2 Entrepreneurship Management

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Q. Good project report or Business Plan?It is essential for an entrepreneur & developing agencies since its provides necessary

information about the unit to be set up. It eliminates difficulties encountered during projectsetup especially obtaining loans. It is basically an integration of functional plans, such asmarketing, finance, operations & HR to establish company’s goals and objectives.

It basically addresses the questions:

• Where am I now?

• Where am I going?• How will I go there?

Format of a Business Plan

1. Introductory Page.a. Name & address of businessb. Name & address of the promoter & partnership if any.c. Nature of businessd. Treatment of financial need

2. Executive Summary (3 0r 4 pages comprising of complete business plan)

3. Industry analysisa. Future outlook & trendsb. Analysis of competitionc. Market segmentationd. Industry forecast

4. Description of venturea. Products/serviceb. Size of businessc. Office equipment & personnel

d. Background of entrepreneur

5. Production plana. Manufacturing processb. Physical plantc. Machinery & equip.d. Name of suppliers of RM

6. Mktg. Plana. Pricing, distribution, promotion, product forecast & controls

7. Organizational plan

a. From of ownership b. Identification of partners & principal share holdersc. Authority of principalsd. Mgmt team backgrounde. Role & responsibility of members

8. Risk Assessmenta. Evaluate weakness of business b. New technologyc. Contingency plan

9. Financial plan.a. Performa income statement & Balance sheetb. Cash flow projectionsc. Break even analysis

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d. Sources & applications of funds

10. Appendix (containing backup material)a. Lettersb. Mkt. research datac. Leases & contractsd. Price list for suppliers

Q. The Executive Summary of the Business Plan:

It is prepared after total plan is written. The executive summary should be two or three pages inlength and should stimulate the interest of the potential investor. It should not be taken lightlyby the entreprenuer since the investors uses the summary to determine the worth of thebusiness plan. Determining what is important would be difficult since every business plan isdifferent. A no. of significant issues should be addressed. First, briefly describe the businessconcept. Second, data that support the opportunity for this venture should be stated. E.g.trends and potential growth in the industry, internet business, growth in no. of I-net users,growth in avg time spent on the net. After establishing the reallity of the opportunity then statehow it will be perused. What is the mktg strategy and how does it differs from others. Nexthighlight key financial results that can be achieved importance experience of entreprenuers,important contracts or other legal documents that are in place which can assist in selling thebusiness venture to a potential customer.

Q Why Business Plan fails?

Generally poorly prepared business plan can be blamed due to one or more of the followingfactors,

• Goals set are unreasonable• Goals are not measurable

• The entrprenure has not made the total commitment to the business or to the family.

• Entrepreneur has no experience in planned business

• Entrepreneur has no sense of potential threats or weaknesses to the business.

• No customer need for the proposed for the product or services.

Setting goals requires information about the type of business and the competitive environment.Goals should be specific and not so mundane as to lack any business of control. Entrepreneurmay target a specific mkt share, units unsold or revenue. These goals are measurable and canbe monitored overtime. Lenders or investors will not be inclined toward a venture that does not

have full time commitment. Lenders or investors may expect entrepreneur to make financialcommitments even if it means second mortgage or a depletion of savings. Lack of experiencewill result in failure unless the entrepreneur can attend the necessary knowledge or team upwith someone. The entrepreneurs should document customer needs before preparing the plan.

This can be identified from direct experience, letters from customers or mkt research. Clearunderstanding of needs and how the entrepreneur will effectively meet them is vital to thesuccess of the new venture.

Q. Concessions & Incentives for SSI ?

SSI/ancillary units are the industrial units having an investment of not more than 3 crores

rupees in fixed assets like plant & machinery’s. Whereas tiny units have 25 lac for the same ason 1998. However recently the govt. has reduced the invt. To 1 crore rupees for SSI & there hasbeen no change for tiny units.

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Following are the concessions /incentives offered by govt. to SSI

1. Investment Limits in P&M :Govt. has reduced the ceiling of investment from 3 crores to 1 crore in 1999 wit a view tosecure ownership & control of material resource & easing out the problem of unemployment.

This ceiling for tiny units has been retained to 25 lac.

2. Reservation of Items in small scale sector manufactured exclusively:

At present 812 items are listed in this category. These items can be manufactured by largescale units also but with 50% export obligations

3. Reservation of Items for exclusive SSI purchases:Director general of supplies & disposal (DGS&D) has listed down 358 items, which areoffered at purchase price preference 15% as compared to large-scale units & othersuppliers. National small industries Corp. Ltd. Does the mktg. Of SSI products to govt. underpreferential purchase policy. This avoids multiplicity of registration with various agencies.

4. Text Incentives/ concession & deductions from profits & gains:

• If a unit is set up in backward area under factory act (sec 80HH) 20 % for 10 yr.

• Its is 20% for 10 yr. for SSI in rural area (sec 80HHA)

• 20% for industries setup under factories act for 7 to 9 yr., 355 for corp. society’sfor 11 yr., 35% for co.’s for 11 yr.(sec80I)

• 25% for industries under factory act/ 100% for yr. & 25% for next 5 yr. If the unit isin backward area.

5. Exemptions & preferences from central excise duty:If an SCI’s has a turnover of more than 3 crore then 2options are available

a. For 1st 1 crore duty in nill, cenvat credit no permissible b. For 1st one crore 60% normal duty an cenvat credit permissible

Besides this they get relaxation in mode of duty payment & filing of returns

6. Foreign Direct Investment.:In order to encourage modernization & technological upgradation equity participation upto25% of total share holding by offer industrial undertaking or foreign collaborators in SSI ispermissible. Beyond this approval in needed with a commitment of 75 % to export.

7. Policy of priority credit:Nationalized commercial banks give priority to SSI’s, out of the 40% banks advances forpriority sector, 15 to 17% goes to SSI’s. out of this 40% goes to tiny units having investment.5 lac in plant & machinery & 20% for those having investment. between 5 to 25 lacs. Theinterest rates are also very low for these loans. Prime lending rates are applicable for loan

above 2 lac.

8. Initiative for credit:Reserve bank of India has directed 370 specialised SSI banks to provide working capital toSSI upto 20% for annual turnover limit upto 5 crore. Banks are advised to increase no. of SSIbranches. Loan from SIDBI for tiny sector for credit availability has been increased form50,000 to 2,00,000 rupees. The branch mangers are empowered to take the credit decisionsat branch level itself to ensure smooth flow of operations.

9. OTC exchange of India.Institutions like UTI , IDBI, LIC, GIC, ICICI has setup these exchange to raise resource from

capital mkt. It provides trading mechanism like bought out deals, market making,sponsorships for convenient assess to capital market. The minimum requirement for acompany to list on the exchange is 30 lac of post issue paid up capital./ It is helpful forentrepreneur to setup new ventures or expand activities. Exchange also provides trading in

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debentures unit of Mutual Funds, bonds. Exchange has state of art technology to promotetransparency for transaction all over the country.

