.
2. To analyze environmental set up relation to SSI and other business.
3. To create awareness about business opportunities.
4. To select product.
5. To formulate project for the product.
6. To understand projects and procedure involved in setting up of a small enterprise.
7. To acquire the necessary managerial skill, knowledge, post training assistance.
8. To enable to take decision.
9. To identify and train potential entrepreneur.
10. To create awareness of various law procedure relating to entrepreneurship.
11. to argument the numbers of entrepreneurs for increasing the space of industrialization.
12. Possibility to create dispersal of ownership.
13. TO industrialize rural and back word areas.
14. To generate self employment for the educated unemployed youth.
NEED FOR ENTREPRENEURIAL DEVELOPMENT PROGRAMME:
1. Motivation:
Enhancing the motivation knowledge and skills of the potential entrepreneurs.
2. Change of behavior:
Arousing and reforming the entrepreneurial behavior in their day to day activities.
3. Providing assistance:
Assisting them in the development of their own enterprises.
4. Catalysts role:
Trained entrepreneurs thus become catalysts of industrial development and economic process.
5. Information for development:
To collect necessary information to play entrepreneurial role in successfully.
PHASES OF EDP
An EDP consists of three broad phases.
1. Pre-training Preparation:
It comprises policy issues related to the objectives of the programme; laying down criteria of success;
recruitment, selection and training of trainers; development of training material for different levels of applicant
population of entrepreneurs and publicity strategy.
2. Entrepreneurial Training:
It centers on the entrepreneurs themselves. Allied issues to be tackled-location, methodology, use of
training material, trainer-trainee relations and coordination among faculty form different development
institutions.
3. Post-Training Care:
This consists of making available necessary information, counseling and support to the entrepreneur in his
enterprise-building efforts.
It is notable that every EDP has to pass through these phases and each phase involves a considerable
amount of work some times within the organization, but most of the time in cooperation with other
development institutions. Any deficiency in any of these phases can affect the outcome of the programme.
COURSE CONTENTS AND CURRICULUM OF EDPS
Fundamentals of project feasibility study:
Under this input, the participants are provided guidelines on the effective analysis of feasibility or
viability of the particular project in view of marketing, organization, technical, financial and social aspects.
Knowledge is also given how to prepare the ‘Project’ or ‘Feasibility Report’ for certain products.
The course contents of an EDP should be formulated as per the objectives of the EDPS.
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It should consist of the following:
1. General Approach to Entrepreneurship:
The participants should be given exposure about the conceptual frame work of entrepreneurship role,
expectation, entrepreneurial environment etc.
Innovative behavior related issues should be focused to enlighten the entrepreneurs about their future
challenges and prospects. Besides, development agencies should try to design appropriate strategies enabling
the potential entrepreneur to tackle different risks inherent in an innovation activity.
 Technical Risk
 Economic Risk
 Social Risk
 Environmental Risks
2. Motivational Training:
Motivational Training inputs are meant for developing the motivation of potential entrepreneurs and
their enterprise building skills. Besides, motivational inputs also include psychological games, tests, goal
setting exercise, role play etc. The motivational inputs will be aimed at increasing the participants,
understanding of the entrepreneurial personality and entrepreneurial behaviors.
3. Developing Management Skills:
Prospective entrepreneurs should be given exposure is different types of management problems. It
would sharpen their management skills. The management problems take different forms and the management
patterns are peculiar to the situation.
4. Training for Project Management:
Project inputs are required to help the potential entrepreneurs to develop their project ideas into
bankable projects.
They should be given acquaintance with the industrial opportunities in the areas and also necessary
guidance on product selection.
Under project preparation, technical feasibility includes selection of technology, availability of raw
materials, selection of location and site. They should be given proper training about scheduling of various
activities. Provision for effective supervision and need for avoiding delay and consequent cost escalation.
5. Structural Arrangement:
Training inputs also aim at familiarizing the participants about the proposed structural arrangement for
the business or industrial unit.
They should be given adequate familiarization about government policy regarding development of
industries especially with regard to small scale industries, registration and licensing procedures, forms of
organization like propriety, Partnership, Private Company and Joint stock Company, Institutional set up etc.
6. Support System:
In most of the case, participants are generally first generation entrepreneurs and they do not know
about the government and institutional support system. Support system may also be used as motivational
inputs to encourage the participants about their future prospects.
7. Factory Visits / In-Plant Training:
Practical exposure is also necessary. Depending upon their products the potential entrepreneurs may
feel the need to gain more knowledge about the production process etc., by visits may have to be arranged.
TYPES OF ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES
Depending up on the objectives of the entrepreneurship development training programmes and the
nature of the target group or beneficiaries, following types of EDPs are organized all over India. They are as
follows:
 Entrepreneurship Awareness Training Programme.
 Entrepreneurship development training programme general
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  Product oriented entrepreneurship development training programme
 Target – group oriented entrepreneurship development training programme.
 Managerial skill development programme for existing entrepreneurs

UNIT- III
Business idea generation – Identification of business opportunities- feasibility-marketing-Financial-
Economic-Technical-Managerial- Project appraisal- Project report.
Idea Generation
Idea Generation is the foundation of the process of discovering new sustainable business opportunities
New ideas often arise from simple questions like ‘What is this?’, ‘What is it for?’, ‘What could it be for?’
Questioning the basic uses of utensils we use in everyday life and common customs and rules opens up space
for many new opportunities. Therefore, looking at things from a different angle is the first step to innovate
and invent new solutions. This activity aims to boost participant’s creativity and help them to develop creative
ideas that make a difference.
Idea Generation is a process of deliberately brainstorming. There are a number of tools and
considerations that can help generate powerful ideas. These tools have been shown to be particularly relevant
to the pursuit of sustainability-driven ideas. In addition, this section provides participant with important
considerations for the development of sustainable products/services and will bring their attention to the major
opportunity areas for sustainable businesses.
Sources of ideas:
In a sense, opportunity identification and selection are akin to, what is termed in marketing
terminology, “new product development,” Thus product or opportunity identification and selection process
stats with the generation of ideas, or say, ideas about some opportunities or products are generated in the first
instance. The ideas about opportunities or products that the entrepreneur an consider for selecting the most
promising one to be pursued by him/ her as an enterprise, can be generated or discovered from various sources-
both internal and external.
They may include:
(i) Knowledge of potential customer needs,
(ii) Watching emerging trends in demands for certain products.
(iii) Sources for producing substitute product,
(iv) Going through certain professional magazines catering to specific interests like electronics,
computers etc.,
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 (v) Success stories of known entrepreneurs or friends or relatives,
(vi) Making visits to trade fairs and exhibitions displaying new products and services,
(vii) Meeting with the governments agencies,
(viii) Ideas given by the knowledgeable persons.
(ix) Knowledge about the government policy, concessions and incentives, list of items reserved for
exclusive manufacture in small –scale sector,
(x) A new product introduced by the competitor, and
(xi) One’s market insights through observation.
In nutshell, a prospective entrepreneur can get ideas for establishing his/her enterprise from various
sources. These may include consumers, existing g products and services presently on offer, distribution
channels, the government officials, and research and development.
Identification of Business Opportunity: Idea Generation and Opportunity!
In general sense, the term opportunity implies a good chance or a favourable situation to do something
offered by circumstances. In the same given, business opportunity means a good or favorable change available
to run a specific business in a given environment at a given point of time.
The term ‘opportunity’ also covers a product or project. Hence, the identification of an opportunity or
a product or project is identical and, therefore, all these three terms are used as synonyms. The Government
of India’s “Look East Policy” through North East is an example of ‘opportunity’ to do business in items like
tea, handicrafts, herbals, turmeric, etc.
Opportunity identification and selection are like comer stones of business enterprise, Better the former,
better is the latter, in a sense, identification and selection of a suitable business opportunity serves as the trite
saying ‘well begun is half done; but it is like a better said than done. Why/ because if we ask any intending
entrepreneur what project or product he/she will select and start as an enterprise, the obvious answer the/she
would gibe is one that having a good market and is profitable, but the question is how without knowing the
product could one know it market?
Whose market will one find out without actually having the product? Whose profitability will one find
out without actually selling the product> there are other problems, besides. While trying to identify the
suitable product or project, the intending entrepreneur passes through certain processes.
The processes at times create a situation, or say, dilemma resembling ‘Hen or Egg’ controversy. That
is , at one point, the intending entrepreneur may find one product or project as an opportunity and may enchant
and like it, but at the other moment may dislike and turn down it and may think for and find other product or
project as an opportunity for him/her. This process of dilemma goes on for some intending entrepreneurs
rendering them into the problem of what product or project to start. Then, how to overcome this problem of
product identification and selection?
One way to overcome this dilemmatic situation is to know how he existing entrepreneurs identified
the opportunity and set up their enterprises. An investigation into the historical experiences of Indian small
enterprises in this regard reveals some interesting factors.
To mention the important ones, the entrepreneurs selected their products or projects based on:
(i) Their own or partners’ past experience in that business line:
(ii) The government’s promotional schemes and facilities offered to run some specific business
enterprises:
(iii) The high profitability of products:
(iv) Which indicate increasing demand for them in the market?
(v) The availability of inputs like raw materials, labour, etc. at cheaper rates:
(vi) The expansion or diversification plans of their own or any other ongoing business known to them
(vii) The products reserved for small –scale units or certain locations.

