Q1

ANSWER

Tips to become successful Entrepreneur

Entrepreneurship is different than self-employment. The word entrepreneur denotes that the business youve set
up or are about to set up is unique, creative, and innovative. To be successful as an entrepreneur, you need,
above all else, to be a self-starter and to have a great idea. Here are the steps to becoming a successful
entrepreneur by bringing your idea successfully to your customers and/ clients:
1. Be passionate with what you do. You start a business to change any or all part of your life. To attain this
change, you need to develop or uncover an intense, personal passion to change the way things are and to live
life to the fullest. Success comes easily if you love what you do. Why? Because we are more relentless in our
pursuit of goals about things that we love. If you hate your job right now, do you think you will ever be
successful at it? Not in a million years! You may plod along, even become competent at the tasks, but you will
never be a great success at it. You will achieve peak performance and do what you have to do to succeed only if
you are doing something that interests you or something that you care about. Entrepreneurs who succeed do not
mind the fact that they are putting in 15 or 18 hours a day to their business because they absolutely love what
they do. Success in business is all about patience and hard work, which can only be attained if you are
passionate and crazy with your tasks and activities.
2. Focus on your strengths. Lets face it; you cannot be everything to everybody. Each of us has our own
strengths and weaknesses. To be effective, you need to identify your strengths and concentrate on it. You will
become more successful if you are able to channel your efforts to areas that you do best. In business, for
example, if you know you have good marketing instincts, then harness this strength and make full use of it.
Seek help or assistance in areas that you may be poor at, such as accounting or bookkeeping. To transform your
weakness to strength, consider taking hands-on learning or formal training.
3. Never consider the possibility of failure. Ayn Rand, in her novel The Fountainhead, wrote, It is not in the
nature of man nor of any living entity, to start out by giving up. As an entrepreneur, you need to fully believe
in your goals, and that you can do it. Think that what you are doing will contribute to the betterment of your
environment and your personal self. You should have a strong faith in your idea, your capabilities and yourself.
You must believe beyond a shadow of a doubt that you have the ability to recognize and fulfill them. The more
you can develop faith in your ability to achieve your goals, the more rapidly you can attain it. However, your
confidence should be balanced with calculated risks that you need to take to achieve greater rewards. Successful
entrepreneurs are those who analyze and minimize risk in the pursuit of profit. As they always say, no guts, no
glory.
4. Work hard! Every successful entrepreneur works hard, hard and hard. No one achieves success just by
sitting and staring at the wall every single day. Brian Tracy puts it out this way, You work eight hours per day
for survival; everything over eight hours per day is for success. Ask any successful businessperson and they
will tell you immediately that they had to work more than 60 hours per week at the start of their businesses. Be
prepared to say goodbye to after-office drinks every day, or a regular weekend get-away trip. If you are in a
start-up phase, you will have to breathe, eat and drink your business until it can stand on its own. Working hard
will be easy if you have a vision, clear goals, and are passionate with what you do.
5. Constantly Look for Ways to Network. In business, you are judged by the company you keep from your
management team, board of directors, and strategic partners. Businesses always need assistance, more so small
businesses. Maybe the lady you met in a trade association meeting can help you secure funding, or the
gentleman at a conference can provide you with management advise. It is important to form alliances with

people who can help you, and whom you can help in return. To succeed in business, you need to possess good
networking skills and always be alert to opportunities to expand your contacts.
6. Willingness to Learn. You do not need to be a MBA degree holder or PhD graduate to succeed in your own
business. In fact, there are a lot of entrepreneurs who did not even finish secondary education. Studies show that
most self-made millionaires have average intelligence. Nonetheless, these people reached their full potentials
achieved their financial and personal goals in business because they are willing to learn. To succeed, you must
be willing to ask questions, remain curious, interested and open to new knowledge. This willingness to learn
becomes more crucial given the rapid changes in technologies and ways of doing business.
7. Persevere and have faith. No one said that the road to success is easy. Despite your good intentions and hard
work, sometimes you will fail. Some successful entrepreneurs suffered setbacks and resounding defeats, even
bankruptcy, yet managed to quickly stand up to make it big in their fields. Your courage to persist in the face of
adversity and ability to bounce back after a temporary disappointment will assure your success. You must learn
to pick yourself up and start all over again. Your persistence is the measure of the belief in yourself. Remember,
if you persevere, nothing can stop you.
8. Discipline yourself. Thomas Huxley once said, Do what you should do, when you should do it, whether you
like it or not. Self-discipline is the key to success. The strength of will to force yourself to pay the price of
success doing what others dont like to do, going the extra mile, fighting and winning the lonely battle with
yourself.

Types of Entrepreneur:
Entrepreneurs are classified in a number of ways as discussed below.
Clearance Danhofs Classifications
Danhof classifies Entrepreneur into four types.
1. Innovative entrepreneur: This category of Entrepreneur is characterized by smell of innovativeness. This
type of Entrepreneur, sense the opportunities for introduction of new ideas, new technology, discovering of new
markets and creating new organizations. Such Entrepreneur can work only when certain level of development is
already achieved and people look forward to change and improve. Such Entrepreneur are very much helpful for
their country because they bring about a transformation in life style.
2. Adoptive or imitative entrepreneur: Such entrepreneurs imitate the existing entrepreneur and set their
enterprise in the same manner. Instead of innovation, may just adopt the technology and methods innovated by
others. Such types of entrepreneur are particularly suitable for under-developed countries for imitating the new
combination of production already available in developed countries.
3. Fabian entrepreneurs: Fabian entrepreneurs are characterized by 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 enterprises.
4. Drone entrepreneurs: Such entrepreneurs are conservative or orthodox in outlook. They always feel
comfortable with their old fashioned technology of production even though technologies have changed. They
never like to get rid of their traditional business, traditional machineries and traditional system of business even
at the cost of reduced returns.
Arthur H Cole Classification
Arthur H Cole classifies entrepreneurs as empirical, rational and cognitive entrepreneur.
Empirical: He is entrepreneur hardly introduces anything revolutionary and follows the principle of rule of
thumb.

Rational: The rational entrepreneur is well informed about the general economic conditions and introduces
changes, which look more revolutionary.
Cognitive: Cognitive entrepreneur is well informed, draws upon the advice and services of experts and
introduces changes that reflect complete break from the existing scheme of enterprise.
Classification Based on the Scale of Enterprise
Small scale: These entrepreneurs do not possess the necessary talents and resources to initiate large-scale
production and to introduce revolutionary technological changes.
Large scale: They possess the necessary financial and other resources to initiate and introduce new
technological changes. They possess talent and research and development facilities.
Other Classification
Following are some more types of entrepreneurs listed by behavior scientists.
Solo operators: These are the entrepreneurs who essentially work alone, introduce their own capital and if
essential employ very few employees. In the beginning most of the entrepreneurs start their enterprises like
them.
Active partners: Such entrepreneurs jointly put their efforts and resources. They actively participate in
managing the daily routine of the business concern. Entrepreneurs who only contribute their funds but not
actively participate in the business are called simply Partners.
Inventors: Such entrepreneurs are creative in character and feel happy in inventing new products, technologies
and methods of production. Their basic interest lies in research and innovative activities.
Challenge: According to such entrepreneurs, if there is no challenge in life, there is no charm in life. Such
entrepreneurs plunge into industry/business because of the challenge it presents. When one challenge seems to
be met, they begin to look for new challenges. They convert odds and adversities into opportunities and make
profit.
Buyers: These are the entrepreneurs who do not like to face the hassles of building infrastructure and other
facilities. They simply purchase the existing one and by using their experience and expertise try to run the
enterprise successfully.
Life timers: Such entrepreneurs take business as an integral point of their life.
Family enterprises, which mainly depend on exercise of personal skill, fall in this category.
Industrial entrepreneurs: Such entrepreneurs engage in manufacturing and selling products.
Service entrepreneurs: Such entrepreneurs engage in service activities like repair, consultancy, beauty parlor
etc where entrepreneurs provide service to people.
Business entrepreneurs: They are also called as trading entrepreneurs which buy and sell goods.
Agricultural entrepreneurs: They engage themselves in agricultural activities like horticulture, floriculture,
animal husbandry, poultry etc.
Corporate entrepreneurs: Corporate entrepreneurs undertake their business activities under legally registered
company or trust.
Rural entrepreneurs: Entrepreneurs selecting rural-based industrial opportunity in either khadi or village
industries sector or in farm entrepreneurship are regarded as rural entrepreneurs. According to khadi and village
industry commission (KVIC) Village or rural industry means any industry located in rural area, population of
which do not exceed 10,000 which produces any goods or services in which fixed investment of an artisan or a
worker does not exceed one thousand rupees.
Women entrepreneurs: According to government of India an entrepreneurs is defined as an enterprise owned
and controlled by 16 a woman and having minimum financial interests of 51% of the capital and giving at least
51% of the employment generated in the enterprise to women. Women entrepreneurs play an important role in
economy especially in rural areas.