10. Incentive scheme for acquiring ISO9000Since ISO is required for quality certifications for exports, SSI are given the incentives foracquiring the certification to the extent of 70% of cost of subject to the maximum of 75,000

11. Integrated technology upgradation & management programIs implemented for energy conservation, pollution control, process mordification. Thisprogram is started for 12 clusters all over India for small scale Units in the 9th 5 year planwith the cost of 6.5 crore.

12.Technological bureau for small enterprises (TBSE)It is a joint venture of small industries development bank of India (SIDBI) & the asian pacificcentre for transfer of technology. TBSE offers under one roof assistance & prospecativesmall enterprises in sphere of technology transfer & fund syndication. The main objective isto have a speedy assess & transfer of technology. This beareau identifies willingcollabroaters & extend support for financial assistance in terms of term loans, foreigncurrencies, venture capital, equity assistance.

13. Small Enterprises information & resource center This provides data & information for samll enterpreneurs, exporters, market avenuesseekers. It also provides technical knowhow. As on date this network has 21 electronicnodes.

14. Interest on delayed payment act.

This act was brought forward to safe guard the interest of the SSI units. In order to tackle theproblem of settlement of dues from co.s .

a. Change in the penal rate of interest form 5% above the floor rate to 150% of theprime lending rate (PLR) of SBIb. The agreed date of settlement of dues no to exceed 120 days form the date of acceptance.c. Additional alternative Mechanism of arbitration & conciliation to resolve disputebetween SSI suppliers & large scale buyers

15. Relaxation under environmental lawsAs per the water & air pollution control the board of environmental pollution gives grants of approval to SSI’s except 17 categories which are heavily polluting. This granted consent is validfor 15 years provided there is no change in treatment or disposal system. However pollutioncontrol board can have random checks or call for any further info.

16. Common effluent treatment plant (CETP)For cluster of SSI’s financial assistance is provided for above project.

• 25% subsidiary from central & state govt.

• 30% as loan at reduced rate from FI’s

• 20% as contribution from individual units

SSI’s are given some concession for expenditure on effluent disposal system. Training &awareness for cleaner technology are conducted by Dist. Collectorate SSI. The main obj. is tolaunch a campaign for waste minimisation.

17. Export Promotion Council

These are non-profit orgns. under Companies/ Society Registration Act established to promoteSSI’s products in export market by direct mktg., Vendor development or opening of sales outlet

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abroad. These councils also take bulk orders from buyers and pass on to SSI units for deemedexport. For this they charge nominal fees. These councils also decimate info. regarding eximpolicies, customs & excise duty rules. The membership charges for these councils are minimumfor SSI’s

18. Industry related research institutes

19. SIDBI strategic initiatives

20. Credit guarantees for SSI’s

This is for guaranteeing the loans & advances upto 10 lac rupees without co-lateral or thirdparty guaranty for SSI’s engaged in IT or software industries for 5 years.

Q. Who is an Entrepreneur, Define Entrepreneurship, State the Advantages of Entrepreneurship to an Individual & the nation?Entrepreneur is a person who undertakes an enterprise with a chance of profit & loss. He is theperson who can take moderate risk. He has the ability to work hard & capitalise on opportunityand has an urge for achievements & who has a desire for responsibility. He is the person withskill of organising & has some financial strenght.

Entrepreneurship is the process through which entrepreneur seeks innovative & employmenti.e. doing new things or things in the new way.

Advantage to an individual:1) It creates a self employment and a sense of self reliance i.e. freedom of idea adoption2) It provides prolonged career for next generation i.e. no limited tenure of career3) It enhances sense of innovativeness and creativeness4) It provides modes of unlimited and high-retained income5) It creates a sense of independence/satisfaction

6) It enhances per capita income via increase output7) It initiates a structural change in society and business

Advantage to a nation:1) Provides large employment: since entrepreneurial ventures are basically started as SSI

utilizing labour intensive techniques thus generating lot of employment for regional manpower

2) Wider distribution of wealth: increase in wealth output can be divided into variousparticipants

3) Optimum utilization and mobilisation of regional resources: since entrepreneur relies moreon local resources for production needs i.e. raw material and labour thus results inoptimisation of resource utilization.

4) Closing the demand gap through appropriate opportunity: due to knack of seekingopportunity in the environment through study of demand gap and utilizing their venture tomeet such demand gap

5) Export potential: since innovativation is an ongoing process for entrepreneurial venture thiscreates an export opportunity and hence increase exports potential.

6) Regional development: this is one of the key advantage which can be utilized disparities inregional development and also accelarate the pace of economic development

7) Enhance skills and savings8) Stimulates innovation and efficiency

Q. Characteristics and guiding factors for successful Entrepreneur:

Personality traits: urge for achievement, determination to win, willingness for moderate risk,ability to identify and explore opportunity, analytical ability for strategic decision, perseverance,flexibility/capacity to plan and organise, prepaid for physical and emotional stress

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Guiding factors: clear objectives, hr abilities, communication ability, technical knowledge, highenergy level, motivator, self confidence, problem solver, goal setter.

Q. Factors affecting growth of Entreprenuership:Change in attitude, expansion of educational horizon, supportive family structure, role models,professional support network, growing consumer class, easy access to money, venture capitalavailability, good technological access and infrastructure development, promotional policies and

incentive schemes, decision making tools, respect for ethics and culture, environmental factori.e. political, socio cultural, technology, legal, economic

Q. Entrepreneur for Economic Development:

Entrepreneur sets up enterprise wherein entrepreneur devotes resources, time and efforts toproduce goods and services with increase in the productivity output, value addition, income andemployment. Since entrepreneurship is low cost strategy, where entrepreneur plays a crucialrole. The spirit of entrepreneurship is the drive for achieving higher goals, creativity innovative

attitude. Thus spirit spreads like chain reaction in a dynamic society. In the economicdevelopment roles are to be played by everyone.

• Govt.: promotional i.e. facilitator and incentive oriented, neutral and regulator.• Corporate: Intrapreneurship i.e. entrepreneur within an orgn.• Individual: entreprenuership

Intrapreneur: is a person who focused on innovative and creativity who brainstorms dreams orideas into profitable venture by operating within the organisational environment.Intrapreneur is corporate entrepreneurship whereby an orgn seeks to expand by exploring newopportunities through new combination of existing resources. It is a tool for stimulating andcapitalizing entrapreneur in and orgn. It is basically to retain knowledge, revenue generation

through innovation, motivation to employee. It gives managers a freedom to try new idea byemploying firm’s resources in a unique way.

Advantage of Intrapreneurship:

• It offers idea to build or improve corporate business.

• Capital required for ideal comes from internal source

• Establish corporate image, enhance the chance of success of Intrapreneur idea.

• It helps corporate in economies of scale in mktg, distribution and service

• It is a multiple disciplinary team activity with job security and prosperity

Q. Essential of Intrapreneur:

1) Vision: It is the basis of successful venture. Since Intrapreneur has ability to visualise fromidea to actualisation.

2) Motivation: Intrapreneur is self motivated, but response to corporation reward andrecognition, money is measure of success and not incentive for efforts.

3) Bias to act: Intrapreneur is achievement oriented i.e. they want to act to realise dreamrather than entangling in planning cobweb. They look for incremental achievement.