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 Now , having gained some idea on how the existing entrepreneurs selected Products /projects, the
intending entrepreneur can find a way out of the tangle of which opportunity/ product / project to select to
finally pursue as one’s business enterprise.
One of the ways employed by most of the intending entrepreneurs to select a suitable product/ project
is to firstly generate ideas about a few products/ projects, accordingly, what follows next is a discussion idea
generation about products.
A brief mention about each of these follows in turn:
Consumers:
No business enterprise can be thought of without consumers. Consumers demand for products and
services to satisfy their wants. Consumers’ wants in terms of preferences, tastes and likening keep on
changing. Hence, an entrepreneur needs to know what the consumers actually want so that he/she can offer
the product or service accordingly. Consumers; wants can be known through their feedback about the products
and services they have been using and would want to use in future.
Existing products and services:
One way to have an enterprise idea may be to monitor the existing products and services already
available in the market and make a competitive analysis of them to identify their shortcomings and then, based
on it, decide what and how a better product and service can be offered to the consumers, many enterprises are
established mainly to offer better products and services over the existing ones.
Distribution channels:
Distribution channels called, market intermediaries, also serves as a very effective source for new ideas
for entrepreneurs. The reason is that they ultimately deal with the ultimate consumers and, hence, better know
the consumers’ wants.
As such, the channel members such as wholesalers and retailers can provide ideas for new product
development and modification in the existing product. For example, an entrepreneur came to know from a
salesman in a departmental store that the reason his hosiery was not selling was its dark shade while most of
the young customers want hosiery with light shade. The entrepreneur paid heed to this feedback and
accordingly changed the shade of his hosiery to light shade. Entrepreneur found his hosiery enjoying
increasing demand just within a month.
Government:
At times, the government can also be a source of new product ideas in various ways. For example,
government from time to time issues regulations on product production and consumption. Many a times, these
regulations became excellent sources for new ideas for enterprise formation.

For example, government’s regulations on ban on polythene bags have given new idea to manufacture
jute bags for marketing convenience of the sellers and buyers. A prospective entrepreneur can also get
enterprise idea from the publications of patents available for license or sale.
Besides, there are some governmental agencies that assist entrepreneurs in obtaining specific product
information, such information can also become basis for enterprise formation.
Research and development:
The last but no means the least source of new ideas is research and development (R&D) activity. R&D
can be carried out in –house or outside the organization. R&D activity suggests what and how a new or
modified product can be produced to meet the customers’ requirements.
Available evidences indicate that many new product development, or say, new enterprise
establishments have been the outcome of R&D activity. For example, one research scientist in a fortune 500
company developed a new plastic resin that became the basis of a new product, a plastic molded modular cup
pallet. Most of the product diversifications have stemmed from the organization’s R&D activity.
Methods of generating ideas:
35
 As see n above, there could be variety of sources available to generate ideas for enterprise formation.
But, even after generating ideas to convert these into enterprise is still a problem for the prospective
entrepreneur. The reason is not difficult to seek.
This involves a process including first generating the ideas and then scrutinizing of the ideas generated
to come up with an idea to serve as the basis for a new enterprise formation. The entrepreneur can use several
methods to generate new ideas
However, the most commonly used methods of generating ideas are:
 Focus groups
 Brainstorming
 Problems inventory analysis.
These are discussed as follows:
Focus groups:
A group called’ focus group’ consisting of 6-12 members belonging to various socio-economic
backgrounds are formed to focus on some particular matter like new ;product idea. The focus group is
facilitated by a moderator to have an open in-depth discussion. The mode of the discussion of the group can
be in either a directive or a non-directive manner.
The comment from other members is supplied with an objective to stimulate group discussion and
conceptualize and develop new product idea to meet the market requirement. While focusing on particular
matter, the focus group not only generates new ideas, but screens the ideas also to come up with the most
excellent idea to be pursued as a venture.
Brainstorming:
Brainstorming technique was originally adopted by Alex Osborn in 1983 in an American Company
for encouraging creative thinking in groups of six to eight people. According to Osborn. Brainstorming means
using the brain to storm the issue/problem. Brainstorming ultimately boils down to generate a number of ideas
to be considered for the dealing with the issue/problem.
However, brainstorming exercise to be effective needs to follow a modus operand involving four basic
guidelines:
1. Generate as many ideas as possible.
2. Be creative, freewheeling, and imaginative.
3. Build upon piggyback, extend, or combine earlier ideas.
4. Withhold criticism of others’ ideas.
There are two principles that underlie brainstorming. One is differed judgment, by which all ideas are
encouraged without criticism and evaluation. The second principle is that quality breeds quality. The
brainstorming session to be effective needs to work like a fun, free from any type of compulsions and
pressures.
Each member needs to have willingness and capacity to listen to others’ thoughts, to use these thought as
a stimulus to spark new ideas of their own, and then feel free to express them. As such, efforts are mode to
keep the brainstorming session free from any sort of dominance and obstruction derailing and inhibiting
discussion to proceed in a desired manner to serve its purpose. A normal brainstorming session lasts for from
ten minutes to one hour and does not require much preparation.
Here as an example of brainstorming used to generate ideas to make the organizations presence noticed.
A national level institute of the government of India took it faculty to a resort in Himachal Pradesh for a
brainstorming session for two days to generate ideas on what it can do to be known, noticed and recognized
at the national and international arena
The seven major ideas generated were to:
(i) Open courses like PGDM for the general public.
(ii) Introduce new courses to meet the emerging market requirements,
36
 (iii) Introduce research activity in terms of research projects and fellow program me.
(iv) Sign Memorandum of Understanding(MOUs) with reputed national and international academic
institutions,
(v) Start courses in collaboration with the Government and Industry,
(vi) Nominate especially young faculty members to join the Faculty Development Programmer
conducted by the Indian Institute of Management, Ahmadabad (IIMA) , and
(vii) Publish the Institute’s research journal.
Problem Inventory Analysis:
Problem Inventory analysis though seems similar to focus group method, yet it is somewhat different
from the latter in the sense that it not only generates the ideas, but also identifies the Problems the product
faces, the procedure involves two steps: one, providing consumers a list of specific problems in a general
product category.
Two identifying and discussing the products in the category that, suffer from the specific problems.
This method is found relatively more effective for the reason that it is easier to relate known products to a set
of suggested problems and then arrive at a anew product idea.
However, experiences available suggest that problem inventory analysis method should better be used
for generating and identifying new ideas for screening and evaluation. The results a=derived from product
inventory analysis need to be carefully screened and evaluated as they may not actually reflect a genuine
business opportunity.
For example, General Foods’ introduction of a compact cereal box in response to the problem that the
available boxes did not fit well on the shelf was not successful, as the problem of package size had little effect
on actual purchasing behavior. Therefore, to ensure the better if not the best results. Problem inventory
analysis should be used primarily to generate product ideas for evaluation.
All of above sources and methods may give a few ideas about the possible projects to be examined as
the final project or product.
Opportunity/ product Identification:
After going through above process, one might have been able to generate some ideas that can be
considered to be pursued as ones business enterprise.
Imagine that someone have generated the give ideas as opportunities as a result of above analysis:
(1) Nut and bolt manufacturing (industry)
(2) Lakshani shoes (industry)
(3) Photocopying unit (service-based industry)
(4) Electro-type writer servicing (service-based industry)
(5) Polythene bags for textile industry(ancillary industry)
An entrepreneur cannot start all above five tyoes f enterprises due to small in size in terms of capital,
capability, and other resources. Hence, he/she needs to finally select one idea which he/she thinks the most
suitable to be pursued as an enterprise. How does the entrepreneur select the most suitable project out of
alternatives available? This is done through a selection process discussed subsequently.
Having gone through idea generation, also expressed as ‘opportunity scanning’ and opportunity
identification, we can distinguish between an idea and opportunity. We are giving below the two situations
that will help you understand and draw the line of difference between an ‘idea’ and and ‘opportunity’
Having gone through idea generation, also expressed as ‘opportunity’
PROJECT IDENTIFICATIONS
Meaning of Project
A project is an idea or plan that is intended to be carried out. The dictionary meaning of a project is
that it is scheme, design, a proposal of something intended or devised to be achieved. The success or failure