Q2
ANSWER
INTRODUCTION OF ENTREPRENEURSHIP IN THE ORGANISATION

Q3
ANSWER

Five Definitions:
As per Peter Drucker- An entrepreneur is one who always searches for change,
responds to it as an opportunity. Entrepreneurs innovate. Innovation is a specific
instrument of entrepreneurship.
As per Joseph A. Schumpeter- Entrepreneur is one who innovates, raises money, and
assembles inputs, chooses managers and sets the commercial organization going with
his ability to identify them and opportunities which others are not able to identify and is
able to fulfill such economic opportunities.
As per Walker- An entrepreneur is one who is endowed with more than average
capacities in the task of organizing and co-coordinating the various factors of production.
He should be a pioneer, a captain of industry.
Cantillon defined entrepreneur as an agent who buys factor of production at certain
prices in order to combine them into a product with a view to selling it at uncertain
prices in future.
Hisrich and Peters defined E as the person who creates something new with value by
devoting the necessary time and efforts assuming the accompanying financial, psychic
and social risk and receiving the resulting rewards of monitory and personal satisfaction
and independence.

Q4
ANSWER

"Entrepreneurs are born and not made"

Entrepreneurship is a discipline with a knowledge-based theory. A person can learn and acquire the
competencies of becoming an entrepreneur and start a venture and make it grow. So the myth that entrepreneurs
are born and not made can safely be dispelled.
Some say that you cant learn how to build a successful company, youre either born with the right stuff or
youre not.
But if thats the case, then why are so many successful business people pouring their own money into funding
entrepreneurial programs in colleges and universities?
There are certain identifiable skills that can make anyone a successful entrepreneur. These skills, such as risk
taking and the ability to see promising new opportunities, are usually thought of as innate, but that doesnt mean
they cannot be learned. Just as there isnt one definition of success, neither is there one type of entrepreneur.
For the same reason, some skills are much more useful for certain opportunities than others. So its more
meaningful to measure success in terms of making the right match between opportunity and personality type,
and then focus on building the necessary skill set. This is the reasoning behind teaching entrepreneurship and
focusing on self-discovery and how to match opportunities to personal qualities.
A report by Ernst and Young has found that out of nearly 700 business owners, most of them became
entrepreneurs after a significant stint in the corporate world. When asked about their most important source of
learning, the most frequent answer was experience as an employee (33%), followed by higher education (30%).
This goes to show that not every entrepreneur is a college dropout, and that higher education is in fact a good
investment in ones future. Since startups are responsible for more than a one third of all new jobs in the United
States, colleges and universities should put more emphasis on properly preparing students for choosing to
become entrepreneurs.
At a more abstract level, we believe that entrepreneurship should be taught to every business student because it
is the very origin of all businessesafter all, there would be no business schools if there had never been any
entrepreneurs! Aristotle is reported to have stated that we do not understand a thing until we see it growing from
its very beginning.

Q5 SHORT NOTES ON SOCIAL ENTREPRENEURSHIP

Social Entrepreneurship
Entrepreneurs are people who venture into new areas primarily with intent of making profit out of the same. Of course
there they socially responsible also and have the obligation of contributing to the well being of the society in which they
operate; but this obligation is secondary. In social entrepreneurship this obligation of contribution to social well being is
primary and in a way profit takes a back seat or is more or less secondary but essential to the survival!
A social entrepreneur is somebody who takes up a pressing social problem and meets it with an innovative or path
breaking solution. Since profit making is a secondary objective, therefore they are people who are passionate and
determined about what they do. They possess a very high level of motivation and are visionaries who aim at bringing
about a change in the way things are.
By definition social entrepreneurs are great people recruiters who present their ideas or solutions in a way that many
people, who are either part of the problem or surrounding it, recognise a need for change and get onboard the change
bandwagon. Thus mobilizing the masses for bringing about change is a hallmark of a social entrepreneur.
Social entrepreneurs operate with an aim of changing the face of society. Be it health, sanitation, education, they are
present everywhere. There are people even who work on bringing about change in the modern innovations because their
impact has been detrimental to human life. They thus work towards improving systems, creating new solutions, laying
down fair practices.
Some of the very famous people who inspire others to take up social entrepreneurship are:

Susan B Anthony: was the CoFounder of the first womens temperance movement and a prominent American
civil rights leader for womens rights in the 19th century.
Vinobha Bhave: is a prominent figure in Indian modern history and was the founder and leader of the Land gift
movement that helped reallocate land to untouchables.

Maria Montessori: a pioneer in education. Developed the Montessori approach to early education in children.

Florence nightingale: she laid the foundation for the first school of nurses and worked to improve the hospital
conditions.

Margaret Sanger: She was the founder and Leader of the planned parent hood federation of America, championed
the family planning system around the world.

These are examples of some people who fought for what they believed in and brought about varying degrees of change in
their respective spheres of work.
Social entrepreneurship has witnessed a boom in the past few years with more and more people getting attracted to it.
There is now a healthy competition and world class graduates are giving up lucrative jobs to work and contribute in
meaningful ways towards the society.
As Bill Drayton would say it aptly Social entrepreneurs are not content just to give a fish or teach how to fish. They will
not rest until they have revolutionized the entire fishing industry. Such is the passion and the commitment required to be
called a social entrepreneur that it may not be misappropriate to say that it is more challenging that traditional
entrepreneurship!

Q6

Critical attributes of successful entrepreneur

The qualities that contribute to the success of an entrepreneur are as follows: 1. Risk Taking: - Entrepreneurs are moderate risk takers. They enjoy the excitement of a challenge, but they do
not gamble. Entrepreneurs avoid low- risk situations because there is a lack of challenge. They avoid high risk
situations because they want to succeed. They like achievable challenges. They do not tend to like situations
where the outcome of a quest depends upon a chance and not on their efforts. They like to influence the
outcome of their quest by putting in more efforts and then experiencing a sense of accomplishment. A risk
situation occurs when an entrepreneur is required to make a choice between two or more alternatives whose
potential outcomes are not known and must be evaluated in advance, with limited information. A risk situation
involves potential gain and potential loss. As the size of the business expands, the problems and opportunities
become more numerous and complex. Business growth and development require an entrepreneur not to be

afraid of taking decisions and certain risks. Most people are afraid to take risks because they want to be safe and
avoid failure. An entrepreneur always takes a calculated risk and is not afraid of failure.
2. Self- Confidence: - A man with self confidence has clear thoughts and well- defined goals to achieve in his
life. An entrepreneur gets into business or industry with a high level of self- confidence. He is able to evaluate
his competencies and capabilities in a realistic manner. He can set realistic and challenging goals. He is
confident of achieving these goals. He possesses a sense of effectiveness, which ultimately contributes to
success of his venture. He puts forward his case confidently and gets needed help from concerned
agencies/authorities.
3. Optimist: - An entrepreneur is able to visualize the hidden opportunities in the environment and translate
them into business realities. An entrepreneur exhibits a positive and optimistic attitude towards such
opportunities. The entrepreneur approaches his task with the hope of success and not with a fear of failure. In
the process of accomplishing his task he may also fail but the failure experience does not change his thinking.
He is always an optimist in his outlook. The positive outlook develops a drive in the entrepreneur to attempt
new things and innovate.
4. Need for achievement: - The need to excel known as achievement is a critical factor in the personality of an
entrepreneur. People with high need for achievement have desire for success in competition with others or with
a self- imposed standard of excellence. They try to accomplish something new and try to innovate themselves in
long- term goals. They try to accomplish challenging tasks. They know their own strengths and weaknesses, the
facilitating factors and constraints in the environment and the resources needed to accomplish their tasks.
If the objectives are accomplished they feel elated.
5. Need for independence: - The need for independence is the prime characteristic that has driven the
entrepreneurs to start their own business. These entrepreneurs do not like to be controlled by others. They do
not wait for direction from others and choose their own course
of action. They set their own challenging goals and put efforts to achieve this goal. The independence provides
opportunity for trying out new ideas and helps them achieve their goals.
6. Creativity: - Entrepreneurs are highly creative people. They always try to develop new products, processes or
markets. They are innovative, flexible and are willing to adopt changes. They are not satisfied with conventional
and routine way of doing things. They involve themselves in finding new ways of doing the things for the better.
7. Imaginative: - Successful entrepreneurs possess a high degree of imagination and foresightedness.
Entrepreneurs have a great vision. Knowing the present and the past the entrepreneur is able to predict the
future events the business more accurately than others. It is because of their visionary nature and power of
imagination that helps them in anticipating problems and evolving actions strategies for such problems.
8. Administrative ability: - A successful entrepreneur is always a good administrator. He knows the art of getting
things done by other people without hurting their feelings of self- respect. He has strong motivation towards the
achievement of a task and puts in necessary efforts in getting things done by others.
9. Communication ability: - Communication ability is the ability to communicate effectively. Good
communications also means that both the sender and the receiver understand each other and are being
understood. An entrepreneur who can effectively communicate with customers, employees, suppliers and
bankers will always succeed in their business.
10. Clear objectives: - An entrepreneur has clear objectives as to the exact nature of the business, the nature of
the goods to be produced and the subsidiary activities to be undertaken. A successful entrepreneur has the
objective to establish the product to make profit or to render social service.

