Entrepreneurship Mgmnt. M1 2013-14

Prof . Purshottam Patil

2013-14

Course Content 100 Marks (A) Entrepreneurial Perspective: Concept of Entrepreneur, Entrepreneurship

and Enterprise ; advantages Entrepreneur

1) Nature and Development of Entrepreneurship; Gender Issues in

Entrepreneurship.

2) The dynamic role of Small Business Industry in Economic Development

3) Personality of an Entrepreneur!

4) Innovation and Entrepreneurship

(B) The Entrepreneurial Environment:

1) Policy Perspectives in India to promote Entrepreneurship

2) Analysis of Business Opportunities in different sectors of economy at

National & Global levels.

3) Quick Start Routes to establish an Enterprise (Franchising, Ancilliarising &

Acquisitioning)

4) Support Organizations for an Entrepreneur and their Role

5) Legal framework for starting a Business industry in India.

(C) The Enterprise Launching : Product/Project Identification , Develop a

Project Report/ Business Plan, Business Financing including venture Capital

Finance

Managing early growth of a Business, Incubation Program, New Venture

expansion – strategies and issuesProf Purshottam Patil 2

Reference Text 1. Beyond Entrepreneurship - By James C. Collins, William

C. Lazier

2. Entrepreneurship Management - By P. N. Singh, By J. C. Saboo

3. Dynamics of Entrepreneurial - By Vasant Desai

4. Entrepreneurship Development in India - By BishwanathGhosh

5. Literature Published by Support Institutions, viz

i) SIICOM, ii)SIDBI, iii)MSSIDC iv)NSIC

Concept : EntrepreneurEntrepreneur

creates new business in face of risk & uncertainty

purpose: to achieve profit & growth

by identifying opportunities &

assembling the necessary resources to capitalize on them.

Prof Purshottam Patil 4

Entrepreneur: Born / Made ? “ Most of what you hear about entrepreneurship is

all wrong. It’s not magic; it’s not mysterious; and it has nothing to do with genes. It’s a discipline and, like any discipline, it can be learned.”

..Peter F. Drucker

Good Entrepreneur: Capable to inspire confidence in people & able to motivate them to work with him in fulfilling the economic goals set by him


Concept : Entrepreneur “A small body of determined spirits fixed by an

unquenchable faith in their mission can alter the course of history”

..Mahatma Gandhi

Entrepreneur : Person who brings in overall change through innovation for maximum social good.

Entrepreneurs have:

Quest quotient > Intelligent Quotient

They have always something to learn.

An innovator who carries out new combination to initiate the process of economic development through introduction of new products, new markets, conquests of new source of raw materials & establishment of new organization of industry.

..J. A. Schumpter

Concept : Entrepreneur

Myth: Entrepreneurs mostly are school dropouts, who strive for fame & fortune.

Fact: Such entrepreneurs do exist, but they are in minority.

Global Entrepreneurship Monitor report 2005: People with post-secondary or graduate are more than twice likely to be involved in a entrepreneurial firm as those with lesser education level.

67% CEOs of the Fortune 500 companies held university degree.

Concept : Entrepreneur

The Diversity of Entrepreneurship Young entrepreneurs

Women

Minority-owned enterprises

Immigrant entrepreneurs

Part-time entrepreneurs

Home-based businesses

Family businesses

Corporate dropouts


Advantages : Entrepreneur

High degree of independence—freedom from constraints

Potential for greater financial rewards

Get to use a variety of skills and talents

Freedom to make decisions

Accountable to only yourself

Opportunity to tackle challenges

Feeling of achievement & pride


Challenges: Entrepreneur

Must be comfortable with change and uncertainty

Must make a number of decisions

May face tough economic choices

Must be comfortable with taking risks

Need many different skills & talents

Must be comfortable with the potential for failure

The greatest Risk in Life is …..

Not to take a Risk at all !!Prof Purshottam Patil 11

Women enterprise..

“An enterprise owned & controlled by women having a minimum financial interest of 51% of capital & giving at least 51% of the employment generated by the enterprise to women.”

…..Government of India

Do you think women entrepreneurship is important for the country ?

Why?


Importance of Women Entrepreneurship

50% population, traditionally out of economic activities

They must be part of the economic development to strengthen economy of country.

The economic status of women is now accepted as an indicator of a society’s stage of development.

Factors influencing women entrepreneurs

Economic independence

Establishing their own creativity

Establishing their own identity

Achievement of excellence

Developing risk-taking ability

Equal status in society

Greater freedom and mobility

Status of Women Entrepreneurship

Traditionally Women had insignificant role

According to official stats 50% of population own & operate less then 5% of economic activity.

They are 60% in SSI, 15% in large and rest, 25% in cottage & micro segment.