37
of an enterprise depends on the project. In the businessman’s language, it is a specific activity on which
money in sent in the expectation of some returns.
Definition: “A project typically has a distinct mission that it is designed to achieve and a clear
termination point, the achievement of the mission.
PROJECT CLASSIFICATION
Projects have been classified in various ways by different experts. Projects have been classified
differently by different authorities. Thus, the different authorities like the planning commission, All
India Financial Institutions etc, have classified projects differently according to their need. It can be studied
under the following heads:
1. Quantifiable and non-quantifiable projects: Quantifiable projects are those, the benefits of which can
assessed in quantifiable terms. For instance, projects dealing with industrial development, power
generation etc. come under this category. On the other hand, Non-quantifiable projects are those projects
where such a quantifiable assessment of benefit is not possible projects concerning with health ,
education, defense etc. are examples for non-quantifiable type.
2. Sectoral projects:
According to this classification, a project may fall in any one of the following sectors:
 Agriculture and Allied sector.
 Irrigation and power sector.
 Industry and mining sector.
 Transport and communication sector.
 Social services sector.
 Miscellaneous sector.
3. Techno-Economic project:
Sometimes, project can be classified on the basis of techno-economic factors like the size of
investment, factor intensity etc.
Projects can be again classified Into:
 Factor intensity oriented classification.
 Causation oriented classification.
 Magnitude oriented classification.
Under this type, a project is classified on the basis of the factor intensity. Viz,, whether capital
intensive or labour intensive. In the case of a project where large scale investment is made on plant and
machinery, it is called capital-intensive project.
C.O.C: Cause based oriented projects like-demand, raw material or resource and export based projects.
Classification on the basis of magnitude of investment and operations such as large, medium, small and tiny
scale.
4. Financial Institutions projects: The various financial institutions established both at the central and state
levels have classified projects into projects and service-oriented projects and service-oriented projects.
PROJECT APPRAISAL:
Meaning: Project appraisal refers to the critical assessment of a project. It is a critical examination and
analytical evaluation of the project for different angles. Project appraisal is generally done by financial
institutions.
Definition: “Project appraisal is a process whereby a leading financial institution makes an independent and
objective assessment of the various aspects of an investment preposition for arriving at a financial
decision”.
Methods of project appraisal: Different methods are used by lending institutions to evaluate a project proposal.
Appraisal of a proposed project includes the following analysis.
Economic analysis:
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 Under economic analysis, the aspects highlighted include requirement for raw material, anticipated
sales, anticipates expenses etc. It wills to be calculated how much sales would be necessary to earn the targeted
profit. Undoubtedly, demand for the product will be estimated for anticipating sales volume. The govt. offers
specific incentives and concessions for setting up industries in notified backward areas.
Financial analysis:
Finance is one of the most important prerequisites to establish an enterprise.
Market analysis:
Before the production actually starts, the entrepreneur needs to anticipate the possible market for the
product. The commonly used methods to estimate the demand for a product are as follows.
 Opinion polling method
 Life cycle segmentation analysis (introduction, growth, maturity, saturation and decline)
Technical feasibility:
This aspect requires a careful examination and a systematic assessment of the various inputs of the
project like land, machineries, trained labour, fuel, transportation, power etc.,
On the whole, technical analysis deals with the following aspects
 Availability of land and site.
 Location of the project.
 Availability of inputs like water, power, communication facilities etc.,
 Suitability of the technology
 Types of technology to be adopted
 Availability of servicing facilities like machine shops, repair shops etc.,
Managerial competence:
The success or failure of any enterprise depends upon the direction and efficiency of the
management. In the absence of managerial competence, the projects which are otherwise feasible may
fail. On the other hand, a poor project may out to be a successful one with efficient managerial ability.
The managerial competence can be judged with reference to the following:
 Educational background of promoters.
 Previous experience.
 Honesty of promoters.
PROJECT REPORT
Introduction and meaning of project report:
Project report or business plan is a written statement of what an entrepreneur proposes to take up. A
good business plan/ project report is essential because it pulls together all the elements of the entrepreneur’s
vision into a single document.
Definition: “A project as a scheme, design, a proposal of something intended or devised.”
CONTENTS OF THE PROJECT REPORT: A project report may be prepared in different ways by
different entrepreneurs appraise it must contain all information necessary to appraise it and take a financial
decision by lending institutions.
 General information: Information on product profile and product details.
 Promoter: Her educational qualification, work experience, project related experience.
 Location: Exact location of the project, Lease or freehold advantage.
 Land and building: Land area, construction area, Types of construction, Cost of construction,
detailed plan and estimate along with plant layout.
 Plant and machinery: Details of machinery required, capacity, suppliers, cost, various alternatives
available, cost of miscellaneous assets.
 Production process: Description of production process, process chart, and technology knows
technology alternatives available, production process.
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  Utilities: Water, power, compressed air requirements, cost estimates, sources of utilities.
 Transport and communication: Mode, possibility of getting, costs.
 Raw material: List of raw material required by quality and quantity, sources of procurement, cost of
raw material, tie-up arrangements, if any, for procurement of raw material, alternative raw
material, if any.
 Man power: Man power requirement by skilled and semi-skilled sources of manpower supply,
cost of procurement, requirement for training and its cost.
 Products: Product mix, estimated sales, distribution channels, competitions and their capacities,
product standard, input-output ratio etc.
 Market: End-users of product, distribution of market as local, national, international, trade practices,
sale promotion devices etc,
 Requirement of working capital: Working capital required, sources of working capital, need for
collateral security, nature and extent of credit facilities offered and available.
 Requirement of funds: Break-up of project cost in terms of costs of land, building, machinery,
preliminary expenses, arrangement for meeting the cost of setting up of the project.
 Cost of production and profitability of first 10 years.
 Break-even analysis.
 Schedule of Implementation.
SIGNIFICANCE / IMPORTANCE OF A PROJECT REPORT:
It is nothing but a business plan to convert a business idea into a productive venture. An objective
without a plan is a dream. The preparation of a project report is of great significance of an
entrepreneur.
Serves as a master plan: For successful management, effective planning is absolutely essential. A project
report serves as a business Plan indicating the objectives or goals of the enterprise and states in detail how
these objectives are going to be achieved at various stages of the enterprise.
Describes direction: The project report is like a road map. It describes the direction in which the enterprise
should go and how to reach the goal.
Foresee requirements: A project report enables an entrepreneur to realize what he need for implementing
the project in advance. It also gives a general idea of his various resource requirements like raw materials,
man power, finance infrastructure facilities etc.
Shows feasibility: A project report also shows the feasibility of the proposed project and the probability of
achieving profit. Whether a project is feasible from different angles-Economic, financial, commercial,
social etc. can be ascertained while preparing a project report.
Indicates profitability: It gives an indication about benefits. The profitability indication will help an
entrepreneur to take an important investment decision. Thus, the financial rewards can be visualized in
advance.
Helps in Decision-making: Crucial decisions have to be made at various stages of production. Important
decisions can be taken with the help of a project report prepared well in advance.
Paves way for financial assistance: The preparation of a project report is absolutely essential for those
enterprises which apply for finance from different financial institutions and banks. Thus it paves way for
financial assistance which is the life blood of an enterprise.
Ensures survival: The survival of any business depends upon the marketability of its products. (Demand
and supply position, competitors, position in the market, expected price etc.
REASONS FOR THE FAILURE OF A PROJECT REPORT:
In spite of all efforts, the report may fail due to the following reasons:
 Failure to estimate the utilization capacity properly.
 Not making adequate provisions for contingency.
40
  Failure to make necessary provision for fixtures, electrifications etc.
 Not providing any cushion for handling or other time losses.
 Not providing up to date information and supporting documents.
 Unrealistic estimates about expenses.
 Wrong capacity utilization estimates.
Purposes of project report:
The business plan/project report in an important document for entrepreneurs. They are detailed below:
Development tool:
Business plan acts as a development tool for entrepreneurs. It forces entrepreneurs to address
important issues. Helps to clarify the venture’s vision and mission: Organization’s vision and mission
statements are important elements in planning the entrepreneurial venture. They describe and
explain to the others what the entrepreneurial venture is about. If forces the entrepreneurs to consider their
purposes, valued and expectations.
Defines planning and evaluation guidelines:
Project report guides the decision maker, on planning and evaluating issues throughout the life of the
business. It clarifies what are the goals and plans. However, if planning is done entrepreneur can manage the
uncertainties even better than in an unplanned situation.
Helps entrepreneurs to secure financial resources:
Another important purpose, which a plan serves to an entrepreneur, is helping to secure needed
finance.
Guidance growth:
Planning the venture serves as a tool for guiding growth. A well designed business plan can lay the
foundation for growth. An entrepreneur to succeed in his venture, need to develop a strong business plan so
that it provide for the future growth of the venture.
FORMULATION OF A PROJECT REPORT:
A business plan should be of a thorough, complete and effective plan having of about 10 to15 pages.
It is a critical tool for successfully, launching and managing the business.
General information:
 Bio-data promoter
 Industry profile
 Constitution and organization
 Product details
Project description:
 Site-location of enterprise
 Physical infrastructure
 Raw material, skilled
 Utilities of power fuel and water
 Pollution control
 Communication system
 Transport facilities
 Production process
 Machinery and equipment
 Capacity of the plant
 Technology selected
 Research and development
 Market potential:
 Demand and supply position
41
  Expected price
 Marketing strategy
 After sales services
 Transportation
Capital costs and sources of finance: The various components of capote items like land and buildings,
plant and machinery, installation cost, preliminary expenses, margin of working capital should be given in the
project report.
Assessment of working capital requirements: The requirement for working capital and its sources of supply
should be carefully and clearly mentioned in the project report. It is always better to prepare working capital
requirements. In the prescribed format designed by limits of requirement.
Other financial aspects: Projected profit and loss account indicating the sales revenue, cost of production,
allied cost and profit should be prepared. A projected balance sheet a cash flow statement should also be
prepared to indicate the financial position and requirements at various stages of the project.
Economic and social variables:
The social responsibility of business, the discount cost i.e. cost for controlling the environmental damage
should be stated in the project.
 Employment generation.
 Import substitution.
 Export
 Local resource utilization
 Development of the area.
Project implementation:Every entrepreneur should draw an implementation scheme or a time table for his
project to ensure the timely completion to all activities involved in setting up an enterprise.
In India delays if in project implementation has become a common feature. Delay in project
implementation the financial viability of the project on the one hand and the entrepreneur to set up an
enterprise on the other hand.
PROJECT SELECTION:
Project selection starts form where project identification ends.The intending entrepreneur analyses his
/ her strengths and weaknesses as well as opportunities / competitive advantages and threats / challenges
offered by each of the project ideas. What follows from above analysis is that there is a time interval involved
in between project identification and project selection. But in some cases, there may be almost no time gap
between the two.
MARKET SURVEY
A systematic gathering, recording and analyzing of all facts and product problems related in the
market. That information is collected from the data methods like primary & secondary methods.
I - Market survey methods : A survey consist of gathering primary data by interviewed a limited number
of people selected form a large group data collection.
Personal interview methods: An entrepreneur market personal contact with the information by obtains the
more information than under any other methods.
Direct personal observation: The data are collected by investigation personally.
Merits:
 Accuracy, true, reliable data.
 Uniformity can be maintained.
 Original data are collected.
Demerits: Unsuitable expenses and time consuming.
Indirect oral interview:
The investigator approaches witness of third parties who are in touch with the information.
42
Main questioners’ method
In this method a questioner consisting of a list of question particular to the survey is prepare and give
blank spaces for answers. The questioner is send to the respondents who are expected to write the answer in
blank spaces.
Merits: Most economical, save money and time.
Demerits: No direct contact suitable only literate people.
II – Telephone Survey:
This type of survey is conducted over the telephone with personal interview.
Merits: cost less, flexible, accurate answer.
Demerits: the persons have no phone connections. It is not suitable.
LEGAL CONSIDERATION
SSI play very important role in the economic development of a industry. Various legal formalities are
to be completed for setting up a SS units.
I - Provisional registration:
It helps the party to take necessary steps to bring him units into existence.The provisional, permanent
registrations are granted at the state, district level by the state director of industry. A provisional registration
is valid for one year in the first instance and thereafter may be renewed by a period of two or more years in 6
monthly extensions by the designated authority on submission of satisfactory proofs that the party is
working.