11. Business Secrecy: - An entrepreneur who is successful always guards his business secrets. Leakage of
business secrets to trade competitors is a serious matter; therefore an entrepreneur should carefully guard it. An
entrepreneur must be able to make a proper selection of his assistant since most of the time it is the assistant
who leaks the trade secret.
12. Emotional stability: - The most important personality factors contributing to the success of an entrepreneur
are emotional stability, personal relations, consideration and tactfulness. An entrepreneur must maintain good
relations with the customers if he wishes to enjoy their continued patronage. He must also maintain good
relation with his employees, whom he shall motivate to perform their jobs at a high level of efficiency. An
entrepreneur who maintains good human relations with customers, employees, suppliers and the community has
a better chance to succeed in his/ her business.
13. Open-mindedness: - Open- mindedness means a free and frank approach in accepting ones own errors and
change for the better. An entrepreneur must be willing to learn from his past experience mistakes and moulds
himself for better.
14. Technical knowledge: - Technical knowledge implies knowledge about the product, process or technology
used in manufacturing. An entrepreneur who has reasonable level of technical knowledge will always be
successful. Technical knowledge is easy to acquire if the entrepreneur tries hard to acquire it.
15. Patience: - Patience means ability to wait. Patience also means doing the work and waiting for the result. A
certain amount of patience is necessary in any type of vocation. An entrepreneur should not wait for actions but
can certainly wait for result for his efforts.
16. Hard working and energetic: - Ability and willingness to work hard is an important quality of an
entrepreneur. A person having physical and mental stamina to cope with the hard work and human relation is fit
to become a successful entrepreneur. By carrying out well- planned and systematic work, success is always the
end result.
17. Good organizer: - Entrepreneurs are good organizers of resources like men, machines, materials and money
needed to start and run the business smoothly. They can convince the employees, investors, customers and coordinate the activities of individuals and groups in the accomplishment of business objectives. An entrepreneur
works like a coordinating force among the resources, mould and manages them effectively.

Q7

Q8

Intrapreneurship
Entrepreneurship within an existing business
Internal business units within which produce innovative products, services or processes
An opportunity for corporate managers to take initiative and try new ideas.
An internal corporate venture

Six strategies of effective intrapreneurship

1) Set up a formal structure for intrapreneurship. It is critical to give people enough time away from
their day jobs to work on creative ideas, while setting up formal processes to make sure those ideas go
somewhere. Google, for example, has set up a formal process for encouraging intrapreneurship through its
Innovation Time Off project, which enables employees to spend about 20% of their time on companyrelated work that is of personal interest. Almost half of Googles product launches are said to have
originated from this program.
2) Ask for ideas from your employees. Encourage everyone from all ranks and functions to contribute to
the innovative process. IBM, for example, uses jams massive online brainstorming conferences to
generate ideas and solve problems. Its famous 2006 Innovation Jam involved 150,000 participants and
resulted in US$100 million being appropriated to start 10 new businesses.
3) Assemble and unleash a diverse workforce. Statistical research has established that diverse viewpoints
result in better ideas and better products. PepsiCo, for example, attributes about US$250 million to new
products inspired by diversity efforts.
4) Design a career path for your intrapreneurs. Intrapreneurs tend to dislike conventional administrative
jobs, so look for non-traditional ways to advance their careers. Recognizing that rewards can be an effective
way to foster professional growth, 3M offers intrapreneurs awards for marketing excellence and technical
innovation.
5) Explore government programs and incentives. Dont ignore the growing number of state-sponsored
programs that support entrepreneurial ventures. Step up your efforts to obtain government funds for
innovation.
6) Prepare for the pitfalls of intrapreneurship. Backing bold ideas can backfire. Be prepared to deal with
failed ventures, internal conflicts, financial risks and intellectual property battles. Set risk limits up-front.
These guidelines can help companies free up organization gridlock and set up a supportive environment that
fosters the creative process. However, that they will succeed only if there is support from senior management
and a framework that views intrapreneurship as an end-to-end process.
Intrapreneurs need encouragement, support and resources from senior management, as well as the freedom to
fail without punishment,. By following these six key strategies, and providing a supportive and nurturing
environment, companies can institutionalize intrapreneurship so that it becomes an inseparable part of a
companys operations. Only then can the process of continuous innovation take place allowing the company
to stay a market leader.

Q9

Despite all the policy initiatives of the GoI since the independence, there has been little
development of villages. The development that we have been experiencing in the big cities
has not been able to reach the real India which lives in villages. Agricultural land has
actually been shrinking due to expansion of urban centres and pressures of housing for our
ever growing population. As a matter of fact there is lot of disguised unemployment in our
villages. The result is migration of villagers to urban centres in search of jobs.
Most of the Govt plans for upliftment of rural society got crushed under the ineffective
implementation. A few success stories have been through co-operative movement under the
inspired leadership of some social entrepreneurs.
Amul Model
There is no better example of Rural and Social Entrepreneurship than the case of dairy
development in the State of Gujarat. This model is popularly known as Amul Model.
This rural social entrepreneurial project was started by Dr Kurien as a Co-Operative in
Gujarat more than 30 years ago. Starting from a small complex of eight societies which
originally collected only a few hundred litres of milk, it has grown into a huge complex
collecting nearly seven lakh litres of milk per day from 240,000 members organized into
840 village societies. Its futile to highlight achievement of Amul brand to any Indian.
Behind the success of this co-operative venture is that dynamic entrepreneur and leader, Dr.
Kurien whose target of opportunity seeking was not financial but social gain, not for
himself, not for the enterprise or agency he works for, but for the people he serves.
Lac Cultivation in Tribal Area
In Nowgai village of Madhya Pradeshs Shahdol district, a self-help group (SHG)
comprising members of the Baiga tribe today boasts savings worth over Rs 4.5 lakh. This
recent upturn in their fortunes is linked to lac cultivation on the Palash (A local tree
normally used as fire wood) trees that dot most fields in the area.
I could never have imagined making all this money before, says the Entrepreneur
Madhav Singh, the leader of the SHG. All I had was 1.21 hectares of land that wasnt
irrigated. The only way we could make ends meet was by working as labourers in cities.
Who would have thought that these Palash trees, which we used primarily for fuel wood,
would make me a lakhpati ? he adds.
Lac is a natural resin (lakh ki chudian) which is formed when the insect Laccifer Lacca
alights on certain types of trees. While lac was earlier used as raw material for bangles and
for seals, it has now found application in in computer integrated circuits and satellite
building due to which its value has risen.
Success stories such as those of Madhav and Nowgais other lac cultivators have been
largely scripted by Jitendra Singh, an officer in charge of implementing the MP
Governments Rajiv Gandhi Watershed Mission (RGWM) and Dr Moni Thomas of the
government-run Krishi Vigyan Kendra, Shahdol.
What is very evident from above two case studies is that the real opportunity for any rural
entrepreneur lies in identifying the local produce and looking beyond his village as the
market. Many social entrepreneurs, some missionaries and some committed Govt Officials

have succeeded in setting up the villagers in successful entrepreneurial ventures by

identifying the local produce for which there is great demand outside the country and
arranging the production, packing and export. But many more are required.
Profile of a Rural Entrepreneur
1. He should not be an individualist. He should have a group orientation. A
individualist is unlikely to succeed in a village enterprise.
2. He should practice a management style where the concern for people is the highest.
3. He should have a strong commitment for rural development.
Profile of a Social Entrepreneur
1. He shouldnt be interested in usual perks and allowances. Social gain should be his
perk and the smiles on the faces of impoverished rural population his only
allowance.
2. He should have strong knowledge of local economy as well as well versed with the
national and international economy.
3. Should have good liaison with govt authorities.
4. Should have knack for marketing.
Development Model for Rural Entrepreneurship
1. Elimination of middlemen and direct marketing to customers.
2. Formations of cooperatives/self help groups like Amul for optimum utilization of
farm produce.
3. Finding markets offering best value for local products.
4. Better marketing (national and international) of rural products; farm produce,
handicrafts, culture (dance forms, musical instruments and other fine arts of
entertainment) resulting in the rural prosperity.
5. Training the local youth for Entrepreneurial ventures resulting in reduction of
disguised employment and alternative occupations for rural youth.
6. Optimum utilization of local resource in entrepreneurial venture by rural youth

Q12
Indian Style of Entrepreneurship
Indian society has traditionally been divided into four castes of people: learned priests, warriors, traders, and people doing
menial jobs.
The existence of a caste of traders is itself proof of many centuries worth of Indian entrepreneurship.
Although the Indian caste system dominated societal standards for ages, the trend has changed.
People are bridging the difference between castes to work in fields perhaps untraditional for their ancestors. The Internet
and advances in telecommunications have made it possible for Indian citizens to sell their services internationally. With
the rapid growth of India as an IT power and business process outsourcing giant, world views of India have also
transformed to recognize the country's entrepreneurial talent and potential.

Classifying Entrepreneurship
Today, Indian society can best be classified into three categories. The first category of people is that of well-established
business families, such as the Mittals, Tatas, Ambanis, Birlas and the like. These families have a very strong base, with
most individuals following the family business tradition passed on from generation to generation. Most of these
companies have a strong management team, and are now going global. World trust in the Indian corporate sector is
increasing like never before.
The second category is dominated by young graduates who are an integral part of Indian business growth. In fact, India
has graduated a huge number of individuals with management degrees over the past decade. With information technology
and multinational corporations on the rise in India, young entrepreneurs serve as the backbone of many flourishing
enterprises.
The third category of society would be product-based business entrepreneurs. You will find them in every big city, town,
or village in India. Educational qualifications do not mean much to them; rather, they rely on sheer entrepreneurship
ability that include training, experience, customer service skills, networking, hard work, and innovation.

