Managerial Process SkillsEnterprise:

It is defined as a place where, with the joint efforts of land, labor, capital & management, a production process is undertaken for profit. For all practical purposes, an enterprise is run by an entrepreneur.

Entrepreneur:

This word is taken from French language which means Risk-Bearing, Innovator, and Organizer. An Irish man, Richard Cantillon, living in France, coined this word, at his unique risk-bearing function on economics in 18 th century. He defined entrepreneurs as agents who buy factors of production at certain prices in order to combine them into a product with a view of selling them at an uncertain price in the future.

Entrepreneurship:

The term entrepreneur is often interchanged with entrepreneur. The relation between the two is like two sides of the same coin.

Entrepreneur (Person) Entrepreneurship (Process)Visualiser VisionOrganiser OrganizationCreator CreationLeader LeadershipInnovator InnovationInitiator Initiation

This means that entrepreneur precedes entrepreneurship. Entrepreneurship is described as a creative & innovative response to the environment. Doing new things or doing things, that are already being done, in a new way is a simple definition of entrepreneurship.

The idea for new product & services often originates in unexpected places. Entrepreneurs are the ones who see demand-supply gap and capital earned on it. An Entrepreneur gathers such novel ideas. Thus, Entrepreneurs are self-starters who organize and build successful organization.

The term Entrepreneur is used in several ways and views which are classified into:

1. Entrepreneur as a Risk-bearer: Richard Cantillon and F. H. Knight describe them as a specialized group of persons who bear uncertainty. It is a risk which cannot be insured against and is incalculable. Entrepreneur is an economic functionary who undertakes responsibility of uncertainty which by its nature cannot be insured, capitalized, nor salaried.

2. Entrepreneur as an Organizer: Jean Baptiste associates it with functions of coordination, organization & supervision. Entrepreneurcombines the land of one, the labour of another & the capital of the third and produces a product. By selling it, he pays the interest in capital borrowed, rent for land and wages to labourers. Remaining is his profit.

3. ENTREPRENEUR as an Innovator: Joseph Schumpeter defines entrepreneur as an innovator & may occur in:a. Introduction of new products into marketb. Instituting new production technologyc. Opening of new marketsd. New sources of supply

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Managerial Process SkillsHe is an inventor who discovers new methods/ material while innovator uses these discoveries to make new combinations.

Qualities/ Characteristics/ Attributes of a successful Entrepreneur:

1. Hardwork2. Independence of thought & actions3. Ability to perceive opportunities & threats4. Realistic approach to planning & organizing5. Risk-taker6. Self confident with the positive self image7. Good business acumen8. Foresight & Vision9. Excellent leadership qualities10. Managerial competence11. Problem solving attitude12. Flexibility13. Adaptability

Essential functions/ Duties of an Entrepreneur:

1. Idea generation2. Scanning of best suitable idea3. Determination of business objective of company4. Product analysis & market research5. Determination of formation of ownership or organization6. Raising of sufficient funds7. Procuring machinery and raw material8. Recruitment of personnel9. Undertaking business operation10. Completion of promotional formalities

Distinction between an Entrepreneur & a Manager (Corporate Executive):

Parameter ENTREPRENEUR ManagerMotive To start a venture by setting up an

enterpriseTo render his services in an enterprise already setup by someone else

Status Entrepreneur is the owner of the enterprise

Manager is the servant of enterprise owned by entrepreneur

Risk-bearing Assumes all risk and uncertainty Does not bear any risk in the enterprise Rewards Reward is the profit generated which is

uncertainSalary as reward for services & is certain

Innovation They themselves think over what & how to produce goods to meet changing demands of the customers. They act as innovators or change agents

They just execute plans i.e. translate entrepreneur’s ideas into practice

Qualification Needs to possess risk-bearing, organizing, vision & foresight, high achievement motive, etc.