4) Locus of control: Intrapreneur discourage system, since he is workaholic personality

5) Locus of risk : Intrapreneur are moderate risk takers since risk acceptance depends on theirskills. Wild risk takers are not affordable to corporates.6) Locus of status: Intrapreneur want to do the work on its own rather than delegating like

managers

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7) Failure and mistakes: Intrapreneur hide risky projects and ideas to ensure learningwithout political cost and public failure. They develop multi disciplinary team in the orgn andmay beyond orgn boundaries for results.

8) Goal set up: Intrapreneur ourself are determined to do things not even asked for. They setgoals and quality stds.

Q. Steps for setting Intrapreneurship in organisation:Secure commitment to Intrapreneurship from top, upper and middle mgmt. without top mgmtsupport, orgn cant have necessary culture change for implementation. Sufficient time to begiven to introduce the concept in the whole orgn through seminars. Intrapreneur is identified tobe trained for resource utilisation, opportunity and market and the success plan is made.

Identified idea should be accessed with financial risk expectation in terms of results has to bespecified in regards to time, volume and profits. There has to be mentor/sponser system forturning cultural orgn into Intrapreneural one.

Organisation should use technology to be competitive with larger firms through assess to largedata bank.

Org. should have manager who is willing to train employees by experience sharing. Trainingshould be given to employees for both basic entrepreneurship & co.s activity for marketableproduct/service.

Develop customer relations by tapping data base from rivals and helping retailers.

Org. should be more productive with fewer resources, the concept “ Lean & Mean” need toexist, i.e. control to be given to subordinates and are made well aware of the procedures so thatoperation can be run smoothly in the event of middle mgmt. downsizing.

Org. should have strong support structure because Intrapreneurship is a secondry activity notaffecting the bottom line, so these venture should be flexible, innovative, authoritative,sufficient fund assessed i.e. over expenditure nor required to be justified.

Performance to be rewarded to encourage & motivate team members because entrapreneuralventure is a part of large org. and not an independent one, so this reward systems becomessometime difficult to handle as it may be understood as an disparity trading process.

Set up an evaluating system for elimination of unsuccessful members & rewarding thesuccessful ones. Org. expansion should in parlance with mission statement.

Q. Describe the concept of Venture Capital with specific reference to the toEntrapreneur. Give the methodology to get venture capital from Venture Capitalproviding firms.Venture capital plays a vital role in financing SSI where growth potential and the risks are high.

This investment could be needed at any stage from start up to commercial production. Venturecapital provider service the business from development, approval of project/ideas, financialassistance and management expertise.

Salient features:

• It is long term source of investment generally 5 to 10 years

• Venture capital firms opt for equity participation through shares or convertible securities

• Venture capitalist ensure participation in management of business• Venture capitalist provide service in terms of mktg, technological mgmt, developing orgn

structure

• It is easier assess to funds than conventional source

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• Venture capitalist is not averse to risk only growth potential should be high

• Flow of funds is in phases of production or in initial stages as debts

• Venture capitalist are not permanent equity holders

• Venture capitalist will exit at appropriate time ensuring that entrepreuer’s interest is notgetting disturbed.

Stages of process:1) Delivery of business plan from an entrepreuer to venture capital provider. This plan

should have mission, objective, mkt analysis, financial statement. While evaluating businessplan venture capitalist ascertains whether the proposal fits his long term policies and shortterm needs, appropriateness of his knowledge in the project, ROI. He also ascertains thecapability and credential of entrepreuer.

2) Due diligence: this is an agreement stage between entrepreuer and venture capitalist priorto commitment in terms of money and efforts. After thorough study of business plan, resumeof promoters and key managers, financial background of promoters and risk of business areanalyzed in this stage.

3) Negotiation: after viability study of project, negotiation takes place in terms of fundsrequired vis a vis funds made available by the venture capitalist along with interest rate onloans, securities, equity, right to control the mgmt of business, buy back arrangement andexit policy.

4) Contract and MOU: considering the above terms agreement is signed with theconsideration of regulatory law.

5) Flow of funds: begins as per MOU, higher degree flexibility is desired from both parties andperiodic review is done at each stage.

6) Exit: since venture capitalist are not permanent equity holders so they may exit atappropriate time by adopting equity bye back, IPO (initial public offering), mergers and

acquisitions and smooth transition as exit strategy.

Entrepreuership should take care of:1) Select venture capitalist carefully2) Don’t hesitate to get all facts about venture capitalist and his previous activities and

background.3) Always involve an intermediary for better deal4) Avoid lawyer, accountant or advisers at initial stage5) Be careful about projected and promise facts and data’s6) Disclose your strength and weakness for better relationship7) Be flexible and patient, always remember performance builds trust.

Q. Compare Franchising, Ancillarising and Acquisitioning as a start up for anEntrepreuer:

Franchising:Also represents an opportunity for an entrepreuer to expand the business with a franchisee, theentrepreuer will be trained and supported in mktg by the franchiser and will be using a namethat has some established imageIt is an alternative for an entrepreuer to expand his or her business by having others pay for theuse of name, process, product, service and so on.

Definition:

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“an arrangement where by the manufacturer or sole distributor of a trade mark product orservice gives exclusive right of local distribution to independent retailers in return for theirpayments of royalties and conformance to standardize operating procedures.”

The person offering the franchise know as franchiser. The franchisee is a person who purchase the franchise and is given the opportunity to enter anew business with better chance to succeed than if he or she where to start a new business.

There are three types of franchising available:

1) Product franchising: selling of the finished goods with just mere displayed of goods, whichfacilitates easy accessibility a product to customer and achieve sale transaction without anyvalue addition.

2) Process franchising: outlets are granted to use the brand name and process of thefranchiser. The process and recipe are generally patented by the parent company.

3) Business format franchising: name, sale and method of doing business are transferredwith knowledge of conducting the outlet with affective follow up mechanism by thefranchiser.

The most common type of franchising is the type that offers a name, image and method of doing business such as mcdonalds, subway, KFC, midal, dulkin, donuts, holiday in.

Advantages:

a) of franchising to the franchisee:

1) Product acceptance: the franchisee usually enters into a business that has an acceptedname, product or service. The franchisee does not have to spend resources trying toestablish the credibility of the business.

2) Mgmt expertise: mgmt assistance provided by the franchiser. Each new franchise is oftenrequired to take a training program on all aspects of operating the franchise. This trainingcould include classes in accounting, personnel mgmt, mktg and production.

3) Capital requirement: a new venture can be costly both in terms of time and money. Thefranchise offers an opportunity to start a new venture with upfront support that could savethe entreprenuer significant time and possibly less capital. In some cases the franchiser willalso finance the initial investment to start the franchise operation. The initial capital requiredto purchase the franchise generally reflects a fees for the franchise, construction cost andpurchase of equip.. the layout of the facility, control of stock, inventory and the potentialbuying power of the entire franchise operation can save the entreprenuers significant funds.

4) Knowledge of the mkt: any establish franchise business offers the entreprenuer years of experience in the business and knowledge of the mkt. This knowledge is usually reflected ina planned offer to the franchise that details the profile of the target customer and thestrategies that should be implemented once the operation has begun. Most franchiser will be

constantly evaluating mkt conditions and determining the most effective strategies to becommunicated to the franchisees.