Q13

Joseph Schumpeters Innovation Theory

Joseph Schumpeters innovation theory of entrepreneurship (1949) holds an entrepreneur as one having three
major characteristics: innovation, foresight, and creativity. Entrepreneurship takes place when the entrepreneur

creates a new product

introduces a new way to make a product

discovers a new market for a product

finds a new source of raw material

finds new way of making things or organization

Schumpeters innovation theory however ignores the entrepreneurs risk taking ability and organizational skills,
and place undue importance on innovation. This theory applies to large-scale businesses, but economic
conditions force small entrepreneurs to imitate rather than innovate.
Other economists have added a dimension to imitating and adapting to innovation. This entails successful
imitation by adapting a product to a niche in a better way than the original product innovators innovation
Schumpeter defined entrepreneurs as innovators who implement entrepreneurial change within markets, where
entrepreneurial change has 5 manifestations: 1) the introduction of a new (or improved) good; 2) the
introduction of a new method of production; 3) the opening of a new market; 4) the exploitation of a new source
of supply; and 5) the re-engineering/organization of business management processes. Schumpeters definition
therefore equates entrepreneurship with innovation in the business sense; that is identifying market
opportunities and using innovative approaches to exploit them.
We must also understand something about his general equilibrium concept.
Schumpeter argued for a circular flow concept of the economic process. Change is only introduced to the
model through the entrepreneurs, who launch various economic innovations, which they finance exclusively
through credit created especially for the entrepreneurs by banks. Once introduced, innovations inspire
imitations, and competition between the alternatives bids the rate of profit down to zero. Thus, entrepreneurial
profit tends toward zero, and is zero in the long run. Eventually, the economy adjusts to innovation and returns
to another equilibrium state.

Though the idea that entrepreneurs are innovators is largely acceptable, it can be difficult to apply this theory of
entrepreneurship to less developed countries (LDCs). Often in LDCs, entrepreneurs are not truly innovators in
the traditional sense of the word. Entrepreneurs in LDCs rarely produce brand new products: rather they imitate
the products and production processes that have been invented elsewhere in the world (typically in developed

countries). This process, which occurs in developed countries as well, is called creative imitation. Creative
imitation takes place when the imitators better understand how an innovation can be applied, used, or sold in
their particular market niche (namely their own countries) than do the people who actually created or discovered
the original innovation. Thus, the innovation process in LDCs is often that of imitating and adapting, instead of
traditional notion of new product or process discovery and development.

Q14

Nature and significance of "technopreneurship"

Technopreneurship is entrepreneurship in the field of technology
There are large numbers of technical institutions at the degree and diploma level producing large number of technical
personnel. The standard of our technical education is comparable with international standards. India has the third largest
pool of technical and scientific personnel in the world. However, we are not able to utilize its full potential and on the
other hand there is surplus technical manpower that are unemployed. This large pool of technical manpower can be best
utilized for developing small-scale industries in the hi-tech areas using improved technologies and scientific methods of
production. They can be trained to use latest management techniques to manage the projects they set up.
A technically qualified and experienced person can make a more competent entrepreneur as he acquires special
knowledge of science, engineering materials and machines, production planning and control, manufacturing technologies
and management techniques for successful launching and smooth running of an industrial unit. Also through training, he
develops an aptitude for objective considerations and evaluation of issues involved in the process of an enterprise.
A technical entrepreneur develops characteristics of quality consciousness, adoption of modern technology and
management technique and realization of the importance of research and innovation for productivity improvement, the
absence of which can lead to industrial sickness.

High-tech and entrepreneurial skills are driving our economy back to prosperity. Technopreneursip-merging
technology prowess and entrepreneurial skills- is the real source of power in today's knowledge-based economy.
A technopreneur distinguishes logic from tradition, tradition from prejudice, prejudice from common
sense and common sense from nonsense while integrating a variety of ideas from diverse groups and
disciplines.
Technopreneurship is not a product but a process of synthesis in engineering the future of a person, an
organization, a nation and the world. Strategic directions or decision-making processes are becoming more
demanding and complex. This requires universities, and in site professional development programs and training
to produce strategic thinkers who will have skills to succeed in a rapidly changing global environment.
What makes an Entrepreneur a Technopreneur:

A technology idea owner who ventures to make his idea a commercial reality
An entrepreneur who gets a technology idea, finds an opportunity to make it a commercial reality

Importance:
Employment creation
Local resources
Decentralization and diversification of business
Promotion of technology
Capital formation
Promotion of an entrepreneurial culture
Eg : Sabir Bhatia , Mark Zuckerberg

Q21

A business plan is internally consistent strategic document designed to achieve the organizational objective.
Discuss the statement and also prepare the set of possible reasons for business failure.
What is the business Plan ? What are its various chapter wise components ? Why do some business plan fails ?
What do you understand by the term "business plan"? Write down a model business plan in respect of a start-up
in any area of your choice in the manufacturing sector.

INTRODUCTION TO BUSINESS PLAN

The business plan is written document prepared by the entrepreneur that
describes all the relevant external and internal involved in starting a venture.
Entrepreneur should consult with many other sources in its preparation like
lawyers, accountants, marketing consultants and engineers. Business plan
could take more than 200 hrs to prepare but varies from person to person
according to their knowledge and experience, with purpose about a new
venture to a potential investor.

CONTENTS OF A BUSINESS PLAN

I. INTRODUCTORY PAGE
A. Name and address of business.
B. Name(s) and address (es) of principals.
C. Nature of business.
D. Statement of financing method.
E. Statement of confidentiality of report.

II. EXECUTIVE SUMMARY

Three to four pages summarizing the complete business Plan.

III. INDUSTRY ANALYSIS

A. Future outlook and trends.
B. Analysis of competitors.
C. Market Segmentation.
D. Industry forecasts.

IV. DESCRIPTION OF VENTURE

A. Product(s)
B. Service(s)
C. Size of business.
D. Office equipment and personnel.
E. Background of entrepreneurs.
V. PRODUCTION PLAN
A. Manufacturing process (amount subcontracted)
B. Physical Plant.

C. Machinery and Equipment.

D. Names of Suppliers of raw materials.

VI. MARKETING PLAN

A. Pricing.
B. Distribution.
C. Promotion.
D. Product forecasts.
E. Controls.

VII. ORGANIZATIONAL PLAN

A. Form of ownership.
B. Identification of partners or principal shareholders.
C. Authority of principals.
D. Management- team background.
E. Roles and responsibilities of members of organization.

VIII. ASSESSMENT OF RISK

A. Evaluate weakness of business.
B. New technologies.
C. Contingency Plans.

IX. FINANCIAL PLAN

A. Proforma income statement.
B. Cash Flow Projections.
C. Proforma balance sheet
D. Break-Even analysis.
E. Sources and application of funds.

X. APPENDIX (contains backup material)

A. Letters.
B. Market Research Data.
C. Leases or contracts.
D. Price lists from suppliers.

HOW TO WRITE A BUSINESS PLAN

The business plan can take more than 200 hours to prepare, depending on the experience and knowledge of the
entrepreneur as well as the purpose it is intended to serve. It should be comprehensive enough to give any
potential investor a complete picture and understanding of the new venture and will help the entrepreneur
clarify his or her thinking about the business. Many entrepreneurs incorrectly estimate the length of time that an
effective plan will take to prepare. Once the process has begun, however, the entrepreneur will realize that it is
invaluable in sorting out the business functions of a new venture. Each of the items in the contents of the
business plan is explained in detail as follows.
INTRODUCTORY PAGE:
This is the title page or cover that provides a brief summary of the venture and should include the following
things:
Name and address of the company.
Name of the entrepreneur(s) and telephone number.

Description about the company and also stating nature of business.

Stating their financial requirements.
A statement of the confidentiality of the report.
EXECUTIVE SUMMARY:
This is prepared after total plan is written. This about 3 to 4 pages in length, this summary should stimulate the
interest of the potential investor. This highlight concise and convincing manner the key point in the business
plan stating the nature of the venture, financing needed, market potential, and supports to why it will succeed.
INDUSTRIAL ANALYSIS:
This reviews industry trends and competitive strategies. The industry outlook is reviewed, including future
trends and historical achievements, insight of new product developments in this industry. Competitor should be
identified, with appropriate strengths and weakness described and how will it affect the new ventures potential
success in the market.
DESCRIPTION OF VENTURE:
It states the product produced by venture which includes patent, copyright, or trademark status. It also gives a
brief idea where the business will be located including the construction of building, leased or owned. In
description of venture the type of office equipment will be required whether it will be purchased or leased. He
(entrepreneur) should also look at the management experience, stating their education, age, special abilities and
interest.
PRODUCTION PLAN:
This includes details of manufacturing process a product, which is very necessary. If the manufacturing is to be
carried out in whole or in part by the entrepreneur, he or she will need to describe to physical plan layout: the
machinery and equipment needed to perform the manufacturing operations: raw material and suppliers names,
addresses, and the terms; costs of manufacturing and any future capital equipment needs. It should also include
state subcontractors name and addresses; costs of subcontracted manufacturing; raw material required for
manufacturing.
MARKETING PLAN:
The marketing plan represents a significant element in the business plan for a new venture. Marketing planning should be
an annual activity that focuses on implementing decisions related to the marketing mix variables (product, price,
distribution, and promotion). Like the annual budgeting cycle, market planning has also become an annual activity and
should be incorporated by all the entrepreneurs, regardless of the size or type of the business. These marketing plans must
be monitored frequently, especially in the early stages of start up.