Needs academic qualification and sound knowledge in management theory & practice

Role Reversal Entrepreneur at times can be a manager also

Manager cannot be an entrepreneur

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Types of Entrepreneurs: (Clarence Danhoff’s Classification)

1. Innovative Entrepreneurs: These introduce new goods, discover new markets, introduce new methods of production and reorganize enterprise. These work only when a certain level of development and infrastructure is already achieved. Customers look for change & improvement.

2. Imitation Entrepreneurs: These are ready to adopt successful innovations developed by innovative Entrepreneurs. They only copy techniques & technology where profit margins are high, less capital intensive and less technology involved. Suitable for underdeveloped regions/ countries.

3. Fabian Entrepreneurs: Characterized by very great caution & scepticism in experimenting any change in their enterprise. They will imitate only when failure to do so will result in a loss or collapse of organization.

4. Drone Entrepreneurs: Characterized by refusal to adopt opportunities, to make changes in production formulae or in any process even at cost of severely reduced returns. Such entrepreneurs may suffer loss but they are not ready to make any changes in existing methods and procedures followed. E.g. Textile Mills in Mumbai.

Other Types:5. Solo Operators:

They work alone and if needed, will employ a few employees. Most entrepreneurs start their enterprise as solo operators.

6. Active Partners: They start & carry an enterprise as a joint venture. All entrepreneurs actually participate in business operations. There are some entrepreneurs who only contribute funds to the enterprise but do not actively participate in business activities and are known as “Sleeping Partners”.

7. Inventor Entrepreneurs: Such Entrepreneurs with their competence and incentiveness, make new products. Their basic interest lies in R&D of innovative products.

8. Challenger Entrepreneurs: These are Entrepreneurs who plunge into industry because of challenges it presents. When one challenge seems to be met, they look for new challenges. E. g. Anil Ambani

9. Buyer Entrepreneurs (Inorganic Growth): These Entrepreneurs don’t want to bear much risk. Hence, to reduce risk involved in setting up a new enterprise, they normally buy the ongoing one.

10. Life Timers (Generations after generations in Business): These Entrepreneurs consider business as an integral part of their life. Usually, family businesses fall under this category.

Advantages for developing & encouraging Entrepreneurship/ Role of Entrepreneur in Economic development of the country:

Developing and encouraging Entrepreneurship is vital for growth. Therefore, all developing countries encourage it.

1. Employment generation: Regional manpower, labour intensive, etc. 2. Optimum utilization of resources like manpower which otherwise would remain unutilized. 3. Promote country’s export trade

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Managerial Process Skills4. Import substitution – Entrepreneurs develop products in the country which are imported saving forex.5. Development of ancillary units (ancillarization occurs)6. An ENTREPRENEUR bridges the demand gap by seizing appropriate opportunity7. Distribution of economic power: small scale businesses are seed beds for Entrepreneurs. Reduce

concentration of economic power8. Promotion of capital formation by mobilising idle savings of common public. E.g. Raising money through

public offerings9. Backward & forward integration: Economic development

Intrapreneurs:

Intrapreneurship is development of entrepreneurship within a large corporation to produce new products/ services/ technology/ new markets by employing enterprise resources in a unique way. It gives professional manager the freedom to take initiatives & to try out new ideas. Intrapreneurship is Entrepreneurship within an existing business.

Big corporates recognise that individuals make big contributions without becoming entrepreneurs by inventing, etc. Intrapreneurship has drawn major transformation in the world leading to huge revenue generation. E.g. HP, Dupont, Apple, Xerox, GE, Ranbaxy, HUL, M&M, Apollo Tyres, Godrej, Titan, Infosys, TCS.

Intrapreneurship or Entrepreneurship aren’t necessarily a new product/ service. Their capability of turning ideas into profitable business is important. Intrapreneurship is corporate Entrepreneurship whereby it explores new opportunities.

It is a tool for stimulating and capitalising on employees who believe that something can be done differently & in a better way. E. g. HP awarded Charles House for Moon Lander Monitor.