5) Operating and structural control: two problems that many entreprenures have instarting a new venture are maintaining quality controls of the product and services andestablishing effective managerial controls. Administrative controls usually involve financialdecisions revolving to cost, inventory, cash flow and personal issues such as criteria forhiring/firing, scheduling and training to ensure consistent service to the customer. Thesecontrols will usually the outline in a manual supplied to the franchisee upon competition of the franchisee deal.

b) of franchising to franchiser:1) Expansion risk : the most obvious advt of franchising for the entreprenuer is that

u can expand a venture quickly with little capital. A franchiser can expand a businessnationally and even internationally by authorising and selling franchise in selectedlocations. The capital necessary for this expansion is much less than it should be withoutfranchising. Operating a franchised business requires fewer employees than a non-

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franchised one. Head quarters and regional offices can be slightly **** to primarily supportthe needs of the franchises.

2) Cost advt: the franchiser can purchase supplies in large quantities thatachieving economic of scale that would not have been possible otherwise many franchisebusiness product parts, accessories, packaging and raw material in large quantities andthen in turn sell these to the franchisees.

Disadvantages of franchising

1) the disadvantages to franchise usually centre on the inability of the franchiser to provideservice, advertising & location. When promises made in the franchise agreement are notkept, the franchisee may be left without any support in important areas.

2) The franchisee may also face a problem when a franchiser fails or is brought out by anothercompany. In some case also the franchiser finds it difficult to find quality franchisee. Poormgmt can cause individual franchise failure.

Legal aspect of Franchise

Franchising involve many risks to entrepreneur since business such as hiring, scheduling,buying, accounting and so on are still franchisee’s responsibility. As per the federal tradecommission’s franchise rule, every franchiser has to submit a statement that provides

information about 20 aspects of franchise offering. He must evaluate franchise alternative frominformation provided to decide which one is important. Information disclosed is as follows :1. identification of franchiser & its affiliates & their business experience2. Business experience of franchise officers, directors & mgmt personnel responsible for

franchise training, service & other aspects.3. Law suit in which the franchiser and its officers, directors & mgmt personnel are being

involved.4. Any previous bankruptcy in which the franchiser and its officers, directors and mgmt

personnel are being involved.5. The initial franchisee fee & other initial payments those are required to obtain the franchise.6. Continual payments the franchise are required to make after the franchise offer.7. Any restriction on the quality of goods

FOR MORE POINTS REFER TO PROF. SABOO’s BOOK

ACQUISITIONEntrepreneur can start & expand the venture by acquiring an existing business. An acquisition isthe purchase of a company or a part of it so that the acquired company is completely absorbedand no longer exists as business entity.

Advantages of acquisition :1. acquired firm has an established image and track record. If the firm is successful the

entrepreneur needs to continue the existing strategy.2. Entrepreneur gets a well established customer base from the acquired firm3. Entrepreneur acquires well established channels and sales structure, suppliers, retailers,

wholesalers, manufacturers by acquiring the firm.4. Actual cost of acquiring can be lower than methods of expansion.5. The employees of the existing business can be an important asset & can help the business

to continue its successful mode.6. Since entrepreneur does not have to find suppliers, channel members, employees or

customers more time can be spent assessing opportunities to expand the business.

Disadvantages of acquisition

1. Most ventures have an erratic, marginally successful or even unprofitable track record. It isimportant to review the records to assess future potentials.

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2. Entrepreneur may assume he can succeed where others have failed. Self evaluation isimportant before agreement. Even though the entrepreneur brings new ideas & mgmtqualities, the venture may never be successful for reasons that are not possible to correct.

3. When business changes hands key employees also leave. Loss can be devastating sincevalue of business is often a reflection of efforts of employees.

4. It is possible that purchase price is inflated due to established customer base, channelmembers or suppliers. It is possible that ROI is not acceptable.

Determining the price of an Acquisition :

There are three valuation process – asset, cashflow and earnings. The entrepreneur can use todetermine the fair price of an acquisition. Key factors in evaluating firms are ;1. one person mgmt2. poor corporate communication.3. few mgmt tools being used4. insufficient financial controls5. highly leveraged – thinly capitalised6. variations & poorly prepared financial statements7. sales growth with no increase in bottom line8. out dated & poorly managed inventory

9. aging accounting receivable10.No change in products & customers.

ANCILLARISATIONAn ancillary unit is defined as an Industrial undertakings having investment in fixed assets, inplant & machinery whether held on ownership or on hire purchase not exceeding Rs. 100 crore& engaged in ;1. manufacturer of parts & components, sub-assemblies, tooling or intermediates &2. rendering of service or proposing to supply or render not less than 50 % of his production or

service to one or more other industrial undertaking for production.

Major difference between SSI & ancillary is that unit setup which can be recognised as a fullfledge large company can be a part of ancillary but under SSI such unit can get transformedinto medium or large scale sectors.

Major benefits of ancillarisation drive to a country is that :1. growth of employment2. growth of GDP3. growth of entrepreneurship

Advantages of Ancillarisation• Minimise investments of setting up of large units as the required as the required

production can be sourced a lower at rate with same quality through subcontacting from an

ancillary unit• Ancillary units JITconcept helps the large co.s to bring down the inventory level and saves a

lot of money.

• Sourcing is economical from ancillary units that are normally located near the co.

• Ancillary units work with the parent co.s in the process & product development

Disadvantages of Ancillarisation1. Delay in payments puts ancillary co.s in big trouble. If the parent co. is big then the ancillary

co. finds it diffucilt to take any legal action2. When parent co.s revise the specification ancillary units are some times not given the

expected support for adopting the higher technology, not given suficient time to bring

changes in the technology to match that of parent co.3. Multiplication of suppliers makes the ancillary units operate below BEP(Break evn point) as a

result these units incur losses because of capacity unutilisation.

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Q. Selection criteria for factory site location? There are certain general factors that influence the selection of the location of an enterprise. The most impt. Are :

1. Availability of raw materials- the biggest advantage of availability of RM at the locationof industry is that it involves less cost in terms of transportation cost.

2. Markets: If the products are fragile and highly susceptible to spoilage & if the transportation

cost constitutes a substantial portion of the total cost involved the proximity to mktconditions assumes added impt in selecting the location of the enterprise.3. Infrastructural facility - the easy availability of infrastructutal facilities play a deciding

role in the location selection of an industry. The facilities includes transport &communication, power, water , banking etc.

4. Govt. Policy - in order to promote the balance regional development the govt. offersseveral incentives, concession to attract entrepreneurs to setup industries in backwardareas.

5. Availability of man power6. Local laws of regulations - certain local laws prohibit the setting up of polluting industries

in particular areas similarily taxation on a higher rate may discourage some industries formsetting up in an area.

7. Ecological & environment factors8. Competition - in case of some enterprises like retail stores where the revenue of a

particular site depends on the degree of competition from the other competitiors in thelocality, they play a crucial role in selecting the location of the stores.

