Development of Entrepreneurship Skills: Challenges and Opportunities

Entrepreneur as an Innovator One who perceives a need and then brings together manpower, material and capital required to meet that need. The entrepreneur in an advanced economy is an individual who introduce something new in the economy- a method of production not yet tested by experience in the branch of manufacturing, a product with which consumers are not yet familiar, a new source of raw material or of new markets and the like (Schumpeter) Entrepreneurship has been considered as the propensity of mind to take calculated risk with confidence to achieve predetermined business objectives.

Issues in Entrepreneurship Development• Human agent at the Centre Stage of the Economic Development,

Entrepreneur as an Innovator(Schumpeter)• Development of Entrepreneurship in Terms of Human Motivation(McClelland)• Traditional business attitude of secrecy and self sufficiency• Lack of open Environment and opportunities for Entrepreneurship• Role of Small Scale Industries: Entrepreneurship Development• Employment Generation• Foreign Exchange Earnings• Balanced Regional Development• Laying the base for Industrial Development

Behavioural Issues in EntrepreneurshipIn entrepreneurship, there is agreement that an entrepreneur’s behavior has the following characteristics –(1) initiative taking, (2) the organizing or reorganizing managerial functions to turn

resources for the useful enterprise, and (3) the acceptance of risk of failure.

Individual Factors affecting Entrepreneurship1 Need for achievement2. Locus of control3. Risk taking4. Job satisfaction5. Previous work experience6. Entrepreneurial parents7. Age 8. Education

The Environmental factors

1. Venture capital availability2. Presence of experienced entrepreneurs3. Technically skilled labor force4. Accessibility of suppliers5. Accessibility of customers or new markets6. Governmental influence7. Proximity of universities/ Institutions8. Availability of land or facilities9. Accessibility of transportation10. Attitude of the area population11. Availability of supporting services

The Organization factors

1. Type of firm2. Regulatory Framework3. Entrepreneurial environment4. Strategic variables

• Cost• Product Differentiation• Scheduling

5. Corporate Restructuring: M&A and Takeovers

The process factors

1. Location factors2. Accumulating resources 3. Marketing products and services4. Producing the products5. Government Regulations5. Corporate Social Responsibility

Industrial Policy in the Recent Era• Change in Economic Policy Regime: Trade, Industry and Financial

Reforms • Disinvestment Regime, Privatisation and Foreign Investment Focus • Encouraging the existing Small Scale Industrial units to undertake

modernisation and / or technology up gradation• Development of Entrepreneurial Skills: Role of EDI and ED Centres• Emphasis on the Development of Industry- Agriculture linkages

Institutional Framework• Role of Banks and AIFI’s: Nationalized and Private Sector Banks,

NABARD and SIDBI etc. • Role of Promotional Institutions: SIDC’s • Role of SFC’s • District Industry Centre• Role of Venture capital Financing

Role of Financial Services in Entrepreneurship Development• Merchant Banking• Leasing• Portfolio Management• Venture Capital• Corporate Counselling• Corporate Restructuring • Factoring

Objectives of Industrial Policy at the State Level• To create a conducive investment climate through infrastructure

creation, reduced regulations and general facilitation. • To rejuvenate and make the existing industry more competitive,

through improved technology, product quality and modern marketing. • To create a special thrust in the areas where the states have an edge

in terms of cost and quality.

Incentives Regime• Entrepreneurship as a function of right type of Industrial Climate• Government Incentives like Industrial sheds, Provision of Electricity

and Tax Exemptions etc.• Investment Incentives like Fixed Capital Investment to the Small,

Medium and Large Scale units• Single Window Scheme of SIDC’s• Perceptions of Entrepreneurs as to Government Policy and Support

System for SSI units

Thrust areas• Agro based and food processing industry. • Electronics, Information Technology & Telecommunications. • Automobiles , automotive components and light & medium

engineering. • Handloom, hosiery , textiles & garment manufacturing • Export oriented units• SEZ’s

Problem areas in Entrepreneurship Development• Many SSI turn sick due to lack of competence on the part of

entrepreneurs. • Surveys into the reasons for these failures invariably discovered that

personnel related problems constituted the main reason for failure, other being lack of managerial experience, marketing fluctuations, financial problems, the growing demand for quality products and so on.• Many small business people are not good at handling employee

problems for a variety of reasons. Human factor which is so essential for running the organization and putting the industry on the right track is completely ignored.