Advantages of Intrapreneurship:

1. Helps to build & improve corporate business2. Capital for ideas is easy to come from internal sources within the corporate identity. (In Toyota, company

receives an avg. of 32 suggestions per employee per year)3. Established corporate image helps to boost chances of success.4. Makes organization’s technology to stay competitive.5. Corporates offer unique advantage of multidisciplinary team work. Intrapreneur retains job.

Profile & Characteristics of an Intrapreneur:

Characteristics1. Vision They visualize from idea stage to implementation stage.2. Motivation They are self-motivated. Corporate rewards & recognition. Money is not the

only incentive for their efforts. 3. Skill Intrapreneurs understand the business intimately. They have technology and

marketing background & they take responsibility of all aspects of business. 4. Action Oriented They involve only in the process of realising their dreams looking for

incremental achievement.5. Control System Intrapreneurs generally dislike control systems. But they learn to live with it

and gradually learn to manipulate it.6. Risk Factors They are moderate risk takers. They avoid uncontrolled risks. They take risk

on the basis of self-confidence. Corporates cannot afford Intrapreneurs who are wild risk takers.

7. Intrapreneurs do mundane work. i.e. part of a new project. Instead of delegation, they often do things themselves.

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Managerial Process Skills8. Goal Setting They are self-determined goal setters

Creating Intrapreneurship Environment:

The following 7 points are outlined to create intrapreneurship environment in the corporate sector.

1. R&DR&D efforts are key for the success of new product ideas. R&D is an investment for sustainability & growth.

2. FundingCompanies invest in other companies for making profits. Hence the question is why can’t they invest in ideas provided by their own employees.Big Corporates encourage intrapreneurship & also act as mentors.

3. Creating a climateCorporates create a climate of intrapreneurship development. It defines the intrapreneurship culture, the outlook and the values

4. TrainingCorporates conduct training program for their employees on intrapreneurship values, motivational factors, developing creativity and innovative scales through brainstorming sessions. Creativity has no boundaries. A different idea can be a nucleus for diversification.

5. Reward systemThis is the easiest system for creating intrapreneurship atmosphere. Corporates have well defined and transparent reward system to encourage intrapreneurship. Stock options appears to be the best & the most widely accepted approach.

6. Multi-disciplinarityAn idea can be translated into an enterprise range of products only by critical analysis from all aspects. The role of a team will come in the second phase.

7. CommitmentThe most important aspect is the commitment to intrapreneurship by the top and middle management levels. Without their support, the cultural environment for intrapreneurship will not take place. Again, the spirit of intrapreneurship cannot be forced on individuals. It should emerge on a volunteer basis.

Comparison between Intrapreneur & Entrepreneur:

INTRAPRENEUR ENTREPRENEURPrimary Motive They have the freedom & access to the

corporate resources. They are proactive.

Need freedom. They are goal oriented, self-reliant and self-motivated.

Risk Preference Accepts moderate risk but puts his career and job on the line of fire.

Accepts higher risk, has the money and is not much worried about reputation and failures.

Attitude to status Considers corporate symbols and designations.

Willing to accept long periods of low status.

Decision Making Need to get others to share his vision. They should be willing to accept a compromise if the need be.

They make their own decisions and are often not ready for any compromise.

Attitude towards Bureaucracy

They dislike the system but have learned to live with it being an employee. Later on, he managed to manipulate the system.

He may have done well in the system, but grew impatient and left the organization to start his own enterprise where he is the sole authority in all matters.

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Managerial Process SkillsFailures and Mistakes

They are very sensitive to corporate attitudes of mistakes and failures. The intrapreneur often attempt to hide errors. They always try to learn from the mistakes committed.

They also learn from their mistakes however, have to pay from their own pocket for the errors committed. All errors are visible and in public domain.

Resources For the Intrapreneurs, it is derived primarily within the organization.