II – Permanent registration:
When the party has taken all steps to establish the units. (Factory building is ready, all requisite
machinery, testing equipments, power connection is obtained).
Application for permanent registration can be made with 7 days of receipt of the application. The
inspection should include an assessment of the installed capacity of the unit. All registered unit should
submit half yearly reports of the raw material received, utilized, stock on hand, production, sales to the
directorate of industries.
ELEMENTS OF PROJECT FORMULATION
Project formulation is the systematic development of a project idea for the objective of at an investment
decision.
Meaning: Project formulation is an analytical management aid. It enables the entrepreneur to arrive at the
most effective project decision.
1. Feasibility analysis: Feasibility analysis is undertaken to determine the desirability of investing in
further development of project idea.
2. Techno economic analysis: It is primarily concerned with the identification of the project
demand potential and the selection of the optimal technology suitable for achieving the project
objectives.
The techno economic analysis consists of two part’s.
 Determination of project demand potential
 Selection of optimal project strategy.

3. Project design and network analysis: Project design is the heart of a project. It defines the individual
activities comprising a project and the interrelationship between the activities. It identifies the follow
of events which must take place before a project can start yielding the desired result.
Network analysis is carried out to identify the optimal course of action. So as to execute the
project within the minimum time keeping in view the available resources.

43
 4. Input analysis: It is primarily concerned with the identification and qualification and evaluation and
evaluation o project inputs.
5. Financial analysis: Financial characteristics of an investment proposition have a significant impact
on the acceptability of a project. Such analysis involves estimates above project cost and revenues and
the fund required for the project.
6. Social cost benefit analysis: This analysis estimate of social cost and social benefits are made and
presented or computation of social profitability of the project. While the cost and benefits under the
financial analysis are estimated employing market prices based on financial objective.
7. Project appraisal: It is the analysis of cost and benefits of a proposed project with the goal of assuring
a national allocation of limited funds among alternative investment opportunities in view of achieving
certain specify goals.
Basic start up problems (or) problems of SSI
Introduction: The SSI constitutes a component in Indian economy. The govt. of India has recognized the
importance of SSI for achieving socioeconomic objectives like generating employment and removal
of regional area and economic backward area and rural area in the problems of SSI.
The problem for SSI: the problems and difficulties faced by the SSI are discussed below.
1. Finance: In adequate fiancé is the major problem for SSI units. Since the most of the SSI units are
either concerns or partnership firms there internal resources are small. The credit provides by the
various institutional agencies. Such as banks, SFCS and SIDBI are inadequate to meet the
requirements of small units.
2. Raw materials: The availability of raw material is a great problem for SSI units. These units use
either local raw material or imported raw materials for the small units making use of local raw
materials the small units making use of local problem is not a serious one. The industries the dues
imported raw material face and more raw material problem.
3. Marketing: In marketing their products the small units have a face competition from other SSI units
and also form large industries. The SSI units do not possess their own marketing organization
the don not have the resources and expectations to market their products effectively. Financial
constraints compel the many small units sell their product to large selling houses at low prices.
4. Technology: Most of the small-scale units use only outdated technology and old machineries and
equipment adoption of latest technology alone can ensure good quality and higher productive. The
SSI is financially weak to undertake research and development activities.
5. Under utilization of capacity: The small industries have a problem of underutilizations of capacity
due to two reasons.
 Frequent power cut.
 Inability to go for alternative.
 Generators and installation of the small units on an average 10% to 501% of capacity is not
utilized in small units.
6. Recovery: One of the basic problems of SSI is recoveries form sales. The buyers do not pay their due
in time; most of the principles do not pay for 6 months or even longer after purchases of goods.
7. Institutional constraints: The entrepreneurs face many constraints in auditing the dues of the
various concessions and facilities extended by various financial institutions government agencies.
8. Other problems: in addition to the problems of SSI face many problems such as imperfect knowledge,
market conditions, lack of infrastructure facilities, managerial skills lack of effective co-ordination
among various supporting by these institutions.
Conclusion: The above the SSI to face many problems. The SSI are also been faced by the all the problems
in SSI.
RISK ANALYSIS OR RISK MANAGEMENT
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 The risk management is a project management to the managerial process.
The risk management possesses four steps. They are prescribed as follows.
 Risk identification
 Risk assessment
 Failure mode and effects analysis
 Probability analysis
1. Risk identification: The first step in the process of risk management is risk identification. It
involves generating a list of all possible risk that could affect the project.
2. Risk assessment: Risk identification reveals a list of potential risk of all the risk do not desire
attention. Some risk which are can be ignored, were as others. Serious threats for the welfare of the
project should be considered. The term members normally assess each risk in terms of the following.
 The undesirable event
 Probability of the event happening
 Interaction with other parts of this project.
3. Failure mode and effects analysis: It is expended the risk severity matrix by including case of
detection in the equation. Impact x Probability x Detection = Risk value.
4. Probability analysis: They are many statistical technical available to the project manage that can
assist in assessing project risk. Decision frees have been used to assess alternative course of action
using expected values.
-------------------- Unit III completed -----------------

UNIT –IV
MSME- Meaning-features-Role-Problems-Rural entrepreneurship- meaning-Need and Problems-
small scale sector in India-Rationale and objectives of SSI-Problems of SSI-Sickness of Small Scale
Units-Causes and Revival.
MSME:
MSME stands for Micro, Small and Medium Enterprises. These industries or enterprises form the
backbone of our economy and need assistance and protection from other big companies as they lack in
resources and technology. To do this the government provides some schemes, rebates or counselling to these
enterprises.
Importance/features of MSME Sector in India
MSME- an abbreviation of Micro, Small & Medium enterprises- is the pillar of economic growth in many
developed, and developing countries in the world.
1. Creates large scale employment:
Since the enterprises falling in this sector require low capital to start the business, it creates huge
employment opportunities for many unemployed youth. India produces about 1.2 million graduates per year,
of the total number about 0.8 million are engineers. And, there is no economy in the world that can provide
jobs to so many fresh graduates in one year. MSME is the boon for many of these fresh manpower.
2. Economic stability in terms of Growth and leverage Exports:
MSME is a significant growth driver in India, with it contributing to the tune of 8% to GDP. As mentioned
in the table, Exports sector in India constitutes about 40% of contribution from MSME alone. Looking at the
45
kind of contribution of MSME to manufacturing, exports and employment, other sectors are also benefitting
from MSME. MNCs today are buying semi-finished, and auxiliary products from small enterprises, for
example, buying of clutches, and brakes by automobile companies. It helps create a linkage between MSME
and big companies.even after the implementation of the GST 40% msme sector also applied GST
Registration which increase the government revenue by 11%.
3. Encourages Inclusive Growth:
About 50% of wealth in India in owned by just 100 people which is due to unequal distribution of wealth.
Inclusive growth is on top of the agenda of Ministry for Medium, and Small, and Medium sized enterprises
for several years. While poverty and deprivation are a deterrent to the development of India, including
marginalized sections of society is a key challenge lying before the Ministry of MSME.
4. Cheap Labor and minimum overhead:
In large scale organizations, one of the key challenges is to retain the human resource through an
effective human resource management professional manager. But in case of an MSME, the requirement of
labor is less, and it does not need a highly skilled laborer. Hence, the indirect expenses incurred by the owner
is also low.
5. Simple Management Structure for Enterprises:
MSMEs do not require a huge capital to start. With limited resources available within the control of the
owner, decision-making becomes easy and efficient. As in case of a large corporation wherein a specialist is
required for every departmental functioning because of complex organizational structure, a small enterprise
does not need to hire an external specialist for its management. The owner himself/herself can manage it.
Therefore, it can be run single-handedly.
6. Plays an important role in making “Make in India” possible:
Post the inception of ‘Make in India’, a signature initiative by the prime minister of India, the process of
incorporating a new business has been made easy. Since the MSME is the backbone in making this dream a
possibility, the government has directed the financial institution to lend more credit to enterprises in MSME
sector.
Role Of MSME In The Growth Of Economy
 The Micro, Small and Medium Enterprise often known as MSME is an important part of a growing
economy.

 It plays a pivotal role in the driving the growth engine.

 The manifest capacity of Micro, Small and Medium Enterprise for driving the economic growth
and development at regional, national and global level can’t be neglected.