Q. Comparison: Manager v /s Entrepreneur

Managers Entrepreneur1) primary motives

promotion & other traditional corporaterewards, such as office staff & powers

2) time orientationshort term meeting quotas & budgets,weekly, monthly & quarterly

3) ActivityDelegates & supervises more than directinvolvement

4) Risk Careful

5) Status

Concerned about status symbol6) Failures & mistakes

Tries to avoid mistakes & surprises7) Decisions

usually agrees with those in upper mgmt.Positions

8) Serviceserves others

9) Family HistoryFamily members worked for large orgns.

10) Relationship with othersHierarchy as basic relationship

Independence, opportunity to create, &money

Survival and achieving 5 to 10 yr growth of business

Direct involvement

Moderate risk taker

No concern about status symbol

Deals with mistakes and failures

Follows dreams with decisions

Serves self & customers

Entrepreneurial small business,

professional, or firm background

Transaction & deal making as a basicrelationship

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Comparison : Male & Female Entrepreneure

Male Entrepreneur Female Entrepreneur1) Motivation

Achievement - strive to make things happenpersonal independence – self image as itrelates to status through their role in

comparison is unimportant job satisfaction arising from the desire to be incontrol

2) Departure pointDissatisfaction with present job sideline

In college, sideline to present job, discharge orlay off , opportunity for accusation

3) Sources of fundsPersonal asset & savings, bank financing,investors, loan from friends & family

4) Occupational BackgroundExperience in the line of work, recognisedspecialist or one who has gained a high level of achievement in the field, competent in avariety of business function

5) personality Characteristicsopinionated & persuasive, goal oriented,innovative & idealistic, high level of self confidence, Enthusiastic & energetic must beown boss

6) BackgroundAge when starting venture :25 to 35 father wasself employedCollege educated – degree in business ortechnical areas usually EngineeringFirst born child

7) Support groupsFriends,professional acquaintances, businessassociates, spouse

8) Types of business startedManufacturing Or construction

Achievement – accomplishment of agoalIndependence - to do it alone

Job frustration, interest in recognition inthe area,

Change in personal circumstances

Personal assets & savings, personalloans

Experience in the area of business,middle mgmt or administrative levelexperience in the field, self relatedoccupational backgroundFlexible & tolerant, goal oriented,creative & realistic, medium level of self confidence, enthusiastic & energetic,ability to deal with social & economicenvironment.

Age when starting venture: 35 to 45father was self employedCollege educated – degree in liberal arts

First born

Close friends, spouse, family, womenprofessional groups, trade associations

Service related – educational service,consulting or public relations

Q) What are prominent institutes imparting Training for EntrepreneurshipDevelopment. Explain their activites and method adopted

There are several organisation engaged in conducting entrepreneurship development programin India. The lead in the matter was given by the small Industrial Development Organisation

through its service centres. Other organisations that have been actively conductingentrepreneurship development progammes are State Bank of India; financial institutes such asIDBI entrepreneurial motivation training centre in northern-eastern region, Xavier Institute of social services, Ranchi: industrial consultancy organizations in various states, centre for

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enterperneurship development, Ahmedabad state financial corporations, centre of entrepreneurship development, Hubli small industries extension training institute, Hyderabad,National science& technology enterpreneurship development Board etc.

The need for a national org. to serve as an apex body to coordinate training program for variouscentre’s and organisation in the country, to train trainers & motivators in entrepreneurshipdevelopment, to prepare a model syllabis training for varoius target group & target areas etc.was felt, with a view to evolve & integrated national approach to this subject

The training program is designed to sub serve the following objectives:1. To impart basic knowledge about the industry, product & production methods2. To build the necessary skill for new entrepreneurs & workers3. To assist the entrepreneur/ worker to function more effectively in his present position by

exposing him to a least concept, technique & info.4. To build up second line of workers & prepare them to shoulder additional responsibilities

and/or switch on to the production of new products, if the is any diversification.5. To expose the entrepreneur to latest the developments which directly or indirectly effect

him.6. To broaden the vision of entrepreneurs by providing them suitable opportunity for an inter

change of experiences within and outside an industry.

7. To impart customer education8. To impart knowledge of the mktg. Of good

Methods of Training:1. The individual instructions : Under this method, a single individual is selected for

training. This mode of training is undertaken where a complicated skill is to be thought to anindividual

2. Group instructions: This mode of training is suitable for a group of individuals with asimilar type of work & where general instruction are applicable to all are to be given.

3. Lecture method: Here the instructor communicates in theory the practice to be followed bythe learners. Under this method, whenever there are any doubts they may be clarified onthe spot.

4. Demonstration method : Where the performance of work to be shown practically by theinstructor for better understanding, this method can be followed. This is more concernedwith the practical then theoretical aspects.

5. Written instruction method: The medium of training is followed where a featurereference is to be made by the learners. This method is mostly followed where astandardisation production is followed.

6. Conference: conferences are frequently organised wherein experts in the field share theirideas & bring to the notice of learners new ideas & techniques to increase the production

7. Meeting: Meetings are a mode of training involving a group of people who discuss thevarious problems confronting them, they involve exchanging ideas & views later on comingto firm conclusion based on the various proposals & alternatives.

Q. Product/Project Identification

Product selection: one has to select the right product, it involves research, careful evaluation& sound judgement. This activity is called the product selection analysis technique.

This technique consists of following steps:1. Idea generation2. Search & screen3. Evaluation

Product Idea: can be generated in a no. of ways. They are as follows:

1. Observations

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2. Foreign publications3. Brainstorming sessions4. Talking to various bodies like SISI,SIDC, The national small Industries Corp. Ltd. & The

national Institute for Enterpreneurship & small business development5. Talking to large scale pvt/public co. can also generate ideas

Product Search & screening

After we come up with product ideas, we look at products presently available & products relatedto those products ideas. Then pose the explortoey questions:1. Are customers satisfied with what they are getting?2. Can we identify a better method of production?3. Can the basic design be changed?4. What is the present demand, future demand likely to be & so on?5. What are the skills?6. Can I handle the technical subjects?7. If not can I hire people easily?8. Do the product idea generated match my basic interest or do I have to develoe nnew area of

interest?9. How much knowledge do I have about the markets?

10.Can I dig more info easily?

As a prospective entrepreneur one should know the bent of mind one has by asking thefollowing questions.1. Am I comfortable in the room full of strangers?2. Can I deal efficiently with people in position of power?3. Can I communicate efficiently & freely with?

If yes, mktg. Is the strong area or may be one has a head for figures an details. Then financemay be the area of strength. One could be interested in mechanical & technical matter with flairfor conceptualising & design. Then production or product design can be the areas of strength.

Production Evaluation Techniques These are products, which have to be evaluated objectively & in depth.. This is the productevaluation. This evaluation is carried on the following factors:

1. Growth2. Stability3. Marketability4. Company position5. Production

Stability

1. Performance of mkt.A product for which there is likely to be long lasting demand would enjoy a higher degree of market permanence than an item likely to become obsolete.

2. Breadth of mkt.A product used by a variety of customers belonging to various mkt. Segment and coversgreater no. of consumers and is rated very well.