Role of Human Resource Management in SSI’s• In the context of small scale industries, HR factor is ignored and these

industries don’t have human resource departments in their organizations. • In most of the units human resource function is being performed by line

management without assistance of specialized Human Resource department.• Lack of right attitude towards change management• In small scale industry HR function is not considered vital for the

accomplishment of organizational goals• Contract labour• Lack of Social security and Labour welfare

Marketing Management in SSI units• Lack of Customer Relationship Management• Distribution and Promotion Problems• Pricing and Product Development Problems• Lack of Focus on Marketing Research by SSI• Sales Through State Government Agencies: STC and MMTC etc.• Quality Mark(ISI and ISO )

Financial Management in SSI units• Sources of Finance: Contribution by Self, Relatives and Friends• Short Term Financing by Banks• Medium and Long Term Financing by State Level Financial Corporation• Lack of Access to the Capital Market• Venture Capital Financing by Venture Funds• Financing by Sector Specific Institutions: Cooperative Banks,

Agriculture development Banks and Industrial Development Corporations• Lack of Focus on Optimal Capital Mix

Production Management in SSI• Lack of Expansion and Modernization • Lack of Diversification by SSI units• Lack of R & D Focus• Low Productivity• Poor Quality• Increasing cost of Inputs

Other Problems in Entrepreneurship Development• Lack of collaboration between universities and companies• Lack of sharing knowledge, experience and the networking skills with

the next generation entrepreneurs• Problem of revival of SSI units: Small and Medium Enterprises

Renewal Fund for Technological Up gradation and Capacity Building• Lack of Professional Management Approach• Lack of Adequate Delegation of Authority• Lack of Adequate Motivational Incentives to Staff• Lack of result oriented approach

How to Accelerate Entrepreneurship Development?• Technology Development and the high risk financing• Open flow of people and the information between the universities, industry and the

financial community• Strategic Management Approach: Clarity as to financial goals (revenue and profitability)

and non-financial goals market share, number and type of customers, choice of market etc.)• Development of Financial Infrastructure: Role of SFC’s and AIFI’s• Entrepreneurship Development through District Industry Centres and Entrepreneurship

Development Centres• Well trained people and have Human Resources Development through Technical

Institutions• Simplification of Procedure and Rationalization of Tax Regime• Identifying the Thrust Products and the Markets

Entrepreneurial Success: Replicating Silicon Valley Phenomenon• Why are the entrepreneurs at SV so successful? How do they build

great companies?• What makes Silicon valley a center for entrepreneurship?• Is it hard work, timing, education, dedication or is it just a plain luck?

How do the ideas germinate? Where does the money come from? What are the pathways to success and the roadblocks they encounter?

Contributing factors at Silicon Valley• Open Environment and Experiments by Skilled Professionals with new

technology, new products, new markets and new applications• Role of Venture Capital• Movement of Professionals between companies and Sectors: from

university to Industry, from semi conductor to telecommunication and from industry to finance leading to cross fertilization of ideas and know how• Open Environment and the opportunities for Entrepreneurship• Knowledge in Technology, products and markets: Strong Thrust

Challenges and Opportunities• There is a Shift in focus from Agriculture to Industry • Need to Develop Agriculture-Industry Linkages• Focus Towards Promotion of Electronic and IT Industry• SSI Unable to Face Cut Throat Competition from Large and Medium

Industry• Lack of Marketing Culture in SSI units• Low Productivity and Various operational Problems• Lack of adoption of sound Financial Management Practices

Challenges and Opportunities• Lack of attention to the Quality and Cost Factors• Red tape and Bureaucratic hurdles• Lack of Strategic Management Approach• Need to cope with the Industrial Sickness in SSI sector• Need to pay attention to the Corporate governance

Be a Job Creator than Job Seeker•Thanks•Best Read Book on “ East Meets West: Entrepreneurial Connection by Gurmeet Narula, age Publications. • In case of any query please send your e mail to: Batra.gurdip@gmail.com