 They are concentrated and informal in nature.

 It is a sector driven by creativity and innovation of the individuals.

 The labour ratio in MSMEs is quite high when compared to larger industries where automation is
becoming the major part of the production.

 Due to upcoming of these enterprises, the employment has increased as most of the production work
is being carried upon by the people as they are comparatively smaller than the large industries in
terms of inputs and expenditures.

Problems of Micro and Small Enterprises:

1. Problem of Raw Material:

46
 A major problem that the micro and small enterprises have to contend with is the procurement of raw
material. The problem of raw material has assumed the shape of:
(i) An absolute scarcity,
(ii) A poor quality of raw materials, and
(iii) A high cost.
2. Problem of Finance:
An important problem faced by micro and small enterprises in the country is that of finance. The problem
of finance in micro and small sector is mainly due to two reasons. Firstly, it is partly due to scarcity of capital
in the country as a whole.
Secondly, it is partly due to weak credit worthiness of micro and small enterprises in the country. Due to
their weak economic base, they find it difficult to take financial assistance from the commercial banks and
financial institutions.
3. Problem of Marketing:
One of the main problems faced by the micro and small enterprises is in the field of marketing. These units
often do not possess any marketing organisation. In consequence, their products compare unfavourably with
the quality of the products of the large-scale industries. Therefore, they suffer from competitive disadvantages
vis-a-vis large-scale units.
4. Problem of Under-Utilization of Capacity:
There are studies that clearly bring out the gross under-utilization of installed capacities in micro and small
enterprises. According to Arun Ghosh, on the basis of All India Census of Small-Scale Industries, 1972, the
percentage utilization of capacity was only 47 in mechanical engineering industries, 50 in electrical equipment,
58 in automobile ancillary industries, 55 in leather products and only 29 in plastic products. On an average,
we can safely say that 50 to 40 per cent of capacity were not utilized in micro and small enterprises.
5. Other Problems:
In addition to the problems enumerated above, the micro and small enterprises have been constrained by a
number of other problems also. According to the Seventh Five Year Plan (GOI 1985: 98), these include
technological obsolescence, inadequate and irregular supply of raw materials, lack of organised market
channels, imperfect knowledge of market conditions, unorganised nature of operations, inadequate availability
of credit facility, constraint of infrastructure facilities including power, and deficient managerial and technical
skills.
Rural entrepreneurship:
Rural entrepreneurship is defined as entrepreneurship whose roots lie in the rural areas but has a lot of
potential to drive various endeavours in business, industry, agriculture, etc. and contribute to the economic
development of the country. India is a country of villages. Nearly 70% of its major population reside in villages
and their livelihood is supported by agriculture and allied activities. Thus the nations’ economic development
depends largely on the standard of living of the people who live in the rural areas and the level of development
which has actually taken place there.
Needs of rural entrepreneurship: -
a) Reduce the levels of unemployment. The occupation provided by rural entrepreneurs would serve as an
antidote to this.
b) Reduce income disparities.
c) Reduce the number of migrants from rural to urban areas.
d) Balanced regional development.
e) To build up village republics.
f) Preserve the heritage of the country through art and creativity.
g) This leads to economic development of the rural areas and country as a whole.
47
Problems of rural entrepreneurship:
Most of the rural entrepreneurs face peculiar problems like illiteracy, fear of risk, lack of training and
experience, limited purchasing power and competition from urban entrepreneurs. Promotion of rural
entrepreneurship is a key to develop rural areas and backward towns.
Problems of rural entrepreneurship:
1. Paucity of funds:
Most of the rural entrepreneurs fail to get external funds due to absence of tangible security and credit
in the market. The procedure to avail the loan facility is too time-consuming that its delay often disappoints
the rural entrepreneurs.

2. Competition:
Rural entrepreneurs face severe completion from large sized organizations and urban entrepreneurs. They
incur high cost of production due to high input cost.

3.Legal formalities:
Rural entrepreneurs find it extremely difficult in complying with various legal formalities in obtaining
licenses due to illiteracy and ignorance.

5. Procurement of raw materials:

Procurement of raw materials is really a tough task for rural entrepreneur. They may end up with poor
quality raw materials, may also face the problem of storage and warehousing.

6. Risk element:
Rural entrepreneurs have less risk bearing capacity due to lack of financial resources and external support.

7. Lack of technical knowledge:

Rural entrepreneurs suffer a severe problem of lack of technical knowledge. Lack of training facilities and
extension services crate a hurdle for the development of rural entrepreneurship.

8. Lack of infrastructural facilities:

The growth of rural entrepreneurs is not very healthy in spite of efforts made by government due to lack
of proper and adequate infrastructural facilities.

9. Poor quality of products:

Another important problem is growth of rural entrepreneurship is the inferior quality of products produced
due to lack of availability of standard tools and equipment and poor quality of raw materials.

10. Negative attitude:

The environment in the family, society and support system is not conducive to encourage rural people to
take up entrepreneurship as a career. It may be due to lack of awareness and knowledge of entrepreneurial
opportunities.

Small-Scale Industries in India:

48
 In Indian economy small-scale and cottage industries occupy an important place, because of their
employment potential and their contribution to total industrial output and exports.

Characteristics of Small-Scale Industries:

(i) Ownership:
Ownership of small scale unit is with one individual in sole-proprietorship or it can be with a few individuals
in partnership.

(ii) Management and control:

A small-scale unit is normally a one man show and even in case of partnership the activities are mainly
carried out by the active partner and the rest are generally sleeping partners. These units are managed in a
personalised fashion. The owner is activity involved in all the decisions concerning business.

(iii) Area of operation:

The area of operation of small units is generally localised catering to the local or regional demand. The
overall resources at the disposal of small scale units are limited and as a result of this, it is forced to confine
its activities to the local level.

(iv) Technology:
Small industries are fairly labour intensive with comparatively smaller capital investment than the larger
units. Therefore, these units are more suited for economics where capital is scarce and there is abundant supply
of labour.

(v) Gestation period:

Gestation period is that period after which teething problems are over and return on investment starts.
Gestation period of small scale unit is less as compared to large scale unit.

(vi) Flexibility:
Small scale units as compared to large scale units are more change susceptible and highly reactive and
responsive to socio-economic conditions.

They are more flexible to adopt changes like new method of production, introduction of new products etc.

Objectives of Small Scale Industries:

To create more employment opportunities with less investment.

2. To remove economic backwardness of rural and less developed regions of the economy.

3. To reduce regional imbalances.

4. To mobilise and ensure optimum utilisation of unexploited resources of the country.

5. To improve standard of living of people.

6. To ensure equitable distribution of income and wealth.

49
7. To solve unemployment problem.

8. To attain self-reliance.

9. To adopt latest technology aimed at producing better quality products at lower costs.

Rationale of Small Scale Industries:

(i) Employment argument,

(ii) Decentralisation argument,

iii) Equality argument, and

(iv) Latent resources argument.

In addition, there is also the argument relating to allocation efficiency and the on-going debate about relative
merits of lean production and mass production. Let us examine each of these arguments.

(i) Employment Argument: The most important argument in favour of the SSIs is that they have a potential
to create large employment opportunities. These are labour-intensive in character, i.e., they use more of labour
per unit of output and investment there has also been an implicit assumption in this argument that small
enterprises use less capital per unit of output. Therefore, in a country where labour is surplus and capital is
scarce, it is only to be expected that the production process should be decentralised and should be divided into
small units.

(ii) Decentralisation Argument:

There are two aspects to this argument— first, there is the need to prevent congestion in large cities
through prevention of growth of industries there; secondly, this negative measure has to be reinforced by
promoting industrial growth in semi-urban and rural areas so that the local people can stay on their areas
without emigrating to the nearby cities.

A third variant of this argument is that small industry helps in fostering enterprises from amongst the
members of castes, classes and professions which have hitherto not contributed or contributed poorly to the
entrepreneurial class in India. These include, apart from others, SCs, backward/poor classes, STs, technicians
and other professionals.

(iii) Equality Argument:

Large-scale industries, generally, lead to inequalities of income and concentration of economic power.
An SSI, on the other hand, it is asserted, “will lead neither to swearing nor to inequitable distribution but
will result in a large and more widely distributed sharing of the productive function and therefore to a
more equitable distribution of the produce of industry.” It is also held that as most of the small enterprises
are either proprietary or partnership concerns, the relations between workers and employers are more
harmonious in small enterprises than in large enterprises.
(iv) Latent Resources Argument:
This argument justifies the cause of SSIs on three grounds as follows: first, it presumes that there is to be
found a large number of small and potential entrepreneurs who are capable of running industrial units

50
efficiently if appropriate opportunity and help is extended to them. Secondly, there are a large number of
potential enterprises whose full capacities have not been used so far. Thirdly, SSIs will be helpful in putting
idle savings in productive use.

PROBLEMS FACED BY SMALL SCALE INDUSTRIES:

1. Poor capacity utilization
In many of the Small Scale Industries, the capacity utilization is not even 50% of the installed capacity.
Nearly half of the machinery remains idle. Capital is unnecessarily locked up and idle machinery also occupies
space and needs to be serviced resulting in increased costs.

2. Incompetent management
Many Small Scale Industries are run in an incompetent manner by poorly qualified entrepreneurs without
much skill or experience. Very little thought has gone into matters such as demand, production level and
techniques, financial availability, plant location, future prospects etc. According to one official study, the
major reason for SSI sickness is deficiency in project Management i.e., inexperience of promoters in the basic
processes of production, cash flow etc

3. Inadequate Finance
Many Small Scale Industries face the problem of scarcity of funds. They are not able to access the
domestic capital market to raise resources. They are also not able to tap foreign markets by issuing ADR’s
(American Depository Receipts) GDR’s (Global Depository Receipts) etc because of their small capital base.
Banks and financial institutions require various procedures and formalities to be completed. Even after a long
delay, the funds allocated are inadequate.