It is acquired and assembled from the market or from family or all the resources in the name of the enterprise.

Skill SAME SAME

FRAMEWORK FOR ESTABLISHING AN ENTERPRISE

One may become an entrepreneur only when one owns an enterprise. The business enterprise to be set can be a manufacturing venture, a trading venture or a servicing venture. The manufacturing establishment encompasses the steps necessary for setting up a trading venture or a servicing venture. Steps involved in setting up a business enterprise (small industrial enterprise)is as follows:

1. Decision to go into business:This is the most crucial decision the entrepreneur has to take, shunning wage or salary every month and opting for self employment or entrepreneurship.

2. Analysing the strength & weaknesses:The strength and weaknesses will vary from person to person. Having decided to become an entrepreneur, one has to analyse his/her strength and weaknesses. This will enable him/her to understand what type and size of business would be most suitable.

3. Training:The above analysis will reveal many deficiencies. These would be made up through training. Such training can be: Developing skills for entrepreneurs. Developing technical or working skills for proposed products or projects.

4. Know the environment:It is essential to study and understand the environment in which we are operating to ensure the success of the enterprise. It also helps to understand the business opportunities and the threats present in the environment. It further helps in proper project identification and selection.

5. Product selection:Next step is to decide what business to enter into, the products or range of products that should be taken up for manufacturing and ____ and if so, in what quantities. The level of activity will help in deciding the size of the business and the form of ownership. During environmental scanning, we may find many project ideas, shortlist a few of them, closely examine each of them and zero into the final product.

6. It is very easy to mfg a product but it is very difficult to sell it, hence, it is prudent to survey the market before embarking upon production. This also ensures the product selected has sufficient demand now and also good prospects in the future. Determine the demand and supply position, study the changes in product design, the extent of competition, pricing, distribution network and potential market share.

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Managerial Process SkillsThe basic principle in the minds of the entrepreneur is to produce goods which the customers demand in a form and quantity that can easily be sold.

7. Form of ownership:An enterprise can be constituted as partnership ltd. company (Co-op Soc., depending on the type, purpose and size of business. The decision for ownership can also be made on the basis of financial resources in hand or from the point of saving taxes.

8. Location:A crucial step to decide is on the point where the unit is to be located either owned or maintained. The size of the plot, the suitability of the site covered an open area, no objection certificate from the local body or municipality is essential for setting up industrial units. Theoretically, the location selected should be based on availability of resources, skills or market.

9. Technology:To manufacture an item, various methods and processes are_____. All the available technology should be collected and the best one identified. This will be useful in determining the machinery and eqpmt which are to be purchased and installed.

10. Machinery:After the selection of the technology, the machinery & eqpmt required for the manufacturing of the selected products has to be decided.

Suppliers of machinery need to be identified and the cost estimated. Planning in advance for the machinery is important, particularly, if it is highly technology oriented and needs to be purchased from abroad. Technical Know How

The technical knowhow can be arranged through TCO (Technical Consultancy Organization), National Small Industries Corporation limited (MSIC), Small Scale Industries Development corporation Limited (SSIDC), Small Industries Service Institute, (SISI) and through foreign collaborations.

Power Connection

The site chosen should either have adequate power connection or this should be arranged. The calculations of total power requirement, voltage, phase are required to be made in advance. The costing of the same needs to be worked out.

Installation of Machinery

It is essential to procure machinery and begin its installation as per the plant layout.

Recruitment of Man Power

Man power is required to run the enterprise. Hence, the quantum (numbers) and the type of labor has to be determined, sources to get the desired labor identified and the staff to be recruited. It is always preferable to have trained employees or otherwise training needs to be provided.

Raw Materials

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Managerial Process SkillsThe raw materials required must be made available indigenously or may be imported. Government agencies assist in the procurement of raw materials which are scarce or imported.