3. Possibility of captive mkt.A product, which provides a unique and exclusive solution to specific mkt. needs, would be avery good rating.

4. Difficult of copying.Products that are highly technical and difficult to copy would be rated very good.

5. Stability in recessionLuxury items are rated poor because they are susceptible to drop in demand levels duringeconomic recession. On the other and consumer goods having regular demand may be ratedvery good.

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Growth Factors1. Uniqueness of product : A product that satisfies mkt. need exclusively or can replace a

more costly product by material substitution or better design possess a high degree of uniqueness and may be rated very good.

2. Demand supply relationship : If demand is greater than supply, unique or not a goodrating can be given.

3. Rate of technological change : Areas where rapid changes in technology are likely to

occur are risky and deserve poor rating. Such products become obselete faster.4. export possibilities : those products that enjoy international demand & can be exportedeasily demand a good rating.

Marketability1. Ease of distribution : A good rating would be given to a product, which can be transported

from point of manufacture to a point of sale easily, quickly & with minimum breakage ortransmission loss.

2. After sales service : products that have to be provided with after sales service, speciallyat customers location are rated poorly.

3. Average order size / per customer : greater the average order size per customer betterwould be the rating. It would be relatively easier & more beneficial to cater to customer to

buy large volumes.4. Freedom from numerous variations : products that have to be made available in a wide

range of grade, size, shape etc. resulting avg. manuf. Economy and inventory controlproblem & would be rated poorly.

5. Freedom from seasonal fluctuations : products for which demand falls in off season arerated poorly. Alternative products will have to be thought of to sustain profit during suchlean periods.

Company position factors

1. Time required to get established : projects having higher gestation period are morerisky for entrepreneurs as he exposes himself to a greater risk of changes in technology,competition & economic conditions.

2. Degree of value addition : Greater the value addition better the rating, hence it is betterto carry out the entire manufacturing process yourself rather than sub-contracting.

3. Availability of raw material : if crucial raw material and other materials are availableduring varying conditions than a good rating can be assigned

4. General labour atmosphere : the project should be located in a area enjoying a goodlabour climate.

Production Factors1. Procurement of equipment : will it be possible to get machinery & equipment easily &

quickly ? are the supplies reliable & convientantly located? If your answer is yes, rating is

good2. Utilities / facilities required : Some projects are highly dependent on clean water, steam,

electricity and good sewage system & if these are not available regularly then that projectwould be rated poorly.

3. Training of personnel : are technical people easily available ? if yes, can they be quicklyinto the company ? Is the training likely to be time consuming.

4. Freedom from difficult maintainance problem : Does a project involve a manufacturingprocess, which is hazardous, which could affect the well being of the work place but also thecommunity at large. A poor rating follows.

5. Freedom from costly waste – disposal problem : both govt. & society are becomingmore conscious of pollution and its dangers. If your project calls for a larger waste disposalsystem to neutralise the effluents than it will be a negative factor.

Conclusion – the list of factors is by no mean exhaustive and can be modified to suit specificproducts. A comparision of product profile would help us to decide which product to pick up.

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Q Role of SIDBI in devp. Of small scale industries.A. Modernisation & Technology upgradation :For this technology upgradation & modernisation of SSI units, SIDBI has a no. od schemes of assistance, the major among these are technology development & modernisation fund(TDMF) scheme. In line with the announcement made by the union finance minister in unionbudget 95-96, SIDBI in april 95, had setup its on resources, a technology development &

modernisation fund with an ear mark corpus of 2 billion. The fund aims at encouraging existingindustrial units in small scale sectors to modernise their production facilities & adopt improved& updated technology so as to strengthen their export capabilities. Direct assistance by way of term loan or participation in equity or both is provide to SSI units.

The TDMF scheme has been liberalised to include :1. Non exporting SSI/Ancillary units2. SSI/Ancillary units which are graduating out of SSI sectors on implementation of

modernisation programs as eligible units of assistance under this scheme.Under TDMF scheme direct assistance is provided at the prime lending rate of SIDBI with no upfront fee.

B. Marketing finance: To assist SSI in mktg. Of their products, SIDBI had created a mktg. Development assistancefund(MDAF) in 1995-96 by appropriating a sum of rupees 100 million out of net profit. Thecorpus of the fund has been expanded to rupees 350 million. Out of this a sum of rupees 25million has been specially year mark for providing mktg assistance to women entrepreneurs.MDAF provides for financing innovative mktg projects through a suitable mix of instruments likeloans, conditional loans, grant & equity. Under the mktg. Scheme assistance ins also availablefor intangibles like marketing research, R&R, product upgradation & standardisation,preparation of strategic mktg plans, advertising, branding, catalogue preparation, production of audio/visual aids, participation in trade fairs/ exhibitions, undertaking sales promotion tours,establishing distribution networks, retail outlets & warehousing facilities etc. besides this

assistance is available for development for infrastructure. Working capital term loanrequireents & bills discounting facilities for service providers are also covered under thescheme.

C. Development of Industrial Infra-structure:Laying special emphasis on the development of infrastructure of the SSI sector SIDBI launchedan improved scheme “of direct assistance for development of industrial infrastructure for theSSI sector”. The range of assistance covers the setting up of industrial estates /development of industrial areas, strengthening of existing industrial estates & clusters setting up of commonfacilities centre’s, warehousing & container services, electronic & software technology parks,permanent exhibition cum sales outlets, mktg outlets etc. wherever the benficieries arepredominantly SSI’s. SIDBI also operates scheme for integrated infrastructural development

(IID), under which financial assistance is provided for the setting up of IID centre’s .

D. Bill Discounting & Factoring Services :In order to promote a bill culture and to mitigate the problem of dealyed payment of reciveablesby SSIs, SIDBI operates two schemes, viz.; Direct discounting of bills (Components) and DirectDiscounting of Bills (Equipment). DDS (Components) covers arising out of purchase of indigenous components parts / subassemblies / intermediates manufactures by SSI units,primarily targeted to help SSIs realize their payments quickly.

E. National Venture Fund for Software and IT Industry :

• A national level venture fund, viz; National venture fund for software and IT Industry was

launched on December 10,1999 by Hon’ble Prime Minister of India.• Main objective of the fund is to meet the total fund requirement of software and IT

companies.

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• The fund would also develop international networking and enable assisted units to attractco-investment from international venture capitalists in subsequent round of financing.

• NVFSIT is closed ended 10year fund with an initial corpus of Re.1 billion promoted by SIDBI.

• The fund is being managed by SIDBI Venture capital Limited a wholly subsidary of SIDBI.

F. Credit Rating for Exporting SSI units:SIDBI has an arrangement with Dun & Bradstreet information services (I) pvt.Ltd. (D&B) toprovide credit rating and allied services to SSI units.

G. Incubating Centres:SIDBI launched National Program on Innovation and incubation for small Industrial under whichincubator facilities are provided to the project, which are at seed stage, and having highresearch and development content and are technology focused to reach the pre-commercialstage, has been initiated.