Bank credit to the small scale sector as a percentage of total credit has been declining. It fell from 16% in
1999 to 12.5% in 2002. Small Scale Industries are not able to get funds immediately for their needs. They
have to depend on private money lenders who charge high interest. Finance, as a whole, both long and short
term, accounts for as large as 43% of the sector’s sickness.

4. Raw material shortages

Raw materials are not available at the required quantity and quality. Since demand for raw materials is
more than the supply, the prices of raw materials are quite high which pushes up the cost. Scarcity of raw
materials results in idle capacity, low production, inability to meet demand and loss of customers.

5. Lack of marketing support

Small Scale Industries lack market knowledge with regard to competitors, consumer preferences, market
trends. Since their production volume is small and cannot meet demand for large quantities their market is
very restricted. Now with the process of liberalization and globalization they are facing competition from local
industries as well as foreign competitors who sell better quality products at lower prices. For e.g. heavily
subsidized but better quality imports from China has made most of the Indian SSI units producing toys,
electronic goods, machine tools, chemicals, locks and paper etc., unviable.

6. Problem of working capital

Many Small Scale Industries face the problem of inadequate working capital. Due to lack of market
knowledge their production exceeds demand, and capital gets locked in unsold stock. They do not have enough
funds to meet operational expenses and run the business.

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 7. Problems in Export
They lack knowledge about the export procedures, demand patterns, product preferences, international
currency rates and foreign buyer behavior. Small Scale Industries are not able to penetrate foreign markets
because of their poor quality and lack of cost competitiveness. In countries like Taiwan, Japan etc. products
produced by Small Scale Industries are exported to many foreign countries.

Sickness of Small Scale Units:

Internal causes for sickness
We can say pertaining to the factors which are within the control of management. This sickness arises due to
internal disorder in the areas justified as following:

a) Lack of Finance: This including weak equity base, poor utilization of assets, inefficient working capital
management, absence of costing & pricing, absence of planning and budgeting and inappropriate utilization
or diversion of funds.

b) Bad Production Policies : Another very important reason for sickness is wrong selection of site which is
related to production, inappropriate plant & machinery, bad maintenance of Plant & Machinery, lack
of quality control, lack of standard research & development and so on.

c) Marketing and Sickness : This is another part which always affects the health of any sector as well as SSI.
This including wrong demand forecasting, selection of inappropriate product mix, absence of product
planning, wrong market research methods, and bad sales promotions.

d) Inappropriate Personnel Management: Another internal reason for the sickness of SSIs is
inappropriate personnel management policies which includes bad wages and salary administration, bad
labour relations, lack of behavioural approach causes dissatisfaction among the employees and workers.

e) Ineffective Corporate Management: Another reason for the sickness of SSIs is ineffective or bad corporate
management which includes improper corporate planning, lack of integrity in top management, lack of
coordination and control etc.

External causes for sickness

a) Personnel Constraint: The first for most important reason for the sickness of small scale industries are non
availability of skilled labour or manpower wages disparity in similar industry and general labour invested in
the area.

b) Marketing Constraints: The second cause for the sickness is related to marketing. The sickness arrives
due to liberal licensing policies, restrain of purchase by bulk purchasers, changes in global marketing
scenario, excessive tax policies by government and market recession.

c) Production Constraints: This is another reason for the sickness which comes under external cause of
sickness. This arises due to shortage of raw material, shortage of power, fuel and high prices, import-export
restrictions.

d) Finance Constraints: Another external cause for the sickness of SSIs is lack of finance. This arises due to
credit restrains policy, delay in disbursement of loan by govt., unfavorable investments, fear
of nationalization.

e)credit squeeze initiated by the government policies.

52
 UNIT-V

Financial assistance and services; DIC – SIPCOT – SIDBI – TIIC –NSIC – SIDO – SIDC – KVIC-
SIDBI- EDII.

I. DISTRICT INDUSTRIES CENTRE ( DIC)

INTRODUCTION

DIC have emerged since 1978 as the model agency for development of small and village industries
to provide all the support services need for such development. These DIC have assisted more than 1.5
lakhs units generating employment for more than 10.3 lakhs persons. The four metropolitan cities are
Mumbai, Chennai, Delhi and Kolkata have been kept out the preview of DIC.

FUNDING OF DIC

The district industry centers are funded by the state concerned and the central jointly.

STAFF PATTERN OF DIC

The DIC has a general manager on the top assisted by 7 managers in various fields. Which were identified
as key area in which small industries needed specific supports and attention.

FUNCTIONAL MANAGERS

1. Manager ( economic investigation)

2. Manager ( machinery)

3. Manager ( credit)

4. Manager (raw materials)

5. Manager ( village industry)

6. Manager (training)

7. Manager (marketing

FUNCTIONS OF DIC

1. Identification of entrepreneurs:
DIC develops new entrepreneurs by conducting entrepreneurial motivation programmers
throughout the district especially in Panchayat Union Headquarters and small towns.
2. Selection of projects:
DIC offers technical advice to new entrepreneurs for the selection of projects suitable to them.
3. Provisional Registration under SSI:
53
 After the selection of projects, entrepreneurs are issued with provisional SSI registration which is
essential for obtaining assistance from the financial institution.
4. Purchase of fixed assets:
DIC sponsors the loan application to TIIC, SIDCO and banks for the purchase of land and building
and sanctions margin money under rural industrial project loan scheme payable to other financial
agencies for the purchase of plant and machinery.

5. Clearances from Various Departments:

It takes the initiative to get clearness from various departments and takes follow up measures to
get speedy power connection.
6. Assistance to Raw Material Suppliers:
It makes necessary recommendations to the concerned raw materials suppliers and issues the
required certificates for the import of raw materials and machinery, whenever necessary.
7. Assistance to Village Artisans & Handicrafts:
DIC arranges for the financial assistance with the lead banks of nationalized banks of the respective
areas.
8. Subsidy Schemes:
DIC assists SSI units and rural artisans to get subsides such as power subsidy, interest subsidy for
engineers, subsidy under IRDP et., from various institutions.
9. Training Programmes:
DIC gives training to rural entrepreneurs and also assists other units giving training to small
entrepreneurs.
10. Self employment for Unemployed Educated Youth:
This scheme was introduced in 1983-84 for youths between 18 years and 25 years with SSLC.
Women are given preference.

STATE INDUSTRIES PROMOTION CORPORATION OF TAMILNADU LIMITED (SIPCOT)

Introduction:

SIPCOT was set up in 1971 as a Public Limited Company, wholly owned by the Government of Tamilnadu
for the Medium and major industries. The office is located in Egmore, Chennai. It works in liaison with
TIIC and extends term loans under IDBI refinance scheme.

Objectives/ Role of SIPCOT:

1) To establish, develop, maintain and manage industrial complex, parks and growth centers at various
places across the state of Tamilnadu.
2) To channelize incentives for industries set up in the state.
3) To provide escort services to medium and large scale industries.
4) To provides entrepreneurial development programmed for the weaker sect5ions to generate
employment opportunities.
5) To help in project assistance and clearance
6) To provide single window statutory clearance
7) To provide marketing assistance
Instead of just accelerating then pace of industrial growth in already development and densely
populated areas, SIPCOT has created industrial complexes, parks, growth centers in 17 stategies
places. They are located in Bargutr, Cheyyar, Cuddalore, Gangaikondam, Gummidipoondi, Hosur,

54
 Irungattukottai, Manamadurai, Nemili, Nilakkottai, Oragadam, Perundurai, Puddukkoti, Ranipet,
Siruseri, Sriperumpedur and Tuticorin.

Procedure for term loan:

1. The entrepreneurs, new and existing have to register their enquiry for financial assistance along
with preliminary details on the scheme.
2. The in-house preliminary clearance committee decides on the processing of the scheme.
3. The entrepreneurs will be informed to submit their detailed application along with a process fee
valued 0.25% of the term loan.
4. The project is then appraised by site inspection- technical, managerial, commercial and financial
appraisal of the project.
5. A report is presented to the screening committee consisting of experts from the concerned area of
specialization.
6. The recommendation of the screening committee is placed before the Board of SIPCOT
7. The decision of the board is then communicated to the applicant.

Other Assistance offered by SIPCOT:

1. SIPCOT has compiled a Data bank, containing information on various aspects of industries
2. It also helps entrepreneurs in assessing the merits of alternative location for the proposed projects
with reference to the source of raw materials, market potential and facilities available in a particular
area.
3. SIPCOT takes initiative to contact entrepreneurs holding Indent, Letters and Licenses in the State
and help them overcome their implementation problems.
4. It guides the entrepreneurs to decide on the economic size of the unit, foreign collaboration, supply
of machinery, technical know-how, etc.,
5. The business development department guides entrepreneurs in applying for license and registration
with the central government, approval of collaboration
6. It also helps entrepreneurs to obtain supply of power

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

Setting up of Small Industries Development Bank of India (SIDBI) marked the fulfillment of a long felt need
to have a separate institution at the national level exclusively cater to the requirements of the small scale sector
in the country. SIDBI became operational on April , 2 1990 with an initial paid up capital of Rs.250 crores

The activities of SIDBI have been patterned to suit the requirements of small scale industries consisting of
both modern and traditional ones. Broadly, these activities can be categorized as under

(i) Refinancing of term loans granted by banks and other eligible financial institution.
(ii) Direct discounting as well as rediscounting of bills arising out of sale of machinery/ capital
equipment by manufacturers is small scale sector on deferred credit.
(iii)Equity type assistance under National Equity Fund (NEF) and by way of seed capital to
entrepreneurs.
(iv) Rediscounting of short term trade bills arising out of sale of products of small scale sector.
(v) Resource support to NSIC & Other institution engaged in supply of raw materials,
marketing of SSI products, setting up of industrial estates, development of industrial
areas and infrastructure, extension hire purchase and leasing facilities.