They work primarily in sectors such as trade & services to tailoring, beauty parlors, and printing. Minimal in in manufacturing.

However, their contribution is much greater then shown in stats because much of it is in informal sector & household.

Challenges in the path of Women Entrepreneurship

Relatively easier for Women from upper strata to face challenges.

Real challenge to bring vast majority of disadvantaged into mainstream of economic activity.

Familial & social conditioning reduces confidence, independence & mobility of women

Insensitivity to gender issues – that result into problems in way of Women Entrepreneurs.

Strategies to develop of Women Entrepreneurship

Overcoming family resistance

Shouldering dual responsibility & Time Management

Education, skills

Financial assistance

Effective & efficient use of IT

Marketing Support

Group entrepreneurship

Programs and policies taking in to consideration special needs and concerns of Women

Mentorship support

Institutions supporting Women Entrepreneurship

Consortium of WE in India

Federation of Indian women entrepreneurs

Federation of Ladies' Organization (FLO)

Women India Trust

Special Schemes by Banks: Cent Kalyani

NABARD

State Government’s Scheme for Development of Women and Children in rural areas

SIDBI

Self-Employed Women’s Association (SEWA)

Organizations Supporting Women Entrepreneurs

SABAL: Crafting Exports of Indian Handicrafts; www.sabalaindia.com

www.indiatogether.org

Shri Mahila Griha Udyog Lijjat Papad; www.lijjat.com

Mahila Sahakari Samiti

http://www.sabalaindia.com/

http://www.indiatogether.org/

http://www.lijjat.com/

Some Eminent Women EntrepreneurshipVidya Chabria : ranks 95 in ‘100 Most Powerful Women 2008’. (Chairperson of Shaw Wallace.)

Anu Aga : Indian businesswoman & social worker, who led Thermax Ltd., figured among the 8th richest Indian women, 40 richest Indians by net worth (2007), according to Forbes magazine.Ritu Kumar: Indian Fashion Designer, based in Delhi. Opened a new flagship store in North America in The Mall at Oak Tree in New Jersey.

Priya Paul (Chairperson of Appeejay, The Park Hotels chain of boutique hotels)

Anuradha Desai: Chairperson, Venkateshwara Hatcheries

Ekta Kapoor…Juhi Chawla…..Shilpa Shetty…..RituNanda…..Shweta Tiwari..

The dynamic role of Small Businesses Industry in Economic Development


The Small Scale Sector

SSI natural habitat of entrepreneurs.

Small start-ups turn into large industries.

The SSI Sector provides opportunity to hone their skills & talents, to experiment, to innovate & transform their ideas into goods & services needed by society.

SSI Sector exhibited +ve growth trends even when other sectors of economy experienced either -ve or nominal growth.

Some statistics about SSI in India?


Profile of SSI Sector in India95% of Industrial Units in the Country

39.92% of Value Added in the Manufacturing Sector

34.29% of National Exports

6.86% of Gross Domestic Product

Employment To 193 Lakh Persons

Production of Over 7500 Items in the Industrial Sector

298 Items Reserved for Exclusive Manufacture

358 Items for Exclusive Purchase from This Sector

For every Rs.0.1million of investment, the small-scale sector provides jobs to 26 people as compared to 4 jobs created in the large-scale sector.Prof Purshottam Patil 23

Small Scale IndustryAn industrial undertaking in which the investment in plant & machinery, whether held on ownership terms or on lease/hire-purchase basis, does not exceed Rs. 10 million (Rs. 1 crore) is regarded as a small-scale undertaking. These include manufacturing & service units

Small Scale Industry evokes different meanings for different agencies and the financial institutions.

E.g. for the purpose of Excise and Sales Tax Exemption, the turnover alone is the determining criterion.

What do you mean by Ancillary & Tiny Unit?


ANCILLARY INDUSTRIAL UNDERTAKING

ANCILLARY INDUSTRIAL UNDERTAKING

An industrial undertaking which is engaged or is proposed to manufacture or producing of parts, components, sub-assemblies, tooling / intermediates/ the rendering of services is termed as an ancillary undertaking.

Its is required to supply or render or propose to supply not less than 50 % of its production or services or more to other industrial undertakings.

The investment in plant and machinery, whether held on ownership basis or on lease or on hire purchase, should not exceed Rs. 10 million


TINY ENTERPRISE

A unit where the investment in plant and machinery does not exceed Rs. 2.5 million (Rs. 25 Lakhs) irrespective of the location of the unit.

Many shops, schools, parlors, Photostat and STD booths in your vicinity are all examples of tiny units.