Q. Explain the Role of Entrepreneurship in the Role of Economic Development of acountry?

The role of entrepreneurship in economic development involves more than just increasing per

capita output & income; it involves initiating & constituting changes in the structure of business& society. This change is accompanied by growth & increase output which allows more wealthto be divided by various participants. Entrepreneurship is presently the most effective methodfor bridging the gap between science & the mkt. place., creating new enterprises & bridgingnew products & service to the market. These activities significantly effect the economy of anarea by building the economic base & providing jobs given its impact on bot the overalleconomy & the employment of an area.

Following roles are played by entrepreneurs in economic development of the country:1. Raises productivity2. Powerful tool for job creation3. Transfer of technology

4. Strategic role in commercialising new invention5. Crucial role in restructuring & transfer of economy6. Reduce concentration of economic power7. Support growth to organised sector8. Make market more competitive9. Stimulate a redistribution of wealth, income & political power10.Improve social welfare11.Create new market- expansion into international market12. Is low cost strategy of economic development, job creation & technical innovation

Q. Why Enterprenureship Mgmt is a compulsory subject for mgmt study?The overall for a course in Enterprenuership:1. Understand the role of new and smaller firm in the economy2. Understand the relative strengths and weaknesses of the different type of enterprise3. Know the general characteristics of the entreprenurial process4. Assess the students own entreprenuership process5. Understand the entrepreneurial process and the product planning and development process6. Known alternatives, methods for identifying and evaluating business opportunities and the

fact is that support and inhabit creativity7. It develop an ability to form, organise and work in interdisciplinary teams8. Know the general correlates of success and failure in innovation and new venture creation9. Know generic entry strategies for new venture creation

10.Understand the aspects of creating and presenting a new venture business plan11.Know-how to identify, evaluate and obtain resource12.Know the essentials of: mktg plan, financial planning, operation planning, orgn planning,

venture launch planning.

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13.Know how to manage and grow a new venture14.Know the managerial challenges and demands of a new venture launch15.Understand the role of entreprenuership in existing orgn

Q. What is the Entriprenurial Decision Process?Many individuals have difficulty bringing their ideas to the mkt and creating a new venture. Yet,entreprenuership and the actual entreprenurial decision hv resulted in several million new

businesses being started throughout the world. Altough no one knows the exact no., in theunited states estimates indicate that 1.1 to 1.9 million new companies hv been formed eachyear in recent years. Indeed millions of ventures are formed despite recession, inflation, highinterest rate, lack of infrastructure, ecnomic in certainty and the high probability of failure. Eachof these ventures are formed to a very personal human processes that, although unique, hassome characterstic common to all. Like all processes the entreprenurial decision processinitiates the movement, from something to something - a moment from a present life style toforming a new entreprises, as indicated.

1. Change from present life style: the decision to leave a career or life style is not aneasy one. It take a great deal of energy to change and do something new and different.Although individual tend to start business in area that are familier, two work environmentshv been particular good for spawning new entreprises, r&d, individuals development, newproduct ideas or processes and often leave to form their own companies, when this newideas are not accepted by their employers. Perhaps and even stronger incentive toovercome the inertia and leave a present life style to create something new come from anegative force – disruption.

A significant no. of companies and formed by people who hv retired, who are reallocated dueto a move by other members in a dual – career family, or who hv been fired. There isprobably not greater force than personal dislocation.

The decision to start a new company occurs when an individual perceives that forming a new

entreprise is both desiable and possible.

Work environment, disruption:

2. Desireability of a new venture formation : the perception that starting a co. isdesirable results form an individuals culture, sub culture, family, teachers & peers. A culturethat values an individual who successfully creates a new business will spawn more ventureformation that one that does note. Countries with cultures that more closely emulate thisattitude do not have as high a business formation rate. It will be interesting to watch whichof the once – controlled economies will develop a pro-entrepreneur culture. No culture istotally for or against entrepreneurship. Many sub cultures that shape value systemsoperates within a cultural framework.

There are pockets of entrepreneur subculture in the united states. This sub culture supports& even promotes enterpreneurship – forming a new co. – as one of the best occupation. Nowonder more individuals actively plan new enterprises in this supportive environments.

There are also variations within this subculture caused by family traits. A very highpercentage of the founders of co.s had fathers or mothers who valued independence. Theindependence achieved by co. owners, professional, artists, professors or farmers permitstheir entire family life, giving encouragement & value to their children’s co. – formationactivity.

Encouragement to form a co. is further stimulated by teachers, who can sinificantly influenceindividuals regarding enterpreneurship as a good possible career path. Schools with exciting

course in enterpreneurship & innovations tend to develop entrepreneurs & can actually drivethe entrepreneur environment in an economical area. An area having a strong educationbase is a strong support factor for entreprenural activity & co. formation. Peers are veryimpt. In the decision to form a co. an area with an entrepreneur pool & a meeting place

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where entrepreneurs & potential entrepreneurs can discuss ideas, problems & solutionspawns more new co.’s than an area where these are not available.

3. Possibility of new venture formation: Several factors- govt., background, mktg, rolemodels & finances – contribute to a creation of new venture. The govt contributes byproviding the infrastructure to help & support a new venture.countries that have arepressive tax rate on business or individuals can suppress company formation, sincecompanies will not have the money to start & grow & monetary gain cannot be achieved.

However the social, psychological & financial risk are still present. Formal education &previous business experience gives a potential entrepreneur the skills needed in forming &managing a new enterprise. Although education systems are important in providing theneeded business knowledge, individual will tend to be more successful in forming business infields in which they have worked. Mktg also plays a critical role in forming a new company.

In addition to the presence of market of sufficient size, there must also be a level of mktgknow-how to put together the best total package of product, price, distribution & promotingneeded for successful product launching. A co. is more easily formed where the driving forceis from market demand than a technology push. A role model can be one of the mostpowerful influence in making co. formation seem possible. To see someone else succeedmakes it easier to picture yourself engaged in similar activities-of course, even more

successful. Finally resource must be readily available. Risk capital availability plays an initialrole in the development & growth of

Q What is the Importance of International Entrepreunership in developing acountry like India . Please give your suggestion in building an Indian MNC. Mention inbrief factors you consider favourable as well as barriers.?India is a developing nation which needs to utilise its natural resources in an optimal fashion inorder to create wealth for the nation . As a nation our major strenghts are skilled manpower ,technical skills , access to modern technology & ecenomical costs of labour . However we alsohave certain inherent weaknesses like poor infrastructure , lack of literacy & a great number of people living below the poverty line.

International Entrepreunership will benefit our country in the following ways

• It will develop industrially with some infrastructure a part of India where the project willbe set up.

• It will aim to generate employment amongst the local people & the functioning of thisfirm will benefit the community at large.

• Its products & services will add to the GNP /GDP & will be a source of tax collection forthe government besides contributing to increasing the basic standard of living & per capitaincome.

• It will earn valuable foreign exchange will India badly needs to reduce its balance of payment position . The future commercial strength of India will depend on the ability of itsentrepreuners & other established companies to take advantage of markets outside the

countrys borders.

