UNIT II

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Unit I
Entrepreneurship: Concept and Definitions; Entrepreneurship and Economic Development;
Classification and Types of Entrepreneurs; Entrepreneurial Competencies; Factor Affecting
Entrepreneurial Growth – Economic, Non-Economic Factors; EDP Programmes; Entrepreneurial
Training; Traits/Qualities of an Entrepreneurs; Entrepreneur; Manager Vs. Entrepreneur.
(14 Hours)
Unit II
Opportunity / Identification and Product Selection: Entrepreneurial Opportunity Search and
Identification; Criteria to Select a Product; Conducting Feasibility Studies; Project Finalization; Sources
of Information.
Unit III
Small Enterprises and Enterprise Launching Formalities : Definition of Small Scale; Rationale;
Objective; Scope; Role of SME in Economic Development of India; SME; Registration; NOC from
Pollution Board; Machinery and Equipment Selection; Project Report Preparation; Specimen of Project
Report; Project Planning and Scheduling using Networking Techniques of PERT / CPM; Methods of
Project Appraisal.
(14 Hours)
Unit IV
Role of Support Institutions and Management of Small Business : Director of Industries; DIC;
SIDO; SIDBI; Small Industries Development Corporation (SIDC); SISI; NSIC; NISBUED; State
Financial Corporation SFC; Marketing Management; Production Management; Finance Management;
Human Resource Management; Export Marketing; Case Studies-At least 4 (four) in whole course.
(14 Hours)

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 Opportunity identification is central to
entrepreneurship and involves:
 The creative pursuit of ideas
 The innovation process
 The first step for any entrepreneur is the
identification of a “good idea.”
 The search for good ideas is never easy.
 Opportunity recognition can lead to both personal and societal
wealth.

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 How entrepreneurs do what they do:
 Creative thinking + systematic analysis = success
 Seek out unique opportunities to fill needs and wants
 Turn problems into opportunities
 Recognize that problems are to solutions what demand is to
supply
Ideas are not the same as opportunities
Ideas Opportunities
Last for ever are perishable
Are free require work

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What is an opportunity??
 An idea that is timely, attractive, durable anchored
in a product or service that creates or adds value for
its buyer and user.
 An opportunity is a favorable set of circumstances
that creates the need for a new product, service, or
business idea.
 An idea, as we defined it, is “Something imagined or
pictured in the mind”. The difference is that an idea
may or may not represent an opportunity.

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 An opportunity as four essential qualities

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 Window of Opportunity
 The term “window of opportunity” is a metaphor
describing the time period in which a firm can
realistically enter a new market.
 Once the market for a new product is established,
its window of opportunity opens, and new entrants
flow in.
 At some point, the market matures, and the
window of opportunity (for new entrants) closes.

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 Three Ways to Identify An Opportunity:
 1. Observing Trends; 2. Solving a problem
 3. Finding gaps in the market place
 The first approach to identifying opportunities is to
observe trends and study how they create
opportunities for entrepreneurs to pursue.
 There are two ways that entrepreneurs can get a
handle on changing environmental trends:
 They can carefully study and observe them.
 They can purchase customized forecasts and market
analyses from independent research firms. 9
 Environmental Trends Suggesting Business or
Product Opportunity Gaps: Green Business
Biotechnology
Event management
It Enable Services
Food, Fruits, Vegetables
processing etc.
Courier services
Herbal Sector
Tourism
Vermiculture
Electric vehicles
E-commerce
International Business
Medical
10 tourism
 Economic Forces
 Economic forces affect consumers’ level of disposable income.
 When studying how economic forces affect opportunities, it is
important to evaluate who has money to spend and who is
trying to cut costs.
 An increase in the number of women in the workforce and
their related increase in disposable income is largely
responsible for the number of boutique clothing stores
targeting professional women that have opened in the past
several years.
 Many large firms are trying to cut costs. Entrepreneurs have
taken advantage of this trend by starting firms that help other
firms control costs.

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 Social Forces
 Changes in social trends provide openings for new businesses
on an ongoing basis.
 The continual proliferation of fast-food restaurants, for
example, isn’t happening because people love fast food. It is
happening because people are busy, and have disposable
income.
 Similarly, the Sony Walkman was developed not because
consumers wanted smaller radios but because people wanted
to listen to music while on the go.