ORGANIZATIONAL PLAN:
The organizational plan describes the venture form of ownership i.e. whether it is proprietorship, partnership or a
corporation. If the venture is a partnership, the term of partnership should be included, name of partners, term of
agreement, specimen signatures of the partners etc. If it is a corporation venture than it is important to detail the shares of
the stock authorized, share options, names and address, resumes of the directors and officers of the corporation. If it is an
incorporation venture than it should state the principal shareholders and shares owned by them; type and number of shares
stating voting or non-voting stocks have been issued, members of board of directors, check signing authority or control.
The plan also states how many members are there in management team and their background, their roles and
responsibilities stating their salaries, bonuses or other forms of payment for each members of the management team.

This is also helpful to provide an organization chart indicating the line of authority and responsibilities of the
members of the organization. This information provides the potential investor with a clear understanding of who
controls the organization and how other members will interact in performing their management functions.
ASSESSMENT OF RISK:

All ventures face some potential hazards, given the particular industry and competitive environment. An
entrepreneur should make assessment of risk and prepare an effective strategy to deal with them. Even if these
factors present no risks to the new venture, the business plan should discuss why that is the case. Contingency
plans and strategies illustrate to the potential investor that the entrepreneur is sensitive to important risks and is
prepared should any occur.
FINANCIAL PLAN:
The financial plan should include proforma income statements, break even analysis, proforma cash flow,
proforma balance sheet, and proforma sources and uses of funds.
APPENDIX:
It generally contains business plan generally back up material that is not necessary in the text of the document. Reference
to any of the documents in the appendix should be made in the plan itself. Letters from customers, distributors or subcontractors are examples of information that should be included in the appendix. Any documentation of information that is
secondary data or primary research data used to support plan decisions should also be included. Leases, contracts or any
others types of agreement that have been initiated may also be included in the appendix. It should also include price lists
from suppliers and competitors may be added.

CONCLUSION
A business plan is a crucial component for an entrepreneur. A business plan is presented to a bank to obtain funds in the
initial stage of a project. It is a monetary rule that a business plan has to be presented to a bank before the release of funds
by the financial institutions. Hence, business plan is a stepping- stone for an entrepreneur in the commencement of a
project.

WHY BUSINESS PLANS FAIL?

Generally a poorly prepared business plan can be blamed on one or more of the following factors:
Goals set by the entrepreneur are unreasonable.
Goals are not measurable.
The entrepreneur has not made a total commitment to the business or to the family.
The entrepreneur has no experience in the planned business.
The entrepreneur has no sense of potential threats or weaknesses to the business.
No customer need was established for the proposed product or service.
Setting goals requires the entrepreneur to be well informed about the type of business and the competitive
environment. Goals should be specific and not so mundane as to lack any basis of control. For example, the
entrepreneur may target a specific market share, units sold, or revenue. These goals are measurable and be
monitored overtime.
In addition, the entrepreneur and his or her family must make a total commitment to the business in order to be
able to meet the demands of a new venture. For example, it is difficult to operate a new venture on a part- time
basis while still holding on to a full- time position. And it is difficult to operate a business without an
understanding from family members as to the time and resources that will be needed. Lenders or investors will
not be favorably inclined toward a venture that does not have full- time commitment. Moreover, lenders or
investors will expect the entrepreneur to make a significant financial commitment to the business even if it
means a second mortgage or a depletion of savings.
Generally, a lack of experience will result in failure unless the entrepreneur can either attain the necessary
knowledge or team up with someone who already has it. For example, an entrepreneur trying to start a new
restaurant without any experience or knowledge of the restaurant business would be disastrous.

The entrepreneur should also document customer needs before preparing the plan. Customer needs can be identified from
direct experience, letters from customers, or from marketing research. A clear understanding of these needs and how the
entrepreneurs business will effectively meet them is vital to the success of the new venture.
What care you will take while presenting it to financial institutions?
1) Your background
2) Brak even
3) How much capital ? why ? what stages?
4) ROI
5) What is your contribution
6) Repayment temrs and conditions
7) Industry analysis
8) Management background
9) Marketing plan
Franchsee
1) brand value
2) training
3) fascilities
4) terms and condition
5) profit sharing
6) Royalty
7) area coverage
8) product range
9) growth
10) tie up
Supplier
Raw material required ? Scale and time
Growth
Technology
Terms of payment
Credit

Q29

Creativity is primary motivation of entrepreneurship. An entrepreneur looks from different point of view. E.g.
how would you apply the creativity process to (1) ball point pen (2) mobile (3) stapler (4) Handkerchief
What is creativity? How can one nurse and promote it effectively in entrepreneurial organization so as to
optimize results?
Creativity implies conceptualizing, visualizing or bringing into being something that does not yet exist. It is
about curiosity and observation.
Creativity is showing imagination & originality. It is basically an innovation generated by entrepreneur in business to
solve or generate ideas to serve the market better. Creativity can decline due to age, education, idleness, perceptual,
cultural, emotional & organisational factors. Creative thinking is basically a process of searching, screening &
connecting thoughts. Creativity can 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. Brainstorming A small group of min 6 to max 12 people sit together and exchange their ideas freely without any
reservations. No criticism is allowed. A senior person moderates the discussions.
2. Reverse Brainstorming This is basically the evaluation stage. After the brain storming, the group sits together to
find what is wrong with each idea. In a way it is a method of selection by elimination.
3. Synectics Synectics is a problem solving tool that stimulates thought processes which would normally not occur
to the person. This method, developed by William Gordon, has as its central principle:
"Trust things that are alien, and alienate things that are trusted."
What it means simply is that dont take any thing for granted while seeking solution to your problems. Dont limit
yourself to your trusted old methods nor should you disregard a old failed method. It is thus possible for new and
surprising solutions to emerge. Its main tool is analogy or metaphor.
Synectics is more demanding a process than brainstorming, since it involves many steps
4. Gordon Method Unlike most other methods, this method starts by not disclosing to the members the nature of
problem. Only general concept associated with problem is outlined and then members discuss all the aspects of
problem. This method ensures that thought process of members is not clouded or channelled by problem.
5. Checklist method
6. Free Association
7. Forced Relationship
8. Collective Notebook Method
9. Heuristics
10. Scientific Method
11. Kemper Tregoe Method
12. Value Analysis
13. Attribute listing method
14. Morphological analysis
15. Matrix charting
16. Modification matrix
17. Inspired Approach

18. Parameter Analysis

Ball point pen: fake note detector, pen drive,Watch

Mobile: projector, remote for home appliances, remote access to files on desktop or laptop, detect BP, heart beat
etc.
Stapler: various size pins used in one stapler, combining with cello tape and spiral binding.
Handcerchief : sanitised handkerchief which would be auto cleaned or sanitised in few minutes to use again as
fresh one..,Writing pad, Material that cools face

Q30 SHORT NOTES

VENTURE CAPITALIST

Venture Capital
The dictionary meaning of Venture, is a risky or daring undertaking that has no guarantee of success. Thus, a
venture capital is a source of finance for risky and daring undertakings; and an entrepreneurial venture is a risky and
daring undertaking. So, the two match perfectly.
Venture capital is a type of private equity capital typically provided by outside investors to new, growth businesses.
Generally made as cash in exchange for shares in the investee company, Venture capital investments are usually high
risk, but have the potential for above-average returns.
A Venture Capitalist (VC) is a person who makes such investments. A Venture Capital Fund is a pooled investment
vehicle that primarily invests the financial capital of third-party investors in enterprises that are too risky for the
standard capital markets or bank loans.
Venture capital as a concept was born to fund the promising but unproven and therefore risky business ideas. Even
though the modern venture capital concept is no more than half a century old (1958 to be precise when a semiconductor
business was funded), original venture capital funding in Europe started over half a millennium back (before
Christopher Columbus) back when the voyagers use to go on expeditions towards distant, and some times new,
locations in hunt of exotic items like Indian Spices which use to fetch great profit back home. Such expeditions used
to be funded by rich people including kings and queens (Columbuss expedition which led to discovery of America was funded
by Queen of Spain after King of Portugal refused).
There was risk of loot and natural elements like storms, wild animals, etc, besides the risk of mercahndise not
finding buyer at anticipated price. Thus, there was great personal risk as well as equally big financial risk. The profits
earned from such ventures were divided provided between financier (Venture Capitalist) and the adventurers (Old
days Entrepreneurs).