55
 (vi) Direct assistance for setting up and expansion of marketing outlets for SSI products and
development of industrial areas for SSI units.
(vii) Share capital and resource support to factoring organization.
(viii) Assistance for promotion of exports of SSi products
(ix) Extension of technical and other related support services for promotion, development and
growth of small scale sector

SMALL INDUSTRIES DEVELOPMENT ORGANISATION ( SIDO)

Introduction
International perspective planning term in 1955 made its recommendations and the Government of
India set up following institutions for the development of village and small industries.
 Central Small Industry Organisation ( CSIO)
 National Small Industry Corporation ( NSIC)
 Small Industry Extension Training Institute (SIETI)
 Khadi and Village Industry Commission ( KVIC)
SIDO is a policy making, co-coordinating and monitory agency for the development of small scale
entrepreneurs. It is headed by addition secretary and the development commissioner of small scale
industry, who maintains a close liaison with government financial institution and other agency.
Courses conducted by SIDO
a.) Training in technical grades
b.) Training in management disciplines
c.) Training in SIDO officers
Operations of SIDO
a.) WTO CELL
 To keep abreast and updated with regard to all World Trade Organisation [WTO]
agreements
 To disseminate information to SSI association regarding recent development
 To co ordinate with other minister and department
 To prepare policies for SSI in tune with WTO agreement
 To organize WTO seminars etc
b.) Small Enterprise Information and Resource Center Network
SIDO launched a project in April 1997, for the development and promotion of SSI. Its aims at creating
an electric network for its 21 electronic modes all over the country
FUNCTIONS OF SIDO
a.) Functions relating to co ordination
 To co ordinate various programme and policies of various state government pertainurs to small
industries.
 To mention relation with the central institution ministry, planning commission, state level
industry ministry and financial institution
 Implementation and co ordinate in the development of industrial estates

b.) Functions relating to Industrial development

 Develop import substitutions for components and products based on the date available for
various volumes wise and value wise imports.

 To give essential support and guidance for the development of ancillary units

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  To recommend the central government for reserving certain items to produce at small scale
industrial level only

 To provide guidance to small scale industrial units items of costing market competition.

c.) Functions relating to management / extension

 To provide training, development and consultancy service to SSI to develop their competitive
strength.

 To provide marketing assistance to business various small scale industrial units

 To assist SSI units in selection of plant and machinery, location, layout design and appropriate
process

 To help them get updated in various information’s related to the SSI activities.

STATE SCALE INDUSTRIES DEVELOPMENTS CORPORATION (SSIDC)

SSIDC was established under the company’s act 1956 as state government undertaking for SSI tiny
and village industries in the respective states / union territories. SSIDC undertakes various activities for
the benefit of small scale industries. Some of them are,

 To procure and distribute scarce raw materials.

 To supply machinery of SSI on hire purchase basis

 To provide assistances for marketing of products

 To construct industrial estates

 To provide infrastructural facilities and their maintenance

 To extend seed capital assistance on the behalf of state government concerned

 To provide management assistances to production units

TAMILNADU INDUSTRIES INVESTMENT CORPORATION ( TIIC)

Introduction

TIIC is wholly owned by Government of Tamilnadu and it is the first state level financial institution in the
country. It was established in 1949 and as government of Tamilnadu holding more than 53 % of the shares.
The rest paid up capital is subscribed by IDBI, Government of Pondicherry and other public institutions.
It includes the following activities.

i. Provision of long term loans for acquisition of land building, plant and machinery to tiny,
small and medium scale industries.

ii. Term loans for modernization, expansion and diversification of existing units on easy
terms.

iii. Underwriting of shares.

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 iv. Designing special schemes for economically weaker section like scheduled caste, tribe
entrepreneurs, physically handicapped persons etc.

v. Provision of loans to those engaged in manufacturing, processing and refrigeration of goods

or in hotel or in industry or in transport business or development of industrial estates or
share facilities for fishing or to any concern for purchase of clerical and surgical
instruments.

Schemes offered by TIIC

1. General schemes

Under the general scheme, term loan assistance is provided for small and medium scale industrial unit. To
set up new industries and expansion of the existing units.

2. Nursing home schemes

The corporation provides assistance for constructions of nursing homes and purchase of electro medicine
equipment in all areas including metropolitan areas with a minimum bed. Strength of 20 non medical
persons is also eligible for assistance under this scheme.

3. Transport operator scheme

The corporation provides loans for purchase of transport vehicles that is delivery vans, lorries, tempo’s to
operate as commercial goods carriers and for the purchase of autos, tourist taxi, pickup vans and passengers
bus ( having route permits) to be operated as public carries and for purchases.

4. Generator scheme

Assistances are given for installation of power generating units for power consumption of the individual
units.

5. Hotel scheme

Financial assistance is considered for setting up of hotels in order to promote tourism and also for
expansion of the existing hotels.

6. Single window scheme

All eligible small scale units including tiny units whose project outlay is within RS 200 lakhs would be
eligible for both term loan and working capital assistances under the scheme.

7. Ex service man scheme

A special scheme being operated in collaboration with SSDBI and ex service man board for ex service
man (EBE). The total cost of the project under the scheme should not exceed Rs. 15 lakhs. Ex service man
can also apply under national equity fund scheme.

8. Mahilaudhayamnidhi service

Women entrepreneurs can avail assistances to setup to new projects; it is the project can does not exceed
Rs 10 lakhs.

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 9. Re-finance scheme for technology development and modernization ( RTDM)

Existing profit making SSI which go in for modernization and technology, upgrade can avail assistances
under this scheme. Re-finance scheme of ISO 9000 services and certification by SSI units.

10. Technology development fund services

The government of Tamilnadu constituted the fund for technology development and modernization of SSI.

11. TAHDCO scheme

The Tamilnaduadhidravidar housing development corporation provides margins money assistances to

scheduled caste enter for setup SSI and purchase of transport vehicles.

12. Soft loan

Soft loan is a loan repayable in a longer period with lesser rate of interest. TIIC also provides soft loan
assistances to eligible first generation entrepreneurs who look back of adequate financial resources.

13. National equity fund

TIIC is the implementing agency for the national equity fund scheme. Tiny unit whose project cost do not
exceed Rs 50 lakhs and which are coming up in rural areas can avail assistances under the scheme.

14. Hire purchase scheme or lease financing scheme.

Existing and financially viable SSI with proven truck can avail hire purchase assistance for purchase of
machinery equipment and operating route buses.

15. Warehouse

To provide warehouse facilities pre dominantly for storing goods manufactured by ssi units

16. Marketing assistances scheme

To provide support to small scale industrial sector in marketing their products

17. Computer training institute scheme

To setup computer training institute that offers good scope

18. Marriage hall / community hall

To provide financial assistances for construction of marriage halls as well as business development
measures.

ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA ( EDII)

It is a national institute set up by public financial institutions and government of Gujarat. Its EDP is
quite comprehensive and successful and consists of the following steps.

a) Selecting potential entrepreneurs

b) Achievement motivation training

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 c) Product selection and project report preparation.

d) Business management training

e) Practical training and work experience

f) Post training support and follow-up

KHADI AND VILLAGE INDUSTRIES COMMISSION ( KVIC)

The KVIC was established in 1956 under the KVIC act. It aims to plan, organize and implement
programmer for the development of khadi and village industries as specified in the schedule of KVIC act
1956. Initially only to, village industries were listed in the schedule but later 16 more industries were added
in the schedule.

II. NATIONAL SMALL INDUSTIRES CORPORATION ( NSIC)

Introduction

International perspective planning term in 1955 visited our country and made its recommendations. The result
of those recommendation was that the Government if India set up many institutions for the development of
village and small industries. One of those institutions was the NSIC with its head office in New Delhi.

The NSIC was set up as a government company under the Company’s Act 1956, because its objectives were
regarded as quasi commercial. For example two of its major programs are

1. To supply machines to small entrepreneurs on a hire purchase basis

2. To assist small units to get a bigger share of government procurement program.

Objectives

 Providing machinery on hire purchase.

 Assisting , marketing and exports

 Enlisting SSI units for tender participation in government purchases.

 Organizing supply of raw materials

 Training of personnel

 Assistance in modernization of the units

Special assistances to small industries

 Supply of machinery on hire purchase basis.

 Assisting the small enterprise in procuring government orders for various items of stores in the
government purchase programme.

 To distribute raw materials, scarce components and parts

 To assist small industries with general marketing facilities.

60
 To provide training and common facilities in the network of development and training center by
constructing industrial estates at various places.

 To obtain clearance from directors general to arrange foreign exchange.

 To undertake on behalf of the government institutional assistances programme in other

developing countries

ONE MARKS :

1.An individual who initiates, creates and manages a new business can be called _____________.