SMALL SCALE SERVICE AND BUSINESS ENTERPRISE [SSSBES]

An industry related service/business enterprise with investment up to Re.0.5 million (5 Lakhs) in fixed assets, excluding land and building, is treated as an SSSBE.

E.g. advertising agencies, Marketing consultancy, Auto repair, services and garages, Tailoring, Desktop printing etc.

The service sector has emerged as the major segment of the economy.

What is an EOU?


EXPORT ORIENTED UNIT [EOU]

A unit with an obligation to export at least 30 percent of its annual production by the end of the third year of commencement of production and having an

investment ceiling up to Rs. 10 million (Rs. 1 crore) in plant and machinery is termed as an export oriented SSI unit.

Features of SSI Unit?


salient characteristics of small-scale businesses

1. Personal Character:

• Owners: themselves are managers. Can operate independently & givecustomized service to clients, which is their USP.

• Labor Intensive: Small businesses actually create more jobs than big businesses. This feature of a small-scale unit is of great significance in a country like India.

• Local Area of Operation: Small businesses are largely local in operation; however the market for its products may be local, regional or even international.

• Short Gestation Period: The capital investment in the small sector is generally low & time taken for production to commence is less. Hence, short gestation period the units give quick returns & pace of economic development quickens.


What are the challenges for the SSI Unit?

Challenges for SSI

1. Paucity of Finance: The small entrepreneurs possess a weak financial structure and find it extremely difficult to obtain credit because of lack of collateral security.

2. Poor availability of power and other infrastructure: Though infrastructural bottlenecks are problems for big businesses too, yet they can overcome these problems to some extent because of their financial strength e.g. generating their own power, or even influencing the government in framing its policies sometimes. The small entrepreneur on the other hand has to battle with them.


Obsolete Technology: Most small businesses use old technologies because they cannot afford better. As a result the quality of their goods is inferior & cost of production is higher than in case of other big ventures.

Marketing Problems: small entrepreneur cannot supply standardized goods of high quality and as a result cannot compete with products of large companies or MNCs.


Challenges for SSI

Poor Managerial and Organizational Skills: usually entrepreneur has to perform a multitude of diverse functions invariably with out having any exposure to professional education or formal training.

High Incidence of Sickness: 7 out of 10 small businesses usually fall sick and die within 3to5 years.

Main causes for this are a wrong choice of product, poor managerial skills, lack of experience, poor quality of products because of the use of old technologies,

Comment of Entrepreneur Personality..

Independence, Administrative Ability, Emotional Stability, Risk taker..


Challenges for SSI

Entrepreneur Personality: Risk Taking

Entrepreneurs are moderate risk takers. They enjoy he excitement of a challenge, but they do not gamble.

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.

An entrepreneur always takes a calculated risk and is not afraid of failure.


Work Ethic?

Work ethic yields only positive results..

Work ethic encourages co-operation from different layers within organization.

Work ethic implies continuously taking up work worth doing.

Work ethic requires to do work with a sense of integrity, but with a lack of attachment

One key factor to achieve entrepreneurial success is the chemistry between the CEO & the promoters of Organization.

This is established when CEO pursues & acts based on work ethic. … Vasant Desai

Entrepreneur Personality: Need for Independence

: - The need for independence is the prime characteristic that has driven the entrepreneurs to start their own business. 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.


Entrepreneur Personality: 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.


Entrepreneur Personality: 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.


Entrepreneur Personality: 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.


What Are Innovations?

Innovation: utilization of better or more effective products, processes, services, technologies, or ideas that are accepted by markets, governments & society.

Innovation vs. invention: Innovation refers to use of a new idea or method, whereas invention refers more directly to the creation of the idea or method itself.


Innovation & Creativity

Creativity.

• The ability to develop new ideas and to discover new ways of looking at problems and opportunities; thinking new things

Innovation

• The ability to apply creative solutions to problems or opportunities to enhance or to enrich people’s lives; doingnew things.


How can we develop organizational innovation?

Tips for Enhancing Organizational Innovation

Include innovation as a core company value

Embrace diversity

Expect creativity

Expect and tolerate failure

Encourage creativity

Create a change of scenery periodically

View problems as challenges

Provide creativity training

Provide support

Develop a procedure for capturing ideasProf Purshottam Patil 41

Entrepreneurship & Innovations Practitioners are important innovators.

They identify a way to meet needs.

The scientific discoveries of the late 19th century gave rise to science-based innovations (Edison, Bell, Marconi).

Major companies (IBM, Sony, Bell, Kodak, GM) built their own research labs.

Public sector labs made important agricultural & environmental discoveries.

Universities & start-up cos. are becoming major sources of new innovations.

Ownership of technology & leadership in its applications move between organizations over time.


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Entrepreneurship Mgmnt. M1 2013-14