Production

The unit established should have an organizational set-up. There should not be any wastage of man power, materials or machine capacity installed. The product produced and its packing must be very attractive.

Marketing

The important aspect for reaching the product to the customer must be carefully studied. The most important of these are pricing, advertising, publicity, distribution channels, distributor’s commission and logistics.

There are 2 stages:

1. Test Marketing

2. Commercial Marketing

The test marketing will save the enterprise from going into disrepute in case the product launched is not well accepted in the marketplace. This will also assist in making modifications, additions in design and packaging.

Quality Assurance

After or at times before marketing the product, quality certification like ISO 9000, BIS (Bureau of Indian Standards), ISI (Indian Standard Institution), QMARK, AGMARK, depending upon the products should be obtained. Quality after all ensures long term success.

ISO14000 – Environment Friendly

Permanent Registration

Once the enterprise is in regular production and marketing, it is ready for obtaining a permanent registration based on its provisional registration.

Market Research

Once the product or service is introduced in the market, there is a need for continuous market research to assess needs and areas for modification, up-gradation and growth.

Market can become a water loop for most small scale entrepreneurs if they ignore this vital operation. The initial success should not give a sense of complacency.

Monitoring

Periodic monitoring and evaluation in terms of production, quality, marketing and profitability helps in knowing where the enterprise stands in comparison to the performance visualized in the project report and also with respect to competition.

Global Vision for Entrepreneurs

Globalization is a well planned program with an agenda for action. This agenda is also called as “The Washington Consensus” & was drafted by the US Government with the World Bank & IMF. It stands for 10 policies.

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Managerial Process Skills1. Free Trade

2. Free Flowing FDI

3. Cut in Subsidies

4. Privatization

5. Deregulation

6. Tax-Reforms

7. Competitive Currency Exchange Rates

8. Liberalized Financial Systems

9. Fiscal Disciplines (smaller budget deficits)

10. Property Rights

India’s Contribution to World Trade

Nearly 200 years ago, India contributed 40% to the total World Trade. With passage of time, it drastically fell to 1.8% in 1950, when India was declared republic. It became 0.53% in 1991. Finally after LPD policies, India’s share is about 0.65% of the total world trade in 2001.

The Concept of International Entrepreneurship

International entrepreneurship is ______. Entrepreneurs conduct business activity across boundaries. This activity was identified and satisfied needs & wants of target consumers in more than one country is called international entrepreneurship. The future commercial strength for any country like India will depend upon the ability of entrepreneurs to take the advantage of markets outside the country.

Why go Global?

Entrepreneurs willing to expand their business globally are motivated by 2 factors:

a) PULL Factor : They are motivated to internationalize their business because of attractiveness of the foreign market. (Proactive factors).

b) PUSH Factor : the push factors are reactive reasons for going global; because of compulsion & rigidity in the domestic market.

Entrepreneurs go global for following reasons:

1. To expand the sales: Sales are dependent on the consumers’ interest in the product/services, on willingness & ability to buy them. The number of people& the amount of purchasing power are higher for the world in comparison to a single country. Hence companies increase sale by ___ certain markets across the world.

2. Profit Advantage: The important incentive for going global is the profit generation. It is more profitable that domestic market in most of the cases. It can also increase the overall total profit in terms of economies of scale.

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Managerial Process Skills3. Domestic Market Constraints: Domestic market constraints often drive the entrepreneur to expand the

market beyond the national borders. This happens when the market is saturated; the potential is fully tapped or is very small. Hence, globalization is the only way to achieve growth.

Business Idea

Developing a business idea

Opportunity is a business concept which when turned into a tangible product or service by the enterprise will result into profits.

Business opportunities arise constantly. Opportunity assessment is a continuous process of gathering data, reviewing the proposition and reformulating the business concept.