Salient Features
1. It is long term source of investment, generally for 5 to 10 years.
2. Venture capital firms opt for equity participation through shares or convertible securities and rarely as loan at fixed
rate.
3. Venture capitalist seeks participation in management of business.
4. Venture capitalist is often an active partner in business and provides his seasoned expertise in terms of marketing,
technological management and developing organisational structure.
5. It is easier source of funding than conventional sources but expensive (equity is always costliest source of
funding).
6. Venture capitalist is not averse to risk, only growth potential should be high.
7. Flow of funds is in phases of production or in initial stages as debts
8. Venture capitalists are not permanent equity holders Such high growth businesses have a typical growth curve
which slows down and then flattens after a meteoric rise in initial years. Venture capitalists exit at the end of initial
high growth phase while ensuring that entrepreneurs interest is not jeopardised.

Stages of Process
1. Delivery of business plan from an entrepreneur to venture capitalist. While evaluating business plan venture
capitalist broadly ascertains the prospects of the proposal and the ROI vis a vis risk of capital. He also ascertains the
capability and credentials of entrepreneur. Many venture capitalists put more emphasis on credentials of entrepreneur
than the business proposal itself.
2. Due Diligence - If some merit is found in the proposal during the initial stage, the detailed analysis of the business
plan begins. This is called due diligence. It is a stage of thorough scrutiny of business plan from every angle and
intense cross questioning of the entrepreneur. Resume of promoters and key managers, financial background of
promoters and risk of business are analyzed at this stage.
3. Negotiation After viability study of project, negotiation takes place in respect of quantum of funds to be
provided, modality of funding, like, percentage of equity in lieu, or convertible debentures, interest rate on loan,
tenure, fund release timing, etc.

Further, other factors like, right to control the management of business (seats in the
Board of Directors), buy back arrangement and exit policy are also negotiated.
(Typically, a venture capitalist would like to invest in the form of equity share while entrepreneur would like to have
it as fixed rate loan).
4. Contract and MOU After the negotiations have concluded satisfactorily, contract or MOU is signed by both the
parties.
5. Flow of Funds Begins as per MOU, higher degree flexibility is desired from both parties and periodic review is
done at each stage.
6. Exit Since venture capitalist are not permanent equity holders so they exit at appropriate time through equity
buy back, IPO (initial public offering), mergers and acquisitions and smooth transition as exit strategy.

WORKING CAPITAL MANAGEMENT

Working Capital cycle start with cash and ends with cash, comment by giving suitable
example
What It Measures
The working capital cycle measures the amount of time that elapses between the moment when your business
begins investing money in a product or service, and the moment the business receives payment for that product
or service. This doesnt necessarily begin when you manufacture a productbusinesses often invest money in
products when they hire people to produce goods, or when they buy raw materials.
Why It Is Important
A good working capital cycle balances incoming and outgoing payments to maximize working capital. Simply
put, you need to know you can afford to research, produce, and sell your product.
A short working capital cycle suggests a business has good cash flow. For example, a company that pays
contractors in 7 days but takes 30 days to collect payments has 23 days of working capital to fundalso known
as having a working capital cycle of 23 days. Amazon.com, in contrast, collects money before it pays for goods.
This means the company has a negative working capital cycle and has more capital available to fund growth.
For a business to grow, it needs access to cashand being able to free up cash from the working capital cycle is
cheaper than other sources of finance, such as loans.
How It Works in Practice
The key to understanding a companys working capital cycle is to know where payments are collected and
made, and to identify areas where the cycle is stretchedand can potentially be reduced.
The working capital cycle is a diagram rather than a mathematical calculation. The cycle shows all the cash
coming in to the business, what it is used for, and how it leaves the business (i.e., what it is spent on).
A simple working capital cycle diagram is shown in Figure 1. The arrows in the diagram show the movement of
assets through the businessincluding cash, but also other assets such as raw materials and finished goods.
Each item represents a reservoir of assetsfor example, cash into the business is converted into labor. The
working capital cycle will break down if there is not a supply of assets moving continually through the cycle
(known as a liquidity crisis).

Figure 1. A simple working capital cycle diagram

The working capital diagram should be customized to show the way capital moves around your business. More
complex diagrams might include incoming assets such as cash payments, interest payments, loans, and equity.
Items that commonly absorb cash would be labor, inventory, and suppliers.
The key thing to model is the time lag between each item on the diagram. For some businesses, there may be a
very long delay between making the product and receiving cash from sales. Others may need to purchase raw
materials a long time before the product can be manufactured. Once you have this information, it is possible to
calculate your total working capital cycle, and potentially identify where time lags within the cycle can be
reduced or eliminated.

PEOPLE MANAGEMENT

People Management

Entrepreneurs often need good people to help them grow their business
Concentrate on engineering the role to the employee.

Don't try to fit round pegs into square holes

Align all staff with clear, concise and well communicated corporate goals

Avoid over centralisation of business decision-making as it robs senior and middle managers of responsibility,
involvement and motivation

Many entrepreneurs fail to take their business to the next level because they rarely dedicate enough time to developing
their employees to their full potential. They need to turn talent management responsibilities over to managers who know
how to do this important work.
Entrepreneurs are often the big ideas people. They have the original concept for the business and bring pioneering new
opportunities to get it up and running. They inject drive and passion to build a company around that original idea. They
get it growing fast in the early years. Innovation and entrepreneurial spirit is critical for creating new income streams but
businesses will never grow in a sustainable manner without strong and effective people management sitting alongside
this.
However their passion and creativity rarely extends to great people management skills. Entrepreneurs are often impatient
with their people. They tend not to recognise, develop or optimise their talent sufficiently. Worse than this, many founderentrepreneurs measure their staff against their own high standards of ideas generation and passion, without considering the
many other essential skill sets that are needed for the business long-term success. They may even demoralise staff by
demanding more of them than they feel able to deliver without additional training and support which they may feel
worried to request.
It is not easy for entrepreneurs or owner/operators of small businesses, who have worked hard to get a business going, to
cede operational control to someone else. Most feel, quite understandably, that it is their company, their invention, idea,
product or service and therefore they must retain control to be successful. It is difficult for this group to grasp the idea that
a time will arrive when new skills are needed to take the business to the next stage in its development and beyond. Venture
capitalists, and other potential investors, place a high premium on the quality of management when making a decision on
whether to invest in a new venture or not. Experienced investors and some business schools, believe that quality
management with a marginal product or service is a better investment than a better product/service with the inventor,
innovator or start-up person remaining in charge.
A skill set of particular importance is in the category of people management. Most entrepreneurs and small business
owner/operators have little experience in the motivation and management of people. And this is a critical issue for all
managers. Increasing competition and accelerating change in consumer taste and employee demands and expectations
pose a constant challenge to all organization leaders.
.
Success for organizations lies in the commitment and high productivity by all employees from senior management to the
rank and file. Achievement of goals and objectives in the long term depends on the performance of all employees. This
requires an understanding of motivation and the skills necessary to create a working environment where all employees can
willingly work to the best of their ability. Interpersonal skills are therefore very important but are often lacking in
entrepreneurs and owner/operators of small businesses.
The benefits of well trained workers using the most advanced technology can be nullified by poor people management
practices by managers. It is management that is the link between employees and increased commitment, superior product
quality, excellence in customer service and productivity. Competent management is of critical importance to the success of
all new enterprises.
It therefore behooves entrepreneurs and owner/operators of small businesses to factor into their business plans the

appropriate time to step back and bring in experienced management. It is better to have a smaller piece of a large pie than
100% of a failed business.

Tools for effective people management

Have mechanisms in place to monitor staff performance. One of the best ways of doing this is through regular
appraisals. This not only gives you a chance to address performance concerns early, it enables you to recognise
and reward those who are going the extra mile.
Set your staff specific objectives, or key performance indicators (KPI) so they know exactly what is expected of
them. Make sure these targets are realistic and achievable.
Ensure there are clear and open channels of communication and make it clear that you welcome input and ideas
and are happy to listen to any concerns that may arise.

SUPPORT ORGANISATION

Support Organisations

An entrepreneur requires a continuous flow of funds not only for setting up of his/ her business, but also for successful
operation as well as regular upgradation/ modernisation of the industrial unit. To meet this requirement, the Government
(both at the Central and State level) has been undertaking several steps like setting up of banks and financial institutions;
formulating various policies and schemes, etc. All such measures are specifically focussed towards the promotion and
development of small and medium enterprises.
The government of India has been taking active steps to promote entrepreneurship in various industry & service sectors. It
has declared several policy measures and is implementing schemes and programmes to enhance the global
competitiveness of small enterprises across the country.

The Government has setup various organisations which specialize in industry promotion & entrepreneurship development
in different sectors. The organisations provide policy framework support, in addition to training & financial aid.