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 Technological Advances
 Given the rapid pace of technological change, it is vital that
entrepreneurs keep on top of how new technologies affect
current and future business opportunities.
 Entire industries have emerged as the result of technological
advances.
 Examples include the computer industry, the Internet,
biotechnology, and digital photography.
 Once a new technology is created, new businesses form to
take the technology to a higher level.
 For example, RealNetworks was started to add audio
capability to the Internet.

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 Political and Regulatory Changes
 Political and regulatory changes provide the basis for new
business opportunities.
 For example, laws that protect the environment have created
opportunities for entrepreneurs to start firms that help other
firms comply with environmental laws and regulations
ISO;18000; 21000.
 Similarly, many entrepreneurial firms have been started to
help companies comply with the ISO:9000, ISO:31000.
 Opportunity to start manufacturing and marketing
Photovoltaic power plant with mini/micro grid and import
export meter facilities.
 Mobile banking as a result of demonization scheme of Govt. of
India in the month of Nov.2016
 Consultancies business in patenting & IPR maintenance
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1. Observing Trends; 2. Solving a problem
3. Finding gaps in the market place

Sometimes identifying These problems can be

opportunities simply pinpointed through
involves noticing a problem Observing trends and
and finding a way to through more simple means,
solve it. such as intuition,
destiny, or chance.

Some business ideas are For example, Symantec

Clearly initiated to solve a Corp. created Norton
problem. Antivirus software to guard
Computers against viruses.

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1. Observing Trends; 2. Solving a problem
3. Finding gaps in the market place
 A third approach to identifying opportunities is to find a gap in the
marketplace.
 A gap in the marketplace is often created when a product or
service is needed by a specific group of people but doesn’t
represent a large enough market to be of interest to mainstream
retailers or manufacturers.
 This is the reason that small clothing boutiques and specialty
shops exist.
 The small boutiques, which often sell designer clothes or clothing
for hard-to-fit people, are willing to carry merchandise that
doesn’t sell in large enough quantities for Wal-Mart, Showrooms,
etc. 16
 Undertaking a business venture is a big
investment requiring adequate planning. Just
as investment opportunities are many and diverse,
products or services options for an entrepreneur are
uncountable. However, the selection of required
product or service is the first step towards success.
 product is anything that can be offered to a
marketer for acquisition, use or consumption.
 products provide the business with the most important
and visible contact with buyers i.e. consumers.
Products to the consumers represent psychological
symbols of personal attributes, goal and social
patterns

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 Inselecting product for a business venture, the
following factors must be taken into consideration:
 Supply-gap: The size of the unsatisfied market
demand which constitute a source of business
opportunity will dictate, to a great extent the need
to select a particular product. The product with the
highest chances of success as reflected in its
demand will be selected. In essence, there must be
existing obvious demand for the selected product.
 Fund: The size of the funds that can be mobilized is
another important factor. Adequate fund is needed
to develop, produce, promote, sell and distribute
the product selected.
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 Availability of and Access to Raw Materials: Different
products require different raw materials. The source quality
and quantity of the raw materials needed are factors to be
seriously considered, Are the raw materials available in
sufficient quantities? Where are the sources of raw materials
located? Are they accessible? Could they be sources locally
or imported? Satisfactory answers should be provided to
these and many other relevant questions.
 Technical Implications: The production process for the
product needs to be considered. There is need to know the
technical implications of the selected product on the
existing production line, available technology and even the
labour force. The choice of a particular product may require
either acquisition of the machineries or refurbishing of the
old ones. The product itself must be technically satisfactory
and acceptable to the user.
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 Profitability/Marketability: Most often, the
product that has the highest profit potential is
often selected. However, a product may be
selected on the basis of its ability to utilize idle
capacity or complement the sale of the existing
products. The product must be marketable.
 Availability of Qualified Personnel: Qualified
personnel to handle the production and marketing
of the product must he available. The cost of
producing the product must be kept to the
minimum by reducing wastages. This is achievable
through competent hands.