The frequently used sources of ideas for businesses are:

1. Dissatisfied customers2. Distribution channels3. Research & Development & new Technologies4. New Technologies5. Improvement in Existing Products & services6. Government regulations & patents

Methods of generating New Ideas

Entrepreneurs & businessmen use several methods to generate and test ideas.

1. Brainstorming

The Brainstorming method allows a group to be stimulated to greater creativity by meeting and participating in organized group experiences focusing on parameters.

2. Reverse Brainstorming

The process usually involves identification of everything wrong with an idea (focusing on the negatives) followed by discussion of ways to overcome these problems.

3. Brain Writing

The Brain Writing is a form of written brainstorming. The method 635 is very popular.

6 – Persons

3 – Ideas

5 – Time in Minutes

4. Focused GroupsA moderator leads a group of individuals – 8, 10 or 12 through an open, in-depth discussion rather

than simply asking questions to understand responses in a structured format, it leads to conceptualizing and developing a new product idea to fulfill the market need.

Besides generating ideas, the focus group is an excellent method for screening the ideas and concept.

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5. Problem inventory analysis

A method for obtaining new ideas & solution by focusing on the problems.

The Product Selection

A product is capable of satisfying the needs to wants of people. Every product can render some service. A product can therefore be anything like an object, a person, activity, and place. The businessman or company should clearly examine the various products & services that people seek from time to time. This forms the basis of generating ideas leading to product solution.

How does on select the right product

Selection of the right product involves:

o Researcho Careful Evaluationo Sound Judgment

This activity is called Product Selection Analysis and consists of well defined steps.

1. Idea GenerationThe following should also be kept in mind.a) Understanding the changing needs & expectations of customersb) Visualizing emerging trends in societyc) Good understanding of the economy

2. Idea Screening

The following exploratory questions need to be answered in the idea screening stage:

a) Our customers are satisfied with what they are getting?b) Can we identify a better method?c) Can a basic design be changed?d) Is it compatible with company’s objective & culture of the organization, strategies & resources of the

company?

3. Idea Evaluation

The product evaluation is done objectively on the following factors:

Stability Growth Marketability Company position Production

These parameters rated on scale of 1 to 10 points.

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Managerial Process SkillsStability

a) Permanence of Markets: The product selected should have a long lasting demand in the marketplace. It should not become obsolete in the near future.

b) Breadth of the Market: A product used by variety of customers belonging to the different market segments covering greater number of consumers are rated high.

c) Stability in recession: Luxury items are rated poor because of low demand during recession while FMCG goods having regular demand are rated very high.

d) Difficult to Copy: Products that are highly technical & difficult to copy are rated high. Low technology products face failures because of duplication & imitation & similarity.

Growth factors

Products that satisfy market needs exclusively or replace a more expensive product by material substitution are rated high.

a) Demand Supply Relationship: if demand is greater than supply, then it is considered to be very good for growth prospects.

b) Rate of Technology Change: Areas where rapid change in technology occurs is considered as risky as products can become obsolete faster. Hence poor ratings for such products.

c) Export Possibilities: products that enjoy international demand and which can be exported will have big growth factors.

Marketability

a) Ease of Distributionb) After Sales Servicec) Freedom from Seasonal fluctuation

Warm clothes in winters will find difficulty in making price margin.d) Freedom from numerous variations

Example: Manufacturing of Acrylic paints. For every color, make variations. Therefore not able to make success (requires storage space)

e) Company FactorsThe time required to get established.Nano required 1.5 years Gestation Period is high

f) Availability of Raw Material / Man PowerSkilled labor should be available

4. Marketing Strategy Development

To find a cost effective & affordable marketing strategy.

5. Prelimnary Business Analysisa) Top Line(Sales) Estimating Total Salesb) Estimating Total Profitsc) Estimating Market Growth

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6. Product Development Step

Till now the product existed as word drawn or present as a prototype. In this step, we have to determine whether the product idea can be translated into a technically and commercially feasible product inside the company.