A.Aleader

B.Amanager

C.Anentrepreneur

D.Aprofessional

ANSWER:C

2. The anentrepreneur relate to _______.

A. Practice and knowledge acquired through experience

B. The protection of proprietary information of commercial value

C. The right to reproduce ones own original work

D.Brandidentity

ANSWER:D

3. Which could provide an individual with the motivation to start a new business venture?

A. The financial rewards.

B. A desire to be independent.

C.Risk-taking

D.All the above.

ANSWER:D

4. Which of the following factors would not be included in a PESTLE analysis?

A..Government re-cycling policy.

B.Proposed reduction in interest rates

61
 C.Competitoractivity.

D.Demographicchanges.

ANSWER:C

5. Which industrial sector tends to naturally promote small-scale businesses and

Entrepreneurship, and generally has lower barriers to market entry?

A.Service.

B.Manufacturing.

C.Distribution.

D.Agriculture.

ANSWER:A

6. Why are small businesses important to a country’s economy?

A. They give an outlet for entrepreneurs.
B. They can provide specialist support to larger companies.
C. They can be innovators of new products.
D. D.All the above.
ANSWER:D

7. A business arrangement where one party allows another party to use a business name and sell its
products or services is known as__________.
A.Acooperative.

B.Afranchise.

C.Anowner-managerbusiness.

D.Alimitedcompany.

ANSWER:B

8. Which of the following is the reason for business failure __________. A.Lackofmarketresearch.
B.Poorfinancialcontrol.

C.Poormanagement.

D.Alltheabove.

ANSWER:D

9. The use of informal networks by entrepreneurs to gather information is known as _______.

A.Secondaryresearch.

B.Entrepreneurialnetworking.

C.Informalparameters.

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 D.Marketing

ANSWER:B

10. Good sources of information for an entrepreneur about competitors can be obtained
from_________.
A.Websites.

B.Product information leaflets.

C. Company reports and published accounts.

D.Alltheabove.

ANSWER:D

11. A new venture’s business plan is important because ______.

A. It helps to persuade others to commit funding to the venture.

B. Can help demonstrate the viability of the venture.

C.Provides a guide for business activities bydefining objectives.

D. All the above .
ANSWER:D
12. Primary data is________.
A. the most important data.
B. the data that is collected first.
C. new data specifically collected for a project .
D. data that is collected second.
ANSWER:C
13. Innovation can best be defined as________.
A. the generation of new ideas.
B. the evolution of new ideas.
C. the opposite of creativity.
D.the successful exploitation of new ideas.

ANSWER:D

14. Which of these statements best describes the context for entrepreneurship?

A. Entrepreneurship takes place in small businesses.

B. Entrepreneurship takes place in large businesses.

C. Entrepreneurship takes place in a wide variety of contexts.

D. Entrepreneurship does not take place in social enterprises.

ANSWER:C

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 15. Entrepreneurs are motivated by _________.
A.money.

B.personalvalues.

C.pullinfluences.

D.Alltheabove.

ANSWER:D

16.Which of the following are described as one of the Big Five personality traits?

A.tolerance of others.

B.need for achievement.

C.propensity to leadership.

D.locus of control.

ANSWER:B

17.Which of the following is least likely to influence the timing of new business births?

A.Governmentpolicies.

B.Profitability.

C.Consumerexpenditure.

D.Weatherconditions.

ANSWER:D

18.Which of the following statements is false?

A.Market segmentation is a useful process for small businesses to undertake.

B. Selling is essentially a matching process.

C . benefit is the value of a product feature to a customer.

D. It is a good idea for small businesses to compete solely on price.

ANSWER:D

19.The purpose of all good small business strategy is__________.

A.toincrease turnover

B.to increase profitability

C.to achieve competitive
advantage
D.to achieve stated
objectives
ANSWER:D

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 20.Which of the following is a recognized disadvantage of setting up as a start-up with other routes
market entry?

A. less satisfaction of the owners.

B. less help from various agencies.
C. there are more funds required.
D. there is a high failure rate.
ANSWER:D

21.Someone legally appointed to resolve the financial difficulties of an inolvent firm is

called____________.
A.anadministrator.

B.apredator.

C.anauditor.

D.aturnaroundconsultant.

ANSWER:A

22.Goods or services reach the market place through ________.

A.marketingchannels. B.multilevelpyramids.
C.monopolies.

D.multiplication.

ANSWER:A

23.To provide financial assistance to entrepreneurs the government has set up a number of___________.

A.financialadvisors.

B.financialintermediaries.

C.Industrialestates.

D.financialinstitutions.

ANSWER:D

24.State Industrial corporations engage in the development of__________. A.industrialestates.

B.institutionalestates.

C.individualinvestors.

D.agriculturalentrepreneurs.

ANSWER:A

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25.________ is the first development bank of the country.

A.ICICI.

B.IDBI.

C.SFC

D.IFCI.

ANSWER:D

26.IFCI stands for____________.

A. Industrial finance corporation of India.

B. Institutional finance corporation of India.
C. C. Industrial funding corporation of India.
D. D. Indian finance corporation and institution.
ANSWER:A

27. IFCI has been converted into a________.

A.joint-stockcompany.

B.co-operativesociety.

C.partnershipfirm.

D.soleproprietorship.

ANSWER:A

28. SIDBI was set up as a subsidiary of_________.

A.IDBI.

B.IFCI.

C.ICICI.

D.SFC.

ANSWER:A

29. Which of the following is a function of SIDBI?

A.Extension of seed capital. B.Discounting of bills.

C.Providing factoring services.

D.All of the above.

ANSWER:D

30. SFC is prohibited from granting financial assistance to any company whose aggregate paid-
up capital exceed__________.
A.1crore.

66
B.1.5crores.

C.2crores.

D.2.5crores.

ANSWER:A

31. SIPCOT’s financial assistance is in the form of

__________.
A.termloan.

B.seed capital scheme.

C.underwriting the capital issues.

D.All of the above.

ANSWER:D

32. The business development department of SIPCOT guides entrepreneurs in

______.
A.applying for licences.

B.approval on collaboration.

C.allocation of scarce raw materials.

D.All the above.
ANSWER:D
33. TIIC is sponsored by the ________.
A. Government of Karnataka .

B. Government of andra Pradesh

C. Government of Kerala

D. Government of tamilnadu
ANSWER:D

34. In backward areas, term loans for expansion or setting up a new unit are available at __________
.
A.concessionalterms.

B.differentialterms.

C.standardterms.

D.specificterms.

ANSWER:A

35. A commercial banker would prefer a ____________ debt-equity ratio over the years as it
indicates financial strength of a unit.
A.Declining.

67
B.Increasing.

C.Stable.

D.Fluctuating.

ANSWER:A

36. EDPs course contents contains ___________. A. General introduction to entrepreneurs.

B.Motivationtraining.

C.Managerialskills.

D.Alltheabove.

ANSWER:D

37. Entrepreneurial Guidance Bureau(EGB) was set up by____________.

A.SISI.

B.SIPCOT.

C.IIC.

D.SIDCO.

ANSWER:C

38. _____________ can be defined as a specifically evolved work plan to achieve a specific
objective within a specific period of time
A.Idea generation.

B.OpportunityScanning.

C.Project.

D.Strategy.

ANSWER:C

39. Large investment is made in fixed assets, the project will be termed as __________.
A.CapitalIntensive.

B.LabourIntensive.

C.ProductIntensive.

D.MarketIntensive.

ANSWER:A
40. PERT stands for __________.
A. Programme Evaluation and Research Techniques.
B. Project Evaluation and Review Techniques.
C. Programme Evaluation and Review Techniques.

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 D. Project Evaluation and Research Techniques.
ANSWER:C

41. _____________ is used to accomplish the project economically in the minimum available
timewith limitedresources A.ProjectScheduling.
B.NetworkAnalysis.

C.BudgetAnalysis.

D.CriticalPlanning.

ANSWER:A

42. ______________ is a form of financing especially for funding high technology, high risk and
perceived high reward projects
A.Fixedcapital.

B.Currentcapital.

C.Seedcapital.

D.Venturecapital.

ANSWER:D

43. In _________, machines and equipments are arranged in the order or sequence in which they are to be
used for manufacturing the product
A.FactoryLayout.

B.ProductLayout.

C.ProcessLayout.

D.CombinedLayout.

ANSWER:B

44. The term ___________ denotes bonus or financial aid which is given by a government to an industry
to help it compete with other units
A.Incentive.

B.Subsidy.

C.Bounty.

D.Concession.

ANSWER:C

45. The granting of cash subsidy on the capital investment is called __________. A.Concessionalfinance.
B.QuantumofSubsidy.

C.InterestSubsidy.

D.CentralInvestmentSubsidy.
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 ANSWER:D

46. New Small Scale industries are exempted from the payment of income tax under section 80J is called
__________
A.DevelopmentRebate..

B.InvestmentAllowance.

C.RehabilitationAllowance.

D.TaxHoliday

ANSWER:B

47. __________ is primarily concerned with the identification of the project demand potential and the
selection of the optimal technology.
A.Techno-economicanalysis.

B.Feasibilityanalysis.

C.Inputanalysis.

D.Financialanalysis.

ANSWER:A

48. _____________ refers to some action which is a time consuming effort necessary to complete
specificevent.
A.ANetwork. B.AnActivity.

C.AnEvent.

D.ANode.

ANSWER:B

49. _____________ is a graphical representation of the various activity and event relating to aproject.
A.Networkanalysis.

B.Schedulingtechnique.

C.LogicalModel.

D.NetworkDiagram

ANSWER:D

50. Activities which must be finished before a given event can occur are termed as _________.
A.PreceedingActivities.

B.SucceedingActivities

C.ConcurrentActivities

D.DummyActivities.

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ANSWER:A

71