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 Government Policies: This is quite often an
uncontrollable factor. The focuses of government
policies can significantly influence the selection of
product. For instance, a package of incentives from
government for a product with 100% local input
contents can change the direction of the business’s
R & D and hence the product selected.
 Company objectives: The contributions of the
product to the realization of the company’s short
and long range objectives must be considered before
selection. For instance, the company goal maybe the
achievement of sale growth, sales stability or
enhancement of the company’s social value.
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 Feasibility study is done to find whether the
proposed project (considering the above discussed
environment appraisal) would be feasible or not.
 Feasibility study is dependent on environment
appraisal yet it is far more descriptive.
 The variable/dimensions of feasibility analysis -
1. Market Analysis
2. Technical/Operational Analysis
3. Financial feasibility
4. Drawing functional plan

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1. Market Analysis
 M A is conducted to estimate the demand and market share of
the proposed product/service in future.
 Demand analysis and market share is based on number of
factors - consumption pattern, availability of substitute
goods/service, competition etc.
 A preliminary discussions with consumers, retailers,
distributors, competitors, suppliers is carried to understand
consumer preferences, existing and potential demands,
strategy of competitors, and practices of distributors,
retailers etc., present and prospective consumers, geographic
and seasonality distribution of the demand, marketing mix of
competitors, accepted marketing mix of consumers.

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2. Technical/ Operational Analysis
 Done to assess operational ability of the proposed business
enterprise.
 Key questions to be answered are- what are the technological
and equipments needs, from where this technology and
equipments be obtained, from where the raw material be
obtained.
 T/O analysis collects information about :
a) Material availability & requirement planning
b) Plant location
c) Plant capacity
d) Machinery and equipment
e) Plant layout

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3. Financial Analysis
 Financial feasibility is done for financial assessment of the
proposed business venture. Following cost estimates have to
be carried out :
i) Cost of land and building – depending upon the
requirement and availability of funds, the land and
building can be hired, taken on lease or purchased.
ii) Cost of plant & machinery-estimating cost of plants &
machineries and their running & maintenance.
iii) Preliminary cost estimation – cost required for conducting
market survey, preparing feasibility report, registration
expenses, expenses involved in raising capital from public
& other misc expanses.

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3. Financial Analysis
iv) Provision of Contingencies : Needs to be made to cover
certain unexpected expanses which can emerge due to
change in external environment like increase in the price
of the raw material, petrol price, transportation costs.
v) Working capital estimates for running the business are also
made.
vi) Cost of Production – It include raw material cost, labour
cost, overhead expanses, utilities like power, water, fuel
etc.
vii) Sales and Production estimates : Based on the plant
capacity the production and sales estimates are made
which help in estimating profitability.

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3. Financial Analysis
viii Profitability projections are made on the following
parameters
a. Cost of production
b. Sale expenses
c. Administrative expanses
d. Expected sales
e. Calculation of the above gives gross profit

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4. Drawing Functional Plan
 After feasibility study, functional plans are drawn which
means developing plans and strategies for all operational
areas : marketing, finance, HR and production.
a) Marketing Plan : MP lays down the strategies of marketing
(Marketing mix) which can lead to success of business. From
the market feasibility study and marketing research,
potential/present demand of customers, which helps in
laying down the strategies for market segmentation,
identification of target market and laying down strategies
for the target market.
b) Production/operation Plan : Production plans are drawn
for manufacturing whereas operational plans are for
service sector. It includes strategies for following
parameters :
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Conclusion
The feasibility study for Production/operation Plan-
must include following points:
1. Location and reasons for selecting the
locations
2. Physical layout
3. Cost & availability of machinery, equipments,
raw material
4. List of suppliers and if possible, distributors.
5. Cost of manufacturing / running operations
6. Quality management
7. Production scheduling, capacity mgt,
inventory mgt 29
c) Organizational Plan : Defines the type of ownership,
organization structure and proposes HRM practices
that would govern the successful running of
proposed business enterprise.
d) Financial Plan : Financial Plan indicates the
financial requirement of the proposed business
1. Cost incurred in smooth running of all the plans –
financial, marketing, operations and HRs.
 For eg. Cost incurred in the marketing plan would
include forecasting sales, for production plan it
includes cost of goods, for organizational plans it
includes cost of compensation to employees.

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A good project feasibility study report should include:

1. Cost incurred in smooth running of all the plans –

financial, marketing, operations and HRs.
2. Projected cash flows.
3. Projected income statement
4. Projected break-even point
5. Projected Balance sheet.

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