7. Test Marketing and formal Business Planning

a) Controlled Test MarketingSign wave research (Free samples given for finding out the exact reaction.)

b) Simulated Test MarketingTo quantify 30 or 40 respondents whom you are familiar with.

Test Markets

a) How many cities will be there?b) Which Cities?c) Length of the Test?d) What information and usage?

a. Attitude / Satisfaction have to be gathered from the test.e) What action needs to be taken?

Formal Business Planning

a) Controlling product in the introduction stageb) Critical Path Methodc) Programme Evaluation & Review Techniques (PERT)

Commercialization

1. Timing is Criticala. First Moveb. Parallel Entrantc. Late Entrant

2. Where (Location of Sale)3. To whom will you sell? (Target Customer)4. How will you sell? (Marketing Strategy)

Before starting new business venture at new location, following factors should be considered:

1. Political environment2. Technology environment3. Social environment4. Economic environment

1. political environment

Political stability Military invasion Legal framework

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Managerial Process Skills IPR Trade regulation and tariff

o Most favoured trading partnerso (signing of agreement between two countries like IT deals)

Pricing regulation Taxation

o In India tax rate varies from 30-40% from small scale to large scale industries. It’s not that high in US of A

Wages, legislation and employment rules Industrial safety regulation Product labelling requirements- statutory warning, price, contents,

2. Technology Environment

Impact of technology on the product offered Impact on the cost structure

o Because of new technology cost comes down e.g. watches Impact on value chain Rate of technology diffusion-RFID,

3. Social Environment

Demography Education level Culture Attitude of People

4.Economic Environment

Type of economy Government Intervention Advantages to host country Currency exchange rates Economic growth rate,GDP Inflation rate

Topic: Motivation

Definition: Motive is known as inner state of mind that moves or activates or energises and directs behaviour towards our goal

Motives are expression o f a person’s goal or need. Motivation is defined as the process that motivates people into action and induces them to continue the course of action for the achievement of the goals.

It is an ongoing process because human needs and goals are never completely satisfied.

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Managerial Process SkillsTopic: Motivation theory

Many theories of motivation have been propounded to explain human behaviour. They explain human motivation to human needs and human nature.

The most commonly used are

1. Maslov’s need hierarchy theory2. McChelland’s acquired need theory

Maslov’s need hierarchy theory is based on human needs. These needs are prioritized into a sequential priority from lower to higher. According to Maslov, all human needs are classified into five need clusters. As shown in the following diagram

1. Physiological needThese needs are basic to human life. Example, food, clothing, shelter, air, water and other necessities of life. These needs are called as survival needs

2. Social security:It involves protection from physical dangers. It also involves economic security. Meeting these needs require more money. Like physiological needs, these needs become inactive once they are satisfied.

3. Social needsMan is a social animal. It refers to belongingness. All individuals want to be recognized and recognized by others. Hence, a professional is motivated to interact with his fellow professionals, the superiors and subordinates.

4. Esteem needsThese needs refer to self esteem and self respect. They include needs which indicate self confidence, achievement, competence, knowledge and independence.A professional manager satisfies his esteem needs by status, designation, respect, recognition, reputation and independence.

5. Self actualizationThe final step in the need hierarchy model is the need for self actualization. He actually means self fulfilment. It also means to become actualized in what one is potentially good at. A professional manager may achieve self actualization by being successful in the endeavours undertaken.

In Maslow’s theory, needs are arranged in a sequential and phased manner from lowest to the highest hierarchy. The second need does not dominate until the first need is reasonably satisfied and settled. Similarly, third does not dominate until and unless first two needs are reasonably satisfied.

McClelland’s Acquired needs theory:According to David McClelland , person acquires 3 types of needs1. Need for Affiliation-These are needs to establish and maintain friendly and warm relations with others 2. Need for power-These are desires to dominate and influence others by using physical objects and action.3. Need for achievement- These are desires to accomplish something to own efforts this implies ones will

to excel their efforts15

Managerial Process SkillsMcClelland Suggest that all 3 needs simultaneously acting on an individual .