Khadi & Village Industries Commission

COIR Board

Small Industries Development Bank of India

National Manufacturing Competitiveness Council

National Skill Development Corporation

State Level Initiatives

Individual states across India have setup specially focussed organisations which work towards the development & support
of small scale industries. These organisations run specific promotional schemes in addition to providing financial support
to industries.
State Financial Corporations

Andhra Pradesh State Financial Corporation

Assam Financial Corporation

Bihar State Financial Corporation

Delhi Financial Corporation

Gujarat State Financial Corporation

Maharashtra State Financial Corporation

Haryana State Financial Corporation

Himachal Pradesh Financial Corporation

Jammu and Kashmir State Financial Corporation

Karnataka State Financial Corporation

Kerala Financial Corporation

Madhya Pradesh Financial Corporation

Orissa State Financial Corporation

Punjab Financial Corporation

Rajasthan Financial Corporation

Tamil Nadu Industrial Investment Corporation Limited

Uttar Pradesh Financial Corporation

West Bengal Financial Corporation

Development Support Organisations

Government of India has also set up various organizations that are at the forefront in providing support and training for
the budding entrepreneurs. Few of them are:

Central Footwear Training Institute - Agra

Indo-German Tool Room - Ahmedabad

Indo-German Tool Room -Aurangabad

Central Institute of Tool Design - Hyderabad

Central Tool Room - Ludhiana

Indo-German Tool Room - Indore

Central Tool Room & Training Center - Bubhaneshwar

Circle Telecom Training Center - Kolkata

Indo-Danish Tool Room - Jamshedpur

Institute for Design of Electrical Measuring Instruments

Electronics Service & Training Center - Ramnagar

Fragrance & Flavour Development Center - Kannuaj

Industry Associations
There are a variety of associations which help & encourage the cause of industry. These associations provide support &
strength to the entrepreneurs & the organisations they setup. Additionally, industry association networks are crucial in
steering government policy & action as well.

National Bank for Agriculture & Rural Development (NABARD)

Laghu Udyog Bharati (LUB)

Federation of Indian Chambers of Commerce and Industry (FICCI)

Confederation of Indian Industry (CII)

The Associated Chambers of Commerce and Industry of India (ASSOCHAM)

Federation of Indian Micro and Small & Medium Enterprises (FISME)

World Association for Small and Medium Enterprises (WASME)

India Trade Promotion Organisation (ITPO)

Technology Innovation Management and Entrepreneurship Information Service

Asian and Pacific Centre for Transfer of Technology (APCTT)

The Government runs and promotes a variety of skills development & training institutes across India, aimed specifically
towards the development of small industries. These include specialised management programmes & technology
enhancement programmes amongst others.
National Entrepreneurship Development Institutes

Entrepreneurship Development Institute of India

Indian Institute of Entrepreneurship (IIE), Guwahati

National Institute of Micro, Small and Medium Enterprises (NIMSME), Hyderabad

National Institute for Entrepreneurship and Small Business Development (NIESBUD), NOIDA

Development Commissioner (MSME) Enterprise & Skill Development Programmes

Entrepreneurship Development Programmes (EDPs)

Entrepreneurial Skill Development Programme (ESDP)

Business Skill Development Programme (BSDP)

Management Development Programmes (MDPs)

Industrial Motivation Campaigns (IMCs)

Vocational and Educational Training

Tool Rooms and Training Centres

SIDBI (Small Industries Development Bank of India) was set up on April 2, 1990 as a
wholly owned subsidiary of IDBI (Industrial Development Bank of India) with a authorised
capital of Rs 250 crore. IT was set up as an apex institution for promotion, financing and
development of industries in small scale sector and for coordinating the functions of other
institutions engaged in similar activities. SIDBI extends direct/indirect financial assistance
to SSIs, assisting the entire spectrum of small and tiny sector industries on All India basis.
The Confederation of Indian Industry (CII) is a non-government, not-for-profit, industry-led and industry-managed
organisation, seeking to play a proactive role in Indias development process. The organisation works to create and sustain
an environment conducive to the growth of industry in India, partnering industry and government alike through advisory
and consultative processes.

The Entrepreneurship Development Institute of India (EDI), an autonomous and not-for-profit Institute, set up in
1983, is sponsored by apex financial institutions - the IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and State Bank of India
(SBI). The Government of Gujarat pledged twenty-three acres of land on which stands the majestic and sprawling EDI
campus.
To pursue its mission further, EDI has helped set up twelve state-level exclusive entrepreneurship development centres
and institutes. One of the most satisfying achievements, however, was taking entrepreneurship to a large number of
schools, colleges, science and technology institutions and management schools

Entrepreneurship Development Programmes(EDPs)

Entrepreneurship Development Programmes are being organized regularly to nurture the talent of youth by enlightening
them on various aspects of industrial activity required for setting up MSEs. These EDPs are generally conducted in ITIs ,
Polytechnics and other technical institutions, where skill is available to motivate them towards self-employment.

SIDBI

Ans. SIDBI (Small Industries Development Bank of India) was set up on April 2, 1990 as a wholly owned subsidiary of
IDBI (Industrial Development Bank of India) with a authorised capital of Rs 250 crore. IT was set up as an apex
institution for promotion, financing and development of industries in small scale sector and for coordinating the
functions of other institutions engaged in similar activities. SIDBI extends direct/indirect financial assistance to SSIs,
assisting the entire spectrum of small and tiny sector industries on All India basis.
Its objectives are
1. To initiate steps for technological upgradation and modernisation of existing units
2. To expand channels of marketing of SSI sector products in India and abroad
3. To promote employment oriented industries in semi urban areas and to check migration of population to big cities.
The range of assistance comprising financing, extension support and promotional, are made available through
appropriate schemes of direct and indirect assistance for the following purposes:(a) Setting up of small scale projects
(b) Expansion, diversification, modernisation, technology upgradation, quality improvement and rehabilitation of
existing SSIs
(c) Strengthening of marketing capabilities of SSI units.
(d) Development of infrastructure for SSIs and
(e) Export promotion.

Direct Assistance Schemes

SIDBI directly assists SSIs under
(a) Project Finance Scheme,
(b) Equipment Finance Scheme,
(c) Marketing Scheme,
(d) Vendor Development Scheme,
(e) Infrastructural Development Scheme, ISO-9000,
(f) Technology Development & Modernisation Fund,
(g) Venture Capital Scheme,
Mgmt study material created/ compiled by - Commander RK Singh rajeshsingh_r_k@rediffmail.com

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Jamnalal Bajaj Institute of Mgmt Studies

(h) Assistance for leasing to NBFCs, SFCs, SIDCs and
(i) resource support to institutions involved in the development and financing
of small scale sector.
These Schemes are mainly targeted at addressing some of the major problems of
SSIs in areas such as high tech project, marketing, infrastructural development, delayed realisation of bills,
obsolescence of technology, quality improvement, export financing and venture capital assistance.

Indirect Assistance Schemes

Under its indirect schemes, SIDBI extends refinance of loans to Small Scale sector by Primary Lending Institutions
(PLIs) viz. SFCs, SIDCs and Banks. At present, such refinance assistance is extended to 892 PLIs and these PLIs
extend credit through a net work of more than 65,000 branches all over the country.
All the Schemes of SIDBI, both direct and indirect assistance, are in operation in all the States of the country through
39 regional/branch offices of SIDBI.

Promotional and Development Activities

SIDBI is actively involved in promoting Tiny and Small Scale Industries by means of its promotional and
developmental activities through suitable professional agencies for organising Entrepreneurship Development
Programmes, Technology Upgradation &
Modernisation Programmes, Micro Credit Schemes and assistance under Mahila Vikas
Nidhi to bring about economic empowerment of women, specially the rural poor, by providing them avenues for
training and employment opportunities.

Main Schemes of SIDBI

1. National Equity Fund Scheme Provides equity support to small entrepreneurs setting up projects in Tiny Sector.
National Equity Fund (NEF) under SIDBI provides equity type assistance to SSI units and tiny units at one per cent
service charges. The scope of this scheme was widened in 1995-96 to cover all areas except Metropolitan areas,
raising the limit of loan from Rs. 1.5 lakhs to Rs. 2.5 lakhs and covering both existing as well as new units.
(a) The following are eligible for assistance under the scheme:(i) New projects in tiny and small scale sectors for manufacture, preservation or processing of goods irrespective of
the location
(except for the units in Metropolitan areas).
(ii) Existing tiny and small scale industrial units and service enterprises as mentioned above (including those which
have availed of NEF assistance earlier), undertaking expansion, modernisation, technology upgradation and
diversification irrespective of location
(except in Metropolitan areas).
(iii) Sick units in the tiny and small scale sectors including service enterprises as mentioned above, which are
considered potentially viable, irrespective of the location of the units (except for the units in Metropolitan areas).
(iv) All industrial activities and service activities (except Road TransportOperators).