Suggestions for building Indian MNCBefore an entrepreunership organisation thinks of doing buisness on foreign soil it should firstconsolidate & have preferably leadership foot hold in the domestic market. It should haveencountered any of the following conditions

• Saturation in local market

• Declining market size in India ie de-growing markets for its products

• Has core competency in existing field of business with spare capacity & hence looking toexpand in terms of geographical boundaries .

Under such conditions a producer of goods & services should look forward to cross boundariesinto other nations to sell his goods & services . They should start off by tapping neighbouringcountries before expanding to further areas.

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Before an Indian entrepreuner thinks of doing business abroad he must understand howinternational business differs from his local business . The key to his success lies in being ableto understand the above & respond accordingly. International entreprenuerial decisions aremore complex due to the following factors• Economics – Creating a business strategy for a multi country area means dealing with

differences with levels of Economic development, currency valuations , governmentregulations , banking , systems as well as market /distribution systems . The extent of thequality of these factors significantly impacts the ability to succesfully engage in international

business .• The countries balance of payment (BOP)- differenec between imports versus exports

effects the valuation of its currency & hence effects its ability to do business withdeveloped countries.

• Political enviornment – The difference in political & legal environments acrossinternational markets pose different cahllenges in doing business in foreign markets.Eachelement of the business strategy of the inmternational entreprenuer can be effected bypolitical/legal environments.

• Culture – The impact of culture on Entrepreuners is significant with respect to the strategiesthat they intend to employ. Each element of the business plan has to have some degree of congruence with local culture . Understanding local culture is essential to development of the entrepreuners worlwide strategy plan, the degree of adaptation & standardisation would

vary in each country.• Technology – Like culture varies significantly across countries & industyr standards vary

from country to country .

Hence the major steps should be• Stage 1 – make initial movements into international business following a highlycentralised decision making process. Tread carefully & start up operations through direct orIndirect exports. In this stage the entreprenuer & his organisation undergo the learning &experience curve effects which will help in the long run• Stage- 2 – Once the business is succesful & the organisation ahs managed to transfer itscompetencies across borders into many countries, the decision making process has to get

de-centralised. The firm could employ a multi country strategy by tailoring its producst tosuit each countries preferences & culture or go in for high degree of Integration &standardisation.• Stage 3 - Once decentalisation is carried out the HQ should retain tight control overrstrategic decisions & tactical implementation of corporate strategy.

Trade barriers

• Import quotas particularly imposed by developed nations on goods allowed fromdeveloping nations .

• Local tariffs / import duty in developed nation making indian goods non-competitive.

• Subsidies to local manufacturers makes imports unviable

• Trade blocks & free trade areas between developed nations & their neighbours

encourages trade between them For e g EU countries , NAFTA etc. which reduces indiaschances of doing business in these sectors.

Trade barriers increase an entrepreuners cost of exporting products & hence such incrasedcost will force entrepreuner to establish the manufacturing base in those countries to surmountsuch barriers .

Favourable Conditions The indian government is encouraging international entrepreunership by offering the followinginitiatives.

• Tax sops on export earnings

• Setting up of export processing zones close to ports• Waiver of import duties on essential RM meant for processing export goods

• Waiver of sale tax, octroi & other govt. levies on export goods

• Providing for cheaper land to 100 % EOUs

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Q. Characteristic of a successful Entrepreneur.

Qualities Skills/ Competencies

1. Administrative - Art of getting things done by other people ability - Strong motivation towards achievement

- Exert considerable efforts

2. Mental ability - Intelligence/analytical approach creative thinking &Anticipate changes

3. Clear Objectives - To establish the product

- make profit

- Render social service

- No charity at, Input level only at, o/p level

-

4. Business secrecy - No leakage of business secrets to competitors

5. Human relation ability - with customers/ employees/ suppliers/ creditors/bureaucrats.

6. Communication ability - with customers/ employees/ suppliers/ creditors/bureaucrats.

7. Technical knowledge - Necessary for risk taking.

8. Learning from experience - modify their goals on feedback from enviroment

- Capabilities testing when opportunities arise.

- Open to feedback

9. Need for Independence - Prefer not to be controlled

10. Hope for success - Motivation and self-confidence for success

- Attempt task than fear of failure

11. Time orientation - Works for the present

- Quote their past failure with pride

- Indicate confidence

- High goals for themselves.

12. High expectations from employees - Drive employees hard to achieve.

13. Competition - Collaborate with other when to their advantage

14. Social Change - Create jobs for others

- New products/ new mfg. Methods

15. Social Consciousness - Social implications of block mkt hoarding

16. Dignity of labour - Work himself with his hands.

Q. Describe the process the of scanning the environment to start an entrepreneurialventure, please give a scheme to short- list a few good business idea?For a new venture to be set up an initial environment analysis has to be carried out in order toidentity trends, changes accruing at national and international level, gather knowledge about

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the government polices in terms of financial and commercial impacts of the policies, knowledgeraw material ability, infrastructure and utility ability at the propose site. The major environmentfactors, which may affect the entrepreneurial, set up, are:

1. Economic - One should consider the trends in terms off unemployment disposable income,GNP and so on.

2. Cultural - The cultural changes has to be keenly evaluated as it may effect the businessplan, because the cultural changes may have change the attitude to wards safety health and

nutrition.3. Technology - In this perdition is difficult in terms of advance due rapid developmentalchanges. So entrepreneur has to make short terms mkt. decision and contingency plan,since these advances effect the product and services. There is major risk like competitor’sreaction mkt. Weakness product obsolesces.

Business ideas would be short listed using various idea-generating schemes such as:

• Brainstorming

• Focus group

• Problem inventory analysis

• Check list

Q Innovation and Entrepreneurship.An innovation is investing of resource to create new wealth or investing of wealth to cerate anew resource. Innovations is the specific function of Entrepreneurship, whether in an existingbusiness, public service institution, or a new venture started by a lone individual in a family.

Innovation is needed for following reasons:1. To face competition.2. To stand out in a clutter.3. To survive recession4. To solve certain problems.

Installing attitude for innovation :1. Encourage creative conflict2. Big ideas from small teams3. Learning happens from the desk4. Understand the product users5. Live in the future6. Failure sometime produces innovation7. Joint prototyping to brain storming for fast track innovation

Different sources of Innovation:1. Unexpected occurrences2. Process needs3. Incongruities4. Industry & market changes

Q. Creativity & its role in developing business ideasCreativity is showing imagination & originality. It is basically an innovation generated byentrepreneur in business to solve or generate ideas to serve the market better. Creativity candecline due to age, education, idleness, perceptual, cultural, emotional & organisational factors.Creative thinking is basically a process of searching screening & connecting thoughts. Creativitycan be used for development of better business ideas in terms of product, process, market

development aspects. The various creativity oriented problem solving & idea generating techniques are as follows:

1. Brainstorming2. Reverse Brainstorming

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3. Synectics4. Gordon method5. Checklist method6. Free association7. Forced relationship8. Collective notebook method9. Heuristics10.Scientific Method

11.Kemper-Tregoe Method12.Value analysis13.Attribute listing method14.Morphological analysis15.Matrix charting16.Modification matrix17.Inspired Approach18.Parameter Analysis

2 Entrepreneurship Management

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