In the case of a professional manager or company executive the high need for achievement is found to be more dominating.

According to David McClelland the people with high need for achievement characterised by following.

1. They set moderate, realistic and attainable goals for themselves.2. They prefer to situations in which they can find solutions for solving personal responsibility.3. They need concrete feedback on how well they are performing4. They have need for achievement for attaining personal accomplishment5. They look for challenging task

The need for achievement plays an important role in making an professional manager successful. It is an inner spirit that activates a professional manager to strive for success. In other words, need for achievement is the desire to do well.

Thus there is a need for developing achievement motivation for professional managers in any economy. This can be developed through training and experience.

It is found that need for achievement motivation can be developed easily and effectively in younger minds. Hence, young professional programs were introduced in US with the object of inducing achievement motivation in younger minds.

In india, the introduction of BBA and BMS courses at graduation level is aimed at developing minds from a very young age.

Motivating factors:

Factors motivating professional managers are

a. Internal factors: 1. Desire to do something new2. Educational background3. Occupational background or experience4. Ambition factors5. Compelling factor6. Facilitating factors7. Encouragement factors: govt encouragement and assistance, encouragement from big employer.

b. External factors

Topic: Business plan:

The business plan is often criticized as being dreams of glory.

It is the single most important document for the entrepreneur particularly at the start-up stage. Business plan helps maintain a perspective for the entrepreneur on what needs to be accomplished. Potential investors are not likely to consider investing in the new venture until the business plan has been completed.

Business plan is an integration of all plans of the company (marketing plan, personal plan, production plan etc. )

It’s important from the perspective of getting investment from venture capitalists.

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Managerial Process SkillsWhat is a business plan?

It is also called as roadmap or B-plan. The business plan helps to answer the following questions

a. Where am i nowb. Where am i goingc. How will i get there

Why do you need a business plan?

a. Starting a new businessb. Diversifying existing businessc. Identifying strengths and weaknesses for buying new organizationd. For getting government assistance and financial help from industry bodies

Who should write the business plan?

Entrepreneur himself writes the business plans with the help of CA, engg., lawyer, auditor and professionals in consultancy firm.

Who reads the B-plan

Bankers, all investors, venture capitalists, employees, distributors, advisors and consultants

Outlines of a business plan

I. Introductory pageA. Name and address of the company to be startedB. Name and address of the entrepreneur/principal C. Nature of businessD. Statement financing requiredE. Statement of confidentiality of the report

II. Executive summary : (2-3) pages

III. Industry analysis

A. Broad analysis of future trends and outlooksB. Analysis of competitorsC. Market segmentationD. Your forecast about the industry

IV. Description of the venture

A. ProductsB. ServicesC. Size of businessD. Background of the entrepreneursE. Description of the officeF. Equipments and also personnel

V. Production plan

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Managerial Process SkillsA. Manufacturing process

B. description of the physical plant

C. Machinery and equipments

D. Supplier of Raw materials

These are first five aspects. In total, B-plan has ten aspects to be covered. (part of syllabus of IV-sem)

11. Project Development/ Project Report:After deciding the form of ownership, location, technology, machinery, the feasibility report must be prepared. The economic & technical feasibility of the product selected has to be established through a project report.The project report that is prepared is helpful in formulating the financial, production, marketing and mgmt plans, obtaining finances for registration & raw materials.

12. Finance:To obtain money certain steps & specified procedures must be followed. A number of financial agencies will give loans at concessional terms to the entrepreneurs. Certain categories of entrepreneurs are eligible for govt. subsidies and for margin money.

13. Provisional registrations:Application or prescribed for provisional registration is to be made to the Directorate of industries. This is not compulsory but desirable as it helps to awake various government facilities, incentives & financial assistance from National Small Industries Corp. Ltd.

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