(b) Project cost (including margin money for working capital) should not exceed Rs. 10 lakhs in the case of new
projects. In the case of existing units and service enterprises, the outlay on expansion/modernisation/technology
upgradation or diversification or rehabilitation should not exceed Rs. 10 lakh per project.
(c) There is no change in the existing level of promoters' contribution at 10% of the project cost. However, the
ceiling on soft loan assistance under the
Scheme has been enhanced from the present level of 15% per project to 25% of the project cost subject to a
maximum of Rs. 2.5 lakh per project.
2. Technology Development & Modernisation Fund (TDMF) Scheme for providing finance to existing SSI units
for technology upgradation/modernisation.
SIDBI has set up Technology Development & Modernisation Fund (TDMF) scheme for direct assistance of small
sale industries to encourage existing industrial units in the sector, to modernise their production facilities and adopt
improved and updated technology so as to strengthen their export capabilities. Assistance underthe scheme is
available for meeting the expenditure on purchase of capital equipment, acquisition of technical know-how,
upgradation of process technologyand products with thrust on quality improvement, improvement in packaging and
cost of TQM and acquisition of ISO-9000 series certification.
SIDBI in July 1996 had permitted SFCs and promotional banks to grant loans for modernisation projects costing
upto Rs. 50 lakhs. The coverage of the TDMF scheme has been enlarged w.e.f. 1.9.1997 to include
(a) Non exporting SSI/Ancillary units
(b) 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 up front fee.
3. Single Window Scheme to provide both term loan for fixed assets and loan for working capital through the same
agency.
4. Composite Loan Scheme for equipment and/or working capital and also for worksheds to artisans, village and
cottage industries in Tiny Sector.
5. Mahila Udyam Nidhi (MUN) Scheme provides equity support to women entrepreneurs for setting up projects in
Tiny Sector.
6. Scheme for Financing Activities relating to marketing of SSI products which provides assistance for undertaking
various marketing related activities such asmarketing research, R&D, product upgradation, participation in trade
fairs and exhibitions, advertising branding, establishing distribution networks including show room, retail outlet,
wears-housing facility, etc.
7. Equipment Finance Scheme for acquisition of machinery/equipment including
Diesel Generator Sets which are not related to any specific project.
8. Venture Capital Scheme to encourage SSI ventures/sub-contracting units to acquire capital equipment, as also
requisite technology for building up of export capabilities/import substitution including cost of total quality
management and acquisition of ISO-9000 certification and for expansion of capacity.
9. ISO 9000 Scheme to meet the expenses on consultancy, documentation, audit, certification fee, equipment and
calibrating instruments required for obtaining ISO 9000 certification.
10. Micro Credit Scheme to meet the requirement of well managed Voluntary Agencies that are in existence for at
least 5 years; have a good track record and have established network and experience in small savings-cum-credit
programmes with Self Help Groups (SHGs) individuals.

BPO

BPO - Business Process Outsourcing

What is business process outsourcing (BPO)? BPO is the process of hiring another company to handle business activities for you.
BPO is distinct from information technology (IT) outsourcing, which focuses on hiring a third-party company or service provider to
do IT-related activities, such as application management and application development, data center operations, or testing and quality
assurance.
In the early days, BPO usually consisted of outsourcing processes such as payroll. Then it grew to include employee benefits
management. Now it encompasses a number of functions that are considered "non-core" to the primary business strategy.
Now it is common for organizations to outsource financial and administration (F&A) processes, human resources (HR) functions, call
center and customer service activities and accounting and payroll.
These outsourcing deals frequently involve multi-year contracts that can run into hundreds of millions of dollars. Often, the people
performing the work internally for the client firm are transferred and become employees for the service provider. Dominant
outsourcing service providers in the BPO fields (some of which also dominate the IT outsourcing business) include US companies
IBM, Accenture, and Hewitt Associates, as well as European and Asian companies Capgemini, Genpact, TCS, Wipro and Infosys.

Many of these BPO efforts involve off shoring -- hiring a company based in another country -- to do the work. India is a popular
location for BPO activities.
Frequently, BPO is also referred to as ITES -- information technology-enabled services. Since most business processes include some
form of automation, IT "enables" these services to be performed.
An offshoot of BPO is KPO -- knowledge process outsourcing. Considered by some to be a subset of BPO, KPO includes those
activities that require greater skill, knowledge, education and expertise to handle. For example, whereas an insurance company might
outsource data entry of its claims forms as part of a BPO initiative, it may also choose to use a KPO service provider to evaluate new
insurance applications based on a set of criteria or business rules; this work would require the efforts of a more knowledgeable set of
workers than the data entry would. The current definition of KPO encompasses R&D, product development and legal e-discovery, as
well as a number of other business functions.
Also coming into use is the term BTO -- business transformation outsourcing. This refers to the idea of having service providers
contribute to the effort of transforming a business into a leaner, more dynamic, agile and flexible operation.

FRANCHISING

In a sense, franchising is very much similar to branching. Franchising is a system for selectively distributing
goods or services through outlets owned by the retailer or dealer. Basically, a franchise is a patent or trademark
license, entitling the holder to market particular products or services under a brand name or trademark
according the different terms and conditions.
According to David D. Settz A franchisee is a form of business ownership created by contract whereby a
company grants a buyer the rights to engage in selling or distributing its product or services under a prescribed
business format in exchange for royalties or shares or profits. The buyer is called the franchisee and the
company that sells rights to its business concept is called the franchiser.
David H. Holt has defined franchising as a business system created by a contract between a parent company,
called the franchiser and the acquiring business owner, called the franchisee, giving the acquiring owner the
right to sell goods or services, to use certain products, names, or branded, or to manufacture certain brands.
Now, franchising can simply be defined as a form of contractual arrangement in which a retailer (Franchisee)
enters into an agreement with a producer (Franchiser) to sell the producers goods or services for a specified fee
or commission. Franchising arrangements are broadly classified into three types:
1. Product Franchising

2. Manufacturing Franchising
3. Business- Format Franchising
PRODUCT FRANCHISING:
This is the earliest type of franchising. Under this dealers were given the right to distribute goods for a manufacturer. For
this right, the dealer pays a fee for the right to sell the trademarked goods of the producer. The Singer Corporation used
product franchising perhaps for the first time during the 1800s to distribute its sewing machines. This practice
subsequently became popular in the petroleum and automobile machines also.

MANUFACTURING FRANCHISING:
Under this agreement, the franchiser (manufacturer) gives the dealer (bottler) the exclusive right to produce and
distribute the product in a particular area.
This type of franchising is commonly used in the soft- drink industry.
BUSINESS- FORMAT FRANCHISING:
This is recent type of franchising and is the most popular one at present. This is the type that most people today mean
when they use the term franchising. In the United States, this form accounts for nearly three- fourth of all franchised
outlets. Business- format wide range of services to the franchisee, including marketing, advertising, strategic planning,
training, production of operations manuals and standards and quality control guidance. The International Franchise
Association (IFA) of America has defined format franchising as follows:
A franchise operation is a contractual relationship between the franchiser and franchisee in which the franchiser offers or
is obligated to maintain a continuing interest in the business of the franchisee in such areas as know how and training,
wherein the franchisee operates under a common trade name, format and or procedure owned or controlled by the
franchiser and in which the franchisee has or will make a substantial capital investment in his business from his own
resources.

ADVANTAGES
Franchising agreement is a symbolic one for the franchiser and the franchisee.
Following are the advantages that franchising provides to the franchisee.
1) Franchising makes the task of getting started easier because the franchisee gets a business format already market tested
and found to work. Hence buying a franchise is so far safer than trying to start a new business.
2) It reduces chances for failure. Here significant to mention is that less than 10 percent of all franchise fails. In dramatic
contrast with this is the fact that two out of every five entrepreneurs who start on their own fail within three years and
eight out of every ten fail within ten years.
3) A well established franchise brings with it the very important advantage of recognition. Many new businesses
experience lean months or years after start up. Obviously, the longer the period the business must experience it, the greater
the chances of failure. With the well tested franchise, this period of agency may reduce to only weeks or perhaps just days.
4) Franchising may increase the franchisees purchasing power also.
Because, being part of a large and that too recognized organization means paying less for a variety of things such as
supplies equipment, inventory, services, insurance and so on. It also can mean getting better service from suppliers
because of the importance of the organization
(franchise) of you is part franchisee).
5) One gets the benefit of the franchisers research and development in improving the product.
6) The franchisee has the protected or privileged rights to franchise within a given area.
7) The prospects of obtaining loan facilities from the bank are also improved.
8) The banking of a known trading name (franchiser) becomes quite helpful while negotiating for good sites with setting
agents or building owners.

DISADVANTAGES
Franchising is not an unmixed blessing. There are some disadvantages as well associated with a franchise arrangement.
The main ones are listed as follows:
1) Unlike entrepreneurs who start their own business, the franchisees find no room or scope for enjoying their creativity.
They have to work as per the given format. One classic example of regimentation in franchising can be found in the Mc
Donalds restaurant organization. A

Mc Donalds franchise is given very little operational latitude, indeed the operations manual attends to such minor details
as when to boil the bearings on the potato slicer. The purpose of these restrictions is not to frustrate the franchises, but to
ensure that each outlet is run in a uniform correct manner.
2) A number of restrictions are also imposed upon the franchisees.
Restrictions may relate to remain confined to product line or a particular geographical location only.
3) Franchisees usually do not have the right to sell their business to the highest bidder or to leave it to a member of their
family without approval from the franchiser.
4) Though the franchisee can build up goodwill for his or her business by his or her efforts goodwill still remains the
property of the franchiser.
5) The franchisee may become subject to fail with the failure of the franchiser, another disadvantage facing franchisees is
that franchisers generally reserve the option to buy back an outlet upon termination of the contract. Many franchisees
become vulnerable to this option. As such, they operate under the constant fear of non- renewal of the franchise
agreements.
Then do these disadvantages mean that franchising is no longer desirable way to go small business? Certainly not
franchising is a proven and complete business concept. In fact, what do they really mean is that the security that some
people associate with franchising is an illusion? Hard work, realistic expectations, and very careful investigation are
required if becoming a franchisee is to be a successful, satisfying experience. This underlines the need for evaluation of a
franchising agreement.

Q31